Topical Issue Debate

Local Authority Rates

Deputy Jim Daly

The importance of growth in the economy to complement the success we have made since becoming a programme member is underlined every day. It is important that the Government and the Oireachtas do everything possible to encourage and stimulate that growth. No sector is better poised to assist us in that area than the small and medium enterprise, SME, sector. If all 250,000 of them had the assistance to create one new job each, our dole queues would be halved overnight. It is important we support this sector, and that is why I raise this matter.

I wish to illustrate some of the obstacles created by the current rates system A constituent who has a unit for lease has secured a new tenant. The new tenant has agreed to take on the lease of the unit which has been idle for the past six to nine months. Unfortunately, there is a rates arrears hangover attached to the unit and this transfers automatically to the new tenant, irrespective of the new tenant's history or of the new tenant's future. This anomaly causes serious obstacles to generating growth in our economy by allowing people to take up new leases. Landing a new tenant with a rates bill inherited from a previous tenant is outrageous.

Other constituents who wish to expand their business approached me during the week. They have a fabrics and soft furnishings business. They want to expand and have found an old car showroom which is suitable. They went to the local authority, because the rates on the premises are €1,700 per month, and asked the local authority to do a deal whereby they could pay 50% the first year, 75% the second year and 100% the third year, which seems reasonable in the current times. The local authority replied in writing that it has no discretion in this area. It is full rates or nothing. Unfortunately, the reality for Cork County Council is that, in this case, it will be nothing. The unit will be left empty because of the inflexibility of the rates system.

I lament a major lost opportunity in our recent jobs initiative where we should have grappled with this thorny issue because of the urgency and immediacy afforded to it. As a former county mayor, I am well aware of the importance of rates to every council. I am not criticising local authorities. In Cork County Council, for example, rates were worth €100 million a year. I also appreciate the challenges posed by the difficult and draconian legislation undermining the gathering of rates by each authority.

I earnestly request the Minister to act immediately, notwithstanding the current and planned reviews of rates, and give county and city managers discretion in the application of rates to new businesses willing to occupy vacant premises. This can be done by ministerial directive and does not require the long protracted legislative process, because time is of the essence and jobs are being lost. While headlines will always focus on the very tragic big job losses, the small loss and lost opportunities which make no headlines and appear on no record are just as much of a concern to me as a Member of the Oireachtas. I also ask the Minister to introduce emergency legislation to amend the existing Act that transfers the onus of rates, which are effectively a property tax on a building, from one errant tenant to a new prospective tenant who will create employment, generate revenue for the local economy and the rate collector — the local authority — and to speed up the current review of the rates system with a view to introducing a commercial rate that reflects the reality for SMEs in Ireland today, not the dark ages to which they belong.

Minister of State at the Department of the Environment, Community and Local Government (Deputy Willie Penrose)

I thank the Deputy for raising this important matter for debate, which I am taking on behalf of the Minister.

Rates income is a very important contribution to the cost of services provided by local authorities such as roads, water, public lighting, development control, parks and open spaces. The continued provision of these services is essential to creating and maintaining the local environment in which business can operate and prosper. Local authorities are under a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the independent Commissioner of Valuation under the Valuation Act 2001. The levying and collection of rates are matters for each individual local authority. The annual rate on valuation which is applied to the valuation of each property, determined by the Valuation Office, to obtain the amount payable in rates is decided by the elected members of each local authority in the annual budget, and its determination is a reserved function of a local authority.

The factors that influence the decision on the annual rate on valuation include the level of services to be provided by the local authority and the income available to fund these services. Therefore, elected members adopt the annual rate on valuation they consider necessary to provide the range of services for the communities, including businesses, in their area. In this regard, all rates collected locally are spent exclusively on providing services within that area. This is local democracy in action.

The Government is acutely aware of the pressures on small and medium-sized businesses and the challenging economic environment in which many property and business owners are operating at the moment. In this context, the Government is focused on reducing the costs of doing business to support competitiveness and employment in the economy and to protect the interests of communities. Local authorities have responded positively to requests to exercise restraint in setting commercial rates. Annual rates on valuation have been reduced by an average of 0.6% in 2010 and by a similar level in 2011. The Minister for the Environment, Community and Local Governmentwill continue to keep all matters relating to rates under regular consideration. However, I have no immediate plans to reform the rating system.

