Seanad Éireann debate -
Tuesday, 1 Apr 2003

Vol. 172 No. 6

Motor Vehicle (Duties and Licences) Bill 2003: Second Stage (Resumed).

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

Mr. Bannon

I, too, welcome the Chinese ambassador and delegation to the Distinguished Visitors Gallery and the Minister of State at the Department of the Environment and Local Government, Deputy Gallagher.

As a politician, citizen and car owner, I object in the strongest possible terms to yet another stealth tax imposed by the Government on me and the people, in particular those I represent. Once again, citizens are being asked to make up the financial shortfall, the direct result of the ineptitude of the Minister for Finance and the Fianna Fáil-Progressive Democrats Government. This new assault on our pockets follows numerous other charges imposed by the Government since the general election. For what purpose?

Is it not logical to assume that such a tax, while unwelcome, would be used for road maintenance programmes? Logically, the answer is, "Yes" but we are now faced with another Government deception. Despite indications when the increase was announced after the budget that the revenue would be used for such a purpose, we now find that it will be used to replace Exchequer funding. In other words, we are once again being asked to prop up the Government.

With the increase in hospital and local authority charges to name but two, we are yet again spending considerable time debating tax increases and broken Government promises. The tax may have been passed by the Dáil on 12 December 2002 but it was passed with the support of the Government parties, not the Opposition. It angers and galls me to see two Deputies from my constituency, one from Fianna Fáil and the other from the Progressive Democrats, claim that they had had no act or part in the increase in motor vehicle tax.

Since the general election we have suffered increases in tax, ESB charges, bus and rail fares, VHI premiums, college registration fees, hospital charges, and charges for local authority services such as water, refuse, parking and planning, while cutbacks across the board have left us with decreased services.

The health service has seen an increase of 5% in the face of a 10% inflation rate, which means even worse services. The situation is hopeless in my area of Longford-Westmeath – the Midlands Health Board area. In Longford-Westmeath Hospital patients, including those insured with the VHI, are on trolleys as we speak, waiting for beds despite the fact that fully equipped units are in place – two in Mullingar – which could accommodate 12 patients but we are waiting for €1.3 million in Government funding to staff and operate them. Even to maintain pre-budget services, hospital managers' budgets would have had to rise by €350 million. The actual increase was in the region of €26 million. Drugs refund and long-term illness schemes have been cut by 10% in real terms.

There has been a cut of 4.5% in real terms in the roads budget. Soon we will be returning to the pothole era on county roads. Rail services have seen an 8.5% cut in service development budgets. I have received numerous representations from those who use the Dublin-Sligo rail line about the conditions which they must encounter. I see no evidence of anything happening to improve rail facilities.

The Department of Rural, Community and Gaeltacht Affairs has had its development budget cut by 20%. There has been a 68% cut in the western development fund and a cut of 25% in CLÁR programmes.

Cuts and levies have come one after another in agriculture, totalling around €200 million in the last budget, something which affects farmers nationwide. There have been cuts in community employment schemes which support the community in every parish. There was a huge cut last November and we are promised a further 20% cut in the schemes this fall. Teachers and students across the country are walking out of schools today to protest at cuts in the schools building programme announced in the budget.

With those cuts came new increases. The non-indexation of tax bands in budget 2003 meant an effective increase in the tax burden of around €300 million. The average family will pay an extra €400 per annum. Hospital charges are up 26% to €40 a visit. VHI charges are up over 13% for domestic users, over 8% for small businesses and over 4% for industrial users. College registration fees have risen by 69%, from €396 to €670. Effectively, free third level education has been scrapped by the Government. Bank and card charges are up 108% while the television licence fee is up by 40% to €150.

All this flies in the face of repeated pre-election promises by Fianna Fáil and Progressive Democrats candidates that there would be no cutbacks or increases. Does the Government think it is dealing with a very gullible nation? Let me assure the Minister of State that this is not the case. The Government is dealing with a nation sick to the core of political mismanagement and carrying the can for the Minister for Finance's ineptitude. No biblical story could rival the situation in which we now find ourselves. The rewards of years of plenty have been dissipated or destroyed by the Minister for Finance, and years of famine now follow naturally, despite the Taoiseach assuring us before the general election that the public finances were in good shape.

Mr. Kitt

Is this a budget debate?

Mr. Bannon

The Senator will know if he travels the roads to Galway.

Mr. Kitt

I was only asking a question.

Ms White

Senator Bannon is a professor of economics.

Mr. Bannon

Apart from the increase in motor tax being an extension of the Government's "we screw up, and you pay" policy, where is the logic? Given environmental considerations and attempts to promote public transport, surely it would have made more sense for the increase to have been put on motor fuel. A fuel tax would ensure the more people drive, the more they would pay. Such an equitable arrangement would have had an offshoot benefit to the environment and provided a strong encouragement to leave the car at home. Why not reward those who try to minimise their annual mileage? As it stands, drivers who will be paying through the nose to tax their cars will certainly not take kindly to being asked to leave them at home and look for a bus.

I ask the Minister of State where is breaking point. Through the charges that the Government is levying, it is the largest single contributor to increased inflation. An increase of 12% at a time when inflation is running at 5% is totally unacceptable. How long can the nation's tolerance, allied to its ability to pay, or lack thereof, maintain the current deficits? Is the motorist easy prey – a pawn in the hands of a Government intent on hitting those least able to react? The 2 million licence holders carry a burden equal to 20% of entire tax income because, in most cases, they have no alternative.

Many motorists have opted for private transport because they are caught in the trap of necessity. For those outside the immediate environs of the city, cars are a necessity, not a luxury. The motorist, who is essentially making up for the lack of adequate public transport, is being penalised because of his or her need. The motorist is not only at the mercy of Government tax. Insurance companies continue to charge exorbitant premiums while petrol companies maximise profits by setting prices regionally.

