Local Government (Charges) Bill 2009: Second Stage.

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

Minister for the Environment, Heritage and Local Government (Deputy John Gormley)

I am pleased to open the debate in the Seanad on the Local Government (Charges) Bill 2009. The purpose of the Bill is to give effect to the Government's budgetary decision to introduce an annual charge on non-principal private residences. The Bill sets the charge at a level of €200 and it will be payable, in the main, by owners of rental, holiday and vacant properties.

It represents a significant broadening of the revenue base of local authorities. The proceeds of the charge will be paid to, and retained by, local authorities, and it will apply in 2009 and subsequent years. This is the first time in more than 30 years that a new source of local funding has been made available to local authorities. This measure is significant because it recognises that local authorities should not be disproportionately dependent on central government funding and, to this extent, its importance outweighs the level of revenue which it will generate The existing revenue base of local authorities is narrow by international standards.

It is now generally accepted that our economy, especially our tax revenue, has been overly reliant on activity in the construction sector. The decline in the yield from transaction taxes such as stamp duty, capital gains tax and value added tax on property generally has been a major factor in the imbalance in our public finances which the Government has had to address. The correction has been sharp and painful and more needs to be done. The €200 charge on non-principal residences is one of the measures taken to close the gap between expenditure and revenue. However, it should be seen as more than simply a measure to raise additional revenue. It is a new form of revenue stream that will not be subject to the volatility associated with the transaction-based property taxes to which I referred earlier.

The Bill is a relatively short and straightforward legislative measure. Essentially, owners of non-principal private residences will be liable to pay to the city or county council in which a relevant property is located an annual charge of €200. Liability arises each year on a point in time basis. Ownership of a relevant residential property on a specified day, known in the Bill as a liability date, gives rise to the requirement to pay the charge. I intend to designate 31 July as the liability date for 2009. In subsequent years the liability date will be 31 March and this earlier date will fit better with the overall annual financial cycle of local authorities.

The charge can be viewed as a type of self-assessment measure because it is for the owners of residential property, in the first instance, to assess whether they are liable to pay the charge. Given the relatively modest level at which the charge is set, I consider it important to minimise the costs associated with its collection. Accordingly, city and county councils will not be required to issue bills or invoices to those persons who own property liable for the charge. None the less, the charge is a relatively simple and straightforward measure and is easy to understand and administer. I do not anticipate that those persons who are liable to pay it will be under any confusion on this point, and my Department and local authorities will mount an information campaign to advise people of their responsibilities in this regard. In addition to the normal sanctions involving a fine on conviction of an offence, the Bill incorporates a late payment fee which should act as a real incentive to pay the charge when it falls due.

From a drafting perspective, the Bill starts from a position where all residential property is liable for the charge. It goes on to exempt certain buildings and owners from this liability. To put it another way, it identifies what is not liable within the totality of residential buildings, rather than taking as a starting point buildings and owners that are liable.

By far the most important exemption relates to principal private residences. Owner-occupied residences account for some 70% of the entire housing stock. The more important of the other exemptions include property which is let directly or indirectly by local authorities or voluntary housing bodies for social housing, property that is the subject of shared ownership arrangements with local authorities and certain heritage properties. Other exemptions to the charge are provided for, including persons who, in the process of changing house, own two residential properties for a short period, residential properties owned by charities and certain discretionary trusts and a spouse having an interest in a property after a divorce or separation agreement but who does not reside there but the other spouse does.

Following publication of the Bill, the point was made to me that mobile homes are a special case and should not be subject to the €200 charge. There are arguments for and against requiring a charge to be paid in respect of these properties. Some mobile homes are sited in very desirable locations and are traded on the market for significant sums of money. However, on balance and on reflection, I am disposed to accept the arguments that most mobile homes are a relatively modest form of accommodation and that, in many cases, those who own them do not also own the land on which they are situated. I am therefore tabling an amendment to exempt mobile homes from the charge.

The Bill provides that the charge shall be paid to county and city councils with an estimated annual yield of some €40 million. However, census and other data suggest that there may be some 400,000 properties in the State liable for the charge. The annual potential yield therefore could be higher than estimated at present. Like any new taxation measure, however, knowledge of the actual yield will only come with experience of its operation in practice. Given the data sources available, it is likely that, initially at least, collection levels from rental properties, of which there are about 200,000, may be higher than from holiday homes and vacant residential properties.

For reasons of efficiency, the smaller urban authorities that are rating authorities — those that levy and collect commercial rates — will not be involved in this exercise. They will, however, receive a payment from their parent county council based on the yield from the charge related to properties located in the town area. Provision is also made for the costs of collection of these charges to be retained by the parent local authority. This ensures all local authorities who have revenue-raising powers will benefit from the introduction of the charge.

In the event of non-payment of a charge for which a person is liable by a certain date, a late payment fee of €20 will apply for each month or part of a month for which the charge remains unpaid. An unpaid charge and any associated late payment fee will be a charge against the property in respect of which the liability arises.

The rolled up amount of a late payment fee should not be underestimated and non-payment of a charge for a period of five years will result in a liability of almost €5,000 when account is taken both of the charges and the late payment fees. I want the message to go out clearly to those who are liable to pay the charge that it will be simpler and a lot less expensive to pay the charge when it falls due than to attempt to evade it, especially in terms of the resale of the property concerned. Local authorities will also have power to take prosecutions against owners who fail to discharge their liability to pay the charge. Prosecution will be by way of summary jurisdiction and a court may impose a fine of up to €2,000.

Where a property liable for the charge is sold, the Bill provides that the new owner of the property will be liable for unpaid charges and late payment fees, and that these will remain a charge against the property for a period of 12 years from the date that they were incurred. This should prove a strong incentive for a purchaser's solicitor to ensure that all outstanding charges are paid before a contract to sell the property is executed.

Local authorities can delegate functions to the Local Government Computer Services Board or the Local Government Management Services board, or both. In practice, the computer services board will design and operate a website facilitating electronic payment of the charge and a database to record payments. It is likely that local authorities will delegate functions to the local government computer services board with regard to overall operation and management of a website through which the charge can be paid and a database recording payment of the charge.

Provision is made for data exchange between local authorities and the Private Residential Tenancies Board, PRTB, the Electricity Supply Board and the Revenue Commissioners. This data should assist local authorities to identify properties liable for the charge. The PRTB holds data on rental properties and the ESB's systems can generate data on residential properties where a relatively low quantum of electricity is used, something which may indicate the possibility of a holiday or a vacant residential property. The Revenue Commissioners hold data on certain property transactions, such as stamp duty, VAT and capital gains taxes.

Payment will be accepted on behalf of any local authority through a website that has been designed and constructed by the Local Government Computer Services Board and which is broadly similar to the motor tax on-line system. The revenue accruing will be relayed automatically and at intervals to the bank account of the city or county council in whose area the property is situated. While payment will also be accepted locally in local authority offices, I ask those concerned to use the website for their own convenience. This will minimise costs associated with the administration and collection of the charge.

Senators will be aware of the significant role which the local government fund has played in the financing of local government since it was established in 1999. The fund is financed from a combination of an Exchequer contribution and the full proceeds of motor taxation. Total funding for 2009 amounts to some €1.46 billion, which represents approximately 30% of local authority current funding. The fund comprises an Exchequer contribution of €417 million and the proceeds of motor tax, which is projected at €1.04 billion this year. In addition, local authorities will retain the full proceeds of the new pension-related deduction, estimated at €80 million in 2009, and the Exchequer contribution to the fund has been reduced to take account of the deduction. The new pension related deduction has, therefore, a neutral impact on local authority finances in 2009.

Local authority current expenditure amounted to €1.8 billion in 1997. This year, current expenditure by local government will be in the order of €5 billion. Local authorities were advised of their 2009 general purpose grant allocations in October 2008, which indicated an average reduction of 6.4% over the corresponding 2008 allocations. The general purpose grant allocation from the fund to local authorities for 2009 amounts to €935 million. These allocations have been reviewed in light of the estimated income from motor tax in 2009 and the Exchequer contribution to the fund for 2009 as set out in the supplementary budget. This has necessitated a further reduction in individual allocations of 3% and I have notified local authorities on the matter. The €200 charge is estimated to provide some €40 million in income to local authorities. This will more than ameliorate the impact of the reduction of €30 million in general purpose grants to which I have referred.

