Vol. 691 No. 4
105 Deputy Phil Hogan asked the Minister for the Environment, Heritage and Local Government if he directed the Dublin Docklands Development Authority to value its property portfolio using a valuation methodology being used by the National Asset Management Agency instead of current market value; if he is satisfied with the approach taken by the DDDA to value the property portfolio; and if he will make a statement on the matter. [36113/09]
I have not issued any direction to the Dublin Docklands Development Authority on this or any other matter. Recognising the current difficulties in securing an appropriate and realistic valuation of property assets under the present extraordinary market conditions, my Department and the Department of Finance met with representatives of the Dublin Docklands Development Authority in July. It was agreed that the authority would await the publication of the National Asset Management Agency Bill 2009 and also have regard to the guidance for the treatment of impaired assets, prepared by the European Commission and the European Central Bank, in valuing its property assets.
The intention was that the authority should have access to the most up-to-date guidance on this issue in finalising its annual accounts for 2008. The valuation of its assets in the accounts is a matter for the authority; the accounts are prepared in compliance with relevant accounting standards and are audited by independent auditors. I understand that the annual accounts for 2008 are now being finalised within the authority and will be submitted to me in the coming days, following which I will bring them to the attention of the Government and arrange to have them laid before both Houses.
Is the Minister aware of any other agency in his Department which produces an annual report without submitting annual accounts at the same time? Is the Minister in favour of using current market value when it comes to the accounts of the Dublin Docklands Development Authority and its various sites or is he in favour of the new NAMA methodology as outlined by the chairman?
I am not aware of the position of other agencies but I will address the question of whether I favour current market value. If the Deputy is referring to the NAMA way of doing business, it is current market value plus a premium. I understand, and I believe it already has been in the public domain, that the site we are referring to has been written down by approximately 85%, if one is to believe reports seen in the newspapers. I have not received the accounts yet but I understand that is roughly accurate.
There has been significant depreciation in that site, which is to be expected under the current conditions, as we are in extraordinary times and this site was bought at the very height of the boom. We are now at the lowest end of the market. It is to be expected. I hope to receive the full accounts and Deputy Hogan will have the opportunity to go through them in detail. No doubt he will then have the opportunity to put questions pertaining to those accounts.
The Minister should be aware that the decision to use a new valuation model for the 2008 accounts of the Dublin Docklands Development Authority, based on NAMA valuations and methodologies, is a departure. The Minister is wrong when he says it is consistent with good accounting standards. Accounting standards state that valuation methodologies must be fair, true and consistent from one year to the next. Is the Minister concerned about this departure on the basis that all the agencies with land under his remit could be treated in a different way for valuation purposes than heretofore?
I am not at all concerned. I understand these valuations have been carried out by the reputable valuers Lisneys, who have said that the valuation of this particular site has gone down by as much as 85%. Listening to what some people have said about NAMA, one might think the decrease is 50% but in this case it is not; the figure is 85%, which is unprecedented but the truth of the matter and nothing can be done about it.
The Deputy would be far better off under the circumstances awaiting the publication of the accounts. As I have said to the House, they will be laid before the Houses. I am very concerned about governance issues pertaining to the Dublin Docklands Development Authority and I have appointed a chairperson of calibre who understands the question of corporate governance. That person has been complimented by the Deputy and will do a very thorough job. The Deputy can be assured that no stone will be left unturned on any matter relating to the Dublin docklands.
The Minister is aware that he has not yet received any valuation under the NAMA methodology but he received a valuation from Lisneys in July. Will he indicate if that is accurate? He has received a valuation so what is in it?
I have not received a valuation.
The Minister has received one.
Allow the Minister to reply.
I have heard from my officials and I will say, for the third time, that as I understand it, the value of this site has depreciated by up to 85%. That is my information and it is accurate. It reflects what I have seen in newspaper coverage as well.
The Minister has a person on the board.