Budget 2003 saw yet more increases in the tax burden on motorists, already amounting to approximately €4.4 billion. This is now being followed by a 12% increase in motor tax. How much more will motorists accept before the burden becomes a very serious political issue, which, allied with other increases and broken election promises, will soon see them call the Government to account?

Mr. Kitt

I also join in the welcome to the Minister of State at the Department of the Environment and Local Government, Deputy Gallagher. I very much welcome the opportunity to make a short contribution to the debate on this Bill. I was just looking at some of the information leaflets available in the inquiry office for those who visit the Houses of the Oireachtas. They indicate that legislation in a democratic society should be fair and make Ireland a safe place. Looking through the schedule of charges for motor tax, in particular, I notice that the rate of duty for a small car not exceeding 1000 cc is €144. It goes up to €278 for cars under 1400 cc, €298 for cars under 1500 cc and €372 for cars under 1600 cc. As the Minister of State said, these rates cover most cars in the country. However, the rate of duty on cars exceeding 3,000 cc is €1,279 or approximately £1,000. It is useful that the legislation includes this schedule, which gives us an opportunity to discuss the roads and how we conduct the business of charging motor tax and trade plate licences.

The Minister of State indicated that there are two technical amendments on motor tax law in the Bill and that there is also an enabling power for the Minister to facilitate the processing of on-line motor tax applications. This is an interesting development. People often forget that information technology is available in every town and parish. Last night I attended the opening by the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, of an information technology unit which uses an old school at Clan Doyle near Glenamaddy in County Galway. Glenamaddy is famous for the song about the four roads. I am sure there are four roads to every town, but there are four particular roads to Glenamaddy.

Mr. Bannon

They are pot-holed roads.

Mr. Kitt

The building in question is used for training, mostly for elderly people who want to learn about on-line technology. They want to learn simple applications such as how to send e-mails to members of their family who live abroad and access replies. When this course was discussed some time ago, certain people objected to it on the basis that the money might be better spent on public health nurses, carers or providing an ambulance in north Galway. However, it is useful that on-line facilities such as e-mail and computer training are available and obviously these will be useful following the inclusion in the Bill of the provision to which I refer.

I welcome the fact that the receipts for motor tax, including driver licence payments and trade plate licences, will go into the local government fund, which is ring-fenced for local authority purposes. Obviously that fund is used for discretionary grants for day-to-day expenditure and in respect of non-national roads. I could speak at length about the non-national roads. Galway is the second largest county and has many non-national roads, in respect of which we do need a great deal of funding. A considerable amount of road tax is collected in the county and this goes into the local government fund.

It is not the only fund concerned. There is Exchequer funding, funding from commercial rates and charges and fees for services. There are also specific Government grants available.

Mr. Bannon

They are robbing Peter to pay Paul under this Government.

Mr. Kitt

County Galway contributed over €5 million in 2003 and, therefore, there is a huge contribution to road tax receipts from the county.

One of the issues to which I wish to refer is the CLÁR programme. A sum of €2 million has been made available for the programme in 2003. The Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, recently announced that a number of additional areas will come under the CLÁR programme. That is good news. Sometimes we think of the programme as providing extra money for water and sewerage schemes, towards sports capital grants or through the Leader programmes. However, it is important to point out that it provides funding for roads. Specific improvement works can be included—

Mr. Bannon

There is a 30% cutback.

An Leas-Chathaoirleach

Senator Kitt, without interruption.

Mr. Kitt

A sum of €2 million is being provided this year and, as already stated, there is extra funding coming into County Galway which should give us a good non-national roads network.

I also wish to refer to the local improvement schemes because they can make a good contribution to roads. I am concerned here with roads on which there may be no houses which lead into lands or bogs. A total of €800,000 is being provided for 2003 in our area and that is certainly a scheme which should be supported. The Minister has provided funding and in recent years we have seen that increase. I am glad that with CLÁR and the local improvement scheme, we are making progress in that regard.

The other import issue I wanted to raise is the link between motor tax and the local government fund. The Minister of State made that link clear in his contribution. We have seen the improvements in roads and local government services as a result of the fund and, from 1 January, these particular increases will be coming into effect to be ring-fenced for the local government road programme.

The Minister of State said that 60% of the national private car fleet is made up of cars under 1,400 cc. The owners of such vehicles should have to pay the lowest increase and the Minister has gone about providing for that in a real way, particularly when one considers the example I gave of what one must pay for a car over 3,000 cc.

It is also clear that there is not a bottomless pit of money for the Government and that the motorist must be considered. One of the real issues for people driving cars is not so much the payment of road tax but the question of insurance. That is an issue which we could find time to debate on another occasion. It is not particularly the Minister of State's area, but it is an issue which I hope we will discuss shortly in the Seanad.

The huge insurance increases – not only in the motor insurance area, but right across the board in the area of public liability – were mentioned on the Order of Business earlier. Motor insurance is an issue about which we are all concerned. I hope that, with the advent of the penalty points system and the success of that scheme, the Tánaiste will follow-up on this matter and that there will be a reduction in motor insurance premia.

One insurance company, Hibernian, stated that joining its scheme would lead to a 20% reduction in premium. I welcome that development and I know people who have benefited from the scheme. On the other hand, I read a letter in the Irish Independent last week about a person who joined the Hibernian insurance scheme and who subsequently found that the €4,000 premium he was originally quoted remained the same. That is extremely disappointing. There are a number of questions we need to ask about the scheme if that is the case. The motorist concerned stated that he was now selling his car, which is disappointing.

A sum of €434 million has been allocated for non-national roads this year, which is much the same as the amount provided last year. I hope we will use this money efficiently. When I say efficiently, I mean, for example, that over the years small, patchy repairs have been made to roads. Such repairs do not really last more than a day or a week. When we tackle the surface dressing or resurfacing of roads, it is important that we do so properly. It is good that the local authorities have their three-year or five-year programmes, but it is also important to get around to these roads and repair them properly.

