Local Government Reform Bill 2013: From the Seanad

The Dáil went into committee to consider amendments from the Seanad.

I understand that the Seanad amendments are proposed from the Chair. Seanad amendments Nos. 1 to 8, inclusive, and 10 and 107 are related and they may be discussed together.

Seanad amendment No. 1:
Section 1: In page 11, line 31, to delete all words from and including "and", and in page 12, line 1, to delete all words down to and including "2013"." and substitute "and may be cited together as the Local Government Acts 1925 to 2013.".

I understand amendments Nos. 1 to 8, inclusive, 10 and 107 are grouped together.

I did not get a list of the grouping of amendments.

We will get that for the Deputy.

Will I read the grouping of amendments again for the Deputy?

No; I will wait for the list. I noted the amendments that were mentioned.

I would like to refer briefly to the context of today's debate. This local government reform legislation has been a major undertaking involving many areas of my Department and other Departments, with input from a range of sources and impacts on an extensive body of other legislation. It has been undertaken with a relatively short timescale and, in view of this, I indicated at the outset that additional provisions would be introduced during its passage through the Oireachtas, which has happened, with a substantial number of provisions having been added on Committee Stage in the Dáil and on Committee and Report Stages in the Seanad. It is quite common for Bills initiated in the Dáil to go through the Seanad with little change, almost as a procedural exercise, but this has not been the case with the Local Government Bill; more than 120 amendments were made to the Bill in the Seanad. Therefore, we have an example of the very active involvement of both Houses in the development of this legislation. This seems particularly appropriate given the special link that exists between the Seanad and the local authorities in electoral terms.

Many of the provisions that were added to the Bill in the Seanad were ones that had not been fully drafted for inclusion at an earlier stage, and many of the amendments that are being dealt with today involve relatively minor corrections or technical drafting changes. Others were in response to issues that were raised during the course of the debates. Today's session enables the Dáil to consider and affirm these changes, beginning with amendment No. 1. These are a series of technical and drafting amendments to section 1 and Part 6 of Schedule 2 to the Bill. Amendments Nos. 1 to 4 and amendment No. 8 amend a number of the collective citations provisions in subsections (2), (4), (6), (8) and (13) of section 1. These amendments are necessary because the phrase that is to be included in the collective citation was used in 2013 collective citations at the time of drafting. This text was used because the Acts in question had already been given a 2013 collective citation by another Act earlier that year - that is, they are references to an existing citation for the year concerned. However, as the Bill will now be enacted in 2014, these citations will have to be amended to read "may be cited as" rather than "shall be included in". In other words, the new citation will be referenced in 2014 rather than 2013.

Amendment No. 5 provides for the insertion of a collective citation in subsection (12) of section 1 in respect of the Education and Training Boards Acts 2013 and 2014. This arises from amendment No. 107, which makes a number of amendments to the Education and Training Boards Act 2013 in Part 6 of Schedule 2, consequent on structural reform at county and city level. Consequential amendments are also made to the Energy (Miscellaneous Provisions) Acts 1995 and 2006 in amendment No. 107. Amendments Nos. 6 and 7 correct an existing collective citation contained in section 113 to the Health Acts, which needs to be updated to include the reference to the Health Acts 1947 to 2014 within the collective citation. Amendment No. 10 is a drafting amendment to subsection 21 to replace the word "fixed" with "appointed", which will bring the text into line with a wording used earlier in the subsection.

Seanad amendment agreed to.
Seanad amendment No. 2:
Section 1: In page 12, lines 7 and 8, to delete all words from and including "and" in line 7 down to and including "2013"." in line 8 and substitute “and may be cited together as the Housing Acts 1966 to 2013.".
Seanad amendment agreed to.
Seanad amendment No. 3:
Section 1: In page 12, lines 16 and 17, to delete all words from and including “and” in line 16 down to and including “2013”.” in line 17 and substitute “and may be cited together as the Electoral Acts 1992 to 2013.”.
Seanad amendment agreed to.
Seanad amendment No. 4:
Section 1: In page 12, lines 23 and 24, to delete all words from and including “and” where it secondly occurs in line 23 down to and including “2013”.” in line 24 and substitute “and may be cited together as the Planning and Development Acts 2000 to 2013.”.
Seanad amendment agreed to.
Seanad amendment No. 5:
Section 1: In page 12, between lines 37 and 38, to insert the following:
“(12) This subsection, the amendments to the Education and Training Boards Act 2013 provided for in section 5(6) and Part 6 of Schedule 2 and that Act may be cited together as the Education and Training Boards Acts 2013 and 2014.”.
Seanad amendment agreed to.
Seanad amendment No. 6:
Section 1: In page 12, line 41, to delete “This subsection and” and substitute “This subsection,”.
Seanad amendment agreed to.
Seanad amendment No. 7:
Section 1: In page 12, line 42, after “Schedule 2” to insert “and the Health Acts 1947 to 2013”.
Seanad amendment agreed to.
Seanad amendment No. 8:
Section 1: In page 12, lines 42 and 43, to delete all words from and including “shall” in line 42 down to and including “2013.” in line 43 and substitute “may be cited together as the Health Acts 1947 to 2013”.
Seanad amendment agreed to.