I advise the House that Deputy Joanna Tuffy has indicated she will be slightly late arriving to the House. I have agreed to take her priority question last so with the indulgence of the House, we will now take Question No. 107 in the name of Deputy Phil Hogan.
107 Deputy Phil Hogan asked the Minister for the Environment, Heritage and Local Government if he will make a statement on the financial position of the local authorities for 2009; his plans to improve local government funding in the context of the White Paper on local government reform; and if he will make a statement on the matter. [36114/09]
Local authorities have budgeted to spend some €11 billion in 2009 between current and capital expenditure. The capital income is funded mainly through grants, borrowing and other capital income sources. Current expenditure is funded from specific grants, commercial rates, income from goods and services and general purpose grants. I am providing some €905.2 million in general purpose grants from the local government fund to local authorities for 2009. These grants are my contribution to meet the difference between the cost to local authorities of providing an acceptable level of day to day services and the income available to them from local sources and from specific grants. It is a matter for each local authority to prioritise its spending, within the resources available to it, across the range of services it provides.
The Government decided to broaden the revenue base of local authorities by introducing a charge on all non-principal private residences. I consider this to be a very important development in providing local authorities with a new source of local revenue and one which will reduce their dependency on central funding.
Local authorities are not immune to the effects of the downturn in the economy. However, while there are pressures on resources at all levels, local authorities are required to introduce efficiencies where possible and to prioritise their expenditure to focus on essential services and to maximise the use of all resources available to them. I intend to advance the White Paper on local government later this year following, in particular, Government consideration of local government financing in light of the report of the Commission on Taxation and the commitments included in the renewed programme for Government.
The Minister is aware that the debt of local government financing as of 31 December 2008 is €4.9 billion, which has led to many local authorities being in a serious financial position. A programme for Government review was agreed by the Minister's party and Fianna Fáil last Saturday. On 30 September the Minister stated that we cannot have a document that is not costed; it must be costed and it will be costed. What are the costs associated with the measures that will assist local government bodies to meet their financial targets over 2010 and 2011?
The Deputy is aware that when I spoke about costing, it was in the context of a forthcoming budget. The budget provides the costings for a programme for Government. The programme is simply a series of political commitments but the budget puts a financial shape on those commitments.
With regard to the programme for Government, we have considered a number of issues relating to the financing of local government. As I have always stated, it is our intention to broaden the revenue base for local authorities. We operate a system which, in my view, is unsustainable in the long term. The difficulties relating to it date back to 1977 and we are still trying to recover from them.
We have begun the process of introducing reforms to broaden the revenue base. There are a number of steps in this regard. As stated, I have introduced a tax on second homes. I would like to examine — this is included in the new programme for Government — the idea of a site value tax. In addition, we want to consider introducing some form of a system of water rates that will be based on allocation or metering. A capital investment will be required in this regard. The process of reform will be slow and difficult. There must be a political commitment to introduce the reforms to which I refer, and we must not shy away from the difficult choices to which I refer.
As the Minister stated, the programme for Government refers to a site value tax, water charges and extra local government taxation. Which of these measures does he intend to prioritise for 2010 in the context of local government finances, particularly as there will be an 8% reduction in the local government fund next year? What measures will the Minister prioritise in order to ensure the debts of local authorities can be serviced and their current costs met?
A two-pronged approach is required in this regard. In the first instance, we must consider a number of expenditure cuts. I am sure the Deputy will agree that it also will be necessary to reform the public service. It is common knowledge that, unlike the boom years, there is not a great deal of activity in planning departments at present. I am obliged to ask myself what these staff are doing. There are demarcation problems in respect of the public service but I would like a situation to develop whereby it would be possible to move people from the public service into the Civil Service. I have tried to encourage some of the planners in the departments to which I refer to assist An Bord Pleanála in clearing its backlog. Therefore, the approach I am advocating involves obtaining real public service reform and examining the introduction of new revenue-raising measures.