I also wish to raise the issue of road markings because they seem to differ from county to county. One need only travel from Galway, where I live, to Dublin to see major changes in road markings as one passes into different local authority areas. For example, cats' eyes are used in some counties and not in others. There are inconsistencies and we should be able to devise a plan which will ensure that these markings are better. Some markings which would be easy to provide – even the white line in the middle of the road in some cases – are not in place on some smaller non-national roads.

The Minister of State has mentioned that more than €5 million is to be provided this year for signposting. Many road signs throughout the country have been interfered with. The result of this vandalism can be very confusing for everyone, especially for tourists who are trying to find their way.

The "fingerposting" of which the Minister has spoken has been very successful. I hope the money he is now providing will be used in the provision of more of these signs, which are not usually interfered with, as the smaller signs unfortunately are. A sum of €25 million is being provided over five years, which is a very good amount to be dedicated to signposts. Let us make sure that money is used well.

I did not say much about trade licences. The increases proposed in this area are small. Our main interest in this debate, however, is the private car. Car owners have been tormented by the cost of insurance more than anything else, although this might change with the success of the penalty points system. Perhaps the Minister of State could pass this on to the Minister for Enterprise, Trade and Employment. It is to be hoped that the committee being chaired by Deputy Cassidy will be able to come up with proposals to ensure we have a reduction in these costs.

I welcome the Minister to the House. I am glad that the money to which this Bill refers is being ring-fenced for the road fund, which is very important, and I hope it will be used efficiently by local authorities.

Mr. Quinn

I welcome the Minister of State to the House.

In the 1950s, my father ran a ballroom in Skerries. This was during the time of the showbands and the big ballrooms. At the time, there was a tax on each dancer. The ballroom owners of Ireland held a big meeting to call on the Government to tax ballrooms by size instead of taxing each dancer. This would be of considerable benefit to the ballroom owners. There was a big campaign, but when they were ready to take action, my father stood up and said he did not know whether it was a good idea. He said that back in the earlier part of the twentieth century, there was a tax on cars. The case was made for taxing the petrol instead of the cars because this was a better indicator of road use. The Government of the time thought that was a great idea and put a tax on petrol as well as on cars. My father said he did not think one should ever propose a new tax to a Government because it would impose it and leave the other one there as well. The campaign fell apart.

I will make a proposal rather like this today. We have a problem with traffic in Ireland and we do not always use our laws and our taxes in the general interest. We usually use taxes just to get money. We have not thought this through. If we have a serious problem with traffic and do not use public transport enough, maybe we should consider ways of encouraging its use. I want to use this debate to highlight a basic mistake in the way we tax cars and other vehicles. Front-loading the costs gives people a vested interest in using their vehicles as much as they can. What we should do is make it more expensive to use one's vehicle. We need to move towards a system in which people pay the cost of using their vehicles as they go.

How do we tax vehicles at the moment? First, we impose a massive registration tax, which adds to the cost of buying a car in the first place. Then we tax people on a yearly basis, as set out in the Bill before us. Finally, we tax them through their use of petrol. The effect of the present balance of costs is that before a person actually drives a single mile in a vehicle, he or she has already incurred quite a significant cost. This is added to by the flat-rate charge of insuring the vehicle, which is the same irrespective of how much the vehicle is used. The upshot of this is that because of the way people pay the costs of motoring, they have a built-in incentive to use their cars as much as possible. This is because the more they drive, the cheaper it becomes on a per-mile basis.

This skewing of cost becomes more important when public transport is brought into the equation. In most cases, the choice a person makes is not between driving somewhere and staying at home, but between using private transport and using public transport. If a person has already paid a large amount for his car he will use it. The way we arrange motoring costs means that public transport never gets a look-in. This is because for any given trip, the traveller has already paid a very large part of the cost of going by car in the up-front costs of buying, registering and insuring the vehicle. If he goes by public transport, the fixed cost of his private transport stays the same – he has already paid for it, except for the petrol, which is only a small cost – but he must pay for public transport. He has an incentive to travel privately rather than by public transport. This is not in the interest of the State.

I am saying all this in the context of a declared national transport policy of encouraging people to use public transport. Making that a reality will depend on the availability of high-quality public transport, which we do not have. We will have to invest much more in public transport if we want to succeed in this aim. However, even if we provide high-quality public transport to meet people's needs, there will remain a cost question in every travel decision they make.

We have two choices: we can either make public transport cheaper by subsiding it even further, or we can rearrange the costs of private motoring so that we pay as we go rather than paying up front. As a long-term policy, we should seek to shift the costs of motoring away from fixed costs and towards individual journey costs. As I said earlier, I am always loath to propose any form of additional tax, because a Government may decide to leave the current one there and add the other, but I suggest that we lower the registration charges or do away with them altogether and lower the yearly charges, while at the same time encouraging insurance companies, however we can, to charge on the basis of how much and how often people travel. To compensate for these lower charges, we should increase the tax on petrol and consider introducing an element of road charging, as we have seen in the UK recently, to be implemented during rush hour in our busiest cities and towns.

We do not currently take the longer-term objective into account. We simply add on to the cost of buying and registering a car as well as the cost of petrol. Taking a long-term view would mean reducing the basic cost of the car and increasing the cost of running it, so that we encourage people to use it less and use public transport more. If that means introducing road charges during busy times in cities, well and good. If we reorganise the cost of motoring to reflect properly our long-term policies on national public transport, we will find it easier and faster to bring about the realisation of these policies. I recommend such an approach by the Government. While I know it will not happen in this Bill, the Minister should consider it as it takes the broad longer-term picture into account.

Senator Kitt talked about the responsibility on local government for road marking. I see around the country exactly what he described – different standards in different counties. Responsibility for the carnage on the roads is not just in the hands of the drivers alone. On occasions there is very bad signage and we can do something about that. The answer lies in the hands of local government and we should find some way of encouraging it to raise its standards in that area and thereby reduce the number of deaths on the road. I am happy to have the opportunity to speak on this Bill and give those thoughts to the Minister.

