Seanad Éireann debate -
Friday, 24 Jul 1970

Vol. 68 No. 14

Local Government (Temporary Reduction of Valuation) Bill, 1970: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Local Government (Mr. Molloy)

Bearaítear ag an mBille na socraithe sealadacha i leith rátaíochta a deineadh sna h-Achtanna Rialtas Áitiúil (Luacháil a Laghdú go Sealadach) 1954 go 1966, a chur ar ceal, diaidh ar ndiaidh. Baineann maolú rátaí faoi na hAchtanna sin le foirgnimh a tógadh nó a feabhsaíodh i rith na tréimhse dar chríoch 31 Márta, 1969 agus nach raibh i dteideal maolú rátaí a fháil faoi aon Acht eile. Faoin mBille, leathnófar an tréimhse le h-aghaidh críochnú na bhfoirgneamh suas go dtí 31 Márta, 1972. Leanfaidh an maolú de dhá thrian ar feadh 6, 5 nó 4 bhliain ag braith ar an mbliain inar chríochnaíodh an obair, agus, ní dheonfar é ach i gcásanna inar iarradh cead pleanála, nuair is gá sin, ar dhátha nach déanaí ná 9 Nollaig, 1969. Níltear chun na socraithe sealadacha seo a choinneáil i bhfeidhm i ndiaidh na tréimhse atá luaite sa Bhille seo.

The purpose of the Bill is to phase out, over a period of three years, the general rating reliefs, which have been provided on a temporary basis under the Local Government (Temporary Reduction of Valuation) Acts, 1954 to 1966. The 1954 Act provided for the granting of a two-thirds remission of rates for seven years on the valuation of new buildings, or on increases in the valuation of existing buildings which had been enlarged or improved, provided the erection, enlargement or improvement was begun and completed within a three year period which expired on the 26th July, 1956. Amending Acts, passed in 1956, 1960, 1963 and 1966 extended that period up to the 31st March, 1969. The remissions apply to buildings which do not qualify for rate remissions under any other code.

The remissions, which were designed originally to stimulate activity in the building industry generally, have applied to a very wide range of building projects including factories, hotels, office blocks, supermarkets and houses, other than grant-type houses for which separate rating concessions are provided in the Housing Acts or the Housing (Gaeltacht) Acts. The need for this form of stimulus of the building industry no longer exists and there is no justification for the continuance of relief from rates for all forms of building activity at the expense of the general body of ratepayers. Buildings at present being erected or which have been completed since the 31st March, 1969, would not qualify for any rates relief under the Local Government (Temporary Reduction of Valuation) Acts if no action were taken to continue the Acts. This would, perhaps, be unfair to persons who had undertaken building projects in the expectation that the temporary rating concessions which had heretofore applied would be continued. The purpose of the present legislation, therefore, is to provide for a further and final extension of the temporary rating concessions, but on a reducing scale, in respect of buildings which are completed by the 31st March, 1972, provided planning permission, if required, had been applied for not later than the 9th December, 1969, that is, the day on which the Government's decision to phase out the rating concessions was announced.

Section 2 of the Bill provides for an extension of the period within which buildings must be completed in order to qualify for the concessions from the 31st March, 1969, to the 31st March, 1972. Section 3 limits eligibility for the rating reliefs by reference to the date on which planning permission, if required, was applied for and modifies the period to which the two-thirds remission will apply. For buildings completed by the 31st March, 1970, the remission will be for a period of six years, while for buildings completed by the 31st March, 1971, and the 31st March, 1972, the duration of the remission period will be five years and four years, respectively.

The phasing out of the temporary rate reliefs will not, of course, affect in any way the exemption from rates provided for in the 1966 Act in respect of new or improved farm buildings.

The objection to the continuance of the temporary concessions is that they apply to all types of buildings without regard to the merits of such buildings for this form of indirect subsidy from the ratepayer. It may well be, in relation to some specific types of building, that there would be justification for the continuance of rate relief in the future even though the cost would fall on the remaining ratepayers. Consideration will be given within the phasing out period to the desirability of providing in permanent legislation for such relief.

I recommend the Bill to the Seanad.

Mr. J. Boland

This Bill brings to an end a series of enactments going back to the principal Act, which is the 1954 Temporary Reduction of Valuations Act. That Act provided that all buildings would receive a two-thirds remission of rates spread over the first seven years after construction. It was designed to encourage development and the construction industry generally and, taken in conjunction with the grants which were in operation for small dwellings, it represented a considerable incentive to developers to invest their money in this country and to help to develop various towns and cities.

With the passing of this Bill, this encouragement will no longer be there. I wonder is this necessarily a good thing. The argument that will be put forward in favour of the measure is, of course, that the Government have been accused of supporting the development of large office blocks at the expense of housing and by passing this Bill they can say they have clean hands in this regard and are not providing any incentive to a developer or speculator to put his money into office block development, supermarket or other such development and that they are instead trying to channel whatever capital resources are available into the housing sector of the construction industry, if the developer desires to invest his money in that industry at all.