I cannot state for certain whether we are in a position to introduce any form of water taxation. In light of the logistics involved and the capital investment required to put in place a system of water metering, it would be difficult to see it being introduced in 2010.
In the context of the programme for Government and the Minister's plans to deal with the financial issues relating to local government, will he indicate the income that is likely to be generated from the introduction of water charges and a site value tax?
I have asked my Department to prepare scoping documents in respect of both matters. The process relating to introducing water meters into people's houses would be both extensive and complex. It will be some time before I can make available to the Deputy a scoping paper on that matter. However, I will keep him well informed of progress.
It will take a great deal of time to introduce a site value tax. As the Commission on Taxation recognised, this will prove to be an extremely tax. I am of the view that it will take up to two years to obtain the necessary valuations. We must obtain those valuations before we can even consider introducing such a tax.
So nothing is going to be done.
108 Deputy Ciarán Lynch asked the Minister for the Environment, Heritage and Local Government the progress made towards implementing the announcement of 23 April 2009 not to proceed with the implementation of electronic voting here; if all voting machines have been removed from their long-term storage locations; if all long-term storage contracts have been terminated; if so, the cost to the State; if new short-term storage arrangements have been entered into; the cost to the State; the way it is intended to physically dispose of all of the electronic voting equipment, including that stored at Gormanston, County Meath; the cost of same; and if costs are being incurred for the storage of manual electronic voting related equipment. [36055/09]
On 23 April 2009 I announced that the Government had decided not to proceed with implementation of electronic voting in Ireland. Since then, a process has been put in place to address the issues that arise from that decision. An interdepartmental task force, chaired by my Department, has been established to bring the project to an orderly conclusion and to oversee disposal of the equipment and termination of storage arrangements. The first meeting of the task force took place in July 2009.
In considering options for disposal of the equipment, the priority is to pursue the most economically advantageous approach with a view to achieving the maximum recovery of costs possible in the circumstances, consistent with environmental and other obligations. Detailed consideration of all relevant factors is under way to inform the manner in which disposal of the machines will be effected. This process includes contact with the original suppliers of the machines.
In 2007 more than 60% of the machines, some 4,762 in total, were moved from 12 local storage locations to a central facility at Gormanston Army Camp. The remaining machines are stored at 13 local premises that were originally identified by returning officers for this purpose. It is intended that all machines will be removed from their current locations when arrangements for their disposal are implemented. Work on termination of local lease arrangements is proceeding in this context.
In May 2007 my Department, following a competitive tendering process, engaged consultants with valuation expertise to examine individual leases and to make recommendations on termination of leases, where appropriate. In May 2008 I accepted the consultants' recommendations and these are currently being implemented. The consultants recommended termination of leases in seven cases and this has since occurred at three locations. No additional payments were made in respect of these terminations. Work is ongoing on concluding the other four leases. It is expected that, in certain instances, termination of lease arrangements will give rise to buy-out costs and these will be dependent on the outcome of negotiations.
Returning officers continue to have requirements for the storage of manual voting equipment. My Department has informed them that these arrangements should be made on the basis of achieving the best value for money, with a preference that such items be stored in an appropriate public building where payment of rent is not required.
I thank the Minister for his reply. I welcomed the announcement he made on 23 April. The purpose of the question is to obtain a progress report in respect of this matter. On foot of the Minister's reply, I am not sure as to what progress has been made. By all accounts, the Exchequer is still paying for the storage of these machines. Is it correct that a deadline has not been set in respect of completing the process of disposing of these machines?
A letter was sent to local authorities in September but the Minister did not refer to this. That letter is critical in the context of the audit regarding the number of these machines that are in place and in respect of the escape costs relating to the storage leases, the duration of which is 20 years or more.
