Seanad Éireann debate -
Thursday, 5 May 1983

Vol. 100 No. 6

Local Government (Financial Provisions) Bill, 1983: Second and Subsequent Stages.

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

Minister of State at the Department of the Environment (Mr. Quinn)

The purpose of this Bill, which is of a technical nature, is to clarify the law in relation to the determination and making of rates by local authorities and to ensure the validity of rates determined or made in recent years.

The need for the Bill arises from questions raised by local authorities as to the time scale involved in the preparation of their estimates and the determination and making of their rates. It relates in the main to the provisions of section 29 of the Local Government Act, 1946. That section which refers to the timing of the making of the rate requires that a rate be made by an authority "either immediately prior to or at the beginning of each local financial year". A later enactment, the City and County Management (Amendment) Act, 1955 reinforced this timing by requiring that the local authorities' estimates — the preliminary to the making of the rates — should also be prepared prior to the beginning of the year to which they relate.

A need for change in this time scale arose however, with the introduction of the Local Government (Financial Provisions) Act, 1978. That Act, which was introduced to provide for the derating of domestic and certain other property, also gave a power of discretion to the Minister for the Environment in regard to the level of rate poundage increases.

The local authority estimates cycle, therefore, had to await decisions on national budgetary measures which were generally not made until the beginning of the calendar year and in the exceptional circumstances of this year and last, until well into the year. This change in the relationship between the State and local authorities was, however, recognised in the 1978 Act and under section 14 of that Act a local authority are allowed to prepare their estimates after the start of the financial year notwithstanding the requirements in the 1955 Act stipulating the earlier preparation of the estimates.

The 1978 Act went even further and allowed local authorities to spend up to one-half of the previous year's budget pending the adoption of the estimate and rate. The 1978 Act therefore clearly envisaged the local authority budgetary cycle taking place in the year to which the estimates related. Moreover, local authorities must prepare their estimates in a period prescribed by the Minister by order and Ministerial orders in recent years have set estimates periods which have ended as late as 15 May.

However, although the preparation of estimates is, as indicated, an essential prelude to the making of a rate, local authorities, nevertheless, have asked that the law be clarified as regards consistency in the provisions relating to both these operations. Part of the urgency in relation to the Bill arises from the fact that local authorities are at present in the process of determining and making their rates for the current year and it is accordingly desirable that the law be clarified urgently.

The timing of the past two general elections has meant that the local authority estimate cycles of this year and last have been much later than one would have wished. The aim of the Bill is to deal with such situations and to remove any doubt about the validity of the rates for such years. I might say that I would prefer that local authorities should be allowed to prepare estimates and make rates much earlier than in recent years. This makes for better budgetary planning and the earlier flow of rates and other revenues. This Government have as an objective the bringing forward of the national estimates cycle and this will in time facilitate the setting of earlier estimate cycles by the authorities.

Mr. M. O'Toole

I welcome this seemingly short but very important piece of legislation. As a result of our joining the EEC the financial year was changed from 1 April to 31 March, starting in a calendar year. That has not worked satisfactorily throughout the country, and local authorities at the moment are in a budgetary situation for an eight-month or seven-month period depending on the time the Minister for the Environment gives his instructions as to how moneys should be spent and indeed on the pegging of the percentage the local authorities can spend by comparison with the previous year.

This has been a nightmare in the last two or three years for local authorities throughout the State. Even this year we were unable to estimate what the percentage increase would be. Last year we were in the same position. Three years ago at the beginning of the calendar year we got off to a very good start but through no fault of the present Minister or indeed the past Minister or either Government, the abruptness and frequency of elections at times were highly unsuitable to the programming of the Department of the Environment, with officials at a standstill awaiting decisions from the top. Work programmes could not be prepared until such time as we knew what allocations would be coming from the Department.

The only people who did not change their system from the financial year to the calender year were the Revenue Commissioners and they would want to tidy up their own Department in that respect so that we have an overall calendar year established, starting on 1 January, which would enable local authorities to prepare their estimates roughly around October, November and December and have everything ready for the beginning of January. I would like more permanency in local government or in Government so that this could be brought about. The short periods of the last number of Governments brought this type of distortion into the Department of the Environment and I welcome anything that can be done to bring about a better type of programming in local government.

