Local Government (Financial Provisions) Bill, 1977: Second Stage.

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

Minister of State at the Department of the Environment (Mr. J. O'Leary)

A major undertaking of the Government's pre-election manifesto was that from January 1978 rates would be abolished on domestic property, the domestic part of mixed property, secondary schools, bona fide community halls and on farm buildings which were not previously exempted from rates. The Bill is designed to give statutory effect to this undertaking. Its other purposes are to validate the partial relief of domestic rates which obtained in 1977, and to provide for a number of consequential and miscellaneous amendments of the law relating to rating and local government.

Several investigations and studies of the rating system have been undertaken in recent years. It is fair to say that these have been prompted more than anything else by a dissatisfaction with the way in which rates bore on householders. No fundamental solution to the problem emerged, however, until our proposal to give total relief of domestic rates. For example, despite the last Government's action in phasing health and housing charges from the rates between 1973 and 1977, the average rate in the £ still rose in this period from £6.70 to £9.00. Our initiative has been bolder and more clearcut. It removes once and for all the burden of rates from over 850,000 householders and other ratepayers benefiting from the new reliefs.

A rather complex Bill has been required to give legislative expression to the derating proposals of the manifesto. However, the structure of the new rating reliefs is simple enough. Under section 3 of the Bill rating authorities will, each year, make an allowance to the rated occupiers of the newly relieved properties. Section 4 provides in the same way for the more limited relief of 25 per cent of domestic rates which was given in 1977. From 1978 onwards the allowance under section 3 will be equal to the full amount of the rates which would otherwise be payable on the valuation or part of the valuation of the properties concerned. The allowance thus has the effect of removing the burden of rates in whole or in part, as may be appropriate. Grants corresponding to the total of the allowances made will be paid each year by the Minister for the Environment to rating authorities under section 9 of the Bill.

The main advantage of this approach is that it allows the Exchequer to take over simply and directly the liability for rates on all property qualifying for the new reliefs. The Exchequer, in other words, is stepping straight into the shoes of former domestic and other relieved ratepayers. The full cost of domestic derating is being met fairly and squarely by the State and no part of the burden is being allowed to fall directly or indirectly on local authorities or other ratepayers.

Section 1 defines the categories of property which will qualify for the new reliefs and section 2 prescribes the amount of the rateable valuation of these properties which will attract relief. In case of a refusal by a rating authority to make an allowance in respect of a property, the rated occupier may, under section 7(1), apply to the District Court to have the allowance made. In effect, then, the District Court—and the higher courts if further appeals are taken—will have the role of dealing with appeals about the way in which local authorities apply the new reliefs.

A domestic hereditament is defined in section 1 as any premises which is used as a dwelling and which is not a mixed hereditament. The definition extends to yard, garden and the normal domestic outhouses. Where these carry a valuation separate from the dwelling itself they will still be regarded as domestic, provided the valuation does not exceed £1 in the case of land, or £2 in the case of buildings.

Use of a dwelling to provide lodgings which are not registered under the Tourist Traffic Acts, 1939 to 1975 will not of itself disqualify a premises from domestic status. This means that houses listed, as distinct from registered, with Bord Fáilte will not thereby lose their entitlement to domestic rates relief.

Registered guesthouses under the Tourist Traffic Acts are in a different category from ordinary dwellings and, as such, they cannot qualify for relief as ordinary dwellings under the Bill. Where, however, a registered guesthouse contains accommodation specially and permanently set aside as ordinary domestic quarters, it will be entitled to relief as a mixed hereditament in respect of this portion.

Domestic property will be relieved of rates on the whole of its effective buildings valuation and on any adjoining land valuation which does not exceed £1.

A mixed hereditament means a premises which is used partly as a dwelling to a significant extent and partly for another or other purposes to a significant extent. The point of the latter qualification is that, if the domestic use of a premises is insignificant, it will be regarded as wholly non-domestic, while if the non-domestic use is insignificant it may be regarded as wholly domestic.

Unless an application is made to the Commissioner of Valuation under section 7(2), the rateable valuation of the domestic portion of a mixed hereditament will be taken to be one third of the total valuation of the property or £18, whichever is less. I would like to emphasise, however, that where this formula is felt to bear unfairly, the rated occupier concerned may apply, through the rating authority, to the Commissioner of Valuation—with appeal from the latter's decision to the circuit court—to have the domestic and non-domestic elements in his valuation specially apportioned. The rating authority themselves are also empowered to take this initiative.

Secondary school is defined as a school not already exempted from rates which is recognised as a secondary school by the Minister for Education. Relief of rates will extend to all of the buildings forming part of the school complex. Relief will also apply, subject to a limit of £40 valuation on the amount relieved, to land belonging to and used in conjunction with the school.

The Government's undertaking to abolish rates on bona fide community halls responds to a long-standing aspiration of voluntary groups involved in community work. Community hall is defined in the Bill as a hall or similar building which is not mainly used for profit or gain but for purposes which both involve participation by inhabitants of a locality generally and are recreational or otherwise of a social nature. Use of a hall for sports purposes will not of itself make a premises a community hall. On the other hand, a hall is not disqualified from being a community hall simply because it is normally used by persons of a particular age group or a particular religious denomination.

Registration of a premises under the Registration of Clubs (Ireland) Act, 1904 so as to enable permanent bar facilities to be provided for club members will, however, rule out the recognition of that premises as a community hall. Community halls will be relieved on the whole of their buildings valuation.

Relief of rates is also being granted on those farm buildings which, because they were erected before 1 March 1959, do not already enjoy exemption from rates. Farmers with older non-domestic buildings had to pay full rates on those buildings up to now. On the other hand, farmers with modern buildings erected since March 1959 were totally exempt. I am happy to bring this anomaly to an end.

The definition of domestic hereditament extends to all property used for residential purposes, whether owner-occupied or rented. The Bill contains a number of provisions designed to ensure that the benefit of domestic rates relief is passed on to the tenants of rented accommodation. The position of rented small dwellings within the meaning of the Local Government (Rates on Small Dwellings) Act, 1928 is dealt with in sections 6 and 18. These comprise all local authority dwellings and all privately rented dwellings with a valuation of not more than £8 in Dublin and, in general, of not more than £6 elsewhere.

In relation to these small dwellings, liability for rates fell on the owner, or landlord, rather than on the occupier, or tenant. Heretofore the landlord could recover the rates paid by a series of additions to the rent spread through the year. Section 18 of the Bill has the effect of removing the authority from 1978 onwards for the rates-linked supplements to rents which were previously levied by landlords of small dwellings. Section 6 makes corresponding provision in relation to the 1977 rate.

Section 5 of the Bill deals with rented accommodation apart from small dwellings. Although the section is long and complex its object is simple. For a tenant who was not previously directly liable for rates, the section gives the right to an allowance from the landlord equal to the rates element which was in his rent before removal of domestic rates.

Difficulty may arise in calculating the amount of this allowance where a unit of letting is not separately valued. There is provision, therefore, for either landlord or tenant to apply to the rating authority for apportionment of the valuation. An appeal may be taken to the Commissioner of Valuation under section 7 against an apportionment made by the rating authority. If the proper allowance is not made by a landlord, the tenant is entitled, under section 5, to recover the amount as a simple contract debt in any court of competent jurisdiction.

The rate reliefs provided for in the Bill have the effect of increasing the proportion of the current income of local authorities which is being met by the Exchequer. In 1976, State grants met 40 per cent of local authority current income; for 1978 the figure will be about 61 per cent. In 1976, the State paid £1 out of every £4 which would otherwise fall to be raised by local authorities in rates. In the current year, the State will be paying nearly £2 out of every £3. The cost to the Exchequer of the reliefs under the Bill is estimated at about £80 million for 1978.

A financial liability of this size has important implications for the Exchequer, since it has to be fitted in with the needs of other programmes, including the capital requirements of local authorities and the needs of other services financed by the Exchequer, many of which are vital to the creation and maintenance of employment. There is a need also to take reasonable measures to protect the interests of non-domestic ratepayers, including farmers, small shopkeepers and people with businesses of one kind or another who remain liable for rates.

Section 10, accordingly, enables the Minister for the Environment, with the consent of the Minister for Finance, to issue directions to local authorities limiting the amounts to be provided in their estimates of expenses, and, in the case of rating authorities, in their rates in the £. If an authority seek to include an amount in their estimate of expenses or in the rate in the £ which is greater than any limit notified, the estimate or the rate stands to be reduced to the maximum amount allowed by the limit.