A properly resourced local government sector is vital to local democracy. I take this opportunity, however, to refer briefly to another issue that is equally important to the well-being of the local government sector. As Senators will be aware, I have published a Green Paper on Local Government Reform and will publish a White Paper after the Government has had an opportunity to consider the report of the Commission on Taxation. The Green Paper addresses a number of issues, including, a proper balance of power at local levels between the managers and elected representatives, directly elected mayors, establishing town councils in towns that have displayed significant population growth, quality customer service and expenditure limits at local elections.

I refer briefly to my recent announcement that the first election for a mayor for Dublin with a regional mandate will be held during the summer of next year. The election of the Dublin mayor in 2010 will fulfil, one year ahead of target, a key commitment of the Government's programme. In introducing a directly elected Mayor for the region, the Government will be making the most significant change to local democratic leadership in Dublin since the foundation of our current system of local government in the 19th century. Dublin is both a city and a region. A strong, dynamic and sustainable capital is essential to the well-being of the whole nation, not just to the people of the city itself. Experience has shown that strong political leadership can bring a new dynamic to cities and their regions.

The mayor will be elected by the people of the city and the three surrounding Dublin county councils, that is, the area which constitutes the existing Dublin Regional Authority, and will have the powers to set strategic policy for the region, co-ordinate across institutional boundaries and ensure that local activity is in tune with a coherent set of strategic regional policies and plans. A strengthened Dublin Regional Authority, chaired by the mayor, will support and complement the mayor's activities. The introduction of a democratically accountable mayor for Dublin, a position which personifies local government and thereby forges a new connection with the public, will capture the imagination of the people of this city. Among the consequences will be improved strategic planning for the region, better services, greater integration and coherence, enhanced use of resources and stronger local democracy.

Quality customer service is another issue that is addressed in the Green Paper. The efficient and effective performance of local government is of real importance to our citizens and to the welfare of our local communities. In that context, the transforming public services agenda will build on the local government modernisation programme which has taken place over the past decade, but will also represent a step change in regard to progress in this area. The report on transforming public services recommends that local government structures should be drawn on to enhance public service delivery. The democratic legitimacy of elected councils is also recognised and should be maximised as a focus for consultation on the delivery of national services locally. The local government sector is a willing and able partner in this agenda and recognises that public sector transformation is an integral part of the solution to Ireland's current economic difficulties.

In this context, greater coherence and synergy between different levels of Government and the public service are fundamental to more efficient and effective operation. My Department and the local government sector are working closely together to advance broad public service initiatives for a more integrated public service which can achieve better value for money and enhanced customer service.

The Local Government (Charges) Bill is a short and straightforward legislative instrument. The revenue stream to which it will give rise is significant, at €40 million annually, but could not be described as large in the context of overall local government spending. Nonetheless, its importance cannot be measured simply in these terms. The Bill establishes a new funding source for local authorities, one that is genuinely local in that it derives from revenue raised locally and that will be expended for local purposes. By broadening the revenue base of local authorities, it can properly be described as a ground-breaking initiative and I hope it will receive a general welcome for that reason. Arguably, it would serve the interests of local democracy still better if local authority members themselves determined, perhaps within certain limits, the level of the charge, as is the case in regard to commercial rates. There may be scope to devolve other aspects of the charge to local authorities also. These are issues that I may well revisit at a future date, and I would very much welcome the views of Senators in this respect.

I thank Senators for their co-operation in facilitating early consideration of the Bill and I commend it to the House.

Senator Paudie Coffey

I welcome the Minister and his officials to the House for the debate. The Fine Gael Party in principle supports the general tenor and thrust of the Bill, in which the Minister proposes to broaden the revenue base for local authorities. It is a widely debated issue, not only in this Chamber and the Lower House but also in many local authority chambers throughout the country. Indeed, it has been the subject of many conferences and I know my colleague, Senator Glynn, has attended many conferences and has made contributions on the whole area of local government funding.

This Bill breaks new ground in providing a way in which local authorities can raise and broaden their revenue base. However, there are implications for the implementation of the Bill that need further analysis and clarification from the Minister. He briefly referred to the charges for mobile homes, which has already been widely debated by the public, including on public radio shows, as the Minister will know — one Senator referred this morning to this sudden Government U-turn on the mobile charge as "the Joe Duffy amendment". The U-turn is welcome. Many people have mobile homes in holiday parks which they do not own and they pay an annual charge for the use of that holiday park. While they may have owned the mobile home for decades, this new charge would have been additional and, therefore, the Government amendment to remove the section that applies a charge is welcome.

In a way, this amendment tells us that the Bill has been rushed, despite its general thrust having been announced in the budget of October 2008, where it was indicated that a €200 charge would apply to non-principal residences in this country. Why has there been a delay and why is the Bill suddenly going through all Stages in the House on one of the last sitting days of the session? If Opposition parties want to table amendments on Report Stage, we would be entitled to time to do so, which would mean the business of the Seanad would have to be rescheduled to facilitate the debate. Any reasonable person would acknowledge that this is not the best way to introduce legislation. The Minister needs to take account of this point and he should not try to rush legislation through the House in this manner.

I wish to address some of the measures contained in the Bill. To broaden the revenue base for local authorities is certainly a welcome element and is the main thrust of the Bill. It is estimated it will yield in excess of €40 million per annum for local authorities, although this will vary from one local authority area to another. Obviously, much building has taken place in the commuter belt around Dublin and the local authorities in that area stand to gain much more than those in other areas, where there is not as many second residences. Some areas will, therefore, have a slight imbalance with regard to fund raising.

In addition, it needs to be acknowledged that this is not additional funding for local authorities. As the Minister said, he has cut local authority general purpose grants by almost 10% in this year's allocation compared to the allocation for 2008. The Bill is really trying to fill the gap caused by huge deficits in local authority budgets and we are not sure it will succeed because we do not know the full amount of income that will be yielded from this source. Many issues remain to be examined in the coming months and years to ensure local authorities are properly funded. The Bill will not answer all the questions, although it will go some way towards doing that.

With regard to administration, most of the Opposition amendments which will be discussed later focus on the administration and collection of these charges by local authorities, which are already overstretched with regard to their mandate to carry out many obligations under the various Local Government Acts. Local authorities are pressed in their effort to deliver services on the ground and this is an additional workload we are asking them to take on. I am not sure if the means by which local authorities will collect this charge has been fully thought out. While the Minister stated that an online system will be used and an effort will be made to centralise the collection system, enforcement and the administration of the system will require resources.

Fine Gael makes the reasonable request that the Minister consider a role for the Revenue Commissioners in the collection of this charge as they have the best resources and ICT systems to analyse and ensure its full and proper collection. It is a new area for local authorities to step into. I understand they are involved in the motor tax system but this system is quite different and, as it concerns property ownership and the many legal issues around that, it is more complex. Fine Gael believes the Revenue Commissioners could play a greater role in regard to the collection system, although we will come back to this point at a later stage.

We also have concerns with regard to exemptions. For example, the HSE might have contracted with private landlords for emergency accommodation or otherwise, or local authorities might have contracted accommodation through the rental accommodation scheme. If my understanding is correct, these accommodations are exempt although they are similar. The question that arises is what is deemed to be the difference between one house which is in the RAS and another on the opposite terrace. Although it is the same type of house with the same builder, one house will be charged while the house in the RAS will not be charged. We need clarification on this because, if it is the case, it seems quite unfair that just because a private landlord enters a contract with a local authority for long-term accommodation, he should be exempted while a person living across the road is not.

I referred briefly to the implications for local authority resources. The motor tax system is working very well, which I have always acknowledged in the House. It is an excellent system that should be expanded to more areas if at all possible. In this case, the Minister is proposing such an expansion but I have some concerns. The Minister referred to the Private Residential Tenancies Board, which gives rise to a serious issue. The PRTB was before the joint committee yesterday and we heard horrifying evidence of how its business operates. It seems to be one of the main planks of information and data exchange that the Minister is depending on for this scheme but, if that is what it is, I assure the Minister it is a very shaky and vulnerable plank.

Did the Minister know there is over €10 million sitting in the bank accounts of the PRTB that has not yet transferred to local authorities, to which it should have transferred long ago to assist them in inspections and enforcement? The PRTB claims this is not its fault and that it is carrying out the registrations and collecting the money. When questioned by Opposition committee members, it quite squarely blamed the Department and the Minister. It was claimed that the local authorities are not drawing down this money and that there is a role for the Department and the Minister in ensuring this will happen. For every registration of private rented accommodation, €70 is collected. Four sevenths of this is retained by the PRTB and three sevenths is meant to go to local authorities. In the current economic climate, it is a disgrace if €10 million is sitting in a bank account of a State body that has not been moved to where it should have gone. I draw the Minister's attention to this issue.