That said, the Commissioner of Valuation, who has sole responsibility for all valuation matters, is conducting a programme of revaluation of all commercial and industrial properties throughout the State. This will produce more consistent and up-to-date valuations for rating purposes and will assist in making the rating system fairer and more equitable for ratepayers.

Deputy Jim Daly

I thank the Minister of State for his response. It is obviously not the response I wanted, and we need to look at that. The Oireachtas has a responsibility to move with the times, and to get a blanket clarification from the Minister that there are no plans to reform the system will not send a message to the business community that we are supporting the SME sector.

Empty units throughout the country are of no use whatsoever in terms of revenue to local authorities. Revenue should do what every other sector is doing, such as the hotel sector, which is suffering inordinately owing to rates, by offering course discounts and reviews and offering to do business with people. That is how markets react and how economies thrive and survive.

I urge the Minister of State to take on board my suggestion that county and city managers be given discretion, especially when it comes to vacant premises. Ultimately, it will lead to an increase in their revenue. I am not trying to deny any local authority its revenue.

The other argument made is that if we give a break to new businesses, we are discriminating against existing businesses that are paying the full fee, but all the phone and television companies do that. Many companies provide introductory offers for the first six months or the first 12 months. The existing customers are paying the full rate, but it does not disenfranchise them. There is an onus on us to take this much more seriously.

Deputy Willie Penrose

As I stated in my introductory remarks, the Government is acutely aware of the pressures on small and medium-sized businesses at the present time. The Minister of State, Deputy Perry, is dealing with various competitiveness and cost issues that will certainly incorporate some of things raised by Deputy Daly. The Deputy's point about vacant properties is well made.

Local authorities have taken a number of initiatives to promote and support enterprise, economic development and employment generally, including in particular the establishment of business support units or equivalent arrangements in each county and city council. Local authority cost bases have been reduced and continue to be rigorously examined rigorously to maximise efficiencies which, in turn, impact positively on business. We will continue to impress upon local authorities the need to continue measures to enhance efficiency with a view to minimising rates and charges for business.

As I outlined previously, the Commissioner of Valuation is conducting a programme of revaluation of all commercial and industrial properties throughout the State. Following completion of the revaluation programme, there will be a much closer and uniform relationship between the rental values of property and their commercial rates liability. This relationship will thereafter be maintained by means of recurring revaluations provided for in the Valuation Act. This will lead to more consistent and up-to-date valuations for rating purposes and will assist in making the rating system fairer and more equitable for ratepayers.

I recognise that these are difficult economic times for many businesses. While it is not my intention to reform the commercial rates system at this time, I will continue to keep the approach to rates by local authorities under active review. I remain determined that every avenue will be pursued to optimise efficiency and curtail costs in the local government sector.

Jobs Initiative

Deputy Brendan Griffin

I am very grateful for the opportunity to speak on the need for individual jobs plans for all regions of the country. The recent announcement on the loss of almost 600 jobs at TalkTalk in Waterford was a devastating blow to the south east, and the Minister for Jobs, Enterprise and Innovation and the Government have responded decisively by announcing the formulation of the south-east employment action plan. Once complete, this plan will act as a roadmap for tackling unemployment in that region, as it is clear from the statistics that there is a grave problem in the south east.

Given that there are almost 500,000 people on the live register nationwide, there is a clear need for jobs plans specific to every region of the State, focusing on the respective strengths and opportunities of each region. I also envisage such plans identifying particular difficulties for existing large employers and key sectors in each region, with recommendations on how to ease such difficulties before they become irresolvable and threaten existing employment. Perhaps the south-east plan, when complete, could be used as a template in the formulation of a plan for each region. We need correct national policy to help create an environment for job creation and sustainability. While I acknowledge that the Minister has taken numerous measures in this regard, we must also focus on the unemployment problem on a regional basis in tandem with the national policy effort.