Section 11 requires that any decision by a local authority authorising expenditure over and above that provided in their estimate of expenses should have the sanction of the Minister for the Environment. Sanction may be given either generally or in particular cases under this section.

As a matter of policy, I propose to see to it that, with the responsible cooperation of all concerned, little if any interference will be caused by these new arrangements to the free ordering of priorities by local authorities. Rating authorities have been able to operate as freely as before within the limit on rate poundages which I notified for the current year. Last week, in authorising a 10 per cent increase in rate poundages for 1979, I made the particular point to local authorities that it would be entirely for them to decide the priorities which should apply to the services catered for in their 1979 estimates of expenses.

Among the remaining minor provisions of the Bill, I will draw attention only to section 13 which is designed to simplify the procedure for the making of the rate. For some time now, at least two meetings of a rating authority have been required: an estimates meeting, frequently extending over a number of meetings, at which the estimate of expenses is adopted and the consequent rate in the £ "struck" or determined, and a later "rates" meeting at which the rate as struck is assessed on individual valuations.

It is difficult to see why the law should require elected members to be involved in endorsing the rate on individual valuations. Once councillors have struck the rate and the Commissioner of Valuation has fixed revised valuations, applotment of the rate is automatic and admits of no scope for variation. The function is properly administrative and section 13 simply recognises it as such. I must emphasise, however, that the functions of adopting an estimate and striking a rate in the £ remain absolutely untouched by the present section. These continue to be powers exercisable only by elected members.

The present Bill contains no provisions affecting the future valuation of new and improved domestic property. The Tánaiste and Minister for Finance has, however, already adverted to the possibility, in the wake of domestic rates abolition, of a global rather than individual valuation of domestic property being carried out for each rating area in future. It is intended to introduce appropriate legislative proposals in the new year.

In the knowledge that it fulfils our stated manifesto undertakings for relief of rates, I commend the Bill to the House.

Mr. Reynolds

We welcome the Bill because it gives complete rates relief on domestic houses and in other areas as well. The Bill deals entirely with domestic properties, the domestic portion of mixed properties, secondary schools, community halls and farm buildings not already exempt. We all realise that for years rates were an unfair means of collecting revenue. They were unfair for many reasons. There will still be a certain amount of unfairness so far as shopkeepers are concerned. Under the old system we often made the comparison between a farmer farming 40 acres, living alone in a house valued at £40, and a farmer married and having seven or eight children and with the same valuation and the same amount of land. It could not be justified that the two of them should pay the same amount of money into the Exchequer.

Now we will have a small shopkeeper with a valuation of £20 operating in one end of the town and a larger shopkeeper with a valuation of £30 operating in the centre of the town. The small shopkeeper may be married and have a number of of children, and the large shopkeeper may be a single man. The same arguments will be made by the shopkeepers. This will have to be looked at. It could be unfair. It is easy for us to talk about the Exchequer giving an increase to the local authorities last year of 11 per cent over the previous year's figure and hoping they would continue to provide services. They have failed to provide the services.

I have been a member of a local authority for approximately 40 years and I was chairman for the past ten or 12 years and I know the cost of wages went up by 15 per cent and the price of materials went up by 12½ per cent. How could an increase of 11 per cent provide the same services? We had to meet a back-payment on wages and we handed out £57,000. We had to take that money out of the allocation of 11 per cent plus the other amounts we had collected ourselves. In every county the by-roads are impassable because of potholes. That situation will worsen next year because we have reduced the 11 per cent by 1 per cent. Some of the potholes on the less major but not actually minor roads make it dangerous to drive a car. I was travelling through County Cavan a fortnight ago and I drove my car into a pothole. I burst a tyre and tube, and bent a wheel, and I was driving at 50 miles an hour only. Maybe this is due to the go-slow by the engineers, but these potholes have been there for some time.

The house building programme of every local authority will be reduced substantially. To meet the Government's demands, most local authorities have increased their staff. In some counties they have employed one or two extra engineers and other staff in the engineering section. This means there will be more people there to spend less money. I cannot say what the ultimate effect will be. The Minister said recently that 16 local authorities did not spend the 11 per cent. I am sure that is possible. I am quite prepared to accept the Minister's word. Those people had a substantial income from increased valuations, and so on, to keep them floating, but in my county the increase in valuations last year was only £6. That is general to the west. That increase will not be sufficient to keep the services going. The income in these counties from the letting of local authority houses is much smaller than that in other counties. We have a number of people over 65 years of age and the density of population must also be taken into account.

Section 4 refers to domestic and mixed hereditaments. In a mixed dwelling where people have living accommodation and a shop or an office they get a reduction of one quarter of the total rate, or 25 per cent. Section 7 provides that, if they are not satisfied with this, they have the right to appeal to the Commissioner of Valuation, or to the courts, to have the property apportioned. Why not let the local authority and the person concerned apportion the property? If a property measures 2,000 square feet, and the private part where the people are living takes up 1,000 square feet and the shop or the office takes up another 1,000 square feet, why not divide the rate on that as 50 per cent each way? If one area comprises 1,500 square feet and the other area 500 square feet why not apportion it as 75 per cent and 25 per cent of the total cost of the rate?

It is suggested that people can go to court. People are slow to go to court. If they go to the Commissioner of Valuation's office and do not succeed, they have a notion that they are holding the court in hell and the devil is presiding. It is very hard to convince people in rural Ireland or anywhere else to go to court. Under the Bill landlords must pass on whatever rates relief they get to their tenants. I want to ask the Minister did that happen last year, or does he believe for one minute it will happen next year? In my opinion it did not and will not. There is no point in telling these people they can take a court case against their landlords. They are afraid to take a court case against their landlords because the landlords will find some means to get them out of the house. People outside are quite prepared to pay the rent they were paying, if not a bit more. These people will have to be protected by the Department or by the local authority. If they are not, they are being thrown to the wind and there is no protection for them. The Minister should take a serious look at this.

The main point in the Bill is the loss of power by local authorities. Since I became a member of a local authority, power has seemed to dwindle away. The day has gone when members of a local authority had any say in the wages paid. We have no say in the fixing of rents. Rents are fixed here and sent down to us. We have no say in the sale of houses. That is fixed here and sent down to the local authorities. No matter what they want to do, there is a guideline available in the Department of the Environment for the local authorities, and they must operate within that guideline. If they do not, they will be in serious trouble.

Under section 10, if the local authority do not strike a rate the county manager has the power to do so. This means the day of the power of the local authority is gone. Managers are trying to collect revenue. We had the experience of this recently. Managers have suggested to local authorities who have not got a water rate that they should think of striking a water rate, that if they require more revenue this is one of the ways they can get it. Other managers have made the suggestion to the local authorities that they should make a charge on planning permission applications. If the money has to be found, the Minister is entitled to tell the local authorities where it is to be found, and how it is to be found. We all know it will be necessary to get much more money to maintain our house building programmes and our water and sewerage schemes. Loans on water and sewerage schemes have increased substantially over the past few years, and will continue to increase, and we will find that increases across the board with regard to loans for housing and so on.

I thought of putting down some amendments to the Bill but I know it would be said they would create a charge on the State and they would be ruled out of order. Certainly we will have to give some thought to putting down one or two amendments. Again I welcome the Bill for the relief of rates on private houses it provides.

Mr. Hyland

It is a fact of political life and political debate that politicians, depending on which side of the House they are on, tend to highlight or cloud aspects of legislation for political reasons. For those of us in the practice of politics this is understandable. Far too often it leaves the public in a confused state. They are dependent on the media and on political correspondents to put the matter into its proper perspective. It is not surprising, therefore, that the main purpose of this legislation has been sidetracked and all sorts of red herrings introduced to cloud the real issue which is why the Government and the Minister brought the Bill before the House in the first instance. However, to the extent that Second Stage provides the freedom for a wide-ranging debate, the views expressed on local government in general will be welcomed by both the Minister and the House.

By and large the views expressed by the previous speaker and by speakers in the other House on local government in general are sincerely held. The Minister recognises this. He also recognises that there is a very strong attachment in this country to the importance of the role of local authorities in the work of overall national development. I say this by way of general comment, I will come back to the purpose and the intent of the legislation before us introduced by the Government to enable them to give effect to the proposals they put before the people before the last general election and which were endorsed so overwhelmingly by them. This legislation was introduced in response to widespread public demand, and it has brought considerable relief to individuals and communities. It is a basis on which future national development can take place. Regardless of the views expressed by some speakers, it is generally agreed that rates on domestic dwellings were a very selective and unfair tax, very often leaning most heavily on people who could least afford to pay. Even the Opposition admitted this, but they were not prepared to come to realistic grips with it. We can all cite examples of a husband and wife with a large family trying to educate their family. Their income does not make them liable for income tax and yet they were compelled to pay rates on their dwellings.

