Dáil Éireann debate -
Tuesday, 31 Jan 2012

Vol. 753 No. 2

Topical Issue Debate

Non-Principal Residence Charge

Deputy Charles Flanagan

I am grateful to the Ceann Comhairle for allowing me to raise this matter and I am pleased that the Minister for the Environment, Community and Local Government has come into the House to deal with it. Thousands of home owners have been under a misapprehension about certain regulations for what is colloquially described as the second house charge, which was introduced in 2009. I wish to highlight a consequent anomaly in which I ask the Minister to show an element of redress and common sense. We were led to believe this charge was a tax on second houses, holiday homes and investment properties in the amount of €200 per annum payable in 2009. The tax applied to non-full time residences and became due on 1 September 2009. I make the case that thousands of people have not adequately registered or paid because they have been under a misapprehension as to whether there was a liability. Interest is running and penalties have been imposed resulting in bills of many thousands of euro having been amassed by people who had no idea they were subject to the tax. The assumption was that anybody who had a principal private dwelling - being the home in which he or she ordinarily resided - would not be liable.

In my constituency - I am sure this is true of other Deputies' constituencies - many people bought their houses as first-time buyers. They got their mortgages and moved in, but owing to economic necessity have left the jurisdiction of the State and emigrated to Australia, Canada or the UK because they could not find employment in this country. In many cases the mortgage could not be paid and they entered into an arrangement to let the house. They may have engaged somebody in caretaking the house - to mind the house for them in order to pay the mortgage until the economic climate improved to allow these people to return to friends and family in this country and resume residence within the jurisdiction of the State.

Local authorities have in many respects adopted a high-handed approach by issuing letters informing people that they may or may not be liable when a strict reading of the legislation shows a certain liability. I am asking that a waiver of interest and penalties be provided by the Minister to facilitate those people suffering because of the anomalous situation. The Consumers Association of Ireland recently adverted to matter by stating that in Dublin alone there may be up to 7,000 such houses where people because of economic necessity had to leave the family home, many returning to live with their parents. They made arrangements for a rental income to be paid on the house which they used to pay the mortgage to keep the banks from repossessing the houses. I believe the local authorities should have notified the people as to the liability - if, indeed, there was a liability. It is neither fair nor just to adopt a high-handed approach.

I refer to media reports at the time the tax was imposed. Headlines indicated that owners of second homes had two days to pay the charge and that residential investors must pay the money. However, there was no reference to those who by economic necessity had to leave the jurisdiction of the State and I am now asking for certain clemency in that regard.

Minister for the Environment, Community and Local Government (Deputy Phil Hogan)

I know Deputy Charles Flanagan will agree that I do not write headlines for newspapers and that is not the basis on which we collect money nor can it ever be. It is the duty and responsibility of each homeowner to understand the law and be compliant with it. I wish to set out for the Deputy the issues involved.

The Local Government (Charges) Act 2009, as amended, broadened the revenue base of local authorities by introducing a charge on non-principal private residences. The charge is set at €200 and liability for it falls, in the main, on owners of rental, holiday and vacant properties. The charge on non-principal private residences, since its introduction in 2009, has contributed some €205 million to the financing of vital local authority services, including fire and emergency services, maintenance and cleaning of streets, street lighting, planning and development services, public parks, libraries, open spaces and leisure facilities, etc.

It is recognised that the existing revenue base of local authorities is narrow by international standards. This was a consideration in the introduction of the non-principal private residences charge in 2009. While the NPPR charge represents a dedicated source of funding for local authorities and is relatively stable, it does not go far enough in addressing the imbalance in the sector's financing. A proper broadening of the revenue base for local government is being brought about as a result of the introduction of the household charge in 2012 and the potential of the subsequent property tax in due course. This measure is significant because it recognises that local authorities should not be disproportionately dependent on central government funding. The 2009 Act is structured from a starting position of a universal liability for the charge in respect of all residential property. Liability arises each year on a point-in-time basis, which is 31 March in each year. A number of exemptions from the charge are provided for in the Act, the most significant being where a property is an owner's sole or main residence. The charge is on a self-assessment basis and it is a matter for an owner of a residential property to assess whether there is a liability to pay the charge in the first instance. The Act places the charge on non-principal private residences under the care and management of the local authorities, and application in particular circumstances is a matter for the relevant local authority. Perhaps that is an avenue the Deputy might wish to pursue his concerns on the matters he raised.