With regard to ICT systems, the PRTB is dealing with all registrations manually. It is all hard paperwork because, the board claims, legislation does not allow it to use an online system similar to the motor tax system. This means it must employ more than the core 40 staff. It employes a further 25 agency staff to manually input every registration of a private accommodation and the system has resulted in a significant backlog. There is no information technology system to manage the registration database or to case manage all the registrations and this is causing significant backlogs and disarray in the board.

Dispute resolution takes between 12 to 18 months but in its corporate plan the board set down a target of between five and six months for dealing with disputes. This is totally inefficient and unacceptable and any reasonable person would agree with me. It is taking almost three times longer than it should to deal with disputes related to private rented accommodation, largely due to inefficiencies and excessive bureaucracy within the structure. I was informed that adjudicators in disputed cases are paid more than €600 per day, which is amazing. Up to now they have been dealing only with one case per day but now they are being asked to deal with more than three cases per day. A sum of €600 per day paid by the Private Residential Tenancies Board, PRTB, is a very good payment for any individual for the completion of such work. There is no on-line payment system or IT system within the PRTB and I am unsure how the Minister intends to share data with the board as set out in the Bill. The board is struggling to deal manually with much of the workload as it stands. A great deal of attention is required in this area.

The Minister referred to data sharing between the Revenue Commissioners and the Department of Social and Family Affairs, especially the sharing of personal public service numbers. The Oireachtas Joint Committee on the Environment, Heritage and Local Government, of which I am a member, examined the idea of sharing PPSNs as part of an effort to update the electoral registration system. There are issues with the Data Protection Act and sharing certain personal information. Clarification is required in this area if the Minister expects to acquire information from those Departments for the purposes of this Bill. This could be a problem which the Minister and his officials have not foreseen.

The Minister also referred to the ESB and electricity usage. I worked in the ESB and there are data protection issues with regard to any information on accounts or usage it issues to any third party. This is also an issue and it would not only involve the ESB. There are several other suppliers in the electricity industry, including Bord Gáis Éireann, Airtricity and many others, but they are not mentioned anywhere in the Bill. Such organisations keep account of electricity supply issues. While the principle of data sharing contained in the Bill is good, the matter has not been fully thought out. The PRTB is a disaster at present yet it is one of the main planks of the Bill with regard to sharing information and support for local authorities in this area.

I refer to the implications on the tourism industry. Fine Gael welcomes that this charge will not be applied to mobile homes. However, there are many areas where there are holiday homes owned by small businesses or tourism companies. Such firms have considerable concerns because they already pay rates to local authorities for these homes and they will now be asked to pay an additional charge of €200 per home. These homes are not owned by individuals but by small tourism companies. If the charge were levied the companies would pass it on to the holidaymaker, automatically increasing the cost of holidaying in Ireland. This has negative implications for tourism in Ireland. We are trying to promote holidaying at home and to create incentives for people to holiday in Ireland. The Minister should examine this area and he may be able to clarify the matter later.

Another area requiring clarification relates to exemptions. If a person owns a house and provides it to his or her parent, it can attract mortgage interest relief because there is no revenue income from such a house. By the same principle, is it not reasonable to call for such a house to qualify for an exemption to the charge as well? The Revenue may grant mortgage interest relief if it can be demonstrated with evidence that a son or daughter provides a house for a parent from which there is no rental income. This is part of the reason the Revenue Commissioners provides a better collection system. It is reasonable to request that such houses would not be subject to the charge also and I seek clarification on this matter.

The Minister called for the views of Senators with regard to whether councillors or local elected representatives should determine the charge within certain limits. I would welcome such a measure because we must give autonomy to local authorities and real power to elected local representatives. We have recently emerged from local elections in which excellent councillors have been elected throughout the country. They have the ability and capability to run their local authorities if the correct funding is provided. The Minister could allocate power to set the charge in this area and I welcome any further moves to give more autonomy to local elected representatives.

Senator Camillus Glynn

Ba mhaith liom fáilte a chur roimh an Aire go dtí an Teach. I welcome the Bill which gives effect to a budgetary measure announced by the Government last October. Any legislation or measure which devolves the power to local authority members to raise additional finance by way of reserve function is welcome. I have long advocated this measure and I have not changed my mind on the matter. Many local authority members, local authorities and associated organisations, including my nominating body, the Association of Municipal Authorities of Ireland, the Association of County and City Councils and the Local Authority Members Association have long advocated devolving more power to local authority members and local government. However, it must be borne in mind if one is dependent on the Minister to allocate more money, one is depending on a broken stick because the Minister has much to do with money. I say as much with due respect to the Minister, Deputy Gormley. If local government is to be able to stand alone then it must stand on its own two feet in so far as it is possible.

We have seen the erosion of the funding base of local authorities throughout the years. I recall the early 1970s, during which the coalition of the Labour Party and Fine Gael started the abolition of rates, followed by the Fianna Fáil Government of 1977 which abolished them totally, an outrageous and bad decision all around for which we are still paying. This is the first real opportunity for local authorities to raise money apart from the Local Government (Financial Provisions) (No. 2) Act 1983 which introduced local charges. This is another way for local authorities and local authority members to get money to spend on functions. The Local Government (Charges) Bill 2009 has been introduced to give legal effect to the measures in the budget. The €200 charge will apply to the owners of residential rental property, holiday homes and vacant properties unless the vacant property is newly constructed but unsold. Let us pause here for a moment. I do not regard the Minister's decision to row back on the charge for mobile homes as a U-turn. Any legislation published will always be subject to scrutiny. This is one of the reasons legislation is first published and the process then involves five stages to ensure mistakes are identified and corrected. Perhaps the mistake this time is a mistake with a small "m" or a large "M". It depends from where one is coming.

One of my pet aversions is derelict properties. If one travels down the main street of any town or city one will see properties vacant for the longest time. When a local authority applies pressure under the Derelict Sites Act, lo and behold a planning application is made. Is such a planning application given effect in many cases? The answer is "No". I welcome this measure. In the case of vacant properties which have been allowed to become derelict by their owners a fine of €200 is not sufficient. These properties are a blight and an eyesore on the streetscapes of many villages, towns and cities and it is wrong that this is allowed happen. This provision is a small step forward in resolving that problem but in my view the measure should be stronger. I suggest there should be stronger legislative measures to eliminate this type of disregard practised by many property owners in our towns, cities and villages and even in the countryside.

The law is the law, whether we like it or not. It should be mandatory for property owners to register, just as we are all obliged to pay car tax in the motor taxation offices or any other service charges payable in the finance office of the relevant local authority. I do not see any reason why this cannot be done. This provision will give members more money to spend under reserved functions.

I refer to the Minister's contribution in which he states, "For reasons of efficiency, the smaller urban authorities that are rating authorities — those that levy and collect commercial rates — will not be involved in this exercise." I say to the Minister that they should be. I could cite many examples of small town councils but I will not name them as I would leave out too many. It was the very same when the policing committees were initiated and it was decided that town councils were not to be involved. I remind the Minister that most crime is committed in towns and cities. The Minister show row back on his decision and he should devolve to the town councils that are rating authorities the power to collect this levy.

I refer, for example, to Bray which has a larger population than at least two counties. Tralee has a 12-seat town council as has Dundalk. Does the Minister propose that these towns will not be involved in this process? I consider that to be wrong and I ask the Minister to look again at this proposal with a view to correcting it.

The Minister referred in his speech to the Green Paper and I welcome his statement:

The Green Paper addressed a number of issues, including a proper balance of power at local levels between the managers and elected representatives, directly elected mayors, establishing town councils in towns that have displayed significant population growth, quality customer service and expenditure limits at local elections.

In my view the creation of new town councils is a must. While the non-rating town councils might not have a lot of powers — I ask the Minister to address this point in whatever way he can — nevertheless, they have an elected voice, an elected forum and they identify many issues that need to be identified. Some Members of this House would say that town councils should be abolished. If this is the case, it is amazing and we have come a long way. We fought hard for democracy and now there are people in elected positions advocating its abolition. This is hard to credit but it is true.