There is another Bill to follow that will give powers to local authorities to increase charges for the various services provided but I will not go into this at the moment. I would urge the Minister, while he is here, to take action to ensure that the statutory obligations we have, especially in respect of the OPW and other statutory organisations and commitments that local authorities are now burdened with, having no power over the administration of their estimates, can be met. I understand that a meeting took place quite recently between the highly committed county managers throughout the country, and they are awaiting a meeting with the Minister for the Environment in a week or two. I would hope that the statutory commitments that, in the west of Ireland particularly, local authorities are burdened with, can be fulfilled.

As regards OPW commitments, in Mayo alone this year the OPW increased their estimates by one-third. This is a disgraceful increase. We have no control. We do not even know the identification of the maintenance work carried out on the rivers in our local authority areas. We have asked the OPW people to attend our meetings so that we would get some information as to where this money was spent, why it was increased by one-third this year. We have no control over it. Neither have we control in the Western Health Board or in other statutory agencies for whom we must provide money from year to year. I would ask the Minister to look into that type of statutory demand that local authorities have at the moment.

Mr. McMahon

I, too, welcome the Bill, not indeed that it changes a great deal as regards the rates or the striking of the rate, but it will certainly leave local authorities in a much more confortable position than they find themselves in at the moment. My understanding is that the need for the Bill, which the Minister has said is of a technical nature, arises because local authorities today find themselves in difficulties in collecting rates, are in a very uncertain position and they have to take the offending parties to the courts. I understand section 29 of the 1946 Act read something like this: that the rating authority, either immediately prior to or at the beginning of each local financial year, which is 1 January, shall make the rate for that year.

This Bill enables the local authorities to drag their feet. There is nothing in the Bill to fulfil the hopes the Minister has expressed, that he would prefer to see local authorities allowed to prepare estimates and make a rate much earlier. There is nothing in the Bill to encourage local authorities to do that. In fact what is in the Bill is encouraging them to delay the striking of the rate, which is not a good thing. I feel rather frustrated as a member of a local authority and as a Member of the Oireachtas to find that months after spending money we are discussing the spending of that money.

A lot has been said about reform in Dáil Éireann, but the Minister should give some attention to the reform of local authorities. I know that his hands are tied and a lot depends on the local authorities but surely the Department can do something to encourage local authorities, as Senator O'Toole has said, to prepare their estimates in October, November or December and have a look at their estimates during those periods and be ready to strike the rate at the beginning of the local financial year, which is 1 January. That was the case when I first became a member of a local authority, but in the last few years we have gone away from that and, as the Minister has said, some rates have not been struck until as late as May and well into May, the second week of May.

I do not know what the Minister can do other than what he has said. I would ask him, anyway, at least to have a look at what measures he could take to encourage local authorities to make the rate much earlier. This Bill is very necessary and it will certainly leave local authorities in a happier position with regard to the rates that are due to them should they be pressed into the unfortunate position of having to prosecute for the collection of rates.

I will not delay the passage of this measure through the House — we have much more important matters to discuss here later on — but there is just one item and I avail of this opportunity to draw the Minister's attention to it. A provision in the 1941 Act, section 57, disqualifies a member of a local authority from being a member of that local authority if he owes rates a day after the beginning of the financial year. There are other bills coming before this House and before the Dáil — in fact one was published recently, the Local Government (Financial Provisions) Bill, No. 2, 1983 — and there is nothing to deal with this matter in that. I would just ask the Minister to have a detailed look at that clause in the 1941 Act. I do not know why it was ever in the Act.

An Cathaoirleach

I cannot bear with you — this is very much out of order.

Mr. McMahon

I just ask the Minister to have a detailed look at that clause in the 1941 Act because I think it is long out of date. I do not know why it was ever in the Act.

An Cathaoirleach

It is very much out of order.

Mr. McMahon

Other than that, I welcome the Bill and the sooner it is passed and signed as an Act the better.

Mr. Killilea

I do not propose to hold up the House or to delay the passage of this Bill, because of its urgency. I welcome this piece of legislation for the same reasons as Senator O'Toole. Over the last couple of years we have had a spate of elections both for the Dáil and the Seanad so that no Government had an opportunity to act. Because of the times these elections fell, this piece of legislation was stopped. Having said that, I feel it is very important to get this measure through the Houses of the Oireachtas. The rate making cycle should come forward and the time scale is being brought forward to 1 January. It is right and proper that that should be done.