Mr. Brady

I welcome the Minister of State to the House. Nobody relishes the thought of having to pay more for what used to be a luxury but in many cases is now a necessity – a private car. However, the fact that the resources generated by these measures and the local government fund in general are ring-fenced and used specifically to improve the roads, among other things, justifies the increases to a certain extent. There are similar examples in local authority areas. The parking charges in Dublin city have been very successful and those moneys have been invested in improving facilities for motorists.

The dramatic improvements in the quality of the roads throughout the country bears testament to the commitment of the Government to the enhancement of our infrastructure. In ways we are victims of our success. The increase in employment and the standard of living in recent years have obviously led to an increase in the number of cars on the roads, a phenomenon we have all experienced. The expenditure of €1.71 billion on non-national roads between 2000 and 2002 has borne results.

Senator Kitt mentioned road markings and signage. Although there is a certain discrepancy when moving from county to county, these have dramatically improved. While this improvement has prevented a number of accidents, more needs to be done on this area.

If possible motorist education should be seriously considered, particularly in secondary schools and colleges. If some of the revenues raised were targeted at this area, it would complement the points system, which has proved particularly successful in recent times. The Traffic Education School at Clontarf has been a huge attraction for schools throughout the city. For years it has been used to educate youngsters about the rules of the road. These issues have to be tackled at a young age. People are driving at a younger age and in many cases it is impossible for them to get insurance, but that is another day's discussion. Incentives for people to improve their driving skills should also be introduced.

The footpaths in Dublin city have always been a significant issue, particularly in residential areas. In recent years there have been huge improvements. Dublin City Council has undertaken a comprehensive programme of footpath improvements, which has greatly enhanced a number of estates and streets throughout the city. This came about as a result of the local government fund. It has also reduced the opportunity for often spurious claims for damages against the council and has saved significant money over the years.

Other allocations under the fund include traffic management as well as safety improvement works. I recently visited the Dublin City Council traffic management centre, a multi-million pound state of the art facility that has improved traffic flow. Traffic problems would be ten times worse if they were not managed properly. The resources generated by the increases proposed in the Bill can be put towards specific training of staff and officials in local authorities to give them the expertise to manage the problems we are experiencing. These resources are crucial to improving safety on our roads.

People do not mind contributing if they can see improvements in the services which are used on a daily basis. A number of groups and individuals have objected to bin charges. However, my experience from visiting residential areas, particularly in the inner city areas, is that the introduction of the wheeled bins has improved the environment on housing estates and in complexes throughout the city and in the suburbs. Once people see an improvement in the service being provided, in many cases they do not object to contributing towards it. There have been examples of estate management cleansing, which has improved significantly over the years. There have also been improvements in footpaths and road surfaces.

I welcome the section in the Bill allowing for on-line processing of motor tax applications. For years people used to spend three or four hours queuing up to tax a car at the office in Chancery Street. The service has improved with increased staff levels and better use of technology. People are now guaranteed that it will take less than an hour to tax a car. This is a huge improvement considering the number of cars in Dublin. While the decentralisation of some of these services to the suburbs was costly and entailed negotiation with staff and unions, it has proved extremely successful.

Anybody driving around the country can see the physical improvements. The signs and road surfaces are better. Ten years ago the biggest joke on television related to the number and size of potholes. We do not hear that anymore.

Mr. Bannon

It is coming back. The Senator does not live in the real world.

Mr. Brady

These are some of the improvements over the years. I wish the Minister well and I welcome the publication of the Bill.

Ms O'Meara

I can assure Senator Brady that potholes are back with a vengeance, which is clearly a reflection of under investment, particularly in non-national roads. Senator Brady spoke about the supposed level of improvement in roads, but for a country as wealthy as ours – despite what we have recently been told – that should be reflected in the state of our roads. It is not. Instead billions of euro have been spent on roads which show no signs of being built. There have been massive overruns on projects, management mistakes in planning, a roads authority incapable of managing projects this size and general mayhem in delivering a national roads infrastructure.

On top of this comes a 12% increase in motor tax, suggested in such a way that we could expect a 12% increase in investment on roads or even a 12% improvement in non-national roads in particular. Of course we know the reality is very different. This is yet another attempt at a con job by the Government. When the 12% increase was announced in December one would have expected it to be matched by an increase in the local government fund or in the allocation to the local authorities for non-national roads. However, that is not the case. As members of local authorities know, the local government fund has been frozen at last year's level which, when inflation is taken into consideration, represents an actual decrease.

In January 2003, the Minister for the Environment and Local Government announced an allocation of €433.98 million to local authorities for non-national roads compared to the 2002 allocation of €438.46 million. This represents an actual decrease of almost €5 million, even before one takes account of inflation. In 2002, some €221 million was allocated for restoration grants but, in 2003, this figure declined to €216 million. This is part of the Government's trimming at the edges and constant undermining of public services in a culture of stealth taxes, which are intended to make up for the shortfall in revenue. It also underlines the Government's ideological position whereby, on one hand, it has reduced personal taxation and promoted itself as a low tax Administration, while, on the other, it increased indirect and stealth taxes at an extraordinary level, particularly since the general election.

The list of increases in taxes and charges since the election is phenomenal. In the health area, a visit to a hospital casualty department – where one may have to wait hours before being seen – now costs €40. In 2001, VHI charges were increased by 9% followed by a larger 18% increase which was announced, unsurprisingly and following the general election, in September 2002. The failure to increase the thresholds for medical cards has meant that a swathe of people, including pensioners under the age of 70 years, does not qualify for medical cards. The threshold for the drugs payment scheme has risen to €70, which means that people have to pay more for essential drugs. There has been 13% of charges on domestic ESB bills. College registration fees have increased by 69%, effectively abolishing free fees. Bin charges have also increased throughout the country at a much higher rate than inflation. The TV licence fee has risen to €150, which is a substantial increase. Bank card charges have increased by 108%, one of the most obvious stealth taxes introduced in the last budget.