Seanad amendments Nos. 9 and 67 are related and may be discussed together.

Seanad amendment No. 9:
Section 1: In page 13, line 29, to delete “section 28 and” and substitute the following:
“section 28, section 51 (in so far as it relates to the insertion of section 149A into the Principal Act) and”.

Amendment No. 67 amends section 1 of the Bill by providing for the insertion of a new section 149A in the Local Government Act 2001. It is required in order to provide a definitive legal basis for one local authority to carry out executive functions such as back-office support services on behalf of one or more local authorities. It will apply to County Laois in respect of shared services and procurement. The amendment will facilitate the implementation in the local government area of Government policy for the operation of shared services across the public sector. To give effect to the policy in the local authority sector, a lead local authority model has been agreed whereby a single local authority will deliver the shared services on behalf of all local authorities. Shared services should be a win-win situation for local authorities and citizens as they reduce costs, improve service and increase standardisation while allowing local authorities to focus on core citizen-facing activities. Laois County Council will deal with shared services in respect of payroll and superannuation, which will lead to a saving of €4.3 million per year and 70 staff over time.

Amendment No. 9 is a related amendment to section 1(21) of the Bill and provides for section 51 in so far as it relates to the insertion of 149A into the principal Act, to be commenced on the enactment of the Bill.

I had understood that shared services was something that could happen under previous legislation. Extensive procurement goes on in terms of services. Is there no question of local authorities having to go through that process before sharing services?

Government policy is for the implementation of shared services across the public sector. In the local authority sector, the oversight group looking at these matters has identified a number of areas where we can make substantial savings through efficiencies in the delivery of services. The local government efficiency review group has made €238 million in savings in the past two years, with an ambition of €350 million achieved over a three-year period. In the waste management area, Offaly County Council is the lead authority in permitting and in respect of payroll Laois County Council is the lead authority. There are various suggestions and proposals being put forward and evaluated to see how we can get value for money and that savings can be put into other services.

There is an extensive procurement process for almost everything and it absorbs a huge amount of administrative time. Is there no question of these services having to go through the process?

No, but in order for a local authority to achieve the status of being responsible for the entire local government system, it must undertake a bidding process. There is a competitive process that happened in 2013, with Laois County Council providing the shared payroll and superannuation service on behalf of local authorities.

Sinn Féin does not have a problem with the concept of shared services. The example has been given of Laois County Council in respect of payroll and pension services being combined. That certainly makes sense. The concern I have about services and procurement is that other European countries try to keep contracts in small, manageable pieces to escape the binds of e-tendering. I want the Minister and the Department to take this on board. Over the past few years, VECs and local authorities find that procurement is squeezing out small suppliers and local businesses. Many of the contracts awarded could be broken down into smaller chunks and we could be more creative about that. It is simpler to hand over a contract to one company but, given the shape the domestic economy is in, one way of trying to resuscitate it is to break down contracts into small chunks so that companies can successfully tender for them. That way, we can avoid the rigours of the e-tendering system.

I share Deputy Stanley's concern about the fact that we cannot exclude small businesses from contracts and opportunities at local level. There is a balance to be struck between savings on particular contracts without depriving people of the opportunity to bid in the procurement process. We did that for the water metering programme, where there was a much higher threshold for subcontractors to come in and provide services for the main regional contractor. A figure of €1 million was initially proposed by the group drawing up the proposal and I reduced it to €400,000. I am conscious of the point about including people as much as possible and I will convey this to the national procurement office.