Where a person owns a property in which he or she does not live and his or her sole or main residence is another property, there may be a liability for the non-principal private residence charge in respect of the property owned by the person, unless it is exempted under section 4 of the Act. Interpretation of the legislation is ultimately a matter for legal advice.

I take this opportunity to clarify that the charge on non-principal private residences is not a second-home charge as it has been termed. The Local Government (Charges) Act 2009, as amended, provides for a charge on residences which are not the owners' sole or main residence. However, I note the Deputy's comments on mounting arrears owing to genuine reasons on the part of some homeowners who might not have considered themselves liable. I will investigate his concerns and seek a reasonable and practical solution with local authorities.

Deputy Charles Flanagan

I certainly welcome the Minister's concluding comments. However, I take him up on a point he made in the course of his reply which was that I might take up the matter with local authorities. Is he indicating therefore that different local authorities might adopt a different interpretation as to the imposition of penalties and surcharges or whether there may be a liability? That confusion is the nub of the issue. There does not appear to be a strict reading of the legislation across the board. I refer to a recent statement on the part of a spokeswoman for the Local Government Management Agency, which as the Minister will be aware, administers the collection of the charge for local authorities. She stated that the management agency does not know how many people, who own one property, are liable to the charge as it is enforced by individual local authorities and that there may well be a liability. This is the confusion. Either there is a liability or there is not; likewise, either there is flexibility or there is not.

There is considerable hardship on citizens of this State who have been forced to emigrate to Canada and Australia. In order to meet the mortgage repayments they were forced to enter into an agreement. Perhaps some of them are lucky to get people to enter into a letting arrangement to pay the mortgage while these people had to fend for themselves and their families abroad. I am asking for a common sense approach to apply to those who are not aware of it and who are now facing not only the charge but also considerable interest, surcharges and penalties, which have been accumulating since September 2009 and are imposing significant hardship and difficulty on individuals.

Deputy Phil Hogan

As the Deputy will know it is often very difficult to interpret who is genuine and who is not when it comes to complying with the law and the collection of money. When arrears ultimately accumulate it is a regular excuse for people to claim they were not aware of their obligations under the law. It is a difficult one and I understand the Deputy probably has genuine cases in mind and I am obviously taking his constituents as very sound and solid citizens in that regard. However, the strict interpretation of and compliance with the law are matters in the first instance for the owner of the property and the people who are liable for the second or third home as the case may be. I am certainly conscious that there may often be some misinterpretation or different interpretations by local authorities and I will clarify that for the Deputy in so far as I can, but the law is quite straightforward. There is a liability in respect of the second home and a levy of €200 is charged. I have encountered cases in my constituency in which people believed they were genuinely not informed or aware of it even though it is their responsibility to be informed and aware of it. Anyway, we will see what we can do to ensure compliance with the law and collection of the charge in a way that does not bring about greater financial hardship on the individual.

Food Industry

Deputy Kevin Humphreys

I thank the Ceann Comhairle for selecting the issue and I thank the Minister of State for taking the question. Despite the excellent growth and export figures for the food industry, there has been an alarming trend in recent years whereby several key food manufacturing centres have closed down. This trend has serious consequences for food security. We are an island nation but despite our access to European markets and strong transport links to Europe, the volcanic ash cloud incident and the ice and snow last winter showed us that it is not difficult to shut down these links for a period.

On 19 January, it was announced that the Odlums industrial-sized flour mill on Alexandra Road would be closed by the parent company, Valeo Foods. My sympathies go to the workers and their families. Many of these families had worked for several generations in the flour milling industry.