For example, looking at the south west, where I am a Deputy for Kerry South, many constituents have identified to me sectors and projects that need to be prioritised by the Government as having real employment prospects. Almost 17,000 people are on the live register in County Kerry alone. A targeted plan that would identify key priority projects could lead to a considerable reduction in this figure. I wish to refer briefly to some examples that have been mentioned to me in County Kerry. There should be a determined focus on promoting winter tourism in County Kerry, similar to the Scottish Tourist Board's drive, which could extend the tourism season and its benefits to a year round basis, creating hundreds of extra jobs. A cut in the rate of VAT on beer kegs and tax reliefs for expenditure on customers' taxis for rural publicans would help revive a labour intensive sector of the economy that has been in decline for some time. If every rural pub in County Kerry took on one extra employee, that would create hundreds of jobs. I refer to kegs only because one cannot buy kegs in an off-licence, and the off-licence sector is eating into the labour intensive on-sales industry. Fishermen in Dingle tell me that 50 jobs at sea would be created in Dingle alone by the return of spurdog fishing, and a continued drive to attract foreign vessels to process their catches in Dingle could create many more jobs. The development of a world class links golf course at Inch could create a large number of full-time jobs in an area with poor job prospects at present. The identification of Kerry as a priority county for the reduction of commercial rates, given that Kerry County Council's multiplier is by far the highest in the country, would help employment in the county. Surely GPCE and Shannon LNG would feature prominently in such a plan for the south west, as would emphasis on agrifoods and renewable energy.

While it is not possible to elaborate fully in only four minutes on the many other job creation opportunities available in County Kerry, I have cited these examples to show that every other county and region has similar projects and possibilities which need to be helped along and brought to fruition. I am sure every Deputy could cite countless similar examples of areas in which real jobs could be created.

On possible events, it has been suggested to me that major global sports events such as the Tour de France and the Ryder Cup should be targeted by the Government with a view to having them return to Ireland. Having hosted these events before, we could do so again. They provide an excellent opportunity to showcase the country internationally and generate substantial revenue immediately. Moreover, they would fit into a jobs plan for any region.

A massive task lies ahead. Not only must we get those on the live register back to work, but we must create thousands of jobs to allow the return of those who have been forced to leave Ireland in search of work. A multi-agency, focused effort which takes the best suggestions and ideas from the grassroots is badly lacking. I hope this matter will be given serious consideration by the Government.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy John Perry)

As the Minister, Deputy Richard Bruton, is leading a trade mission to the United States to widen the footprint of Irish exporters by exploring new opportunities in the fast growing south-east states of Georgia, North Carolina and Florida, I am pleased to debate with Deputy Griffin on this matter.

My Department is focused on two key approaches aimed at creating jobs throughout Ireland. First, building on the recent jobs initiative, the Minister is preparing a long-term jobs strategy designed to set out a clear plan for the economy in the next ten to 20 years. The plan should be completed in the coming months. Second, in the shorter term, the focus of the Minister, Deputy Bruton, the Minister of State, Deputy Sean Sherlock, and me is on three key issues, namely, reducing costs for business, improving access to credit and supporting the research and development and innovation agendas to support a strong indigenous engine of growth.

The Department is engaged in an exercise on long-term economic planning to consider from where future jobs will come. We are examining the strengths of Ireland, including our regional strengths, to identify where clustering opportunities can be created or further developed. It is important to play to the strengths and address any weaknesses across regions in the areas of job creation and retention. While a particular focus on a region is needed from time to time, as we have seen in recent months and years, a clear national focus is also needed.

On 10 May the Government launched a range of measures under the jobs initiative to improve the competitiveness of the economy and reduce costs for business. These measures will support the maintenance of existing jobs and the creation of new employment. The initiative also included a number of measures to boost the domestic economy, including a reduction of VAT; the halving of the lower rate of employer's PRSI; expenditure on more employment intensive capital projects; additional funding for energy efficiency schemes which will support jobs in the construction sector; and the development of proposals for a partial credit guarantee scheme to improve access to finance for small and medium-sized enterprises and for a micro-finance start-up fund which will be important for new start-up companies.