It is generally accepted, however, that if, for example, a large office complex or shopping centre is constructed within the administrative area of one of the local authorities, that development will provide considerable revenue for the local authority concerned, especially in cases where the development is not one requiring many services to be made available to it by the local authority, where perhaps sanitary facilities already exist or where the developer has to pay a special charge to the local authority to help them to make these services available. From the time the development is completed virtually the only service the local authority continue to provide is the collection of refuse. In return for that the development, which would probably have quite a high valuation placed upon it, would produce revenue for the local authority over the years ad infinitum, and that revenue could be used to develop other parts of the local authority field. Therefore, I wonder if the cessation of this inducement to build will necessarily bring about any real change in the construction industry or any greater impetus to the housing drive.

It seems to me that at a time when the construction industry generally is very unhappy about the increase in the price of cement, on which we touched briefly earlier today, the passing of this Bill, together with the increase in cement and material costs, constitute a serious depressing effect upon the construction industry.

Mr. Molloy

Can the Senator give evidence of this?

Mr. J. Boland

The phrasing I used was something to the effect that it seems to me that this Bill when enacted, combined with the increase in cement and material costs in the construction industry, will have a depressing effect upon the industry. The inducement to a person with a sizeable amount of capital to invest in buildings which would produce a considerable amount of revenue for the local authority has been lessened to some extent and that to my mind would be the main objection to the operation of the Bill.

I do not quibble generally if the Government decide as a matter of policy not to encourage office development or supermarket complex development any longer. It is not necessarily a bad thing that it should try to redirect capital resources into another aspect of the construction industry. What I am saying is that it constitutes for the local authority concerned a definite loss in revenue which could be used to provide better housing accommodation for the people within its area, better roads, better amenities and better local authority services generally. To some extent that is being removed by this Bill. The most serious effect which the Bill will have is, when one couples it with the Bill we have just been discussing, that people occupying dwelling houses of between 1,250 square and 1,500 square feet who up to this would have got a State and supplementary grant on purchasing that house, and would have got a remission of rates over ten years, will no longer get any of those things, or exemptions from stamp duty. In fact where they might have expected, by being excluded from the Housing Bill, 1970, that they would at least qualify for the two-thirds remission of rates over the seven years period, they discover that virtually at one and the same time a Bill is being passed which will wipe out that concession also. If it is the deliberate policy of the Government to remove these concessions from people with a large amount of capital to invest I would not object but I do object to the fact that people who want, or as I said earlier, have to occupy dwellings of 1,250 to 1,500 square feet, will not even get this concession of a two-thirds remission over seven years where heretofore they would have got a remission spread over nine years and also the two grants and exemption from stamp duty.

There is another aspect of this which perhaps has not struck the Minister. There are many non-profit-making bodies throughout the country such as sports clubs, cultural or social clubs, Macra na Feirme, Muintir na Tire and all such bodies who through their own efforts will try to collect money to build a meeting house, a clubhouse or a hall. As I say, they are not profit-making, they are there for the good of the community and indeed in rural parts they are one of the things which help to maintain any decent standard of life there. Those people will also be penalised when this Bill is implemented because they will no longer be able to get the two-thirds rates remission over the seven year period. That is bad and at the appropriate time I intend to move an amendment to ensure that at least this concession will remain for them.

What I consider unfortunate, and indeed virtually unforgiveable, is that whilst up to now if a man carried out reconstruction to his dwelling house he had an exemption period on having that reconstruction work or extension revalued but now that concession is being diped out. If a person, either through necessity or otherwise, extends or modernises his house he is liable to be re-valued immediately. As we know the valuation office have become much more active in recent times and such people will then be liable immediately for the full rates on the higher valuation. This is a concession which we ought to endeavour to continue and again I propose to move an amendment in this regard.

The Minister did say that farm outoffices and outhouses will continue to receive the concessions as heretofore. However, one particular group of people who are being badly hit at present by the operation of large combines, very often financed from abroad, are the small retail shopkeepers. As we know from a previous debate some months ago, some people are finding it difficult to continue in some places. One of the only ways in which they can compete with the large combines is by modernising their premises and introducing the walk-around type of store. If the small man takes the adventurous step of trying to fight "Big Brother"— who is usually British based — he will immediately be revalued and have to pay the full rates on the upward valuation. No assistance is being given to such people to try to continue to provide a livelihood for themselves and their families and that is bad. While it will be argued that this will provide more revenue for the local authorities, this is not necessarily so because there will be, to some extent, a disincentive to those with capital to invest and they may decide to invest it abroad or outside the construction industry, or outside any sort of allied industry which would provide revenue in any way for the local authority. In addition there is the fact that the relief is being provided by those who from their resources are trying to provide a moderately sized home of 1,250 to 1,500 square feet and they are expected to bear the full brunt of the provisions of this and the other Bill we were discussing. The several reservations which I have about this Bill will be expressed in the form of amendments which I will move on Committee Stage.