This is the last remaining industrial bread flour mill in the State since the Odlums Cork mill closed in 2009. Bolands Mills and Dock Milling have closed as has the mill in Portlaoise and several other mills throughout the country. We are left with a single mill. The mill in Dublin Port has been in operation since 1920, producing 17,000 tonnes of flour annually. From the end of March most bread in Ireland will be made from imported flour. This is a serious issue for bread makers and consumers. It reduces their choice and has a possible implication for pricing. For many years the flour industry has suffered from dumping of over-produced flour, especially from the British market, making some of our flour mills uneconomical. The costs may not become clear for years but we have seen in the case of Irish Sugar that losing these strategic industries results in a loss of skills that cannot be replaced easily. A similar problem occurred in the case of SR Technics. These skills have been developed over many decades and we are now facing the closure of the final remaining mill. For a country that places such pride in its food, it is bizarre that we will now be reliant on flour from the United Kingdom for most of our bread which is a key part of almost every Irish person's diet.

Minister of State at the Department of Agriculture, Food and the Marine (Deputy Shane McEntee)

I am replying on behalf of my colleague, the Minister, Deputy Simon Coveney. I thank my colleague, Deputy Humphreys, for raising this important issue for discussion. I consider the maintenance of an efficient and viable cereals sector in Ireland to be of the utmost importance. In addition to providing an income for growers, it provides the livestock sector with a key source of feeding stuffs.

The EU cereal harvest for 2011 is estimated at 281 million tonnes, somewhat above the five year average, with a marginal reduction in stock levels. World cereal stock levels are forecast to remain unchanged due to balanced global consumption and production. World cereal prices peaked during 2011 but have fallen back in recent months due to increased market concerns about the global financial crisis. In Ireland, the 2011 cereals harvest was one of the best harvests in years, estimated at 2.5 million tonnes, some 22% above the 2010 production levels and well above the long-term average of 2 million tonnes. This record production was due to a combination of factors including an increased cereals area and favourable weather conditions during the growing and harvest seasons, although this did not apply to the people of Donegal who had a hard time of it. National cereal yields in 2011 were the highest recorded for winter and spring barley, with yields of 9 tonnes and 7.5 tonnes per hectare respectively and second highest for winter and spring wheat with yields of 10.2 tonnes and 8.3 tonnes per hectare. Production costs increased during the year but cereal prices remained strong, especially for those who opted for forward selling, with malting barley prices performing especially well. As a result of outstanding yields and good prices, Teagasc estimates an increase of 10% in the acreage sown for winter cereals.

The cereal sector is now entering a period of new market-led opportunities but these are set against significant challenges, including commodity prices trends, the security of food and energy supplies, environmental sustainability and climate change. Against this background, the goals for the sector are to improve competitiveness, profitability and sustainability by increasing yields and to improve product quality while reducing production costs. Achieving these goals will be underpinned by advances in science through knowledge generation and procurement, technological developments and innovation. In this regard Teagasc is providing research, training and advisory services for the sector.

Odlums has a long history in Ireland and has been milling and packing flour for more than 160 years. The original business was established in Portlaoise by the Odlums family in 1845 and has been owned by Valeo Foods since September 2010. The decision by Odlums to close the Dublin Port mill is commercial, taking account of the current challenging market conditions in the industrial bakery flour market. According to Odlums, the mill has been loss-making and unable to compete with low-cost imports especially from Northern Ireland and the United Kingdom.

The company has stated that there is significant excess milling capacity in the United Kingdom which is imported into the Irish market at prices with which Odlums cannot compete. The company continues to produce retail and "at home" baking products in its mill in Portarlington. It points out that locally grown milling wheat remains the major source of wheat for all products produced at Portarlington.

I regret the announcement by Odlums to close the Dublin Port mill and the loss of jobs. However, the Deputy will appreciate that Odlums is a private enterprise and, accordingly, its decision to close the Dublin Port mill is a matter for commercial decision and neither I nor my Government colleagues have any function in that regard.

Deputy Kevin Humphreys

I thank the Minister of State for his response. I accept the Minister of State's answer and that there has been low-cost dumping in Ireland and that this has greatly undermined flour milling in the country. However, there has also been a lack of investment in the Odlums mill and I hope this will not be replicated in Portarlington because then we would see the Portarlington flour mill close down.