There are a few questions I would like to ask because although I am quite clear on it myself, the public at large, and particularly local councillors, may not be. Does it make any financial difference in the budget that there are only five months left in the remaining part of the year? One would assume, in reading of the allocations of moneys sent down in grant aids, particularly to County Galway of which I have knowledge, that the increase in rates this year will be something like 3.5 per cent. We all know that is a long way short of the inflation rate in the county, and for that reason we have great financial strains and burdens on us, and great difficulties rest on councillors. This is an opportunity for the Minister to clarify whether it is a seven-month financial year or not.

It should also be clarified that this Bill does not diminish the powers of local authorities in any way. The message is out now, and it is probably true, that it is a change of heart on the part of the Government, something we did not observe as legislators prior to this, that we seem to be handing over more authority to county managers rather than to county councillors. In the legislation for the striking of the rate this year the county manager if he so wishes can charge a rate of a fixed figure regardless of what the county councillors say to him or what the decision of the councillors is. This is something we should watch because over the years great credibility has been given to county councillors and their work. It is fair and proper to say that irrespective of what political party were in power, responsibility has always been given and has always been taken by county councillors in general for the good and the benefit of their counties. We would not like to see this or any other Government taking that away.

The other point comes under the part of the Bill which refers to revenue. The last paragraph in this context makes several budgetary planning provisions for the easy flow of rates and other revenue. For that purpose I feel the point made by Senator O'Toole is most relevant. Something now must be done because no matter how responsible county councils are —I am speaking in the knowledge that Galway County Council always have been a responsible county council — there is a demand by the Office of Public Works this year which did not take into account our financial strains or our financial allocation from the State. The demand is made, as Senator O'Toole said, on the basis that the Office of Public Works want it, for whatever purposes they deem necessary. For that reason, no account is taken of the ability of the council to pay. This revenue is being extracted and taken from councils. It is of major importance at this minute that the Minister should take this into his hands and do something about it.

The position concerning the social welfare payments is out of the control of councillors, but the statutory demand is met. We in Galway find ourselves in debt to the tune of almost £2 million to the Western Health Board. It is a simple fact that we do not have the money. When we talk about other revenues in this Bill, let us talk about the realities of it also. Other revenues could accrue. I feel that county councils and the administrative costs they are carrying at the moment in holding on to staff are not being appreciated completely by the Department of the Environment. I want to say clearly to the Minister, Deputy Quinn, that I believe we have a ridiculous situation in which we have officials from the Department employed processing house grants around the county when the county council could easily do it. We have a situation in Galway where the official who deals with new house grants is actually from County Cork and has to travel from Cork to Galway to process the scheme. It is the most ludicrous thing I have ever heard or seen.

An Cathaoirleach

You are very much outside the scope of the Bill, and you know it.

Mr. Killilea

I know I am and I will not argue, but these matters are most relevant at this time. County councils are starving for finance to keep them viable. This is an opportunity this morning ——

An Cathaoirleach

There is another Bill to come.

Mr. Killilea

I feel the survival of those who are out and about in the streets of this country today is much more important. As far as Galway County Council are concerned we are in a most precarious position. I beseech the Minister on this occasion, rather than to have bankrupt councils to do something urgently about it. I make that plea on this Bill. I thank the Cathaoirleach for allowing me the latitude extended to me.

Mr. A. O'Brien

I welcome the Bill and I would urge the Minister to do everything possible to ensure that it is the practice for local authorities to meet early in the year previous to the year for which their budgets are being set up so that they can strike their rates and make budgetary provisions for the whole year. It is a ridiculous state of affairs that a council should meet at the end of April or early May when almost four months of the year that they are budgeting for have elapsed.

As the Minister pointed out in his address, the intake of money to the councils has slowed down because it does not begin until the year is well advanced. That is something that any efficient business firm would not tolerate. They certainly would not stay in business for long if they operated a financial system in that way. Two of the things that cause great hardship to local authorities are first, the delay in striking the rate and ensuring the cash flow begins, and second, the delay in the payment of Government grants which means that a great proportion of the funds of the local authorities is eaten up in paying for overdraft accommodation.

Mr. Lanigan

I will not speak at length on this but in Kilkenny we have not yet struck a rate and I am wondering what is the situation regarding counties which up to this particular date have already struck rates. Are those rates valid? Is this Bill retrospective to 1 January or what is the actual situation because the Bill does not state a date?

Mr. Quinn

It does, in section 1 (2).