We are also pursuing other actions to reduce the costs of doing business across a range of areas. For example, reform of the joint labour committee, JLC, system and amalgamation of the industrial relations mechanisms will help to reduce costs for businesses. We have already produced savings for businesses of €187 million from reducing administrative burdens. As chairman of the high level group on business regulation, I am continuing to pursue practical solutions to 20 red tape issues in addition to the 48 issues already identified by business and processed. The advisory group on small business which I also chair and which was established in June will also play a key role in identifying the issues that need to be addressed to support small business and realise the job potential of the sector. These include the issues raised by the Deputy.

Access to finance and credit is critical and has been identified as a major issue for small businesses in recent years. As the Department outlined to a joint Oireachtas committee meeting last week, the Government has taken measures to restructure and recapitalise the banking system to ensure it provides for substantial new lending in the economy. The Department of Finance, the Central Bank and the Credit Review Office are rigorously monitoring the banks' activities to ensure this takes place. Separately, the Department is actively working on the introduction of the temporary partial credit guarantee scheme which was announced by the Government in May. Details of the scheme which is in the design stage will be announced before the end of October.

Another component of addressing the finance needs of industry is the micro-finance start-up fund. Securing access to working capital is critical for start-up businesses. The aim is to formalise proposals for the Government's consideration in the context of budget 2012 which will benefit the 250,000 small businesses employing more than 800,000 people in the domestic economy. A further measure to improve cash-flow for small and medium-sized enterprises is the requirement, from 1 July last, for the Health Service Executive and other public sector bodies to pay their suppliers within two weeks of receipt of a valid invoice.

There has been significant investment in research, development and innovation for the collective gain of the country. The benefit of such investment is that Irish based, research and development performing companies have shown a level of growth in trade and exports during the downturn that demonstrates the value of productive, high calibre research and innovation activity.

An Ceann Comhairle

The time available to the Minister of State has elapsed.

Deputy John Perry

To respond specifically to Deputy Griffin, the Department is conscious that small businesses form the backbone of the economy and we seek to bring value to them in every region and town.

Deputy Brendan Griffin

I acknowledge the great work the Department has done in recent months to try to restore economic competitiveness and reduce costs for small business. We need to create an environment in which small businesses, the backbone of the economy as the Minister of State noted, can prosper and create employment. In addition to developing policy at national level, the enterprise agencies must focus on providing assistance for the regions. Last week I suggested to departmental officials attending a meeting of the Joint Committee on Jobs, Social Protection and Education that they emulate the plan being drawn up for the south-east region in all regions. This would be beneficial to all regions as each has different strengths, weaknesses and faces different opportunities and threats. We must seek to generate employment by playing to the strengths of each individual region. This approach should go hand in hand with the overall national approach. While national policy is moving in the right direction in seeking to create a proper overall environment for business, it can only go so far and a focus on the priorities in each region is required. I hope this will be achieved through the formulation of specific, targeted regional jobs plans. I ask the Department to consider this proposal.

Deputy John Perry

The Minister, Deputy Bruton, is visiting the United States this week. Last week I visited Australia with representatives of 48 Irish based companies. Enterprise Ireland supported companies will record the highest ever level of exports this year, while foreign direct investment has reached an all time high. While we occasionally lose companies, new job announcements are being made continuously. This morning I visited a company which started with a workforce of 15 in 1999 and will recruit an extra 150 people in the next three years on top of its existing workforce of 1,200.

The role of IDA Ireland is to attract foreign direct investment. The environment has become more complex and challenging than it was in the past and the market for such investment has become highly competitive. Ireland has 250,000 small companies. If 50,000 of these companies each created one job, it would be a major success. The focus of the Government is to create an environment for small businesses to flourish. We have produced ten reasons to set up a business and work with third level colleges, encouraged enterprise and made a massive investment in the banks which are now duty-bound to invest in viable small companies to retain jobs. The Minister and his officials in the Department have a plan which will give encouragement to small companies which form the backbone of the economy. The company I visited today which had 15 employees in 1996 now has 1,200 staff. From small acorns large oak trees grow. The job of the Government is to get Ireland working again. The main focus of the Department is to reduce regulation, encourage enterprise, support business people and ensure there is a regional and county balance. Villages and towns are also important because it is in these that jobs are created. I am pleased to address the concerns raised by the Deputy and thank him for doing so.

Dáil Éireann debate - Wednesday, 21 Sep 2011