Previous legislation recognised the unfairness of rates as tax and a system was introduced whereby rates could be paid by instalments. Legislation was introduced to enable local authorities not to levy rates on new properties for a period of seven years. Over a number of years there emerged the feeling, the desire and the wish that something should be done to come to grips with this unfair tax. This Bill which got a very rough and lengthy passage through the Dáil came to grips with the problem. It gives substantial relief to 850,000, householders and to oppose it is, in effect, opposing this relief. Those who oppose it should say whether they want to see this tax restored again, or what the alternative to it is.

Much has been said and written about the financing of local authorities. It is essential for the operation of local democracy that each local authority should have the power and the freedom to finance from their own resources the projects considered essential for their own areas. This tax should be more broadly based than the present very selective tax system known as rates. I urge the Minister to give consideration to this matter and to find an acceptable alternative source of finance for local authorities. In saying this, I know I am not giving him an easy task. This matter has been discussed at great length by various local authorities and, indeed, by the General Council of County Councils. There are various views and various suggestions as to what the alternatives might be.

One system appeals to me personally. I am not an expert on finance but I would urge the Minister and his Department to give consideration to it. A percentage return of the value-added tax should be collected in each county. This tax is broadly based and easily administered. It should not be an impossible task for the Minister and his Department to work out a scheme whereby each local authority would get a percentage return on the value-added tax collected in each county. This would provide the independent source of finance each local authority need to embark on any worth-while local development programme. In this legislation the Government and the Minister did a very fair and straightforward thing by simply picking up the rates bill and paying direct to the county councils the money they would have collected from the householders.

In the current year this amounts to £80 million. Nobody can dispute that this is a sizeable transfer of tax from one small section of the community to the more broadly based tax system. If everybody was fair, it could generally be agreed by every Member of this House that this is a fair and a just thing to do. The Opposition said the Government should not have put a ceiling on the limit to which the remaining number of ratepayers should be taxed. I think this was a responsible attitude on the Minister's part. The 11 per cent increase last year and the 10 per cent the Minister announced over the past couple of days is a fair compromise in trying to strike a reasonable balance between the demands of the various local authorities and what the remaining rate-paying public can generally afford to pay. It is unreasonable to suggest that the Government, having made such a sizeable financial commitment, should not have a say, at least to some extent, in monitoring the situation at national level. To those who say the Bill restricts the freedom of local authorities to implement their own development programmes I would say to some extent this is true. I agree with that point of view. As I have already said, the future financing of local authorities cannot and will not be resolved by the reintroduction of rates and, by implication, this is what some speakers are suggesting.

I welcome the provision in the Bill whereby community halls can be derated. I have a particular interest in community development and I am associated with a number of community development organisations. I know from my contacts with them down through the years how extremely difficult it was for many of them to meet the annual rates bill. By picking up the rates bill in this instance the Government are not only providing financial relief for those organisations but also providing an incentive and an encouragement to them to continue with their work. This Bill also makes provision for the complete removal of rates on farm buildings. This is widely welcomed by the agricultural community. In many cases they represented serious financial hardship for the people concerned.

The Bill also removes rates from boarding schools and those of us who have had contact with the managers of these schools and the principals of these schools realise only too well the serious hardship that the annual rates bill presented for each one of these institutions. The Government and the Minister are responding to a long-felt need in this area and I am grateful to them for taking this step.

On the financing of local government, I urge the Minister to speed up, as far as possible, the introduction of the White Paper on local government reorganisation. I hope it will be possible to have such a White Paper before the local government elections next June when many aspiring young politicians will be entering the arena. It would be nice to think they would have a clear knowledge of what is intended in the future as far as local government reorganisation is concerned. I know I am probably giving the Minister an impossible task in asking him to prepare a White Paper before the June elections. It is important that we should have a White Paper in the very near future because, as our economic position changes, the structures of our democratic institutions change also to keep pace with our programme of national development.

In conjunction with the local government elections next year, we will have the European elections. It is a fact of life that the more regionalised we become and the more remote the decision makers become from the ordinary people, the greater is the need to strengthen and build up and encourage local democracy. One of the very encouraging things about our country at present is that a strong community spirit still exists and this is far less evident in other European countries. We must ensure as far as possible that future legislation on the reorganisation of local government will not only retain this community spirit but also encourage greater participation by all of our people in the work of local government and local community development. There is a remarkable blend between the democratically elected local councillors and the officials who administer local government. As a member of a local authority I never fail to admire the great desire in the part of local authority members and officials at local government level, to unite and be united in their efforts to promote as far as they possibly can, the development of their own county.

I want to make one passing reference which perhaps is not directly relevant to the Bill. We are embarking on the election of new local authorities and we are conscious of the demands public life makes on individual members of local authorities. Because we know from experience the cost of being in public life at present—the cost of providing services to deal fully with the demand which the public are entitled to make, the cost of telephones, the high cost of postage—I do not think it is unreasonable to expect the Minister and his Department to make some provision in future for these people who so generously give their time to promote and further the work of local government. They should not be expected to be out of pocket. I am not asking the Minister to pay members of local authorities, but one of the great things about local democracy and local government is the voluntary work members put into it. One has to be realistic. One has to recognise the financial demands which are placed on these members. I do not think it is unreasonable to ask the Minister and the Government to recognise that fact by compensating them.

I hope that future local government reorganisation will strengthen county councils. I emphasise the word "county" because I believe there is a commitment and an involvement by members in the county structure. Whatever legislation is introduced, whatever study is done in relation to local government, the county should be retained as the administrative structure.

One final comment. I am a member of the General Council of County Councils, as are other Members of this House, and in my opinion we have not fully developed the role of the council in the overall work of local authorities. I hope that in future the General Council of County Councils can be developed to the extent that it will be the policy formulating body for local government administration. I would ask the Minister to give consideration to this point when preparing his White Paper and in the future reorganisation of local government.

Mr. Moynihan

On behalf of the Labour Party I welcome the aspects of the Bill that make statutory the relief of rates on domestic dwellings. This is a development that had been under consideration over a number of years, because it was recognised that this form of taxation was unjust. The relief of domestic rates commenced with the National Coalition Government when they decided to take the health costs entirely and exclusively off local authority rates, a cost which at that time represented practically 50 per cent of the total rates demand.

Mr. McGlinchey

They increased the rates by £4 in the £.

Mr. Moynihan

In so far as the other aspects of the Bill go, it is regrettable that the functions and reponsibilities of local authority elected representatives are being pushed further back. In 1941, under the County Management Act, the powers of local authorities to make appointments, to determine the number of appointments, to determine the wages and salaries applicable, were all wiped out and transferred to the county manager and his staff. The only remaining real responsible function of the elected representatives, whether they were in a corporation, county council, urban council or were town commissioners, rested with the striking of a rate, for what they considered to be the needs of the community they represented and the capacity of that community to meet the bill they would prescribe in relation to the needs. There are no better qualified people than those who are elected in a particular area to determine the level of services required by the community.

When this Bill becomes law, already it is effective through a ministerial regulation, local authorities will be restricted to a particular figure in the extension of their financing to cover the services they provide and this will be a regrettable step. All of us in public life know that the community are clamouring continually for a growing, wider and better service; whether it is in the field of housing, roads, water and sewerage, refuse collection or provincial library services. The taking of major decisions in future in regard to the level of financing to go into all or any of these areas will be removed from the local elected representatives as will be the right to determine the level of services than can or will be provided by the local authorities. This was a very valuable right.

In fairness to the elected representatives down the years it must be said that since the first Local Government Act of 1898, these people gave their services on a voluntary basis. This has been very much to the credit and responsibility of those people. In their wisdom and judgment they made up their own minds, in consultation with their officials, what level of service their community wanted and what was their ability to pay. That very seldom led to any major conflict.

At this point we are facing a continuing increasing demand in regard to roads, because of increased traffic, and also in regard to housing because of increased costs. Many more families will be asking for local authority houses because the cost of sites and the cost of house building have increased beyond the ability of practically any wage or salary earner. Because of the growing magnitude in these fields local authorities will have considerably greater responsibility and involvement. But if they do not have a major say in the financing of these areas their involvement will not have the effect it could and should have.