One issue that concerns me is the recurring names that show up every time in respect of the closure of Irish Sugar, the closure of Jacob's and the transfer of all the brand names abroad. These names have surfaced again. Unfortunately, one such recurring name has been appointed to Bord Bia. There is a concern that we will be left with brand names only and no production. There will be Odlums flour in packages produced in Ireland. Most people who go into the supermarket and see a bag of sugar with the label "Sucra" believe it is manufactured here and people continue to believe that Jacob's biscuits are manufactured in Tallaght. More and more we are losing our brand names abroad and the Government should have concerns in this regard. We cannot continue to lose brand names without keeping the manufacturing plants here. I put it sincerely to the Minister of State that he should examine the names that crop up continually from Irish Sugar to Jacob's and through to the closure of this plant. There is a serious concern in this regard. I call on the Minister of State to take this on board and to investigate the matter further.

Deputy Shane McEntee

I appreciate what Deputy Humphreys has said and I am totally in agreement in respect of what is happening. One educational step is to encourage people to buy local and locally sourced products. A survey was carried out in England as part of which people were asked about their preferred source of food. They indicated that they would prefer to source it locally. I fully agree with the Deputy's comments. It is time there was a serious and proper debate held in the House on what products we buy and support. I take on board everything the Deputy has said and I will discuss the matter with the Minister.

Hospital Staff

Deputy Billy Kelleher

I thank the Ceann Comhairle for allowing me the opportunity to raise this important issue. I have no wish to sound alarmist. The Minister of State is fully aware of the issue facing the Health Service Executive in trying to provide support for maternity services in view of the number of highly qualified midwives who have built up a wealth of experience over many years but who are retiring from the health services sector. As January draws to a close, we should know the full impact of the projected retirements up to 29 February this year. That is something that we do not have to wait too much longer for. We know that there will be fewer midwives working in the HSE in the months ahead. That in itself will create huge difficulties but coupled with the projected rise in the birth rate, this will put huge additional pressure on the maternity services in this country.

The director of the HSE's obstetrics and gynaecology programme, Professor Michael Turner, said on 18 January 2011 that staff reductions and cuts to the HSE maternity service programme could see an increase in Ireland's maternal and infant mortality rate. That is a very serious statement from a highly qualified eminent person. On 24 January 2012, consultant obstetrician Gerry Burke said, "Unfortunately some babies and women may pay for [this] with their lives".

I do not want to be alarmist but if there is a contingency plan in place it should be published in advance. The Government and the HSE should outline it quite clearly in order to allay everybody's concerns. I am not just talking about the concerns of pregnant mothers, but also the concerns of staff who are providing the front line services. Will they have enough colleagues in the event of pressure coming on the service after 1 March? The contingency plan should be published in the next few days, because at that stage, the Government will know how people will be retiring on 29 February.

The Government should not dismiss, as has been the case so far, the comments of eminent people who are at the coalface of health service delivery, and who have an in depth knowledge of the maternity services in this country. They are saying quite clearly that there is potential risk to life in the event of there being no contingency plan in place and no increase in the number of midwives available to the HSE in providing services after 29 February.

Deputy Minister of State at the Department of Health ( Róisín Shortall)

I thank Deputy Kelleher for raising this issue. It is a matter of concern and is receiving much attention at the moment. The Government is fully aware of the impact the early retirement package will have on the provision of all services nationally, including maternity services. Together with the HSE, we are committed to minimizing the impact through a range of strategies, including fast-tracking new innovative and more efficient ways of using available resources. Our priority is the safe delivery of care for patients. In this regard, the Minister for Health has requested the HSE to prioritise the ongoing delivery of safe patient services and to ensure that all necessary steps are taken to avoid risk in their delivery.

Planning for the delivery of health services is undertaken within the context of the annual national service planning process. This process ensures that all factors, such as budgets and staffing levels and any other emerging issues, including the impact of the retirements, are factored into the plan for the services to be delivered within the coming year.

In parallel with this process, each of the HSE's four regions is required to develop a more detailed regional service plan which translates the national goals and targets into service specific targets for the year. All of the regional plans are being developed on the basis of the anticipated number of staff that will be in post after the end of February. These plans are due to be finalized in early February. Managing the specific risks associated with the forthcoming retirements has been undertaken within this planning context.