Can the Minister provide the timeframe for the roll-out of shared services and the roadmap in respect of each section? He has given some examples. Can he provide us with other examples and specific details on the lead agencies, such as Laois County Council in respect of payroll?

I do not have details on other areas but I will supply the information to the Deputy.

Seanad amendment agreed to.
Seanad amendment No. 10:
Section 1: In page 13, line 31, to delete “fixed” and substitute “appointed”.
Seanad amendment agreed to.
Seanad amendment No. 11:
Section 21: In page 33, line 5, after “may,” to insert “following consultation with the municipal district members concerned,”.

The Bill provides that a local authority may, by resolution, delegate any of its functions to municipal district level and may also revoke such a delegation. The purpose of the amendment is to add a requirement on the members of the overall local authority to consult with the municipal district members for the district concerned before deciding by resolution to revoke, under section 131A(2)(b) of the 2001 Act, a delegation of the function to the municipal district members concerned, which had previously been made by the local authority under section 131A(2)(a).

During the debates on Committee Stage and Report Stage in the Dáil, Deputy Catherine Murphy tabled amendments to section 21(3) of the Bill which inserts a new section 131A in the Local Government Act 2001, dealing with the performance of reserve functions at municipal district level, including the procedure for revocation of a delegation to the district level. During the debate, I indicated that I would bring forward an amendment in the Seanad providing for consultation with municipal district members prior to any decision to revoke a delegation order. This amendment provides accordingly. It enhances the status of the municipal district members and ensures their views are canvassed and taken into account in advance of any decision being taken at plenary level. The elected members for each district will perform functions of the local authority on a devolved basis for the district, thereby increasing subsidiarity and making local government more responsive and as close as possible to local communities. The Bill specifies in the region of 70 reserve functions assigned to the elected members at municipal district level. The municipal districts will operate as distinct decision-making components within an integrated local authority structure.

The amendment I tabled related to the European charter for local self-government and went quite some distance further.

Having said that, I welcome the fact that the amendment has been tabled. It is going to be down to the culture within the local authority as to what consultation means as in some cases it has become a very discredited word, where people are told what will be done rather than having a dynamic of consultation in the real sense of the word, which implies a two-way process. I will watch the issue and although I would have liked to have gone further, I acknowledge the inclusion of the matter.

I share completely Deputy Murphy's opinion on the cultural changes required to be inclusive, not just with the members of the local authorities but with the community structures we are setting up as well. Inclusivity and the culture around it has not always been right and we hope to get to a position, certainly after the local elections in May 2014, to see with this legislation that the management and members of local authorities will embrace all the various community interests in a more structured way. They should listen to people and take on board their views, as far as possible, in the delivery of core services over the next few years.

I thank the Minister for the insertion of this amendment. Is the method of consultation at the discretion of the local authority council? For example, should it be an agenda item on a meeting of the municipal authority for ultimate forwarding to a local authority? This would record consensus or otherwise being sought rather than a case, as outlined by Deputy Catherine Murphy, where it is explained for information purposes what is being done.

We will give guidelines but it is at the discretion of the plenary council whether to devolve more additional functions to municipal level or the engagement with the wider community.

Seanad amendment agreed to.
Seanad amendment No. 12:
Section 24: In page 36, to delete lines 8 to 12 and substitute the following:
"24. (1) The Minister shall by order specify a date (in this Part referred to as the "transfer date") to be the transfer date for the purposes of this Part.".

Seanad amendments Nos. 12, 13 and 95 are related and may be discussed together by agreement.

There is a procedure I have not come across before regarding the text of a Bill which is consequential on amendment No. 12, in order to correct a drafting error. In page 36 of the Bill, line 6, the reference to section 24(1)(a) should be changed to section 24(1). There has been a request for a clerk's correction in this regard and I am glad to relay it.

Is it agreed? We are still dealing with amendment No. 12.

Seanad amendment No. 12 is to be taken with Seanad amendments Nos. 13 and 95. These amendments deal with the issue of the ordinary day of retirement for outgoing elected members following the 2014 local elections in the context of the dissolution of the old and establishment of the new structures at county and sub-county levels. These are important technical amendments to the Bill to allow for the smooth transition to the new regime following the 2014 local elections.