Is the Minister in a position to indicate the date by which this project will be scrapped entirely and on which the Exchequer will cease funding it? Has he identified the cost of escaping leases with durations of two, three, four, five, ten and 20 years? What costs have accrued to his Department or to the Exchequer since the announcement was made on 23 April last? How much more will the Exchequer be obliged to pay before the project is completed and the machines disposed of?
As the Deputy will be aware, to date some €51.33 million has been spent on the development and roll-out of the system. In addition, there have been associated storage costs. For 2008 these amounted to €204,000 — lower than those for the previous years. Storage costs for the years 2004 to 2007, inclusive, were €658,000, €696,000, €706,000 and €489,000, respectively. Pending the removal of the machines there will continue to be ongoing storage costs. This was factored into the analysis and informed the decision to end the electronic voting project.
This matter was dealt with in chapter 9 of the annual report of the Comptroller and Auditor General, which was published on 11 September and which states:
It is in the nature of large ICT projects that they can be overtaken by technical developments or that the solutions developed may not achieve user acceptance. In such instances, the challenge for management of projects is to recognise when they are not working as intended and to act appropriately. The decision to abandon a project that is not working is the correct course because it avoids spending further public moneys – both capital and current – in a non-effective way.
It concludes by stating that reasonable steps are being taken to wind down the project and to reuse or dispose of the assets that can no longer be utilised. The Deputy has asked further questions that I intend to answer. I spoke to representatives from Nedap-Powervote, who have indicated the approximate costs. I do not believe they are exorbitant and I will keep the Deputy informed at all times as to the progress being made.
Has a deadline been set by which this process of disbanding the electronic voting project will be completed? On foot of the Minister's announcement on 23 April, what will be the estimated total cost to achieve this deadline? Within the costs associated with the overall process of dismantling this project, has the Minister identified what will be the cost to escape those leases that were set for 20 years? In the context of the Comptroller and Auditor General's report, everyone knew these machines were the equivalent of PlayStation Ones that would expire within a certain timeframe. The idea that leases were taken out for 20 or 25 years on a product that had a limited shelf life was madness in the first instance.
As for the storage arrangements and the costs involved, the original electronic voting machines were stored at 25 local premises. In 2007——
I know that.
I have given this information to the Deputy.
I know that.
In most cases, these leases are of relatively short duration and will not involve negotiation of termination arrangements or the payment of a penalty to end the lease. The most widely publicised lease concerns the storage facility in Cavan-Monaghan, which was arranged by the former Monaghan county registrar. While the length of that lease — which has been publicised as being for 25 years — has been the subject of much public comment, this arrangement was somewhat exceptional in comparison with the other leases.
On the question regarding a deadline, I cannot give the Deputy a definitive date as to when all these arrangements will be completed. However, I am hopeful that progress can be made. The Department has made contact with and is in negotiations with the Nedap-Powervote company.
Will it be within six or 12 months?
I told the Deputy previously that I would deal with this issue.
The Minister said that two years ago.
I have done so and I repeat that it will be dealt with.
109 Deputy Phil Hogan asked the Minister for the Environment, Heritage and Local Government his priorities for his upcoming carbon budget; and if he will make a statement on the matter. [36115/09]
As announced in the 2008 carbon budget and confirmed more recently as part of the supplementary budget in April 2009, there is an unequivocal commitment that a carbon levy will be introduced in 2010. This commitment is reflected in the renewed programme for Government. The recent recommendations of the Commission on Taxation of course must be considered in formulating the carbon levy.
The principle of carbon pricing is accepted by virtually all economists and analysts as the most effective way to secure emission reductions. It is the basis of the EU's emission trading scheme, which applies to the bigger emitters such as power generators and industrial plants. The carbon levy will enable us to harness its benefits in the rest of the economy and will deliver a further reduction in emissions, which will be reflected in the forthcoming carbon budget projections. In accordance with the two previous carbon budgets, this year's carbon budget will demonstrate that climate change considerations now are integrated into the Government's budgetary policy and the decision-making process across all sectors. It also will demonstrate that decisions on expenditure and taxation are informed as much by the climate impact as by the financial and economic impacts.