During 2011, the HSE established a process to identify and record the number of staff expected to retire before the end of February 2012. This information has been updated on a regular basis as retirements become known. The HSE is now finalising the figures for the actual number of staff who will retire at the end of next month. However, it should be remembered that staff who have indicated that they wish to retire still have the possibility to change their minds. It is not possible, therefore, to provide definitive figures today. Subject to this consideration, the HSE's latest information, supplied today, shows that a national total of 34 midwives have indicated their intention to retire at the end of February 2012.

Contingency plans are being developed to cover any gaps that may arise in staffing as a result of these midwives retiring. These plans are at an advanced stage. The scope to replace the staff who will retire is in itself limited, so we need to adopt an innovative approach. Addressing the reduction in staff numbers as a result of these retirements, as well as the wider programme of reducing public sector numbers, requires more significant productivity increases as well as changes to organization structures and work practices.

The HSE is continuing to utilize the provisions of the Croke Park agreement as it seeks to change staff rosters, work practices and to redeploy staff. This will assist in minimising the service impact. Contingency plans to address the impact of the retirements include a focus on staff redeployment and streamlining and amalgamation of some management structures and services. The HSE will seek to deliver greater productivity through the national clinical programmes. These programmes are a key strategic support to the risk management process which is in place around these retirements. The related work of the special delivery unit will also be critical in supporting the achievement of overall resource management in the coming year.

A number of additional initiatives are set out in the HSE's national service plan that will assist in minimising the impact of the retirements on services. These include focused recruitment within the context of the cost containment plans and budgets for each service. Agency staff may be used where there is a critical requirement. The national service plan also makes provision for some conversion of agency costs into whole-time equivalent staff which will be explored in limited circumstances.

We are very much aware of the potential impact of the upcoming retirements. We have taken steps to ensure that the impact is minimized and that the safe delivery of services for patients is prioritized. I believe that with good planning and a co-operative approach by all, we can continue to ensure the best possible service for patients. I thank the Deputy for raising this matter.

Deputy Billy Kelleher

I thank the Minister of State for her reply but I do not believe that the HSE has a contingency plan in place. A quarter of the total number of midwives in the Mid-Western Regional Maternity Hospital are leaving at the end of the month. Deputy O'Dea has raised these concerns on a number of occasions. The consultant obstetrician, Gerry Burke, has said that people could die. These are not outrageous comments. They are comments of concern coming from eminent people who are expressing the view that there is no contingency plan. He said that if there was such a plan, the HSE and the Government are not sharing it with anybody who should be involved in delivering a plan to make sure that we have safe delivery of babies in this country. It is incredible at this stage that the HSE has not got a contingency plan that it can show to the people. We are one month away from an exodus of the most experienced midwives in this country.

While I thank the Minister of State for her reply, I know that it is a reply that was scribbled together from the HSE contingency plans. There is no meat in it. It is basically a bland answer to fob me off. The bottom line is that the director of the HSE's obstetrics and gynaecology programme, Professor Michael Turner, and a consultant obstetrician, Gerry Burke, have clearly stated that this could cost lives. Accident and emergency and midwifery are the two key areas where we have to ensure that we have a competent number of staff in place at all times. We can deal with elective surgery and so on at another time, but we cannot have a deficit in key front line services when we wake up on 1 March and realise that a quarter of the total number of midwives have retired.

Deputy Róisín Shortall

I am not attempting to fob the Deputy off at all. Nobody is under any illusion about the major challenges posed to many different public services, including the health service, following the retirements that will take place at the end of next month. Contrary to media reports that 40 midwives are due to leave a specific hospital, the figures available to me indicate the total number of midwives nationally who have indicated an intention to take retirement is 34.

The loss of midwives and many other critical front line staff poses a challenge. For this reason, as I indicated, work is under way, following on from the service plan process, to draw up regional service plans taking account of the retirements that have been indicated. Limited funding has been provided to backfill a number of posts, albeit not all of them, and work is under way to identify the posts that need to be filled. In addition, we will use the Croke Park agreement to its fullest to secure the flexibility and redeployment of staff promised under the agreement. This work is taking place as we speak and will continue until the end of February. Notwithstanding the challenges presented by the forthcoming retirements, we are hopeful we will be able to continue to provide a level of service that meets demand and guarantees the safety of patients. These are our priority concerns.