Seanad amendment No. 13 inserts a new subsection (3) in section 28 of the Bill, which provides in paragraph (a)(i) that in the case of all local authorities, including those to be amalgamated in Limerick, Tipperary and Waterford, the ordinary day of retirement will be linked with the 2014 establishment day for the new merged authorities. This will allow for the synchronisation of the date for the retirement of outgoing members, the date on which persons elected in 2014 come into office and the 2014 establishment day, which I anticipate will be 1 June 2014. Paragraph (a)(ii) of the new subsection ties in the provisions of paragraph (a)(i) in a situation where a poll is countermanded or adjourned. In such circumstances, the ordinary day of retirement will be the seventh day after the poll is completed or the fresh poll is held, or the 2014 establishment day, whichever is the later.

Subsection 3(b) provides that the date of retirement for members of town councils will be the transfer date, or the date on which the town council will be dissolved, to be determined by the Minister by order under a new section 24(1), to be inserted by amendment No. 12. Section 24(1) of the Bill empowers the Minister to make an order specifying a date to be the transfer date for the purposes of the dissolution of town councils, and the date from which relevant county or city and county authorities will become the successors to these town councils. Again, I anticipate this date will be 1 June 2014.

Seanad amendment No. 95 is consequential on the insertion of a new section 24(1) of the Bill and the proposed addition to section 17(1) of the Local Government Act 2001 originally provided for in Schedule 1 will no longer be required if the amendment for section 24(1) is accepted.

The Minister indicated yesterday, although he was speaking of something else at the time, that the date for the local elections and European elections would be 23 May. Will the Minister confirm that?

I am glad to confirm to the House that the Government agreed yesterday at the Cabinet meeting that 23 May 2014-----

It is going for a Friday.

-----will be the date of the local and European elections. Polling stations will be open from 7 a.m. to 10 p.m.

Seanad amendment agreed to.
Seanad amendment No. 13:
Section 28: In page 39, between lines 29 and 30, to insert the following:
(3) For the purposes of the local elections held in 2014, the definition of "ordinary day of retirement" in section 17(1) of the Principal Act shall be read—
(a) in the case of every local authority (including a local authority that is being dissolved under section 17)—
(i) as if the reference in that definition to the seventh day after the polling day at the election of the incoming members of the local authority were a reference to the 2014 establishment day, and
(ii) as if the reference to the seventh day after the date provided for the purposes of paragraph (b) of that definition were a reference to the 2014 establishment day or the seventh day after the day on which the poll is completed or the fresh poll held, whichever is the later,
and
(b) in the case of a local authority that is being dissolved under section 24, as if that definition referred to the transfer date and to no other day referred to in that definition.".
Seanad amendment agreed to.
Seanad amendment No. 14:
Section 29: In page 41, between lines 10 and 11, to insert the following:
"(8) Notwithstanding subsection (7), where—
(a) in respect of a specified area the base year adjustment calculated in accordance with subsection (3) would result in a levy with a value greater than 20,
(b) the local authority concerned, following the adoption by it of a resolution for the purpose of this subsection—
(i) applies in writing to the Minister to make an order that the adjustment period applicable to such specified area may be greater than 10 years, and
(ii) such resolution and application states the length of the extension being sought (which extension so stated shall be in respect of a period not greater than 10 years),
and
(c) following consideration of the application under paragraph (b), the Minister determines that an extension should be granted,
then, the Minister may by order grant an extension, which extension may, if the Minister considers it appropriate in the circumstances but subject to it not being greater than 10 years, be different from that sought in the application referred to in paragraph (b) and, accordingly, in its application to that specified area, the reference to 10 years in subsection (7)(a) shall be read as if it were a reference to the sum of those 10 years and the extension provided for by that order.".

Seanad amendments Nos. 14, 15 and 121 are related and may be discussed together by agreement.

Again I would like to request a clerk's correction to the text of Seanad amendment No. 121 in order to correct a drafting error. In the proposed new item 12 to be inserted into Schedule 3 by Seanad amendment No. 120, the text of column three incorrectly refers to the Local Government Act 1941, and this should be corrected to state "Local Government Act 1946".