The carbon budget will outline the preliminary emissions figures for 2008; the projected emissions for the 2008 to 2012 Kyoto Protocol period, taking account of the measures already adopted through the National Climate Change Strategy 2007-2012 and in the two previous carbon budgets; the effects of additional measures being put in place; and the projected emissions to take account of these measures. Essentially the carbon budget will demonstrate Ireland's progress towards meeting its targets for emission reductions.
I thank the Minister for his response. Will he indicate how much money he expects to raise through the carbon levy? Has an estimate been generated by his Department for the Department of Finance's budgetary calculations? Second, there has been a shift in emphasis from roads to public transport in the programme for Government. I understand that 94 road projects will be deferred and that the money will be put into public transport. The Minister should provide some details in this regard.
As that constitutes a broadening of the question——
It certainly is.
——I do not expect the detail is available to the Minister.
It could have serious implications in respect of climate change
While this issue falls into the domain of my colleague, the Minister for Transport, that certainly is the intention. I hope the Deputy agrees this shift in ratio is essential and must be made as we were out of kilter with regard to sustainability for far too long. In other words, we were investing far too much in roads and not enough in our public transport system. Thankfully, the new programme for Government recognises for the first time that this must change. This is a real commitment and there must be change. I also am glad to note in respect of public transport that at long last, real-time information will be provided for passengers. This information can be acquired from a computer screen at the bus stop or, even better, from one's mobile telephone.
The Deputy will be aware that I cannot reveal the budget's contents. While I cannot tell him what will be the rate of the carbon levy, it will be introduced. Moreover, I hope it can be introduced in a manner such as has been outlined in the report by the Commission on Taxation, whereby those people who suffer from fuel poverty can be protected and that the money can be directed towards reducing carbon dioxide emissions. That is the purpose of a carbon levy. It must change behaviour and must do what it says on the tin.
Surely the Minister has an estimate as to how much income a carbon levy is likely to generate to meet other objectives in the work agenda as indicated by him. The Minister also should comment on the progress that has been made in reducing greenhouse gas emissions in the transport and agriculture sectors.
On the latter question, we are making progress. Many might state that progress is being made in respect of transport simply because there are fewer cars on the road. However, substantial progress is being made in Dublin city, for example, in respect of other modes of transport. I am pleased to note that cycling has increased substantially and visibly throughout the city. Although the bike to work scheme was derided at the time of the last budget, it has proved to be enormously successful and popular.
I am glad to hear it.
Were the Deputy to examine the report of the Commission on Taxation, he would find therein an outline of what a carbon levy might look like. That is the closest thing to an estimate I can provide to him at this point.
We now turn to Question No. 106 in ainm an Teachta Tuffy.
106 Deputy Joanna Tuffy asked the Minister for the Environment, Heritage and Local Government the steps he has taken to ensure that outstanding development levies are collected from developers by local authorities; the moneys outstanding in total; the moneys outstanding in respect of each local authority; and if he will make a statement on the matter. [36054/09]
As Minister, my role is to provide the necessary statutory and policy framework within which individual development contribution schemes are adopted by each local authority. The adoption of individual development contribution schemes is a reserved function of the locally elected members of each planning authority. It is a matter for the members to determine the level of contribution and the types of development to which they will apply.
Each planning authority also is required to include details of contributions received in that year, as well as information on how the contributions have been expended, in the statutory annual accounts of the authority. A new requirement was introduced for the financial year 2008 to include details in the annual financial statement of all accrued uncollected levies due to the planning authority. The 2008 statements will be the subject of a full audit by the local government audit service during the audit cycle 2009-10. My Department does not, therefore, have up-to-date information on the amount of development contributions due to planning authorities.