The Minister will be aware that many county councillors work full-time as councillors because it is a full-time job. Not only county borough councillors but also even some town councillors work full-time. In one local electoral area of County Westmeath, one councillor out of five works full-time in another job and all the others work full-time as councillors because they realise and appreciate that it takes all of their time and not just part of it. In that context, I feel obliged to relate to the Minister the concerns of councillors. In this time of shortage and recession we all know that everybody has to do his or her bit but many councillors depend on their income from the local authority. I ask the Minister to stay his hand from being too hard on them with regard to their income and training seminars and I make no apology for saying so. Local government membership is ever-evolving and the knowledge required is also ever-evolving. The real learning process for any representative is the interaction with other locally elected members. The only means of doing this is by attending training seminars.

I welcome this measure which has been long awaited and I hope it will be successful for the Minister. I ask him to reconsider the decision not to include the rating town councils in this process as there are very practical reasons they should be included. From my knowledge of small local authorities and urban authorities, they are extremely efficient and they do a marvellous job.

Senator Pearse Doherty

Cuirim fáilte roimh an Aire. Ba mhaith liom fáilte a chur roimh an mBille. Seo ceist atá tógtha agam sa Seanad go minic. Táim ag déanamh gur thóg mé an cheist trí huaire ó déaneadh na fógraí sa cháinaisnéis dheireanach anuraidh. Ach roimhe seo, bhí sé tógtha agam ag iarraidh ar an Aire Airgeadais Bille mar seo a chur chun tosaigh. Os as Tír Chonaill i nDún na nGall mé, tá a fhios agam go bhfuil an chomhairle contae ansin iontach gníomhach ag iarraidh go dtabharfaí isteach an levy seo. Tá siad ag obair chuige sin ar feadh go leor blianta. Tá a fhios agam go raibh mall air go dtí seo, cé gur dúradh san Indecon report i 1992 go mbeadh a leithéid de rud ann. I welcome this Bill and I commend the Minister for bringing it forward. I have raised the issue on many occasions in the House since the announcement was made in the budget that the Bill should be brought forward. I was dissatisfied that it had taken so long to bring this legislation before the House.

I refer the Minister to the legislative programme for the Seanad this week which is absolutely crazy. We have gone through weeks with no legislation and instead have had statements on this, that and the other, and we are now rushing through with nine pieces of legislation this week. This does not make any sense but that is a debate for another day. This Bill is good legislation although I would like to see it amended. I will discuss amendments on Committee Stage and I will raise some of them with the Minister today.

I raised this issue before the Government ever made the announcement because I have strong views on the matter. Holiday homes in particular should pay a rate towards the contribution made to them by local authorities such as the provision of water, roads, sewerage and all the other amenities they use. I raised this issue with the Minister for Finance and he was not disposed at the time but I am pleased that the Minister and his Department have seen the need to introduce this charge. One of the key areas of concern to me was that local authorities would be able to retain the revenue collected within their administrative area. When I raised this matter in the House as a matter on the Adjournment it was clear that this was not the first option which would be considered. I am glad the Minister has decided on the right course of action for which he is to be commended.

I am pleased the Minister will introduce an amendment to exempt caravans as that makes sense.

Regarding some of the other issues in the Bill, as a Donegal Senator, and probably from a selfish point of view, I have raised on a number of occasions the amount of money Donegal could accrue from this scheme. Last year I calculated that just over 23,000 properties in Donegal would come under this scheme. We have the highest number of holiday homes in the country, at 8,275, and that is the ones that are built. Planning permission has been granted for approximately another 1,000 that have not yet been constructed. We have the sixth highest number of occupied rental properties in the State, at 4,232, and 10,768 non-principal private residences, or second houses, which is the largest number in the State after the cities of Cork, Dublin and Galway. That is a total of over 23,000, which would bring in €4.655 million to the local authority if all those properties were levied.

In the budget it was announced that €40 million would be accrued from this levy. I thought that was a lazy calculation because I presume what was looked at were the rental properties in the State and that figure was multiplied by €200, but it did not take account of the vacant houses and holiday homes. I am glad the Oireachtas Library and Research Service has confirmed the figures I was using, which is that it would bring in over €90 million if all properties were levied and €4.6 million for Donegal County Council. That will go some way to meeting the needs of the county.

The Minister will be aware that many people were made redundant in Donegal County Council. We are facing major challenges and I am very disappointed that a Government decision did not come from the Cabinet yesterday on the €1 million bill from the council to deal with the flooding that occurred in Gweedore. That is a separate issue which I, my colleague, Senator Ó Domhnaill, and others will continue to raise in trying to ensure that money is forthcoming.

I want to make a number of points about the advertising campaign. The Minister said that the date set is 31 July. I presumed it would be September or a later date because 30 days is a short period of time. I am not sure if the computer programme has been built. Are there plans afoot to have the advertising campaign rolled out? How will that advertising campaign be rolled out? In particular I would like information on where that advertising campaign will be rolled out. I gave the Minister statistics in terms of Donegal. Many of the holiday homes in Donegal are owned by people who reside in the Six Counties. Will there be a concentrated focus on advertising in that area to bring to people's attention that this levy is now in place?

Senator Coffey raised the other problem, namely, who should collect the money? I believe it should be the local authorities but that calls into question difficulties being experienced by local authorities. I spoke to someone in the manager's office earlier today who said that people are being moved left, right and centre. People are now doing two jobs and covering many bases because of the difficulties being experienced by local authorities in laying off temporary workers. There is a recruitment ban in place but the local authority may need to recruit somebody to oversee the collection of these charges. That is something that must be dealt with by the Minister's Department to allow local authorities recruit somebody on a permanent basis from the moneys they collect. I cannot see how they can do it under their current complement and it would be wrong, because it is a big job in terms of following up on these charges, that no one person would be responsible for it. From my experience in Donegal and listening to members of local authorities in other counties, I am aware there is no more meat on the bones, so to speak, in local authorities. They are pared down to the bone and we must ensure they have that staff complement to assist them in the collection of these charges.

I have a number of concerns about the exemptions in the Bill, which I will outline. For example, many people have houses with built on granny flats, as they are known, to house an elderly parent. Under this legislation owners of houses with built on self-contained flats, which are usually sons or daughters, must pay €200. That is wrong and I would like to see that exempt.

To give another example, in my area of Donegal 10,000 people have lost their jobs in the past year but there has always been a tradition of people working away from home. Under this legislation somebody who owns a house in Gweedore, The Rosses or wherever and is married with children but who works five days a week in the construction industry in Dublin or Galway must pay €200 on the family home where his wife and children live. I see some people are nodding their heads but on my reading of the legislation if one is the owner of the property one is subject to this charge, unless one resides in that property. If there is co-ownership the charge is divided equally between the two co-owners. I refer to an owner living away from home and it is not his or her main residence. If he or she is working in Phibsboro, Cabra or wherever and renting a property five or six days a week while his home lays empty, he or she is subject to that charge. If that is not the case I would welcome that but I suspect it is the case.

I also have a problem with the family home issue. There is a deep attachment in rural Ireland to the family home. It is the house where the siblings were born. The mother and father have passed away and the family home is left usually to all the children. The home is not occupied or used but there is an attachment to it on the part of the family members. One can see them throughout rural Ireland. They are kept in good order but no one no longer resides in them. I am concerned that the family home would be subject to this charge as well. We need to examine the provision of an exemption to ensure that family homes, if they are not used as a holiday home or for rental purposes, are not levied with this charge. We all know the small houses in rural Ireland. They have electricity connected to them. Nobody lives in them but the sons and daughters paint the houses and keep them in good order because they have an emotional attachment to them. If they are levied €200 per year over the next 20 years, those family members will have to make a choice and I do not want to see them knock down these houses because they are part of the fabric of rural Ireland. There must be some provision we can put into the legislation to ensure that anomaly is dealt with.

The other issue concerns elderly persons living on their own who move to a nursing home as a result of a long-term illness and their houses are then subject to this levy. We must consider bringing forward an amendment to deal with that issue because if the owner of the house is in a nursing home on a permanent basis he or she is subject to this levy.

I commend the Minister on bringing forward his own amendment on the carbons issue.