Following the restructuring of the local government sector, there will be in each local authority area a single rating authority and a single valuation list, with a single unified annual rate of valuation, ARV. The power to determine the annual rate and valuation will rest with the plenary council. With regard to Seanad amendment No. 14, I am aware that the harmonisation of ARVs in a ten-year period could potentially increase rates in a few cases. For example, a base year adjustment applied as a levy of more than 20 could not be reduced incrementally to zero within ten years without sizable annual increases in rates for rate payers in relevant areas. This amendment allows a local authority in this specific circumstance to apply to the Minister to extend the adjustment period that will apply in the former rating authority area to beyond ten years. It will be a reserve function of a local authority to apply for the extension, and amendment No. 121 provides that this new reserve function be listed in Part 3 of Schedule 3 of the Bill, which sets out the reserve functions of the local authority. These amendments provide that I may make an order that can allow the adjustment period relevant to the area to be extended beyond ten years but no longer than 20 years.

Seanad amendment No. 15 provides that a local authority subject to an order under this provision will be permitted to increase its ARV despite the harmonisation of all areas within the county area not having been completed. However, this is only possible when all other ARVs other than that to which the order applies have been aligned in a county. I stress again that it is not the intention for ARVs to increase and I will continue to stress to local authorities the need for restraint, and where possible, reductions, in setting ARVs to support business and enterprise generally. It is my strong view that the elected members at plenary level should have full control over the setting of the ARV as quickly as possible, which is why I am bringing forward this provision of circumstances where harmonisation in a specified area can extend beyond ten years.

This is probably the third time I have raised this issue with the Minister over the past year. Seanad amendment No. 14 deals with allowing the adjustment period to be extended beyond ten years and Seanad amendment No. 15 allows the rating authority to determine an increase in the annual rate of valuation. With regard to what we have spoken about over the past year, the Minister consistently gave assurances that he would try to bring the ARV to the lowest level in Waterford and Dungarvan was home to the lowest level. The Minister did as he said and I thank him for following through. I am not saying I did not believe the Minister but I kept a close eye on the issue for the past year. The Minister was consistent and in the case of the city, there has been a really excellent result when one considers that rate payers received a reduction of 20%, and in the county the reduction was 5%.

The Dungarvan level remained as it was and some people in the town think that unfair. For the most part, the feedback I received was that people expected the rate to increase. People were consistently told over the course of a year that there was a good chance the rate would increase. It is worth acknowledging the direction given by the Minister, and everybody is taking credit for this in Waterford, including councillors and officials.

The Minister said that if he could put more money into the local government fund and direct that it be used to secure a reduction during amalgamation, it would and should happen. That is what has happened. I acknowledge what he has been saying in the past year and what actually did occur. I acknowledge the work of Waterford Chamber, including that of Nora Widger and Nick Donnelly. I acknowledge also the work of Dungarvan & West Waterford Chamber, including that of Jenny Beresford and Colette Bannon.

Understandably, with any amalgamation this kind of issue will arise. The areas subject to the greatest attention will be Limerick city and county and Waterford and Tipperary. The urban councils will have had variations in rates also; therefore, this will be a factor and there is likely to be resentment. I heard the point on Dungarvan, where people are paying increased commercial rates with fewer services, for example. Was any work done on this? Did it arise as an issue in the consultation?

There was no increase in Dungarvan.

I am probably not using a very good example. There will be areas where what I describe will be the case. I imagine that there will be some backlash where people see they are paying more than in other areas that may be receiving better services. Was any evaluation made? Resentment would be understandable in such circumstances. It would be useful to know the position considering the amalgamation process.

The objective is to allow further devolution of responsibility to elected members in order that they can decide on their priorities. In the next while I will be trying to get Departments and agencies to devolve an increasing number of functions to local government, in addition to the ones we are creating in this Bill. It is a matter for the elected members to decide on their priorities regarding whether they want to increase or reduce commercial rates, just as they always have done. I hope elected members will not impose additional burdens on employers and realise, based on their seeing competitive circumstances in neighbouring counties, that doing so would not be in the best interests of employment creation. After the local elections in May, democratically elected members will, in deciding the budget for 2015, have to make difficult decisions on their priorities. However, they will have discretion in putting commercial rates up or down and they will have discretion in the case of other charges also.

I acknowledge the efforts of the Minister to address issues raised on this very matter on Committee Stage, notwithstanding the fact that Deputy John Deasy said obvious examples throughout the country were given to the Minister. There is a mechanism by which a special case can be made for an extension of time. I thank the Minister for his commitment in that regard and hope he will be amenable to such requests from various councils throughout the country.