It is against this backdrop that the legislation comes before the House, masked by some technical changes such as putting water taxation on-line. This is yet another stealth tax and it is a burden on an already oppressed section of the population, namely, drivers and car owners who rely on their vehicles to travel to work, school or their place of business.

Senator Quinn's comments on public transport were interesting. The level of investment by the Government in national motorway projects is extraordinary, particularly in light of the under-investment in public transport. The strategic rail review has still not been published and I am beginning to understand why, particularly when one considers the recently published correspondence between the Ministers for Transport and Finance. It is clear that a major tussle is going on at Cabinet regarding the cost of investment in rail infrastructure and the commitments made to it and already made public by the Minister for Transport. With every week that passes and the failure to publish the strategic rail review, it becomes clearer that a battle is being lost by the Department of Transport. I will be curious to see the final publication of that review, how it differs from the leaks and what will be the bottom line, namely, whether funding will be provided to upgrade rail infrastructure.

The massive over-dependence on cars means that motorists feel strongly about where their motor taxation revenue goes. Most of them are of the view that 100% goes towards the upkeep of county roads, although we know that is not the case. County roads are extremely under-funded. The latter is also increasingly the case with local authorities. Motorists will become increasingly angry when the increased motor taxation they are paying out will not be matched by any great improvement in the roads on which they travel.

Deputy Gilmore raised in the Dáil the issue of tertiary roads, on which I commend him. These roads in estates or rural areas are those about which people feel most strongly. If Senator Brady wants to see some potholes, he is welcome to visit north Tipperary and I will show him potholes and roads in a state of virtual collapse.

Mr. Brady

They are not as deep as they used to be.

Ms O'Meara

I will show the Senator what it means to live on a tertiary road and find it impossible, however badly it is needed, to obtain funding from a local authority to repair it. The fact that using such roads regularly reduces the life of a car adds to the costs incurred by motorists. In that context, the legislation is unwelcome because it is yet another attempt by the Government to con people. The level of investment in non-national roads is down this year and the increase in motor taxation by the Government is another example in a long list of stealth taxes that have been imposed since the dishonest general election we endured last year.

Mr. Brennan

I wish to share time with Senator Mansergh.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Mr. Brennan

I welcome the Minister of State, Deputy Gallagher, and thank him for his contribution.

The income from motor taxation, which has paid directly into the local government fund since its establishment in 1998, is used for non-national roads and the general purposes of local authorities. In 2002, local authorities' current expenditure on the non-national roads programme was €3.2 billion and, in that year, the local government fund contributed €987 million, or 31%, of the financing of local authorities' spending on non-national roads.

The viability of local government is dependent on these funds to carry out its functions in an effective and efficient manner. To continue this work, the local government system will need extra resources this year. The national development plan provides an investment of €2.43 billion in the 2000-06 period, which would pay for some 90,500 kilometres of county roads. If we are serious about regional development, we must improve funding for non-national roads.

We have achieved a great deal since 1995. Many Opposition speakers referred to the state of the roads at that time, but anyone who was then a member of a local authority knows that the state of non-national roads was raised at every meeting. The non-national roads programme can stand alone in terms of what has been achieved in that six year period. In 1996 there were 47,000 kilometres of non-national roads in a bad state of repair. This has been reduced to 29,000 kilometres. In other words, 62% of those roads have been restored. That is a good achievement in that period of time. The new rates for motor tax and driving licences, an increase of 12%, will ensure local government is adequately financed to performs its functions and build on the great progress made in the last six years.

The issue of safety measures on non-national roads has been raised. As roads have been improved, it is important that sufficient funds are made available for safety measures. The signpost programme is also important, particularly for the tourism industry. As non-national roads offer access to many scenic areas, it is important that finance is made available for signposting. National speed limits will be reviewed in the near future. I ask the Minister of State to consider reducing the speed limit on national roads in some areas for safety reasons. I wish him well with these proposals.

Dr. Mansergh

Although it is not relevant to this Bill, I envy the Minister of State the magnificent road which goes through his constituency from Sligo. I wish a similar road would materialise some day between Tipperary and Carrick-on-Suir. I welcome the Bill, despite the fact that I will be adversely affected by it. It will provide a 16% increase in own resources for local government. Better funded local government, where there is a degree of independence in its funding, is important.

I am surprised to hear the Labour Party acting as the party of the angry motorist. Its view, if I correctly understand its finance spokesman, has been that tax levels in general are too low. If one is seeking a progressive tax system, there is nothing unprogressive about motor taxation. In general, the poorest sections of the community do not drive cars. In abstracto, to be competitive with other countries we should be in a position to reduce various forms of taxation, including motor taxes. At present, however, given the big increase in the number of cars, the high degree of congestion and with the Kyoto Protocol hanging over us, it is difficult to make the argument for reducing taxes in that regard.

The upkeep of non-national roads is an issue. Part of a road near my home was re-tarred last year and is already showing signs of fraying. The Department should use some type of quality control to ensure that when work is done on a road, most of it will not be eroded within less than 12 months. Otherwise such work is almost tokenism. Cats' eyes have greatly improved safety on twisting roads in some parts of the country. The local authority in County Tipperary has a good programme in this area.

All Senators will be well aware of the deficiencies in the signposting system after trying to find different councillors during the recent election campaign. I support the review of speed limits suggested by Senator Brennan. I hope we will change the system to kilometres and adjust speed limits, both up and down according to the road.