As with all local charges, the invoicing and collection of any outstanding development contributions is a matter for the local authority concerned to manage in the light of prevailing local circumstances and in accordance with normal accountancy procedures. Where any payments required in respect of development contributions are not settled, such payments may be pursued by the planning authority through the courts as a contract debt.
I thank the Minister for his response. I note he has not yet received the information regarding the amount that is owed to the local authorities for development levies. That is worrying in some ways because many newspapers have carried partial information that suggests the amount of money is considerable. In February, The Irish Times wrote that the four Dublin local authorities are collectively owed €322 million by property developers in unpaid levies. Dublin City Council is owed €142 million, Fingal County Council is owed €70 million and South Dublin County Council is owed €22.5 million. One story that caught my eye is related to the property bubble and how property developers are affected. It also relates to NAMA. A story in the newspapers over the summer concerned a development company that owed some €750,000 to local authorities. It also owed money to Anglo Irish Bank, which is a secured creditor.
A question Deputy, please.
This will become a major issue. We may find that local authorities turn out to be insolvent because development levies were a major source of funding for local authorities. If they do not collect these levies over the next few years, local government funding is reduced and they have difficulty collecting water charges from businesses that claim they cannot pay they will be in big trouble. What is the Minister proposing to do on this and what information does he have?
I have some extra information. Authorities are systematically pursuing outstanding development contributions. The action taken includes construction site visits by senior planning staff in order to determine an accurate picture of the moneys due. Failure to pay amounts due to the authority has resulted in enforcement proceedings being initiated under planning legislation and this will continue to be the case. County and city managers are maintaining a policy of actively managing any arrears that may occur or where money is due to be paid and remains unpaid. Staff have been assigned specifically to deal with the collection of outstanding development contributions.
With regard to local authorities referred to at the beginning of Deputy Tuffy's contribution, Dún Laoghaire-Rathdown County Council has 219 cases that have been referred to the planning enforcement section for appropriate legal action to recover the moneys due. Deputy Tuffy also referred to Dublin City Council. Since January 2009 in excess of 200 developments have been inspected to establish if development contributions are due. Following these inspections, 92 warning letters under section 152 and 64 section 154 enforcement notices were issued, 10 section 157 referrals have been made to the District Court and the city council has been successful in the cases that have been heard to date. Fingal County Council has 50 cases at various stages of legal proceedings. These were instituted for the amount outstanding in respect of development contributions.
I could go through this in detail but I do not want to waste the time of Deputy Tuffy. In Kilkenny, 90 cases are with the legal advisors for legal action and Cork County Council has similar figures. We see a picture of actively pursuing these moneys. Deputy Tuffy can have no real concern that the local authorities are not pursuing this. It makes sense because it is their revenue stream and local authorities will do this.
It is welcome that local authorities are pursuing these development levies from the developers and that extra staff have been assigned to this. What if the local authorities are not able to collect the money? Is the Government examining this problem? At the Green Party conference at the weekend the Minister referred to how we will fund local authorities in the future. Local authorities were making money in the same unsustainable way as banks and the Government. All of this development was unsustainable and now it has collapsed. Local authorities are one of the institutions that will pay the price for this type of one-dimensional view of how to get the bulk of funding. Does the Minister have a view of how we will deal with this? Are there plans or emergency plans if they do not collect funds?
I referred to the developer, Laragan Developments Limited, that went in to examinership. The secured creditor was Anglo Irish Bank and the unsecured creditor was the local authority. When developers go into examinership will it be the case that local authorities lose out to the banks because the banks or NAMA have secured debts and the local authorities do not? We could have a crisis in local government besides unfinished estates.
I take Deputy Tuffy's point that much of this is associated with the housing bubble. We conducted a survey and the breakdown of development contribution money as applied across various programme headings of my Department. The survey, conducted in 2008, show that 41% of development contributions are for water and sewerage, 45% on roads and 14% on amenities. We continue with that infrastructural development and continue to invest record amounts in the water services investment programme and public transport. We will continue to receive development contributions on that basis.