There is another important aspect I should like to touch on. Section 11 prohibits local authorities from making excess expenditure. Every member of a local authority is conscious of the many times throughout the year after striking the rate when it was necessary for them, on grounds of urgency or otherwise, to seek extra expenditure for an immediate and deserving project. Under this legislation the manager and the elected representatives are hamstrung until such time as, first, an application is made to the Minister and the Department and, second, sanction is given. In my opinion this was often of an urgent nature, either to finish a job or because of flooding or some consequences of that nature. I would ask the Minister to keep this in mind because local authorities never sought excess expenditure unless there were good and justified reasons for it in servicing their local community.

I agree with a previous speaker who asked the Minister to examine the position of the small family shopkeeper in relation to domestic rates relief. The one-third relief in this case is generally small because we all know that the small family shopkeeper in today's world is fighting many odds. He has to contend with the supermarket and VAT returns, all of which are a strain on his resources. As his competitor has a private residence removed from his business on which he has total rates remission, the Minister should give serious consideration to the plight of the small family shopkeepers who are scattered throughout the towns and villages of rural Ireland and realise that there is a case to be made for greater relief than that given in this legislation.

Another section of the community the Minister should look at again, and they are very small in number, are those in registered guesthouses where they form the normal family home which is used during the tourist season—June, July, August and September—as an adjunct to tourism and to which they are making a tremendous contribution. Where this is exclusively a tourist and family development, the Minister should consider giving the same rates relief as is given to those on the supplementary farm guesthouse list.

We certainly welcome the Bill in relation to its relief of domestic rates and I hope during its passage here that all its aspects will be thoroughly and sincerely thrashed out in the interests of giving this country the best possible structure in local government administration.

Mr. A. O'Brien

I welcome this Bill. I said here and elsewhere a number of times that I recognise rates to be a burden that rests unevenly on different sections of the community. People living in the same street with each house having the same poor law valuation found that because their circumstances varied so greatly the rates burden rested very heavily and unjustly on some of them. That was recognised on all sides of the House. Some time ago a Minister for Local Government introduced a waiver of rates scheme. This was a welcome relief to some sections of the community and was greatly appreciated. The second step was the removal of the cost of housing and health from the rates by the National Coalition Government. That was another step forward and this is the third step which can fairly be described as the most decisive. It removes the burden of rates from the domestic house and therefore is very welcome. I join in the welcome extended to it by other speakers.

There is one sentence in the Minister's speech that I do not think is accurate. He said:

The full cost of domestic derating is being met fairly and squarely by the State and no part of the burden is being allowed to fall directly or indirectly on local authorities or other ratepayers.

I take it that the £80 million not being collected from rates will have to be collected by some other means and that, ultimately, a share of it will fall indirectly on ratepayers. That does not take from my welcome for the Bill.

Every time this Bill is discussed the same question comes up about the rates relief not being passed on to tenants. It has been said in reply that there is a certain difficulty in having that done. It is well to admit that this rates relief is not being passed to tenants. When it is said that tenants have no means of righting this injustice it must be remembered that housing is in such short supply and in such keen demand in many of our towns and cities that people are very glad to get a flat or rooms, as the case may be, and are not likely to antagonise the landlord by immediately looking for their rights with regard to a share in rates relief. This matter will demand a lot of attention as time goes on because there is not much justification for saying that that difficulty does not exist.

With regard to the 10 per cent limit of expenditure by the county councils this year, it is fair to say that the man who pays the fiddler is entitled to call the tune. That has always been accepted. But when we take into account the increases in wages and materials, it is doubtful if this 10 per cent will be adequate. There are counties where the restriction of 11 per cent imposed last year is already beginning to show results. Senator Reynolds said that many of our second class roads, by-roads, are in a very bad state of repair.

It is true that the fault for some of that at least can be attributed to the go-slow by the engineers, but at the same time it is in part due to the limitation imposed on the councils. That is bound to hit some counties more severly than others, for example, in counties where by their very nature, the surface is so boggy that roads are very hard to maintain. There are parts of County Cavan and Leitrim, for example, where it costs much more to maintain a road than it does in Meath or Louth. That is a problem. Other counties because of their contours have a very high road mileage. Because of the number of lakes and hills in County Cavan we have an unduly high road mileage for the area. There are complaints in parts of Cavan about the neglected state of the by-roads. I want to be quite fair; this did not happen in only the last 12 months or in the last few years; the situation has been getting progressively worse over a number of years. Areas which face such situations might demand special consideration when it becomes obvious that the allocation of 11 per cent, or 10 per cent, or whatever it might be, is not sufficient to maintain existing services and at the same time achieve a reasonable growth. The figure of 10, 12 or 11 per cent that might be applicable to the whole country should in certain cases be extended.

There is a lot of work to be done where roads are so narrow that they are not able to cater for school buses, big creamery tankers or lorries with big supplies of fertilisers. There are people living off laneways who cannot have fertilisers delivered because the roads are too narrow. One-third of the population in County Cavan live in this type of laneway and a good deal of work has been done to bring them up to a reasonable standard. People now applying to have their laneways brought up to a reasonable standard are on a waiting list of four to five years. I believe a special case can be made for areas where such a situation prevails. I am glad to note that the Minister mentions in his speech that matters which are considered to be of great priority by a council would have some hope of getting special consideration. I hope that in time to come that that will be borne out.

As has been said by other speakers, down through the years members of local authorities have given good service and have given freely of their time and energy to schemes for the benefit and improvement of conditions in their own counties. It would be regrettable if the schemes a local authority had in mind, schemes that could be supported by professional engineering and executive staff were not embarked on because of the fixed limit of 10 per cent or 11 per cent imposed by the Custom House. It would also be a bad thing if the idea got abroad that local authorities were so restricted in their activities by the Minister for Finance or the Minister for the Environment, that they were no better than rubber stamps. If that were a fact the country would suffer a great loss. People of ability would be no longer interested in local government and no longer anxious to make a contribution to the development of their local authority area. If that were to happen, it would lead to more centralisation and less decentralisation and everyone would like to see more decentralisation in the years immediately ahead.

When we take into account the increases in wages and materials I am doubtful if the 10 per cent limit for the next year will allow the councils to proceed as they would like in extending water and sewerage schemes. Many towns and villages are in need of extended or new water and sewerage schemes. If the 10 per cent limit curtails that development, that will be a pity. Such a course could hinder the development of a county, especially in areas which have a tourist potential. Lately, the programme of removing very dangerous corners has been slowing down in certain parts of the county.

In general, I welcome the Bill. It is good to see rates abolished from domestic dwellings, secondary schools and community centres. I hope that the question of completely tying the hands of the council to a sum of money decided by somebody in an office in Dublin will not develop to such a degree that members of local authorities would come to the conclusion that they have no further power. I hope also that we will be inevitably heading for the day of greater decentralisation.

Mícheál Cranitch

Cuirim céad míle fáilte roimh an mBille seo. Bhímid ag feitheamh lena leithéid de Bhille le fada an lá. It is with great pleasure I express my deep satisfaction at the presentation of this Bill. Its purposes are clearly stated in the Minister's speech. He said the Bill was designed to give statutory effect to the undertaking given in the Government's pre-election manifesto, that as from 1 January 1978, if and when the Government were returned to office, rates would be abolished on domestic property, the domestic part of mixed property, secondary schools, bona fide community halls and farm buildings which were not previously exempted from rates. That gave me very great satisfaction because for many years I have been pointing out that a basic human right is the right to have shelter over one's head and over the heads of one's family. Even the animals and birds can make provision for shelter such as they need. In the early days of mankind people were able to get satisfactory shelter in caves and elsewhere, but as civilisation advanced it became more difficult and more costly to provide shelter for oneself and one's family. I always believed it is a basic human right to have such shelter without having to pay rates for that right and at last this has come about.

I wish to make one or two more points. Rates relief is a great relief to secondary schools as many of them have had very difficult times trying to make ends meet. This relief has been a God-send to them. There was a wave of emotion throughout the country when community halls were included because no one knows exactly how much voluntary labour went into the building of these halls which are used mostly for the education, development, leisure and entertainment of our young people. Throughout the length and breadth of the State kind people gave their time, money and material to the building of these halls and have done an amount of good for our young people growing up. I know of many instances where local people were at their wits end trying to make ends meet to keep the hall in good repair, and on top of that they were faced with enormous bills for rates. Some of them were almost driven to distraction by anxiety. Never was a measure more welcome than this one for community halls.

In conclusion I should like to ask the Minister when he is replying to state what is the thinking as regards a domestic dwelling where one of the family practises in a small way such things as crafts, such as knitting or crochet work in a part of the dwelling with the object of selling it to supplement the family income or where a member of the family, possibly the father who may be unemployed but has skills such as haircutting gets customers to supplement the family income. What is the thinking as regards the assessment for rates on such a dwelling? I welcome the Bill, and the Government deserve the highest commendation for arranging the abolition of rates under the various headings.