Investment in public transport has been mentioned. In 1997 the budget introduced by the then Minister for Finance, Deputy Quinn, contained zero Exchequer funding for public transport. Any moneys provided came from the European Union. That situation has been transformed. There is a large amount of work to be done but it is a bit rich to be attacked when the Government is spending hundreds of millions of euro in taxpayer's money on public transport. That provision did not exist until five years ago. However, that does not mean we should throw money at the problem. I said as much when we were debating the Finance Bill. We must spend wisely and not over-extend or bankrupt the country. We must spend on investments that will make the greatest difference.

The main purpose of the Bill is to ensure local government is adequately funded, both for non-national roads expenditure and other purposes. A large programme of work stretches ahead of us with regard to regional and other county roads, the roads between important towns such as the road between Tipperary and Thurles. One could give dozens, if not hundreds, of other examples. The standard of these roads has deteriorated which means that they are slow to travel on and, in many places, dangerous. We are concentrating most of the resources on putting a motorway and upgraded dual carriageway network in place but there is a big programme facing us for regional roads. If we increase funding for local authorities, they might be able to make a decent start on the programme without waiting until all the national road improvements are finished. That would be important.

Mr. Finucane

This Bill should be put in context. It provides for an increase of 12%, an increase introduced by stealth after the Budget Statement had been made and Members had gone home for the Christmas recess. Suddenly there was an announcement in the newspapers that motor tax was to be increased by 12% across the board.

I often wonder if the Government, in imposing increases, ever takes account of the consumer price index and inflation. Inflation was running at 4.6% but look at the range of increases that have occurred since the Government was re-elected. In all cases the increases have been in excess of the rate of inflation. College registration fees were increased by 69%. The same occurred with VHI and ESB charges. Take any example one wishes. At the end of the day, purchasing power has been reduced.

During the period of the Celtic tiger a survey was carried out, prior to the general election, which found that seven out of ten people believed their quality of life had improved over the previous five years and that they had more money. However, that is not reflecting the current reality. The Government pats itself on the back for matching the funding for non-national roads allocated for 2002. As there was a general election in May 2002, there was an excessive increase. At Estimates meetings members of the Government parties could feel good because they were announcing a big increase in funding for roads. The time to get such funding was prior to May 2002. Now, however, reality is dawning and a different situation prevails.

Let us get real. The Bill represents a 12% increase. Since 1998 motor tax revenue has gone directly to the local government fund. However, what about the motorist and the haulage industry? The 12% increase in motor tax and the subsequent rise in diesel costs mean that hauliers will go out of business because they operate in a competitive market.

In talking about non-national roads Senator Brady is very fortunate to be a Taoiseach's nominee because if he had had to travel the 26 counties during the Seanad campaign, as I had to do after the general election campaign, he would have seen the condition of many such roads throughout the country.

Mr. Brady

I was out there.

Mr. Finucane

Let us be honest about them. I could take the Senator on a tour of west Limerick along roads which are in poor condition. Some have been improved but we must remember the sale of the century in 1977 when road tax was abolished and a nominal registration fee introduced. That is what happened and the people bought it; the person with a Honda 50 motorcycle went out to vote for Fianna Fáil at the time on the basis of that promise. The reality, however, is that motor tax has increased excessively during the years since.

What happened to the emission targets under the Kyoto Protocol to which we signed up? This is a serious issue for the Department of the Environment and Local Government to grapple with. What has happened to the projections for 2007? It is projected that we will take 2 million tonnes of fossil fuels out of the equation and in doing so increase wind energy consumption from the current level of 145 kw to 475 kw. While I am in favour of wind energy and other such developments, I am predicting that those targets will not be achieved because the Department has not delivered a coherent policy for local authorities to promote wind energy.

A deputation is meeting the Department tomorrow to discuss its concerns about areas designated by Dúchas to protect hen harriers. If those areas are designated special areas of conservation because of the EU natural habitats directive, the more meaningful locations for wind turbines will be taken out of the equation. If a wind turbine was located on top of Carrantuohil, one might get away with it but in most cases objections will be raised to wind turbines in other locations. That is the reason the Department, in conjunction with local authorities' development plans, should be earmarking various locations in each county which would be suitable for wind energy projects. In that way we could do away with the culture whereby most projects are objected to that impinge on residential amenities.

We are not examining the Kyoto Protocol seriously. If one studies its climate strategy and the relevant industrial projections, high energy industries will close down because they will not be able to conform to the emission targets set. If they have to trade with companies in other countries with different emission policies, it will place an excessive burden upon them. In addition, Australia and America stayed out of the protocol because they believed their industries would be at risk. One might say that is an irresponsible attitude but has the Government targeted Irish companies which may be at risk due to their current emission standards? If so, is it aware of the financial cost to them of remaining in business? It might be surprised to learn of the potential risk to jobs from now until 2007. Despite the fact that the protocol dates back several years, this situation is only now dawning on some companies. Under the terms of the protocol, Ireland stated emission standards would rise by 13% above 1990 levels but they are now running at 20% above them.

On the one hand, we are trying to take action while, on the other, there are certain deterrents to achieving those objectives. I am extremely concerned that, given the difficulties facing businesses in the current downturn, more companies will be driven out of business. Departmental officials should analyse the implications of the Kyoto Protocol's climate strategy as well as examining the businesses which will be vulnerable as a result. There will be no point in complaining afterwards if some businesses decide it is no longer viable for them to remain in the economy because of the costs involved in adhering to the emission standards laid down by the protocol. We had better face up to that reality soon.

I wish to discuss a matter concerning Foynes Harbour, about which I am very disappointed. As my colleague, Senator Brennan, is aware, we had a plan for an access road bypassing the harbour. Over many years the harbour board campaigned to get this access road finished and local people were elated when the project was completed because it would stop trucks parking in the village. In many cases such trucks had spread dust and other material in the village over many years during which local people had to put up with this traffic burden. While the road was finished last October, it is blocked because CIE has taken an inordinately long time to deal with the legal complexities of installing a level crossing. While the rail service is vital for the port, in the past year no railway engine has traversed it on business related to the port. I cannot understand the delay over the level crossing, which is not the fault of the local council.