What consultation has the Minister had, if any, with the Minister for Public Expenditure and Reform? Has he discussed with him or the Government as a whole the possibility of considering a complete overhaul of the rates valuation system? It is and has been a crushing tool for many businesses throughout the country during their efforts to get back on their feet and retain business. As we said on many occasions during various debates, in committee rooms and the House, the valuation system and mechanism used are archaic, to say the least. Rents have decreased by up to 70% in many locations throughout the country, yet rates have not decreased to that extent. One would be doing well to have experienced a decrease of 5% in the past five years because of the fall in regular revenue from local authorities' traditional sources. I will not get into the debate on the funding of local authorities; we will do so on another day. Considering the unfortunate fact that the Minister could not honour his commitment on rent reviews, a concerted and more determined effort should be made regarding commercial rates. What preliminary discussion, if any, has the Minister had with the Minister for Public Expenditure and Reform? Has the Cabinet discussed this issue? Is it the intention of the Government to overhaul the commercial rates system?

I totally agree with the Deputy's sentiments on the valuation system. The current system is certainly not in keeping with the financial and economic reality in many areas. There is a danger that we will have two Irelands in regard to economic activity, particularly in town centres. Some of the suggestions made by the party opposite in its Private Members' legislation have certainly been considered by my Department and others to determine how we can further promote activity in town centres. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, is very conscious of the need to overhaul the valuation system. There is a Bill before the House and this matter will be brought to the Dáil shortly. It has been dealt with in the Seanad. It is urgent legislation to have fairer criteria available to the Valuation Office in order that we can be mindful of and more responsive to current economic and financial needs, particularly in provincial areas.

I must agree with Deputy Barry Cowen on the system being archaic; it is and the Government acknowledges this. On three or four occasions friends of mine went out of business when competing against a business operating over the Internet. The latter type of business is run from the home and pays no rates. On a couple of occasions my friends said to me that the next time they went into business, they would compete on a worldwide level over the Internet. They said there was no future in paying rates and trying to compete against individuals who had a warehouse somewhere from where they shipped their product. We need to start taking this into consideration because the world is changing. Our system is not changing quickly enough.

Since I started examining this issue, one point comes across to me time and again. A number of Departments have a stake in commercial rates valuation and there is insufficient co-ordination. The commercial rates valuation issue is like the unwanted child for the Government. One needs to start considering putting responsibility under one roof. The responsibilities of the four relevant Departments, the Department of Finance, the Department of Public Expenditure and Reform, the Department of the Environment, Community and Local Government and the Department of Jobs, Enterprise and Innovation, should be consolidated. There is a singular lack of co-ordination throughout government. If addressing this issue means giving responsibility to the Department of the Environment, Community and Local Government, it might be a good first step to take in this area.

The Minister alluded to the Valuation (Amendment) Bill. It limits the criteria according to which somebody can make an appeal. It introduces a system of self-assessment, but the key question which has not been answered and on which the Valuation Office was very unclear is whether those being given new valuations, as in Dublin, Limerick and Waterford, will be able to self-assess under the new system when the legislation comes into play. People want to know this. One might ask oneself whether it would be wise to have two systems in operation next year once the Bill is enacted. These are some of the questions with which we will have to deal.

Consider the issues concerning the Valuation (Amendment) Bill and the Valuation Office. Until recently the Department of Finance was the umbrella organisation or Department. Now responsibility has transferred to the Department of Public Expenditure and Reform. I know there is a chance responsibility might be transferred to the Department of Justice and Equality, but I get the feeling nobody wants this. Somebody must step in and take ownership of commercial rates valuation. That would be a good first step.

This is a matter which I raised with the Minister previously on Committee Stage. I also raised it with the Minister for Public Expenditure and Reform. There is much concern on the ground among business people whose rateable valuations are currently being reviewed. This is happening in Waterford at present. I agree with those of my colleagues who have argued that the current system does not reflect the modern economic challenges out there, including the decline of city and town centres and the increase in online trade. Following the recent revaluations in Waterford city and county, the rates for some industries, mainly multinationals, fell but I would argue that such industries can well afford to pay higher rates to the local authorities. In the retail sector, however, which is seriously challenged at the moment, rates have increased, in some case by up to three times the original amount.