Mr. Connaughton

I welcome the Bill. There is no doubt that with so many thousands of people involved in the abolition of rates it would only be reasonable to assume that a lot of people are delighted that they do not have to pay rates. However, that is not the whole story, and it is only reasonable to ask—never was it so urgent to ask this question—where will the money come from that was paid by ratepayers formerly. We are witnessing a revolution here as far as local authorities are concerned. I have reason to believe, from the announcement of the 10 per cent increase in expenditure by the Minister in the last seven days that county councils and, indeed all local authorities, will have as much power over the spending of money as our local ICA branch in Mountbellew have.

I have come to the conclusion that there is a good reason why the Minister would want to have the final say as far as expenditure by local authorities is concerned. Rates from private housing is gone and there is a big loss of revenue. Car tax has gone with a big loss of revenue and a host of other things. It is well known that in County Galway in order to maintain services at last year's level we should be getting 17.9 per cent additional income but now we have to do with 10 per cent. Not alone can we not maintain our services to a reasonable standard—not very reasonable in some cases—but, in fact, they will be less than reasonable. I put the blame fairly and squarely on the Government and, particularly, on the manifesto that bought votes at the last general election.

I have no doubt that the contribution local authorities have made to the progress of the nation over the years has been significant. The only way they can have any real planning in any area of development is when they have money to spend. The simple fact is that they will not have that money to spend this year because the Government have not got it. What is thought about us on international money markets was well spelled out for us at the EMS negotiations last week.

We have been told that 850,000 houseowners have been de-rated, but what about the thousands of flatdwellers in cities who are likely to be flatdwellers for a long time? What does this particular Bill do for them? Where we have a wealthy family, as opposed to those living in a two or three-roomed house both have rates abolished, but is that a fair and equitable law? I had to smile when I hear Senator Cranitch talk about the necessity to have shelter over the heads of our people as a basic human right. We have now arrived at the situation where because of the price of houses it will soon be a human right to get halfway near a new house. A lot of the problems relating to this are caused by the monetary code of discipline presently being carried out by the Government. If we decide to cut off from the Exchequer the type of money we are talking about, it has to be found somewhere else. Great play was made of the derating of farm buildings. There is a rumour currently circulating in this House, and in all other areas of agricultural activity, that would suggest that as this derating has happened we are about to see a new rating exercise as far as the valuation of farms is concerned in the next budget. If we were debating this matter in 12 months time there would be another colour on it. No matter how one juggles the figures around, if it is decided with one stroke of the pen to do away with a certain amount of expenditure in order to keep the servicing of the nation going, it has to be got somewhere else.

There are only approximately 3 million people here and this has to be divided between them somehow. Basically, the scheme is a good one but it is not accompanied by a document that will outline to us where the money is likely to be found. There are a lot of small businessmen here who cannot be too happy about the derating arrangement as it applies to them. There is no doubt that down the years people with small businesses in provincial and rural towns always had a grouse about rates. It did not matter what particular Government was in power, but the Government with all the answers have decided to ignore them also. They are no better off. It is very important that persons who are trying to supplement their income by means of another type of house-based job such as crafts, as Senator Cranitch mentioned, or indeed a hairdressing outfit are considered. In small rural towns there are a number of them. I have had occasion during constituency work to come across a number of them who were turned down as far as rating is concerned and had to pay the full rates on their new dwellings.

It is also significant to note that because there is such an immense amount of money missing from the Exchequer because of derating, local authorities will have a tremendous task in the next 12 months to try to maintain the necessary services. Nobody will deny that the condition of our roads has not improved in the last few years. There is a huge job to be done. As Senator O'Brien mentioned, a lot of side roads and bad bends need to be improved. Those rural towns without sewerage schemes can forget about them because the money is not there. The 10 per cent additional funds to be granted by the Minister for the next financial year will certainly mean for all those community-minded people the end of the story for this year. A great number of people are happy with this scheme but whether they remain happy or not is another matter. We have two short months to wait until the crocodile tears start flowing again.

Professor Conroy

I should like to welcome the Bill as a great step forward as regards groups of people such as newly married people starting to bring up a family and with a house on a mortgage. It has been an enormous benefit to such people and this is widely recognised. It will benefit another group of people that we do not hear so much about, older people, particularly widows, who find themselves in a situation in which the mortgage on their house was paid but found themselves in very reduced circumstances. Such people found themselves having to cut down on expenditure of virtually every type, even on basic necessities such as food. There was one thing on which they could not effectively cut down unless they were to sell or leave the family home in which they had lived all their lives, the rates. This was a very severe burden to these people. It was an enormous financial demand which they had to meet and which very often took a very high percentage of their income. There was no way they could effect any reduction. If for no other reason the Bill was well worth while for this humanitarian point of view. On those and many other grounds I would like to welcome the Bill wholeheartedly.

Mrs. Robinson

Undoubtedly, this is a very important and significant Bill. It has been interesting, listening to the debate, to hear the number of Senators not just on this side of the House, who are beginning to realise the deeper implications of what appears to be a very popular move, promised by Fianna Fáil when fighting the last general election and seeking the support of the electorate. It is the kind of thing that in a sense nobody can be against. It is hard to be against the abolition of rates and, certainly, the Labour Party are deeply aware of the hardship and unfairness of the burden of rates down the years. Senator Conroy has referred to the problems of young couples with a mortgage trying to discharge the severe financial burdens and they find themselves in being further crippled by a rates burden. He has referred to old people who had the burden of rates. This cannot be disputed and, indeed, the Coalition Government were in the process of removing stage by stage the rates' burden on citizens but Fianna Fáil decided to do it globally and overnight. They decided that it would be part of their manifesto, part of their overall promise to the electorate that rates would be removed in that way. We need to think very seriously about the implications of that promise which is being fulfilled in the measure before us to day. There are several different kinds of implications we have to look at.

We have to look at this as an overall taxation measure because rates are a form of local taxation and what Fianna Fáil promised to do, and what they are doing in this measure, was to remove that kind of local taxation from private dwellings and from other related buildings such as secondary schools and community halls. There is no dispute at all about that. It is, obviously, a measure that must be welcomed wholeheartedly but let us look at the position of removing local tax from private dwellings across the board. To begin with it is the kind of promise the people can calculate. The better off they are the more they have to calculate. For those living in Ailesbury Road or Orwell Road, or the better-off suburban areas, the calculation is one that has to bring immediate concrete pleasure to the electorate. They can actually work out how much better off they will be. I believe that that was the intention, the motivation behind making this a platform for Fianna Fáil in fighting the election and it was very hard indeed to resist. It was a measure that was obviously welcome to anybody suffering a burden of taxation.

We must also think about the other kinds of implications because we cannot look at this measure alone. We have to set it side by side with the other promises and other measures. Not only did this promise more to the better off, it is part of a package of promises which promised more to the better off. It is part of a package of promises which lifted the burden on those in our community who are best able to pay, best able to afford to contribute to the common fund which is the source from which we draw to provide essential services, essential infrastructure, essential relief to the less well off. It is essential to provide the kind of quality of life, to use that term, which, as a community, we want to see for all our citizens.

The better off got the best advantage from this global and immediate removal of rates. There was no attempt to structure it in such a way as to ensure the kinds of values that Senator Conroy mentioned. There was no attempt to ensure that it would be those least able to bear the burden who would achieve the relief. If it were an isolated measure I do not think it could be viewed in the same critical way which the Labour Party view it. As Senator Moynihan, my colleague in the Labour group said, we are not in any way against the removal of the hardship of the burden of rates particularly of those on whom it oppressed most severely. However, we believe that this measure must be seen in the context of the overall steps and promises made by Fianna Fáil when buying office. Another measure which is totally in tune with the removal of rates across the board favouring those who are paying the most rates for their large houses and private dwellings is the removal of the wealth tax. It is also in tune with another measure that we will be considering tomorrow in relation to the capital gains tax. We will be indexing the effect of capital gains tax although nobody is saying we should index social welfare benefits or the benefits at the lower end of the scale. We will be considering the proposal of the Government to index at the level of the higher incomes and those who are liable for capital gains tax. It is in tune with the removal of car tax and with the whole approach to taxation policy which does not spread the burden of taxation fairly, does not tax the self-employed in the same way as the burden is oppressing on those under the PAYE system. It does not tax the larger farmers who are now benefiting most from the common agricultural policy and from the spin-off of the better prices for their agricultural produce.