According to my information, CIE is projecting that it could be next May before this matter is sorted out. I cannot understand how bureaucracy and legal implications can cause such a delay. The project was completed seven months ago, yet members of the local community are asking what has happened to the access road. They cannot understand the delay in opening it. I do not expect the Minister of State to do much on the basis of what I said, apart from agreeing with me about the future implications for industry of target emission levels but he should try to bang heads together to see if the access road can be opened. As a native of Foynes, I would be only too delighted to carry out the official opening.

Ms White

I will wait until the Minister of State is ready as I wish to make a couple of points to him.

Mr. Gallagher

I may not be watching the Senator directly and perhaps I am out of order but it does not mean that I am not being attentive.

Ms White

I would just like the Minister of State to listen.

Mr. Gallagher

I have listened to every word and could perhaps repeat it verbatim.

Ms White

I would just like the Minister of State to look at me when I am speaking. I am sorry but I am just being honest with him. I would like him to listen because I will only contribute for about one minute.

Mr. Bannon

They listened to Senator White last Saturday at the Sinn Féin Ard-Fheis.

Ms White

As the Minister of State at the Department of the Environment and Local Government, Deputy Gallagher, could deliver value for money based on this motor taxation increase, he should get that message across by improving sign-posting, which is generally dismal. Recently I drove 200 miles across England and even in foggy and misty conditions we were able to get from Penzance to Bristol due to good road signs. We need major signposts here to indicate the general direction, with other signs to show local roads.

Two weeks ago, I left a transport conference in Clonmel at 11 p.m. and ended up driving in circles around the town. I could not get out of Clonmel that night because the signposting for Dublin was appalling. As a person who worked in a local authority organisation for 14 years, I believe there is not sufficient transparency for what the engineers deliver. There are people who are not accountable for their work.

Road markings throughout the country are generally appalling. As Minister of State at the Department of the Environment and Local Government, Deputy Gallagher should demand of county managers that they deliver road signs and markings of a standard quality. As Senator Quinn said, there is no doubt that the road markings on the side of roads are so dangerous that they lend themselves to accidents happening, particularly in the glare from the lights of oncoming traffic.

In the area of Dundrum in which I live, a bypass, which was on the drawing board for the past 30 years, has been built, but it is disastrous. In the construction of the Wickham bypass, account was not taken of the growth in traffic. The laneways on the bypass are too narrow and the slip-roads for access to the M50 are badly designed.

If I was the Minister of State introducing an increase in tax and trying to let the public know they are getting value for money, I would demand to know why county managers have such low standards in terms of signposting and road markings. I do not understand it. If it was a private organisation, it would be out of business with the low standards it exhibits in those areas.

Mr. Bannon

On a point of order, is Senator White stating that councils are not functioning properly with regard to signposting?

Acting Chairman (Mr. Leyden)

That is not a point of order.

Mr. Bannon

Is she putting the role of a county manager over that of an elected representative?

Acting Chairman

The Deputy had an opportunity to make his contribution. That is not a point of order. If no other Members are offering, I will call the Minister of State, in accordance with an order of the House, to reply.

Minister of State at the Department of the Environment and Local Government (Mr. Gallagher)

I thank the Members who contributed to this important debate. As in the Dáil, the contributions were lively and wide-ranging. While many of them were outside my remit in this regard, I will try to deal with them as best I can.

The contributions are a fair reflection of the Bill. Some Members who are opposed to the legislation strayed quite a bit away from it. I am not infringing on the Chair's right to advise them of that, but their contributions strayed into the area of health and other taxes. We are discussing only non-national roads. I believe that everybody is relatively happy with the allocations.

This debate brings back memories of the past and the allocations made in those times. Given the ultimate use to which motor tax will be put by local authorities, it is inevitable that the debate would range across a wide spectrum. It is worth repeating that the purpose of the Bill is to ensure that local authorities have the necessary resources to continue to provide good quality services to the public across a range of areas and to retain the same record level of investment in non-national roads. Perhaps we have been the victims of our own success.

The allocation by the Department in 1997 – Members will realise why I take that as the base year – for non-national roads of £214 million is in sharp contrast to the allocation last year and this year's record allocation of €434 million. If we were to link that to the 1998 Act, which introduced the local government fund and the necessity to increase our contribution towards it for non-national roads due to inflation, we have exceeded the 1997 allocation by €204 million this year.

The proposals for the Bill were drawn up only after detailed consideration of all the options open to us. We did not take a decision to increase motor taxes lightly. The increases in motor tax rates provided for in the Bill were drawn up because we believe it is the right thing to do in terms of supporting our local government system and enabling us to build on the work already undertaken on developing our non-national road network.

In 2003, despite difficult economic conditions, the local government fund has continued to provide a buoyant source of funding for local government authorities. This year, a total of €626 million has been allocated in general purpose grants for local authorities. This represents a 6% increase on the 2002 allocation and is some 85% higher than the corresponding allocation in 1997, to which I referred as the base year. Such increases would not have been possible without the extra revenue generated by increases in motor tax rates. The increases in these rates have also enabled us to maintain the provision for non-national roads just short of the record levels for 2002.

In the context of the Bill, it is important that there is an understanding of where the non-national roads programme stands in 2003. I wish to highlight some key points which should be of interest to a number of Members. In 2003, non-national road allocations will amount to just short of €434 million. That represents €4,346 for every kilometre of non-national road in every county. The 2003 programme includes measures for appropriate road markings on 11,000 kilometres of regional road network and a new regional road signposting programme, both of which are issues to which Senators referred. That provision is part of the programme for Government.

The Government gave a commitment that, over a five year period, it would provide €25 million for regional road signposting. We have taken the initial step in that regard this year. We are providing €5.1 million for signposting in a number of counties and we will develop on that in the future. It is hoped that by the end of our five-year term in office we will have fulfilled our obligation to provide the necessary regional road signposts, details of which I announced earlier this year.