Leaving that issue aside, the revaluation process is almost ten years behind as we speak. There is a need for an urgent review of the entire rateable valuation system. While I acknowledge the system's independence, it must take account of the modern economic challenges that exist. Modern technologies are challenging businesses, as Deputies have already said. The issue of self-assessment must be examined too. There is a need for self-assessment in this area and I hope we will get an opportunity to discuss this further when the Valuation (Amendment) Bill comes before the House under the Minister for Public Expenditure and Reform. I ask that the Minister for the Environment, Community and Local Government also take account of the concerns being expressed here today.

The big weakness in the rates system at the moment, even with the changes being proposed, is that no cognisance is being taken of ability to pay. There are many small businesses from which people are not even getting a week's wages at the moment. Some sole traders and those employing three or four people are not even getting a half-week's wages for themselves from their businesses. Consideration of ability to pay has to be built into the rates system. It could be based on the profits for the previous year. Some recognition must be given to this issue. This is a constant complaint that I have heard during my entire time as a public representative. It is what drives small businesses to the wall in many instances. It tips the balance and the businesses go from being in the black to being in the red. I know there is no easy solution to this problem because if we build in some provision, it may have a knock-on effect elsewhere. However, my party believes that some measure must be introduced into the rates system to take account of ability to pay.

I thank the Deputies for their support for a review of the valuation process. I wish to confirm to the House that the Valuation (Amendment) Bill is on Committee Stage in the Seanad and I understand it is scheduled to be discussed in that House in February. Hopefully, it will come before this House before the end of this session.

Seanad amendment agreed to.
Seanad amendment No.15:
Section 29: In page 41, between lines 15 and 16, to insert the following:
“(9) Notwithstanding subsection (8), it shall be lawful for the rating authority to determine an increase in the annual rate on valuation where—
(a) the adjustment period of a specified area in the administrative area of the rating authority has been the subject of an order under subsection (8), and
(b) the adjustment period applicable to all specified areas in the administrative area of the rating authority, other than any specified area that is the subject of an order
under subsection (8), have ceased in accordance with subsection (7).”.
Seanad amendment agreed to.
Seanad amendment No. 16:
Section 31: In page 41, between lines 32 and 33, to insert the following:
“Amendment of certain provisions relating to rates on vacant premises
31. (1) Section 71 of the Local Government (Dublin) Act 1930 is amended—
(a) by inserting the following after subsection (1):
“(1A) A local authority may—
(a) specify a local electoral area or local electoral areas within its administrative area where owners of vacant premises shall be entitled to claim and receive a refund of differing proportion of the municipal rate to that referred to in subsection (1), and
(b) determine the proportion of the refund to apply in respect of each specified local electoral area or local electoral areas in accordance with paragraph (a).
(1B) The specifying of a local electoral area or local electoral areas and the determination of the proportion of the refund shall be a reserved function.”,
and
(b) by inserting the following after subsection (3):
“(4) The Minister may make regulations specifying the financial considerations and administrative and other procedures to apply in relation to the performance by Dublin City Council of functions to which subsections (1A) and (1B) relate.”.
(2) Section 20 of the Cork City Management Act 1941 is amended—
(a) by inserting the following after subsection (1):
“(1A) A local authority may—
(a) specify a local electoral area or local electoral areas within its administrative area where owners of vacant premises shall be entitled to claim and receive a refund of differing proportion of the municipal rate to that referred to in subsection (1), and
(b) determine the proportion of the refund to apply in respect of each specified local electoral area or local electoral areas in accordance with paragraph (a).
(1B) The specifying of a local electoral area or local electoral areas and the determination of the proportion of the refund shall be a reserved function.”,
and
(b) by inserting the following after subsection (3):
“(4) The Minister may make regulations specifying the financial considerations and administrative and other procedures to apply in relation to the performance by Cork City Council of functions to which subsections (1A) and (1B) relate.”.
(3) Section 14 of the Local Government Act 1946 is amended—
(a) in subsection (1) by deleting “which is situated in a county but not in an urban area and”,
(b) by inserting the following after subsection (1):
“(1A) For the purposes of subsection (1) reference to county rate shall include a rate adopted by a city and county council.
(1B) A local authority may—
(a) specify a local electoral area or local electoral areas within its administrative area where owners of vacant premises shall be
entitled to claim and receive a refund of differing proportion of the
county rate to that referred to in subsection (1), and
(b) determine the proportion of the refund to apply in respect of each specified local electoral area or local electoral areas in accordance with paragraph (a).
(1C) The specifying of a local electoral area or local electoral areas and the determination of the proportion of the refund shall be a reserved function.”, and
(c) by inserting the following after subsection (3):
“(4) The Minister may make regulations specifying the financial considerations and administrative and other procedures to apply in relation to the performance by a local authority of functions to which subsections (1B) and (1C) relate.”.”.