We are not talking about a measure in isolation; we are talking about an orchestrated Tory approach to the taxation system. It is worth looking at what Fianna Fáil have done since they came into office, and it is classic Tory Conservative Party policy——

Professor Conroy

It was the Senator's party who joined in the Coalition with the Conservative Party here.

Mrs. Robinson

The policy of Fianna Fáil since they came into office is classic Tory policy. It would give great joy to the classic Tory economists in Britain. I have mentioned the specific measures I am referring to.

Mícheál Cranitch

Surely, the Senator is not serious.

Mrs. Robinson

I am very serious and I have given examples of it. Who is better off by the removal of rates on private dwellings?

An Cathaoirleach

We cannot carry on business by way of a conversation across the House. Senator Robinson without interruption, please.

Mrs. Robinson

I am very grateful to the Cathaoirleach for his protection in the matter. My first serious query about this approach to the question of rates, who will bear the burden, and how it will be distributed, is that this measure which favours the better off is not progressive in its approach. It is not trying in a country with limited resources to ensure that the burden is borne or removed on equitable grounds. It is an immediate offer of a global relief to all private owners of dwellings so that the calculation could be made, and that the electorate would respond by voting for a Government which offered it that. A number of Senators, and I join with them, have raised the question: how is the shortfall to be met? How is the gap to be bridged? Where is the money that used come in differing degrees from the rates on private dwellings to come from? That is where we come to the second serious underlying problem in this legislation and the approach of the Government to this matter.

The Bill is a serious one. It signifies the death knell of local government autonomy in a real sense. We saw this recently in the directive from the Minister for the Environment last week that the estimates for 1979 would remain within 10 per cent, would not increase by more than 10 per cent. This immediately upset the draft estimates that the city manager in Dublin had prepared based on the kind of increase that featured the year before, namely an 11 per cent increase. The city manager, as a very experienced local government official, looked into his heart and decided that this was the very minimum that should be tolerated in order to maintain the level of services to the citizens of Dublin. It is not his function to be expansionist; it is not his function to propose a draft of the estimates which would set new targets for expenditure. It is rather his function to calculate on the basis of experience what the acceptable minimum level of increase in expenditure should be. On that basis he was calculating that an 11 per cent increase was the minimum to maintain the level of services of Dublin Corporation.

That manager got this abrupt and brutal directive from the Minister, as did every local authority, to keep within a 10 per cent increase. This Bill will give the Minister full legislative authority, under section 10, to carry out this kind of directive year by year. In the case of Dublin this means that £400,000 has to be stripped off the draft estimate. Where is it going to be pared off? What services will not be maintained? What will deteriorate? What will fall out of the priorities at local authority level? That is what we mean when we talk about local government autonomy. I have not had the experience of working on a local authority, but looking at the implications of the Bill as a lawyer, as somebody concerned about local government democracy, I believe that the underlying implications of this measure are very far reaching.

It is interesting that there has been a serious rethink which has been expressed by representatives of local authorities from the Labour and Fine Gael Parties. It is widely shared by members of local authorities of Fianna Fáil who now see the implication of what is being proposed in this measure. They see the reality of the fact that the most important reserved function of a member of a local authority has now been rendered very much more a rubber stamp duty than the possibility of establishing local priorities, local initiatives, the capacity of local representatives to know and highlight the real needs of that community.

We are about to confer, through the Bill, a very significant power not to the Minister for the Environment—that is clear from the structure of the Bill—but to the Department of Finance. This is a very centralising measure under which immense power will be wielded anonymously within the Department of Finance. That Department will have immense power to decide on the ultimate level and standard of services at local level. Representatives on local authorities can talk forever and with eloquence about local needs but they will not have the capacity to change the directive within which they must operate. They will only be able to decide within the overall terms of that directive how they will slice the smaller cake the Minister has imposed upon them. The Minister will decide the size of the cake. The representatives of local authorities will have some say on how to divide up that smaller cake. That may be a very difficult and harrowing decision for them to make in particular circumstances.

It would be a mistake to talk about this change in the overall power structure, this stripping of local authorities of a very real power in their reserved function in striking the rate and determining the level of increase needed to maintain or improve local services purely from an institutional or legal perspective. Let us talk about the reality on the ground. We have heard about the predicted minimum increase for Galway of over 17 per cent but they are bound by the Minister's directive of a global 10 per cent maximum increase in the estimates. What does this mean? It is extremely serious, because every local authority is faced with pressing human needs. A number of them have a sharply increasing population in their area. They have a need for services which are not just a question of maintaining the level of the year before but require the possibility of improving substantially the range of services within their jurisdiction.

We have the problem of the larger urban areas. The situation in Dublin has not only inner city areas but also difficult and deprived streets, or a triangle of streets in a very significant number of areas, not just in the inner city. There is a need for substantial initiative from the local authority. Initiative in the provision of youth employment, in the employment of full-time youth workers can, to some extent, be taken by the Minister at a central level.

If we are going to have the response by the community to the representatives of that community, then a substantial part is going to have to come from the overall budget of the corporation and from the collective decision of the members of the city council. The problem is of extremely serious proportions. It is illustrated by statistics that people would not believe unless they did research on them and realised that this was the situation. Statistics show, for example, that there are about one-third fewer youth workers in Dublin now than there were in 1972 to 1973. Dublin has increased in size. The proportion of young people in Dublin has increased dramatically. The problems of the north and south inner city, the problems of vandalism that we hear so much about and the problems that a cycle of deprivation and poverty have aggravated, have increased, but the response in the provision of the kind of services, commitments and full-time expertise on the ground, which should be the concern of a city council in particular, have declined very seriously in the past few years.

When we talk about local authority autonomy what we are really saying is that when important issues like this are raised or come up as part of a general discussion on a particular estimate, motion or problem at a meeting of a local authority, the representatives of the local authorities can talk until the cows come home, but they will have no degree of real discretion to decide that this is something, which for their area is a very important and critical problem, which is part of the jurisdiction of that authority in the sense that it is required—an improvement of a service, an initiative to be taken or a serious concern backed up by the expenditure of local moneys in order to redress a problem. They will see that such are the constraints of operating within the binding directive of the Minister, who himself will be under the thumb of the Minister and the Department of Finance, that they have no leeway or possibility of responding to the need which will be eloquently identified, not by representatives of any particular party or exclusively by the local community representatives, but probably right across the board by all the local representatives there. They may all agree on the degree of the local problem, on the need and on what should be done, but this measure effectively will deprive them of autonomy.

The implications of this measure, therefore, must be seen as part of an approach to Government administration and as deeply relevant to the kind of society and power structure that we want. At a time when democracy is very much an instinctive reaction by us as a people and when there is at least lip service to greater participation in decision-making, it seems to me interesting, not to say alarming, that we would allow a degree of centralisation of immense power over the amount that can be spent and effectively, therefore, over the manner of its expenditure on essential services for many of our citizens. That is why there has been a substantial rethink on the deeper implications of this Bill since it was tabled and it got its First Reading in the Dáil on 14 December 1977. Indeed, for a Government who made promises with such enthusiasm and who have a 20-seat majority in the other House, one can only remark that this Bill has not made what might be called swift progress through the Houses of the Oireachtas. I welcome that for the reasons which I have given. The fact that it has not made swift progress has meant that Deputies and Senators have had more time to reflect on its implications and what better time to reflect on the implications of denuding local authorities of their autonomy in their most important reserve functions than in the run up to local elections. Elections concentrate the minds of politicians. A number of those seeking nomination and seeking to stand again for the local elections must be crucially aware that, as they go out and sell themselves, promote their party and identify and speak out on the problems of their constituents, their capacity to act upon and redress those problems are being substantially diminished in this Bill.

This comes back to the unanswered question of where the money will come from and how to ensure that we do not have the kind of cramping directive which confines local authorities within a much narrower rate of increase in their overall expenditure than would be the case under the old system. I do not believe, if we had the old system where the local authorities exercised their reserve function in the traditional way, we would have a global restriction to 10 per cent on the increase in the estimates of local authorities. First of all, I do not believe that we would have a global, single restriction across the board. Secondly, I am convinced that it would not be as restrictive or as rigid and significant a cutback in real terms as the confining to a 10 per cent increase on the estimate for 1979 would be. There are very significant implications there.