Some €75.5 million has been allocated to non-national roads for employment and economic activity. Under the EU co-financed specific improvement scheme, expenditure of over €47 million will be incurred this year on non-national roads schemes to facilitate housing development. This is an ambitious and progressive programme. Non-national roads expenditure is already 13% ahead of the national development plan profile. Our track record on non-national roads is second to none. For example, in the period 1996 to 2002 almost 30,000 kilometres of non-national roads were improved under the restoration programme and more roads will be restored in 2003. That represents real progress and we can stand on our record. The Government is determined that we will have a non-national roads system of which we can be proud and which will support the social and economic needs of a peripheral country. That is why we have increased motor tax rates.

Reference was made to the potholes. Irrespective of whoever will be here in 100 years, there will still be some potholes. Many Members were here a number of years ago. My county could be more than a microcosm of the rest of the country. Members will recall who was in office in 1985-86, when there was a proposal to abandon half of the roads in the country and to try to maintain the rest of them because so little was being provided for them by the Government at that time. In 1997, only €214 million was provided for them. While funding arrangements introduced through the local government fund in 1999 have served local authorities well, we cannot stand still. A lot has been done and a lot more will be done.

With a view to further reform and improvement in the system, the Minister has outlined his intention to commission a major independent review of local government funding in order to meet the challenges facing local government in the future. This review will be broad-ranging and will examine all practical options for financing local government. In the meantime the Government is committed to ensuring local authorities continue to have sufficient funding to provide good quality services to the public and to maintain progress on the development of our non-national road network. It is because of that commitment that this Bill is before the House.

The Department of the Environment and Local Government makes a major contribution to non-national roads but there is also an onus on the various local authorities. I will communicate with a number of local authorities because I am disappointed that some have decided to reduce their own resource contributions this year. I realise they are under severe pressure but it is only right and proper that they should raise these funds. A number of counties have decided that if there is a shortfall it should come out of their own resources but we will deal with this issue and write to the relevant local authorities.

Senator Kitt referred to the local improvement schemes. If we were to be totally parochial and say all politics is local, possibly the most important roads of all are those leading out of farms to regional and county roads. We have provided a record allocation of €11 million to the local improvement scheme. We were criticised for being top heavy in allocations to the BMW region. This was due to the large number of applications from that area and because we are trying to help it catch up.

Senator Quinn may not want to be associated with a proposal which might be an add-on, though he made it clear that his proposal is intended to be a substitute scheme. Every proposal should be looked at but Senator Quinn's proposal is not a matter for the Minister for the Environment and Local Government, rather the Minister for Finance. It could be considered generally in the context of green taxation but there are some obvious difficulties when it comes to putting an extra tax on petrol. Increases in petrol would have a significant impact on inflation and petrol and diesel increases would also impact hugely on those in transportation and the taxi industry, for example, who depend on driving for their jobs. Those in rural areas would also be significantly affected, as by and large they have no other mode of transport apart from their cars. Senator Quinn referred to public transport and pay-as-you-go schemes but unfortunately in the real world of rural Ireland we do not have the public transport systems which operate in urban areas.

We are considering the introduction of a more environmentally friendly system based on CO2 use and not necessarily based on cubic capacity. In a review of CO2 we are looking particularly at the effect on the environment, safeguarding revenue and equity.

In general terms the national development plan provides for the investment of some €2.43 billion in the non-national road network in the 2002-2006 period. Expenditure to the end of 2002 is ahead of that profiled for the period, while €165.29 million has been allocated to restoration and improvement in 2003. This will enable all county councils to complete all their 2003 schemes as part of the 2002-2005 multiannual restoration programme. They may dip into 2004 on one or more of those schemes so we are slightly ahead of our targets.

Detailed proposals on the design and implementation of a green tax have already been advanced by the Department of the Environment and Local Government in the lead-up to the 2002 and 2003 budgets. Among the key points in the proposal presented in the plans for budget 2003 was the recommendation of a tax of €20 per ton of CO2 applied to all fossil fuels, to be phased in over a three to four year period. It was also proposed that a rate of €7.50 be applied in 2003, which would cut projected emissions by 0.64Mt by 2003 and by at least 2Mt per annum by 2010. We realise we have obligations to reduce the emissions and we will pursue this in coming years.

Some suggestions were made about the quality of the work in this regard and I take Senator Mansergh's comments on board. However, the Fitzpatrick value for money study was quite complimentary to local authorities. The road restoration programme tackles roads on a long-term basis rather than a temporary or ad hoc basis. That is how it should be. We will carry out a study of road pavements later this year and we hope to have definite recommendations early next year, if not by the end of this year.

Senator Finucane suggested that after the budget we decided to introduce this tax. Motor tax is not a budgetary tax, therefore it was a matter for the Minister for the Environment and Local Government to announce. He did so in December but not when everyone had gone home for Christmas. Senators will appreciate the necessity of bringing a resolution before the House. That was done on 12 December last, when there was a full and frank debate which made it abundantly clear that the contribution and allocation this year would be the same as last year.

As I said, we are victims of our own success because there has been a 100% plus increase over the period from 1997 to date. That is an indication of the Government's commitment to the development of our non-national roads up and down the country. We will continue that in years to come so that we have a non-national road system we can be proud of.

The Opposition can criticise us for the sake of criticising but they will state quietly that the development in recent years could not have been foreseen in 1997. We are committed to this programme and we will continue, through the Department of the Environment and Local Government and the local government fund, to provide record funding for non-national roads. I am anxious that local authorities increase their resource contributions, which is not something they all did this year. We will pursue that with the relevant local authorities to ensure they make a realistic contribution to the fund.

I hope the House is convinced we are totally committed to the development of non-national roads. Those roads are important to all of us but particularly those in rural Ireland.

Question put and agreed to.

Committee Stage ordered for Wednesday, 2 April 2003.