I will seek to bring forward another amendment, and I am glad the Minister mentioned it in his contribution because it is a missed opportunity. I believe that local authorities should set this rate. It is within the Minister's gift and it is proper that initially the Government sets the rate at €200, but we should give local authorities the power to decide the rate from now on, and we should do that now. There should not be a need to come back, as the Minister announced, to re-examine this issue. We allow local authorities decide the rates for small and medium enterprises, corner shops, barbers, restaurants and multinational companies, and we should trust them enough to allow them to set the rate, whether it is increases or decreases, on holiday homes, second homes and rental properties. If that power was given to them it would be welcomed by local authorities throughout the State. I hope to hear from the Minister that he is disposed to that idea, although perhaps not now. Is there something we can write into the legislation that would allow the Minister to do that by way of ministerial order? There should be a stronger commitment to doing that.

I welcome the legislation, which will help struggling local authorities. There will be many challenges in terms of collecting the rates. It will be easier to collect from the rental sector but challenges will be faced in terms of the holiday home and the vacant house sector, and we will need to keep a close eye on that. I am also concerned about the cost of collecting the charges. A review mechanism should be built into the legislation to ensure that local authorities do not spend 25% of the income from charges on administration. Best practice should be shared among local authorities. Collection methods will vary because the types of dwellings will vary in different areas.

I thank the Minister for the legislation. I will bring forward amendments on Committee Stage.

Senator Dan Boyle

Any move to increase the local government funding base is to be welcomed. We await the report of the Commission on Taxation as to how this might be done on a more long-term basis. This is a modest charge but it will help make the local government funding base more diffuse and diverse. It also gives it a property element, which the Irish taxation system has lacked.

May I cite the example of our nearest jurisdiction? My wife and daughter are engaged in further education in Coventry, where they live in rented accommodation.

Senator Dominic Hannigan

Did the Senator send them there?

Senator Dan Boyle

I did not send them to Coventry, although I have been sent there by them on several occasions.

They have received a council tax demand from the local authority. They are resident but they do not own a property, are not UK nationals and do not have independent income. Nevertheless, the council tax demand is £1,300 each for local government services. When one compares and contrasts the local government funding systems in the two neighbouring jurisdictions, one sees that local government in Ireland has been a poor relation, both in funding and compared to other local government systems. On that basis, there should be a more generous welcome for this legislation and fewer demands for the types of qualifications which have been mentioned on certain radio programmes and by Members during the debate to date.

To own one property in Ireland requires a level of wealth, to own two requires a level of wealth to which many in this country cannot aspire. In his opening contribution, the Minister stated that 70% of Irish residences are primary domestic residences. Much of the remaining 30% consists of rental properties which are designed to earn an income for their owners. The number of people who own a second house and use it for a purpose other than income or as a primary domestic residence is small.

I do not accept the qualifications cited regarding people whose work takes them elsewhere and whose families could almost be said to live in two jurisdictions. There is other legislation on joint ownership of the family home and this is adequately covered by the exemptions to couples in divorce and separation agreements, which the Minister mentioned in his opening contribution. This has been thought through. Second Stage debate is an opportunity to seek clarification and to consider suitable amendments. The Minister is in the process of introducing an amendment on mobile homes, which are a different type of second residence. They can be moved and are smaller than other second homes. Even in accepting those arguments, other questions have been unleashed regarding other more fixed holiday-type home arrangements for which special exemptions are already being sought. I am thinking of chalets and the like. Lines must be drawn. A fixed building which is a secondary residence should be covered by the legislation. The charge is set at a very modest level.

The Minister also referred to local government reform and the imminent publication of a White Paper when the Government has considered the report of the Commission on Taxation. There has been speculation about what the commission might recommend regarding wider local government finance. I would not like to see a return to the old system of imposing rates on domestic residences and built property. Rates were a negative tax because they discouraged local economic activity. Householders who improved their homes, putting money into a local economy by employing local people, were penalised for doing so by being given a higher rateable valuation and having to pay more to the local authority. The essence of local government reform lies in site value taxation, which is more constant than property prices. We know how inconstant property prices have been in the past 20 years. When the report of the Commission on Taxation is published, there should be a debate on this issue. To return to what did not work in the past would not be in the interest of the country or of local government.

The Minister also welcomed the bringing forward by one year of the direct election of a mayor of Dublin. This will be one of the most significant reforms in the history of local government. I would like to see this measure followed by the extension of the concept to other metropolitan areas such as Cork, Limerick and Waterford, perhaps in time for the next local elections. As and when the election of the mayor of Dublin is seen to be a success I hope that will happen. To encourage the direct election of mayors to large metropolitan centres and to the dozen or so large towns which have a population of more than 7,500, we should hold local referendums to ask the people in those areas if they want a directly elected mayor or to achieve town council status. These are the ideas which we should discuss when the White Paper on local government is published.

The Minister also detailed the effects of changes in Government spending on local government. Like many Members, I am not aware of the content of the report of an bord snip nua or how it will impact on local government. It is clear that while excellent public services are delivered through our local authorities, the need to examine where money is being used applies as much to local authorities as to any Department or State agency. The straitened circumstances in which the country finds itself afford an opportunity to reform local government in more ways than one. We can consider new structures, new powers for elected members and new offices, such as the elected mayor of Dublin. We must examine how local government services can be introduced most efficiently and local government's ability to do so through independent and separate funding, such as that contained in the Bill. That is why we should welcome the Bill. I fully endorse its being put to the House.

Senator Dominic Hannigan

I welcome the Minister. I am glad to hear his commitment to holding mayoral elections in Dublin next year, a year ahead of schedule. I look forward to elections in other city and town councils and the introduction of new town councils and urban district councils as soon as possible.

If the proposed charge is a new source of local government funding and not merely a replacement of existing Government funding it may be a step forward. I am glad the Government no longer proposes to apply the charge to mobile homes — the Labour Party had tabled an amendment to that effect. Having spent many holidays in mobile homes, I see this as a sign that the Government appreciates that mobile homes are not owned by the rich but by ordinary people who cannot afford an expensive second home. Mobile homes fill a gap in the market and it would not be right to include them in the legislation. I am glad the Government will not impose the charge on them.

I am concerned that self-catering homes are included. I have received much correspondence from people involved in the self-catering holiday industry, who are very concerned by this charge. The chairperson of the Irish Self-Catering Federation, Ms Helen Cousins, says that exempting registered and listed self-catering homes would cost the Government less than €2 million per annum. That is a very small amount compared to the estimated income from the tourism industry. The self-catering sector is worth almost €1 billion to the Irish economy. In addition, a constituent of mine from Laytown has pointed out that if registered and listed self-catering homes are not exempt, the local authority charge might mean that many self-catering operators will not be able to continue in business. Driving anybody out of business is a retrograde step. I urge the Minister to re-examine the issue of taxing self-catering properties. The Oireachtas Library and Research Service offers the information that one company has 750 self-catering properties in Ireland. This company alone will face an annual charge of €150,000 with the introduction of this levy. It will undoubtedly have a significant impact and could lead to a reduction in employment.

I agree with Senator Pearse Doherty's comments about rural homes and family homes in the countryside which have been kept, perhaps vacant, for many years. If elderly parents or grandparents die, people might not wish to sell these houses. They might not fetch a great deal on the open market anyway but they have a value in terms of the links people have to their family home. We should try to find a way to ensure these homes are not subject to this tax.

The €200 charge will be applied equally to all properties, regardless of their value. It is similar to a poll tax. Senator Dan Boyle mentioned that his relations in the UK are paying approximately €1,600 per annum in charges, but the charges in the UK vary according to the size and value of the property. I am not sure it is fair that somebody who owns a cottage in Annagassan or Clogher Head in County Louth, for example, should pay €200 while somebody who owns a second home worth €8 million or €10 million in Dalkey or Glenageary pays the same amount. There are equity issues here. Should there not be some sliding scale?

Payment of the levy can be made over the Internet or in local authority offices. Can Fingal County Council offices accept payment for a property in County Donegal or must somebody who does not wish to pay on-line go to the office in Donegal? Can they make the payment by post? Clarification about the payment mechanism would be helpful. I also have questions about tax issues in respect of the levy. Will the Minister confirm if businesses that operate self-catering homes or a rental scheme be able to get tax back when they pay the levy? Will they be able to claim this charge against their operating costs?

The Government is expecting to use the electoral register to help administer the levy. Everybody is aware of the problems this might cause. The electoral register in many counties leaves much to be desired. This will be compounded by the fact that additional work will be generated in local authorities. There is a recruitment ban in many local authorities so I am concerned about the impact this additional charge will have in terms of the administrative burden.