Another important and worrying aspect of this measure is the failure by the Government to take the appropriate initiative to ensure that the benefit of removing rates on private dwellings was guaranteed to transfer to those who should be benefiting from it. I am specifically talking about flatdwellers and those in rented accommodations who are not getting the benefit of the relief on rates. I have tried very hard—with the advantage of legal training—to follow one of the most complex and unwieldy sections of a Bill that it has ever been my dubious pleasure to examine and analyse, that is, section 5 of this Bill. Section 5 deals with allowances by certain landlords to certain tenants. I hope the Minister, in his reply, will furnish me with some kind of guidance into the intricacies of this section. What it clearly does not do, and this is important, is in any way guarantee or ensure that tenants get the benefit of the removal of the rates from their tenancy. It places a burden of initiative, a burden of making inquiry and a burden of ensuring that the benefit does transfer to people who, in very many circumstances, are not equipped either to know of the benefit they are entitled to, that they are entitled to relief on their weekly rent to the proportion that the rates have been built into that weekly rent. They do not know who their landlords are in the first place. Their landlords are not registered in many instances in Dublin. If the Minister spoke to those living in rented accommodation in Rathmines he would find that in many cases there is a very one-sided situation. On one side there is the kind of landlord who owns a substantial amount of property in the city of Dublin or elsewhere who acts through local agents, is not registered for the purposes of the rented accommodation and who has a large number of tenants in multi-dwelling houses who pay a weekly rent. Such tenants are the kind of people who are not able to read and absorb the intricacies of section 5. They are not easily able to ascertain their rights or, if they are able to ascertain them, seek a remedy and ensure that the benefit falls where it is intended to fall.

I am indebted to a survey carried out by the National Flatdwellers Association in March 1978 for concrete evidence of what I have been saying, for the facts on the ground. This survey examined the situation of 469 tenants in 51 houses in the Rathmines area—it was carried out by the Rathmines branch of the National Flatdwellers Association—and came out with very stunning statistics. They discovered that a significant number of the tenants concerned did not know who their landlords were. They discovered that the vast majority of landlords were not registered and they could not ascertain any prosecution of landlords for failure to register where this was required. If I may give some statistics. On the question of tenants' knowledge of their landlords, 70 per cent knew the landlord's name only; 20 per cent knew the landlord's name and address and in only 4 per cent of the cases was the landlord resident.

The situation with regard to the passing on of rates relief was that, in the vast majority of cases, this did not occur. On the question of the landlords and the law, the survey states that only 46 houses were rated correctly as being entirely let in flats. Fourteen houses in Grove Park, which were entirely let in flats, were registered as private houses with the Rates Department. It describes some of these. The survey goes on to ascertain the question of the legality of conversion to flats and the kind of fire and other safety measures which had been taken.

This and other surveys that have been carried out reveal that in very many cases where there is not a separate designation of the proportion of the rates which the tenant is bearing and where it is built into the rent—that is the situation I am talking about, where the tenant pays, particularly in the case of a weekly rent, a certain amount—all too often, the tenant has not got the benefit of any rates relief. In some instances that I know about from doing advice work in Rathmines, where the tenants sought to avail of the rates relief and, because the landlord is an unknown entity and not someone to whom they have any direct access, or can check by looking at a register, they made representations to the agent collecting rent and were fobbed off by the kind of version that the relief on the rates would have been set off against a rent increase. So the figures they are paying either remained the same or potentially they even had an increase in the rent. Due to the scarcity of accommodation in the area and to the lack of protection of tenants, this is a situation which happened over and over again and for which the tenants all too often had no real redress.

The tenants in private rented accommodation—I am not talking about local authority accommodation but private rented accommodation—are particularly vulnerable because of lack of legal protection. They are particularly vulnerable in relation to this measure because the Minister, in the structure of the Bill, has not ensured that the intended beneficiary, the tenant of the dwelling, would necessarily receive the benefit of the relief from rates which the landlord primarily would receive as the owner of the multi-dwelling building.

There are many ways that the Minister could approach a problem like this. For example, the Minister had an opportunity he might well have seized of using the benefit to the landlord of the relief of rates to require and enforce registration by landlords if they wished to receive the benefit of reliefs as far as they were conceded. They would only receive that benefit if they could show that the benefit to any rented accommodation within the building had been passed on to the particular tenant. In that way the onus would have been on the stronger party in the circumstances. The onus would have been on the landlord who by the nature of things has more access to legal expertise and to the terms and conditions of the tenancy. It is a very striking feature of a great deal of rented accommodation in Dublin, particularly in congested areas like Rathmines where private rented accommodation is scarce, expensive and exploited, that tenants do not have any knowledge of an agreement or have a dim memory of having signed something when they moved in several years before. They have been paying rent and it has been going up. They are still paying a figure which does not reflect at all the removal of the rates in the past year and the advantage which the landlord enjoyed and benefited from.

This would appear to be a deficiency in the measure which is not, in any case, attempting to be an equitable measure in seeking out those who are most affected by the burden of rates and trying to ease their burden as part of an overall approach to a fair taxation system. Not only is it not equitable or progressive in that sense but it has positive defects in that it does not ensure, in the terms of the Bill, that the benefit penetrates and is passed on to the tenant of the dwelling, that he or she gets the immediate benefit of the rates relief.

The Minister, in his speech introducing the Bill, referred to the fact that the Exchequer would provide the amount which would have been available otherwise from rates on private dwellings and other properties such as secondary schools and community halls. He said:

The Exchequer, in other words, is stepping straight into the shoes of former domestic and other relieved ratepayers. The full cost of domestic derating is being met fairly and squarely by the State and no part of the burden is being allowed to fall directly or indirectly on local authorities or other ratepayers.

What is basically deceptive about that is, first of all, that the Exchequer is not stepping straight into the shoes. It is stepping into the shoes all right, but at a lower level. It is imposing a more rigid overall permitted percentage increase. This Bill gives the Minister the legal authority to issue these directives and obliges local authorities to obey them. The Exchequer is not assuming the full burden in the sense of a realistic assumption of it, that the burden would increase with the increase in the cost of living and the increase in the cost of the provision of services for the expanding population that a local autority may be responsible for. It is not doing that. The Minister is being disingenuous, to say the least, in saying that no part of the burden is being allowed to fall directly or indirectly on local authorities or other ratepayers. There is almost an assumption that the Exchequer is some sugar daddy or Santa Claus out there who is stepping in in this benevolent way to fill the gap.

What is the Exchequer? The Exchequer is the financing which the Government receives and, because of this measure and the range of other measures that I referred to, the removal of wealth tax, the tinkering with the capital gains tax, the removal of rates from cars, a very substantial proportion of that burden is now being borne in an oppressive way by the PAYE employees. This is something that needs to be said fairly and squarely. The Minister is not getting rid of a burden; he is just redistributing that burden. He is making the better off in our society, who used to pay high rates on their large private dwellings, very substantially better off. The money has to come from somewhere so it is coming from the taxpayer.

This brings us to the kind of tax system we have and the type of inequities which have worsened since Fianna Fáil took office. I say that as an empirical fact, the tax system is much less fair, much less evenly distributed, much more burdensome on those who are unable to engage in sophisticated tax avoidance as are other groups in society and therefore bear an unfair share or have to bear a share that should be distributed more widely and fairly in our society. That is one way the Exchequer is going to make up the gap and the shortfalls: by the global across-the-board removal of rates on private dwellings. The other one, of course, is by borrowing. We can borrow and borrow, extend our vulnerability as a nation and extend the level of our external borrowing. I understand the current assessment of our overall external borrowing is that it is 13 per cent of GNP. I think the real assessment is 14 per cent of GNP, not 13 per cent. It is a very high level of external borrowing. It seems to the Labour Party that the Government are seeking a desperate last minute attempt to join the European Monetary System so that they may have further facilities to borrow, preferably with a delay on repayments to carry them through the European and local elections.

This Bill merits very serious consideration. I hope that we will be facilitated by an opportunity to put down amendments and have a substantial Committee State during which these kinds of points can be discussed at length. I would finish by referring to a particular irony of the two elections that are arranged for June 1979.

At the level of the European elections there has been, and I am sure will continue to be, criticisms of the lack of real power of the European Parliament and, with certain differences of degree and emphasis and certain embarrassment in some instances of the European partners, there would be a general overall consensus that the powers of the European Parliament should be strengthened and increased. That is part of what we mean by democracy and what we mean by electing people to a democratic forum. In contrast, we have the prospect of local elections to local authorities from whom we are denuding a local autonomy and a local power of real significance. We are putting under a very strict financial "corset"—that, I think, is probably the word—a very tight and rigid control the estimates of local authorities and the striking of a rate by a local authority from which they will then determine local priorities and provide a level and standard of service to the local community. So let us, in considering this Bill at Committee Stage, be aware of all the ironies and circumstances and be aware that this is not just a popular measure to remove rates. It has very serious implications for the structure of our society and for our approach to how the burden of financing the kind of services we want to see is borne. There is a great deal about it which is more the approach of a party which seeks to buy votes than the approach of a responsible assessment of how best to provide the sources of funds for their taxing at a local or general level. As regards the way in which the decisions will be taken to disperse these funds, we are deciding that decisions will be taken by the Department of Finance, which will be consulted in the matter by the Department of the Environment. That is a better formula than the statement that it is the Minister for the Environment who will decide, with the consent of the Minister for Finance.