Miss Owens

I should like to welcome the Bill. I never felt that remissions were the right way to deal with the problems which there are under the rating code. Indeed, I would query the whole idea of rating as a way of collecting revenue but it is with us and so far even the investigations which were carried out, and the results of which appeared in a White Paper, have not come up with an alternative. I consider that the remissions we have have not necessarily given relief of rating to those who most deserved it. For that reason I welcome the phasing out of all types of remission. As you can cause people great problems by removing such things as remissions overnight I welcome the phasing aspects in the Bill. The whole of the rating system should be related not to valuation but to people's ability to pay. If at some stage we can head towards a differential rating system I would welcome it. In so far as the Bill goes towards removing remissions I welcome it.

Mr. Molloy

As I said, the main provisions in this Bill are to ensure that remission of rates is withdrawn where it is felt there is no longer any need to continue such remission. I am pleased with the reception the Bill has got so far and I should just like to add that the House should know that under this code which has been continued since 1954, an indirect subsidy— amounting in the current year to about £1¼ to £1½ million — has been granted and the burden of this has been carried by the ordinary ratepayer down through the years. This figure will increase but this estimate is the most recent that I could get as to the size of this subsidy arising out of the remissions.

Senator Boland strove to give the impression that the withdrawal of these remissions would in some way act as a discouragement to activity in the building industry. I fail to see how anyone could come to that conclusion when one studies the activity that is taking place in the construction industry all over the country. All this Bill will do from the point of view of activity in the industry is place a greater emphasis on a different type of construction. There will be no need for the State to come in with incentives to encourage the building of office blocks by giving a rates remission of two-thirds for seven years. I do not see why the State should give such a remission to persons building supermarkets. Neither do I see any need to continue this type of remission to persons building dancehalls. Nor do I think that there is any necessity to give this remission to factories generally. Adequate financial incentives are available from the other State agencies, mainly under the Department of Industry and Commerce, to assist the development of industry. These have been very successful.

It is right and proper that the principle underlying the Housing Bill we have just discussed should also be enshrined in this measure. I refer to the principle of ensuring that the resources of the State are used to assist those who can least afford to build houses for themselves. By doing that we are meeting in a very real way problems we all recognise exist. Any other attitude would be unrealistic. The building industry is, indeed, booming and there is no question of any difficulties.

Dr. Belton

Not even with regard to skilled labour.

Mr. Molloy

I said the industry is booming.

Dr. Belton

The city manager does not agree.

Mr. J. Boland

Is the industry working at full stretch?

Mr. Molloy

It is. Regrettably there was a full due to a cement strike but the industry is now getting back into top gear again. I should know that better than anybody else because of my involvement in planning and development generally and because of my close contact with local authorities.

I could not let the reference to the services provided by local authorities pass without making some comment on Senator Boland's statement that the people affected would be large ratepayers and that the only service they would get would be that their refuse would be collected. This is really reducing the whole issue to ridiculous proportions. No large-scale development takes place unless proper services are available in the first instance. These involve adequate water and sewerage. Not only must they be available initially but they must be continuously maintained at a standard which will ensure that development can operate efficiently. This necessitates constant expenditure by local authorities. It is rather ludicrous of the Senator to suggest that the only benefit these ratepayers would get would be having their refuse collected. Roads have to be constructed and maintained. These developments create additional traffic and additional traffic leads to further road problems. There is a continuous necessity for increased expenditure to ensure that services keep pace with the demands created and generated by all these new developments. If Senator Boland believes it is possible to reduce the whole complex problem to the simple facility of collecting refuse then he would want to do some further study.

Another point raised by Senator Boland was the question of extending the remission to certain types of building activity. The Senator mentioned sports buildings. I want to draw his attention to my statement here in which I stated quite clearly that it may well be that in relation to some specific types of building there would be justification for the continuance of rates relief in the future, even though the cost would fall on the remaining ratepayers. I am considering, during the phasing out period, the desirability of providing permanent legislation for such reliefs. This particular Temporary Reduction of Valuation Bill will bring to an end an omnibus code which granted remission over a whole field of activity, including many specific types of development, in which I do not believe that rates remission should

"( ) Section 3 of the Principal Act is hereby amended by the addition after the words "31st day of March, 1969;" of the words "the prescribed period in the case of buildings administered by non-profit

continue to be granted. We are carrying out a review and at some not too distant date I hope to come back with legislation granting some concessions to specific building activities in cases in which we feel such concession would be desirable. That should meet the points made by the Senator.

Question put and agreed to.

Agreed to take remaining Stages today.