Research which we have seen suggests a significant amount of money will be raised by the charge. There are potentially 500,000 properties that will be subject to the charge. In Meath, it is estimated there will be an increase of €2 million in revenue and in Louth the increase is also estimated to be €2 million. How will that money be spent? It is important that this should be seen as additional revenue. It should not mean the Government will reduce payments to local authorities equivalent to what the authorities will gain from this tax. The revenue should be hypothecated towards, for example, the roads fund, which has been cut back in many councils and has suffered due to lack of funding. Sums of the €2 million to €3 million per annum would significantly assist the condition of local roads. What advice and guidance will the Minister give to local authorities regarding how this money should be spent? Will it just be put into a general operating costs pot or will it be hypothecated towards specific expenditure items?

The main issue is that we ensure the revenue generated as a result of this Bill will be seen as new revenue for local authorities, not as an excuse to cut back central funds provided by the Government to the authorities. The Labour Party will table amendments to the Bill. We are glad the Minister accepted our amendment relating to the charge on mobile homes but we will table a further amendment to provide that married couples who have separated or entered into an agreement to separate will also be exempt from the charge.

Acting Chairman (Senator Terry Leyden)

I welcome the Minister of State, Deputy Áine Brady.

Senator Brian Ó Domhnaill

I welcome the Minister of State to this discussion on the Local Government (Charges) Bill. Members have offered their views on the legislation and the generic view appears to be that everybody welcomes the Bill. It is an important Bill, particularly for local authorities that have large numbers of second homes. A table provided by the Oireachtas Library and Research Service indicates where the largest numbers of second homes are located. Obviously, Dublin has the largest number while Donegal is third on the list, with between 22,500 and 23,000 second homes. They would yield, as Senator Pearse Doherty mentioned, over €4.5 million. That is a substantial amount of money coming into the revenue base of a local authority.

This is the first property tax, if one can call it that, to be imposed in Ireland since 1978, when local authority rates were abolished. I generally welcome the legislation. When I was a member of the local authority in Donegal in 2004 and 2005 I sought the introduction of a charge on holiday homes. It was one of the recommendations in the Indecon report on local government financing. I was delighted the Government reacted to that report in the budget last October with its announcement of the €200 levy on second homes.

To clarify the figures being used, it appears the Department's estimate of €40 million income from the levy is based on figures from the Private Residential Tenancies Board. It does not take account of the census 2006 figures. Data compiled by the Oireachtas Library and Research Service suggest there are 487,000 properties eligible for payment under the Bill, which would generate substantially more than €40 million. It could be double that amount. Perhaps we will be given clarification of the figures.

There has been discussion of exemptions under the legislation. I wholeheartedly support the exemption for mobile homes proposed by the Minister. While I have not said anything publicly to date on the matter, in recent days I have been in consultation with mobile home site owners and the owners of mobile homes. In Donegal, families own mobile home sites and rent them to individuals who own mobile homes. It was unclear whether the mobile home owner or the site owner would pay the €200.

I received information from mobile home owners concerning the value of a mobile home. Depending on the standard, it costs €30,000 to €40,000 to buy a mobile home whereas a holiday home will cost perhaps ten times that amount. There can be no comparison between paying €200 for a mobile home and paying the same for a holiday home. The depreciation of a mobile home is even more rapid than that of a car, and regarding holiday homes in general, the price of property tends to increase rather than fall. I am glad the Minister is bringing forward the exemption. I know it will be welcomed across the board.

I wish to refer to the other exemptions. I agree with other speakers regarding the self-catering sector. Those involved tend to pay a registration fee of approximately €200 for their property to Fáilte Ireland and are now being asked to pay an additional €200 per year. Some of the self-catering businesses act as businesses, filing their returns to the Revenue Commissioners and these also pay commercial rates for their properties. When a self-catering operation pays commercial rates perhaps there should be a mechanism whereby it does not have to pay this fee which is, effectively, a double charge.

The Minister referred to situations in which an exemption can be made for certain heritage properties. I am not sure what is the definition of a heritage property. A number of individuals have been in touch with me who have what they describe as heritage properties, namely, properties with thatched roofs. Perhaps nobody lives in the properties but the cost of their upkeep is quite substantial. I ask the Minister to consider whether properties of this nature might be included under the category of heritage properties so they could be deemed exempt. I am sure there are only some dozens of such properties around the country. The postcard picture of Ireland in the United States always depicted as the thatched cottage and we should not attack it by imposing this charge. I spoke to two such property owners in County Donegal today who said that if the charge were imposed they would probably knock down the property which, in any case, is almost valueless. The only value is in the thatched roof and there is a grant available from the Department towards that. We should be careful not to attack that very important piece of heritage and should protect it.

Another issue to which I wish to refer is that of collection and administration of this charge. According to the legislation, this will be a matter for the local authorities and the Bill emphasises that collection and enforcement will come from the local authorities. I welcome that because it is probably more beneficial to have the collection locally. We must ensure there is liaison between the Department and the local authorities so that there is a collaborative response in terms of whether additional resources are required.. Perhaps the additional resources may come from the actual revenue stream but this should be teased out with the Department.

I do not agree with using the electoral register as a basis for collecting moneys or gaining access to information on properties until such time as the electoral register is linked to the PPS numbers. At such a time it can be guaranteed.

I come from a Border county where there is an issue regarding the collection of moneys from individuals resident in the North of Ireland who have holiday homes in Border counties. How will we ensure there is a legislative footing to collect those moneys? It is important this should happen because if we do not have such a legislative mechanism, there will be a kick-back from people who live in this State. I am sure this was thought out prior to the drafting of the legislation.

Senator Paddy Burke

I wish to share time with Senator Bradford.

Acting Chairman

Are times of four and three minutes, respectively, agreed? Agreed.

Senator Paddy Burke

I welcome the Minister to the House and am glad of the opportunity to speak about this Bill. Some questions have been raised regarding the electoral register used for the recent elections. The situation was a disgrace. A number of years ago when he was Minister, Deputy Dick Roche, spent a considerable sum of money nationally on compiling and updating the register but it has fallen back again. There is an opportunity here for local authorities to integrate this into a revenue-collecting mechanism and use it as a way of upgrading the local electoral register.

A number of issues were raised concerning the status of people who may live two or three days a week at home and three or four away in Dublin, Cork, Galway, or wherever. The Minister has not been clear and specific on this point in the Bill. He should spell it out.

What will be the position of derelict houses? There are a considerable number of these without sanitary facilities or electricity. Nobody lives in them but they are houses and are part and parcel of the fabric of rural Ireland. Before Committee Stage, I wish to know the position in respect of such houses. In many cases, they are and can be used as a tool to get planning permission for a house in a rural area. Nobody will demolish them overnight but we would like to know the situation. Severe fines are being put in place for the non-payment of the annual €200 and it is very important the Minister should spell out this matter.

Some counties will benefit enormously from the collection of these revenues and more will not. What will be the position regarding those counties that will not benefit so greatly? My own county, Mayo, will benefit by perhaps €4 or €4.5 million. Does this mean that the rate support grant as we know it, which has diminished over recent years, will decrease further to allow for the moneys collected by this charge? The Minister should tell the House. From my reading of the Bill and from the language used by the Minister, it would seem that will be the case because otherwise those counties that will not benefit will be at a disadvantage.

I am surprised about the mechanisms to be put in place for the collection of the charges.. Every local authority has revenue collectors who know their local areas. In some cases they collect water and refuse charges and commercial rates. There are local authorities that collect planning fees and enforce road closings. In many cases, the revenue collectors collect all these charges and the councils have all the data regarding planning permissions granted and those refused. Builders must issue commencement notices to local authorities when they start buildings and the local authorities have all the relevant information. I am amazed a local authority which has revenue collectors in local areas cannot provide a mechanism for collecting this money.

The Minister alluded to the directly elected mayor. It seems that in a very short space of time we will have a directly elected mayor for the greater Dublin region. There is now a newly elected lord mayor of Dublin and I am sure that mayor will stay in place for the next five years. However, judging by what the Minister said in the House today, the new directly elected mayor for the greater Dublin region will be a glorified mayor of the Dublin regional authority. We need further legislation on this matter as soon as possible.

Senator Paul Bradford

I thank my colleague for sharing time. I welcome the opportunity to comment on the Bill. The legislation is like a little trip switch because it allows us, if the Cathaoirleach will excuse the pun, to shed light on the broader local government debate and the issues facing local government.