Amendment No. 1 to Seanad amendment No. 16 has been ruled out of order as it involves a charge on the Exchequer.

Amendment No. 1 to Seanad amendment No. 16 not moved.

Amendments Nos. 16 and 120 are related and may be discussed together.

Section 31(b) of the Bill originally amended section 14 of the Local Government Act of 1946 to the effect that vacancy refunds in authorities where the 1946 Act applies would be reduced to 50%. I previously signalled during our last debate in this House that I intended to consider this matter further. Amendments Nos. 16 and 120 specifically provide that elected members in all local authorities can, as a reserved function, decide on an electoral district or districts within the administrative area of the county or city where a differing rate of refund may apply. Councils can decide on the appropriate refund, being any proportion downwards from 100%, that should apply in each individual area and the Minister may make regulations setting out the administrative and financial procedures to apply in relation to the taking of those decisions. The underlying objective of these provisions is to allow the elected members to respond to the realities of economic circumstances in their local areas. Amendment No. 147 amends Part 3 of Schedule 3 to provide for this new reserved function. Related amendments are also being made to the Local Government (Dublin) Act of 1930 and the Cork City Management Act of 1941 to provide for local discretion there. In both cases, the prevailing refund regime of 50% as provided for in the respective Acts, will remain but, as I have already explained, provision is now being made to allow local authorities to provide for a different proportion of refund in specific electoral districts within the authorities' administrative areas. It would, of course, be open to the elected members in Dublin and Cork to apply a 50% refund regime to all electoral districts in the relevant cities, thereby maintaining the present position if they wish to do so.

I acknowledge again the commitment of the Minister to rescind what was contained in the legislation initially, which caused great consternation, fear and worry for many people throughout the country and, most particularly, for the members of local authorities who felt that they could judge and reflect the situation on the ground in the context of refunds for vacant units. The Minister is to be commended on listening to the concerns, fears and worries that were obvious when the legislation was published initially.

I echo what Deputy Cowen has said. When this legislation was first published, many people got a bit of a fright. Having spoken to the officials since then, I understand the logic of this and Waterford serves as a very good example. I spoke to a senior official in Waterford city who made the case to me that the authority needed to apply sanctions in some cases because people were holding on to properties and sites. The authority wanted to have a sanction to deal with that so that people would move the properties or sites on. Then, in another part of the county like Dungarvan, for example, it made absolutely no sense whatsoever. To have a blanket 50% rate which applied to everyone in the country made absolutely no sense. There has been much talk about a two-tier economy in this country, which does exist. In the case of Dungarvan, for example, the fact that premises are vacant is not a matter of choice and Dungarvan is not the only place in the country where that is the case. There are many places that simply cannot get tenants and to apply a 50% rate would have been madness in this economic climate. The solution, in the form of a variation on the amendment tabled by myself and Deputy Dowds, is reasonable. It talks about the rates being set at district level within a particular local authority to allow for the differences between an urban area and a rural one. I thank the Minister for taking our amendment on board and tabling a variation on it. We appreciate the work done by departmental officials in this regard too.

I welcome this change and commend some of the Members on the Government benches who put forward amendments on this issue. It is important to see Government Deputies contributing amendments. That is a positive development. In fairness to the Minister, he listened to the issues that were raised in this regard. He acknowledged the concerns and made the necessary changes, for which he is to be commended.

I have a number of questions and I ask the Minister to clarify a number of points. The legislation refers to refunds. Does that mean that the owners of vacant properties must pay the commercial rates and then apply for a refund? That may not be feasible for some who have cash flow difficulties. The amendment also provides that the reduction can be from 100% down. Can it be down to 0% or must there be at least a minimum rate charged on the refund? I accept the logic of this and it makes sense in the context of some vacant properties in some parts of the country.

However, there is a difficulty with the logistics involved in operating in a rural local authority - for example, in County Roscommon. If one were to break it down into electoral areas, if there was a dilapidated part of one town, the measure would have to be applied across the entire electoral area.

Debate adjourned.