Mr. Lanigan

I do not see it stated in the Bill. There is another question I would like to ask the Minister. In a circular from his Department earlier in the year it was stated that in determining measures relating to local finances for 1983 the Government were anxious that deficits and related overdrafts on current account built up by local authorities should be eliminated by the end of this year. Local authorities were asked to bear this in mind in setting expenditure and revenue targets and to draw up a programme for the elimination of these deficits and overdrafts. The circular indicates that the Tánaiste would be monitoring progress on this matter during the year.

In Kilkenny one of the major problems that we have on our overdraft situation is that we are owed approximately £850,000 because of the fact that farmers' rates were not paid in the last year. We are told that until such time as there is a determination of the rights or wrongs of this particular problem in the Supreme Court that we will have to carry the overdraft burden of this £850,000 which this year will cost Kilkenny County Council approximately £200,000 in interest. Apart from that £850,000 we are awaiting moneys which were due to us because of snow clearance in January 1982 and that is another £110,000. We have various small sub-headings which bring the actual moneys due to us either from farmers or from the Government, when the case in the Supreme Court is determined, to about £1 million. There is absolutely no way that we in the county council or in the corporation could eliminate that as is suggested in section 9 of that circular from the Department. We could not even attempt to eliminate it. I should like to ask the Minister what interim measures he is going to adopt to help out counties such as the counties in the South East, certain counties in Munster, the counties which are most affected by the fact that there is so much money owed, whether it is owed by farmers or otherwise. It will have to be paid at some stage by somebody, but interim measures will have to be taken unless, as was said by Senator Killilea, we will find ourselves in the situation when the banks will not allow us to carry this amount of overdraft on top of the normal provisions that we have to make for ongoing works within the county. I should like clarification on that point.

Minister of State at the Department of the Environment (Mr. Quinn)

First, I should like to thank the House for its co-operation in the speedy movement through Second Stage of this legislation.

Senator O'Toole raised a number of questions and I would like to deal with them as briefly as I can. The question of the statutory demands is being dealt with this afternoon in so far as the Tánaiste will be meeting in Galway with the managers to discuss the entire matter with them and to try to come to some arrangement that is to the satisfaction of all parties involved. In that context he has already been in correspondence with the Minister for Finance concerning the percentage increase this year vis-a-vis what the percentage increase was last year for statutory demands. We are aware of the problem. We have received representations from a number of local authorities and the Tánaiste is dealing with it directly himself.

On the question of asking the Revenue Commissioners to come into line vis-a-vis the financial year, that makes a lot of sense. I am not certain what kind of influence we have with them but I will convey the Senator's suggestion. It makes eminent sense to me personally that we should be in phase with all of these financial years.

Senator McMahon and Senator O'Toole also raised the question of how this Bill would help in enabling local authorities to facilitate the earlier striking of a rate and to bring forward the preparation of estimates earlier in the year so that we do not have what Senator Killilea was referring to, what appears to be a five-month financial year. As everybody knows in this House, perhaps Senators know more than Deputies, there has been a lot of electoral turmoil in the past 18 months but the House will be relieved to know that in the next four years it will be fairly placid and quiet.

Mrs. Honan

The Minister should not be to sure of that.

Mr. Smith

Who will be relieved most by it?

Mr. Quinn

Maybe all of us but certainly local authorities because it will provide for the early striking of a rate if they so choose. As Senator O'Brien said, it makes far more sense to strike the rate as early as possible in the year and to proceed then with getting the cash flow in. It is difficult quite obviously if you strike a rate at the beginning of summer, allowing for the summer months, to try to collect rate moneys in the remaining months of the calendar year. The striking of the rate earlier will be facilitated by the stability that is now present with us. The second point of this Bill is that it enables local authorities both currently and retrospectively — to answer Senator Lanigan's point — to remove any doubt about the validity of the rate bills that have been issued to all of the ratepayers. Our retrospection in relation to this is in section 1 (2) where it states that:

As well as applying to a rate, or a rate in the pound, determined and made after the passing of this Act, subsection (1) of this section also applies, and shall be deemed always to have applied, to rates determined and made before such passing and on or after the passing of the Local Government (Financial Provisions) Act, 1978.