In 1999, a constitutional amendment was passed to provide constitutional recognition of local government. It seemed like a major step forward at the time, but lip service has been paid to local government since. That has been the case for the past 30 years or so since the 1977 political decision to remove rates from domestic properties. In a sense, all political parties have failed to bell the cat in terms of local government reform and funding.

The Bill is viewed as a positive step. According to the Minister, it will broaden local authorities' revenue base. He stated: "This is the first time in more than 30 years that a new source of local funding has been made available to local authorities." As I told the Minister, this is probably incorrect as a decision was made four or five years ago whereby development charges on individual house constructions in rural and urban areas would be directly paid to local government. It was the first significant source of funding. Unfortunately, as soon as this type of funding was introduced, the Government cut back significantly on the grant for local authorities. It robbed Peter to pay Paul. If we are all fair — as Senators, we have close contact with local government — we must recognise the reality that new sources of funding are urgently required to provide for the future development and expansion of local government.

A fee of €200 per house cannot be sensibly opposed, but the question is for how long will the fee be at that level as all sorts of hard cases and exemptions will be sought. In principle, a tiny property tax is being introduced via the back door. The broader debate that is required on the issue of property tax might stem from the Commission on Taxation's report. I welcome the fee in so far as it will give some funding to local government and as long as we are guaranteed that it will be additional funding and that this direct injection of €40 million or €50 million will not be met by a reduction in the Government grant.

In the short time available to me, I express my interest in the Minister's statement regarding a directly elected mayor for Dublin. He seems to view the project as his personal input into the direction that local government will take. Where directly elected mayors are concerned, there are pluses and minuses. That the mayor of any town or city would have the appropriate powers and funding is of most importance. We must wait to see what the Minister will do in respect of the powers of Dublin's directly elected mayor before casting our final judgment. Where Dublin will lead, the other cities and larger counties will be expected to follow.

If we want real local government, it will need new powers, including the power to raise revenue and set local taxes. This is a difficult debate, but it must be tackled. The Bill opens a small door for us in that regard. I look forward to Committee Stage as a few issues must be teased out. In so far as the Bill gives local authorities some income discretion, it is welcome. From the largest county to the smallest town, every local authority is in grave financial crisis. They need new sources of financial input and the Bill may provide one. Some weeks ago, hotel bed taxes were mentioned in the Chamber. These seem to be the norm in a number of European countries. All this will serve to provide a broad agenda for future discussion. I have no fundamental issue with the Bill, but we will ask questions on Committee Stage and later regarding the funding of local government.

Senator Terry Leyden

I welcome the Minister of State, Deputy Áine Brady, to the House and congratulate her on her exemplary ministerial work to date. I wish her continued success.

I will not welcome any Bill that imposes a tax, but it is a necessary evil at this time and is inventive in terms of taxation. It is basically a voluntary declaration, which is always risky, given that people are not known to indicate voluntarily that they are liable for a charge. The fee is €200, but some people will be caught for €600 per year. It is important that people are aware that if they do not pay the initial charge, they will be liable for the charges on an ongoing basis.

The Bill does not provide for freezing of the charge. Section 14 will allow the Minister to propose an increase in the House. I welcome my colleague, the Minister of State, Deputy Michael Finneran, to the House and wish him continued success in the Department. I am glad he is present for the debate on this section because I would like to discuss a few matters that relate to his portfolio. I request that the charges be held at a particular rate for as long as possible. We do not want to impose more charges and costs on the public.

On the renting of properties — this is the responsibility of the Minister of State, Deputy Finneran — under the Housing (Standards for Rented Houses) Regulations, local councils make greater demands of people who have registered as owning rental properties, although not everyone has registered, than they do of the Minister and the councils themselves. I know of a property that is in excellent condition, but Roscommon County Council has decided that the landlord must cut the grass. I do not know whether the Minister is liable for cutting the grass of the Department or local councils are liable for cutting the grass of rented council houses. I do not think they are. It is a nanny state that would impose such a requirement. It is pathetic, to say the least, and it contravenes a certain article, although I do not know which one.

The landlords who have declared their properties and registered under the Residential Tenancies Act 2004 have had their houses inspected. Senator Coffey referred to the money being held by the Private Residential Tenancies Board. Seemingly, councils have many members of staff who have nothing to do other than examine those properties, which is fine, but councils are imposing requirements on the landlords of properties that are of better quality than the properties being rented out by those same councils, yet they do not impose those requirements on themselves. They should get their house in order before making others liable. Surely a tenant should be liable to cut the grass around his or her house. It is a small point, but I wanted to make it.

There should be a "sale of the century" of local authority houses. Such a scheme was introduced in the 1980s, which was very attractive. The council should dispose of as many properties as possible under the best possible deal and in that way responsibility for maintenance of houses would lie with the owners rather than the councils. As the Minister of State and I know from our experience on Roscommon County Council, house maintenance was always a problem and it was very difficult to find the staff to do so. I suggest that such a scheme be introduced.

I ask the Minister of State to influence the Minister, Deputy Gormley, regarding councillors' attendance at seminars and conferences, as referred to by Senator Glynn. Through the Minister of State and his officials, I appeal to the Minister in this regard. The allowance given by various councils has been reduced due to cutbacks. It allows councillors to attend seminars of great importance. As a former councillor of 22 years, I learned more from going to conferences than I did at any council meeting. I had the opportunity to meet other councillors and to learn of what was occurring in their local authority areas. The Minister's proposal to review this allowance is small and petty in the context of the hard working, committed and dedicated people who devote their time and energy to the betterment of their electoral areas.

I will circulate to my council voters information on the best selection of conferences and seminars — I am dealing with those for July 2009 at present. The list includes the seminar on the management, protection and development of public lands and buildings, which is a very useful seminar, the inaugural Percy French summer school, which will be held in Castlecoote in Roscommon and which, I am sure, the Minister will attend, is also a very useful exercise.

An Leas-Chathaoirleach

I have given Senator Leyden great latitude, but he is straying from the main part of the Bill.

Senator Terry Leyden

I have just one other point. A seminar on planning and building energy regulations will be held. All these seminars, including one on the economy, what went wrong and how to fix it, are very useful. I ask the Minister of State, Deputy Finneran, to use his influence with the Minister, Deputy Gormley, in respect of this matter.

It would be counter-productive and would affect the education of councillors, especially those who were only recently elected for the first time, if they were prevented from attending educational and other seminars. These seminars can be extremely beneficial, from both a tourism and economic point of view, to the areas in which they are held, particularly if they are not normally hosted in such areas.

I am glad the Minister of State, Deputy Finneran, who is a very practical man, is present. In light of his great experience of local authorities and the fact that he previously served as president of the Local Authority Members Association, he is in a strong position to encourage the Minister to leave responsibility for making decisions regarding seminars and the charges relating thereto with local authority members and their executive bodies. I would be satisfied with such an approach.

Senator David Norris

I wish to share time with Senator Quinn.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Senator David Norris

I welcome the Minister of State. I listened with interest to the contribution of the Minister, Deputy Gormley, and I note he intends the charge to relate not just to rental and holiday homes but also to vacant properties. That is a good development because it will provide an incentive for the charge to be passed on.

It is critical the Minister should make clear that the most important exemption relates to principal private residences and that this is not a full-scale property tax. Such a tax appears to be on the Government's agenda and if that is the case, so be it. However, the Minister should beware of recreating the old-style rating system which employed a measurement system involving square or cubic footage. I must declare an interest in respect of this matter. People such as I who renovated slum properties in the inner city because of their heritage value would be taxed out of existence were such a system to come into place. A number of members of the North Great George's Street Preservation Society have already stated that if such a system were introduced, it would sound the death knell in respect of everything the society has done. If the Government is contemplating the introduction of a residential property tax in respect of people's homes, it should be aware it may have a negative impact such as that which I have outlined.

Those who drafted the Bill were careful to take cognisance of the situation of people who, because they are moving house, may for a short period possess two residential homes. Such people will be exempted, which is perfectly appropriate. I also welcome the position with regard to people in the aftermath of a divorce. It is interesting that the Minister has yielded to the lobby in respect of mobile homes. This move may well be appropriate.

I commend Senator Boyle on making clear his respect for the House. Although the Senator was invited to appear on a very popular and important radio programme yesterday, he did not do so because he is of the view that the House is the correct forum in which to discuss this issue. I have no doubt the Senator put forward an effective case in respect of the legislation during his contribution.