One has to see the actual, realistic balance in the matter and realise that this is a very centralising and significant measure. It is very important for the kind of services, facilities and local standards for the citizens of this country. There are very many serious defects in the approach and very serious questions about what might otherwise appear to be the kind of popular measure which nobody could really oppose. Nobody could really be against the removal of rates. I would submit that the manner of achieving that result, the approach, the timing and the relationship with the other measures of the Government make it a very undesirable and very worrying way of achieving that objective.

Mr. O'Toole

I welcome this Bill and the Minister. It is very appropriate that John O'Leary, a man who has such local government background, should be with us this evening. I am sure that the formation of the relief in this Bill was under his scrutiny with the Minister for the Environment.

I welcome specifically the relief provided for secondary schools. As Senators are aware, most of these buildings are enormous and carry large valuations. The fact that they pay rates to local authorities is reflected in student fees. I am pleased with the relief afforded to community halls. Generally they are run by associations with little finance available to them. They are unable to pay the high rates demanded for these halls which provide facilities for meetings and various other functions.

My assessment of the value of this Bill to the nation is that it has attracted criticism from the Labour and Fine Gael Parties. A sign that a Bill is working is that it hurts the Opposition. It appears that this Bill is doing so. We are fulfilling the promises made to the people in our manifesto. In my county where we have a rate of £14 in the £ this Bill will be very welcome. We felt there should be rates equalisation in this nation. With the Mayo rate being the highest and the Meath rate one of the lowest we would expect opposition from the richer counties because their recoupment values were much greater than ours in the west. We have a big geographical area to cover as regards the provision of services, infrastructure, roads and so on. Our recoupment rate was very low and did not bring in the amount of money required to run our county. For that reason I welcome this Bill on behalf of the people from my area and most of the western counties where the rates were very high indeed.

There is some worry also about how this will be financed. I have no doubt that people on the other side of the House are very worried in this connection because they suffered a political financial-coalition collapse on two occasions. If there is a 10 per cent restriction on expenditure by local authorities that is a good thing. When a company are expending money there must be control from the top. When the Department of the Environment are spending £2 out of every £3 surely they must have some right of control over expenditure in each county. Notwithstanding that control, our whole road programme last year, our capital input into roads, drainage, sewerage, water and housing schemes was carried out.

I doubt the authenticity of Senator Robinson's submission about Dublin Corporation. I am chairman of Mayo County Council. I have been a member of a local authority for 23 years. I want to say to Senator Robinson that I have never yet heard of a draft estimate in any county or corporation. I wonder where is she getting her information? If she has access to draft programming in Dublin Corporation suggesting that the introduction of this 10 per cent will reduce the expenditure of that corporation by something like £800,000——

Mrs. Robinson

£400,000. It was in the newspapers yesterday.

Mr. O'Toole

I do not believe there is a draft programme. If there is, there should not be one. Last year we had a figure of 11 per cent. Any manager will gear his estimate towards the regulations he has to adhere to under local government Acts. The manager in my county refrained from providing any draft estimate until he knew we would have a 10 per cent ceiling. The estimate is prepared on the strength of information from the Department. No draft estimate was made and I doubt very much that one was made by Dublin Corporation.

In most counties the services were unaltered. If anything, we provided more services last year than we did on previous occasions. There must be protection for the people who are not derated under the Bill. That is very important. The protection provided by the ceiling of 10 per cent will be welcomed by people in the counties that will not enjoy the benefit of this Bill. It is necessary to have this protection enshrined in the Bill to protect such people. I welcome the fact that farm guesthouses are also included and guesthouses not registered with Bord Fáilte. Because of high rates and the revenue demanded from them by the Revenue Commissioners many farm guesthouses were put out of commission. They provide a worth-while tourist service at very short notice. They provide all the facilities of modern equipment. They must be protected to enable them to give a service to tourists.

Senator Robinson will have an opportunity in June, as we all will, to make herself available at the local elections. If she gets a mandate she will be in a position to have a say in the administration of the corporation or the local authority. The only way to learn something about local government is to be in there at the hub of the administration. If the Senator is not certain of her ground, she might do better to speak on the Pill Bill or some other Bill with which she is more acquainted.

Mrs. Robinson

I must have hurt the Senator since he is so personal in his remarks.

Mr. McGowan

I welcome the Bill. Coming from the county with the second highest rate I can say it is popular and very much accepted. I am sorry Senator Robinson is leaving the House because I should like to comment on some of the——

An Leas-Chathaoirleach

The presence or absence of Senators should not be referred to.

Mr. McGowan

I appreciate that but I would hope I could comment on the statement made which is certainly not in accordance with what I read in the Bill. I find it very difficult to understand how this Bill causes so much fear and alarm to those on the other side of the House and at the same time they classify it as a very vote-catching Bill introduced by Fianna Fáil. It is inconsistent to make both charges. This is one of the best Bills ever introduced, one of the most popular, and one of the least palatable to the Opposition. It did a tremendous amount of good at the last election for the Fianna Fáil Party and it is the type of Bill people expected from Fianna Fáil. It is not a gimmick. It is a proper Bill and it gives legal standing to the promise made. I join with other Senators in welcoming it.

The reliefs in the Bill for domestic dwellings, farm buildings, schools, community halls, and so on, are of tremendous help. People who were burdened with rates recognise it as a genuine attempt to tackle a very difficult problem. I see a need for the problem to be tackled further. I see a need for rates to be wiped out altogether because the system of imposing rates is not a fair one. The Minister said there is a need also to take reasonable measures to protect the interests of non-domestic ratepayers. That recognises that there is a further need. I welcome that recognition because it is very, very hard to gear your business to pay rates on top of ordinary taxation.

I appreciate that there is provision for an exemption from rates for ten years for those who are setting up an industry. That is welcome and very helpful. I hope the Minister will further examine the remaining system. That will not be too difficult in view of the fact that £2 out of every £3 is going directly from the central Exchequer towards paying local authority expenses. In the light of the present achievement of having gone two-thirds of the way, and in the knowledge that hardship is being imposed on the remaining one-third, I would urge the Minister and the Government to continue the good work they have started. When the next election manifesto is being drafted, I look forward with hope to rates being removed once and for all.

I classify this Bill as being one of the most popular Bills ever introduced because it gives relief to those who need relief. It is welcomed by members of local authorities. The Minister is right to retain overall control. Not all of the local authorities are controlled by the Government party and not all of them are conscious of how necessary it is to keep to 10 per cent. I, as a Government supporter, and a member of a local authority for 18 years, realise that there are members of local authorities who would burst the Government if that were possible. Therefore, it is only good housekeeping and wise legislation for the Minister to impose a 10 per cent ceiling. It is no secret that it is necessary for the Minister to impose that 10 per cent. There are members of local authorities who would double the rates in order to embarrass the Government and would care very little about who had to pay them. The expedience of their own position and their desire to attack the Government would be of greater importance than consideration for those who have to pay rates. I urge the Minister to further reduce the 10 per cent ceiling. The increased limit should be kept in line with the national income level. That should be about 6 per cent or 7 per cent. All of us realise that there is no bonanza and nobody will provide finance out of all proportion for any local authority. The Bill is very useful, maybe too useful, and too popular. That is the only complaint I would have. The Opposition find it very difficult to make a genuine contribution opposing this Bill.

Mr. Kilbride

This Bill is very much a repeat of last year's Bill. It relates to the administration of the rating authorities, local authorities, county councils and corporations. The Minister is making provision for a 10 per cent increase. It is argued by some people that this is not enough to maintain the levels of services provided last year. In other words, what a county council set out to provide this year has been found by an impartial, judicious, fair public servant in the person of the county manager in my county, to cost 14½ per cent more this year than it cost last year. Therefore, what has been subscribed to so vociferously by Government Senators is really an attempt by the Government and by their spokesmen to put across the image that the Minister was really saving ratepayers and taxpayers from the actions of an unscrupulous set of people who might be found on this side of the House. The reality is that an officer paid by the Minister and many of the officials under him all responsible to him, set this figure——