That is quite clear. There is no ambiguity regarding any particular bill or account with any particular ratepayer in relation to it. On the point raised by Senator McMahon in relation to the disqualification of councillors, I remember rushing into the rates office in Dublin Corporation in the middle of Christmas week, having received the note that most of us received, drawing attention to the fact that if we had not got the money in by the end of the year we might not find ourselves on the City Council. I am fortunate, however, that I am not a farmer because the ambiguity arises in relation to farmers who happen to be councillors. This brings me to the point raised by Senator Lanigan regarding the PLV High Court decision and the decision of the Supreme Court. Most Members of the House who are members of local authorities recognise the enormous financial difficulties that local authorities have had in recent years. On that point, and in conclusion on Second Stage, the present administration are aware that the difficulties have accumulated over a number of years — I am not wishing in any way to score petty party political points on it — and that the future of local government is very much at stake if we do not come to terms with getting a proper, sound financial basis for its structure and for its operation. To that extent, within the Department we are looking at it in such a way that we can respond to the points that Senator Killilea made about giving a proper basis of power and autonomy to local authorities in their operation of such grants as housing grants on the one hand and the collection of moneys. The House will have occasions in the future to discuss in a fuller way the structure of local authority finances and the way in which moneys can be raised. The intention of this administration is to try to get a new deal for local authorities on the whole question of how they operate and how they are financed. Because of the doubts that have been expressed by some local authorities, it is essential that we have this Bill passed so that there is no ambiguity and no legal doubt regarding the validity of rates bills from the past and for any rate that would be struck in this current financial year.

Mr. Killilea

I do not fully comprehend what the Minister means when he says that the Government intend putting the councils on a proper financial structural basis. How can one expect them to do that when, for instance, all we get this year for our county is an increase of 3.8 per cent or 3.5 per cent? You cannot be saying that on the one hand and on the other hand giving us an amount of money that is starving us to death financially in the county.

Question put and agreed to.

Bill put through Committee, reported without amendment and received for final consideration.

Question proposed: "That the Bill do now pass."

Mr. Lanigan

Could I have a reply from the Minister specifically regarding the PLV situation and the large amounts of money that are due to councils?

Minister of State at the Department of the Environment (Mr. Quinn)

As the Senator is aware, the matter is now with the Supreme Court and it would be improper of me to try to anticipate what the judgment of the Supreme Court would be in that regard. However, it has created as a consequence a considerable difficulty for some local authorities who have a large rateable valuation of farmland. The Department and the Minister for the Environment are aware of it and we are trying to see in what way we can be of assistance to particular local authorities. But the assistance we can provide is strictly governed by the overall financial situation in which the Government find themselves and of which this House is well aware. I would suggest to the Senator that if any particular local authority have particular problems, they contact the Minister and the Department of the Environment about them.

Mr. Killilea

Balance is something that is proper to have. We talk about the PLV situation and I accept what the Minister has said. At the moment the matter is with the Supreme Court and no decision can be made as regards the back rates to the county councils. But, on the other hand, the deputy leader of the Labour Party, the Minister for Health and Minister for Social Welfare last week sent an instruction to all recipients of farmers' benefits that due to the circumstances of the High Court making a decision on the poor law valuation, the system now in operation must be changed and a new system was being introduced by way of the budget. I would like to know if one Government Minister is aware of what another Government Minister is doing? Surely the Tánaiste should know. We are speaking of the Labour Party in Government. We have one ministry which is run by the Tánaiste and the Minister of State. I am not commenting on that but they are saying one thing and the Minister for Social Welfare is using the same argument for a different purpose and using it the other way around. There should be some balance and nothing should be done by either the Minister for the Environment or the Minister for Social Welfare. Until the matter has been determined finally by the courts. One should not contradict the other.

An Cathaoirleach

I am putting the question.

Mr. Killilea

I would like a reply. There are millions of pounds due to county councils.

An Cathaoirleach

The Senator is out of order.

Mr. Quinn

I hesitate to enter into the fray with the Senator but I should like to assure him that all members of the Labour Party are in regular contact with each other, both those who are in office and those who are not. I do not accept the validity of the Senator's argument. Regrettably, many sections of the farming community in Ireland are now at risk in relation to their entitlements under the social welfare code because a small section of that community saw fit to take this legal action. We are constrained by the operations of legislation enacted by this House and by the other House. My colleague, the Minister for Social Welfare, was perfectly correct in what he did. We were aware of it when he took that action. All I can say is that as soon as the Supreme Court decision is made, the matter can then be clarified in a precise way. Until such time as that decision is made, we as a Government collectively had no option but to take the action we have taken both in relation to local authority finance on the one hand and on the other in relation to the legal entitlements to social welfare benefits of which many of the smallholders around the country have traditionally been in receipt.

Mr. Killilea

The point I wanted to make——

An Cathaoirleach

We are on the Final Stage.

Question put and agreed to.