That Minister indicated that, having been advised of the difficulty in respect of mobile homes, he is preparing an amendment. That amendment has not yet been presented to the House. We will all examine it with interest when it emerges. I heard a number of people state on radio that while they possess what are classified as mobile homes, these type of homes are quite static, have steps built up to their entryways, are connected to sewerage and water systems, etc. Therefore, questions arise in this regard.

Had a decision been made to tax mobile homes, it would have been intriguing to discover whether the Traveller community would have come within the remit of the legislation. There is a case to be put to the effect that some very wealthy Travellers might very well be able to afford to pay such a tax. I say this as a great admirer of the Traveller community. I just received a copy of a wonderful magazine, Voice of the Traveller, and I wish to state that all Travellers can be very proud of the contribution their community has made.

I welcome that the Minister has reconsidered the position with regard to mobile homes. I received representations from a person who is a graduate in the area of tourism and economics who informed me he bought a second-hand mobile home in a beautiful seaside area of County Wicklow. He did so because he wanted his children to be able to live in a safe and healthy environment while on their holidays and also, rather patriotically, because he wanted the family to holiday at home in Ireland. Such behaviour has important environmental and economic aspects because families who take this route do not travel abroad, their carbon footprints are subsequently reduced and they contribute to the local economy by purchasing mobile homes, a large number of which are manufactured in this country. In addition, families who holiday here in their mobile homes contribute to local economies by frequenting shops, accessing services etc. The individual to whom I spoke made an interesting calculation to the effect that tens of millions of euro have been gained as a result of the purchase of mobile homes. If a disincentive is introduced to the equation, such gains would be lost.

Acting Chairman (Senator Terry Leyden)

I thank the Senator for his contribution.

Senator David Norris

I am sure the Acting Chairman, who is a good Roscommon man and very flexible, will allow me to make a concluding point.

Acting Chairman

I thank the Senator for his kind remarks.

Senator David Norris

I take this opportunity to scotch the rumours to the effect that I am interested in pursuing the position of elected lord mayor of Dublin. Establishing a directly elected office of lord mayor is a good idea.

Acting Chairman

The Senator cannot use this as an opportunity to campaign.

Senator David Norris

If there is to be a directly elected mayor, he or she must possess the right talents. I am modest enough to state that I do not possess them. In addition, he or she must have access to a proper, decent, good, independent budget.

Acting Chairman

I call Senator Quinn. I hope he does not intend to take the opportunity to make a declaration on his own behalf. The Bill before us does not relate to the creation of a directly elected lord mayor of Dublin.

Senator David Norris

Senator Quinn would make a very good lord mayor. I would campaign on his behalf and vote for him.

Senator Feargal Quinn

I wish to express my disappointment that Senator Norris does not propose to seek election as lord mayor of Dublin.

Senator Camillus Glynn

The Senator wants to be convinced.

Senator Feargal Quinn

Senator Norris would bring great esteem to that office. I welcome the Minister of State. I also welcome the concept behind the Bill and I understand what the Government is trying to achieve. However, I am concerned with regard to the tourism business. I have experience of the latter because my father built Red Island holiday camp in 1947. What was interesting about it was that the 500 guests who stayed there each week travelled over from England. Irish people only took holidays in two places in 1947, namely, they stayed with their relatives on farms in the countryside or they stayed in what were called holiday homes. The latter were usually wooden structures located on or adjacent to the beach. Such holiday homes were extremely popular and common and it was difficult to regard them as second residences. In the interim, extremely substantial holiday homes have been constructed. We are not, therefore, referring to the type of structures that existed in 1947.

As already stated, however, a concern exists with regard to the tourism business. In light of the fact that Irish people who possess second holiday homes might be placed at a disadvantaged and almost encouraged to go elsewhere as a result of the imposition of the charge, we must ensure a balance is maintained. The criterion for applying a charge in respect of these homes is that they appear to be fixed to the ground. Senator Norris stated that the amendment has not yet been published. However, I have a copy of it and it refers to "part of a building" and "a structure or erection of any kind and of any materials, or any part of that structure or erection ... but does not include a vehicle or mobile home". Will the Minister of State indicate what is meant by the term "mobile home"? If it refers to something that is capable of being moved or attached to a vehicle, that is fine. If a mobile home is fixed to the ground, will its owner be liable for this particular tax?

There is a need to broaden the tax base. The Commission on Taxation is due to report at the end of July and is widely expected to recommend the introduction of some form of property tax on principal residences. Will the tax we are discussing at present raise anywhere in the region of the €40 million to which reference has been made? Perhaps the Minister of State will indicate from where that figure originates. Reference has been made to some 200,000 holiday homes but I understand this figure may also include mobile homes.

Like Senator Norris and others, I have been approached by people who are extremely concerned with regard to the reference to mobile homes. Will the tax be applied in respect of mobile homes which have become fixed to the ground? If the answer is in the affirmative, will this represent a temptation for people to unfix such homes from the ground to ensure they avoid the tax?

I welcome what the Minister for the Environment, Heritage and Local Government is trying to achieve. However, I must sound a note of caution with regard to the effect this might have on the tourism industry in this country, especially in the context of people wishing to holiday at home.

Senator Denis O’Donovan

I welcome the Minister of State. It is important to provide additional funding for local authorities. They are somewhat cash-strapped and that is why I welcome this aspect of the Bill. Nobody welcomes a new tax of any sort. A friend, Michael Pat Murphy Jr., who died rather untimely, advocated as a young Independent councillor the imposition of a levy or tax on second or holiday homes. In my area, south-west Cork, there are many such homes. His point was that it would generate extra revenue for the local authority. If this tax had been imposed during the past ten or 12 years of boom when there was unprecedented wealth in the country the pain would be much less acute because money was flowing freely and so on. The sum of €200 seems small but I have no doubt that over the next few years it will be increased.

I am glad to note the exemptions. In nearly every village and town there are scores or even hundreds of unoccupied houses in housing estates but the houses that cannot be sold are exempt. I hope that in their interpretation of what is a habitable dwelling the local authority or agencies concerned will take a practical or pragmatic view and deem a house in disrepair to be uninhabitable. I do not want to see the old situation that prevailed when I was a young lad in the 1960s and earlier whereby a person who had a second house would knock the chimney off the house to avoid rates because if there was no fireplace the rates were not imposed. Some relatively good houses were turned into houses for pigs or cattle. I hope the people in charge today will take a more pragmatic view.

I hope that administrative costs do not outweigh the benefit of the tax imposed. A sum of €200 is small in this day and age for anybody who is fortunate enough to have a second home. There is a fear that the next budget may include some form of property tax. I do not want to see administrative difficulties. I had an experience with the Private Residential Tenancies Board, PRTB, which made me think that the administrative difficulties nearly outweighed the cost of registering. The board is a good system. Not so long ago a daughter of mine was in college and her landlord had several properties in a city that I will not name and insisted that she pay the rent in cash. I objected to this. The conditions in the flat were atrocious. I would like to see better quality rental properties in Dublin, Cork or Galway, that provide basic facilities. There should not be wallpaper falling off the walls because of the damp and lack of heating and atrocious sanitary facilities. The time has come when anybody who has any kind of property should be registered. Does the Minister of State know if any survey has been done to establish how many student or rental properties around the State are registered? Probably up to 40% are not registered with the PRTB.

I did not intend to contribute but wanted to mention those few points. I welcome the Minister of State and congratulate him on the work he is doing. I hope this levy will be of benefit to the local authorities because they badly need a few extra euro in their kitties.

Minister of State at the Department of the Environment, Heritage and Local Government (Deputy Michael Finneran)

I thank Senators for their constructive and thoughtful contributions to the Bill. Rather than attempt to respond to each point on Second Stage I can do this in response to Senators' amendments on Committee Stage. I will respond, however, to a few points. Senator Leyden spoke about the sale of local authority properties. Later this afternoon I will be leading Report and Final Stages of the Housing (Miscellaneous Provisions) Bill 2008 in this House. I initiated the legislation here and it has been through the Dáil. There have been several attempts over the past 20 or 25 years to introduce a scheme for the sale of local authority flats and apartments. That will be introduced when this Bill is passed this afternoon. It gives people an opportunity to buy the flats or apartments they occupy or those they will occupy.

That Bill also includes a new provision called the incremental purchase scheme. For the first time people will be able to buy a council house on the day they enter it. I have always thought that instead of waiting three or five years to sell a council house to a tenant we should give that person the opportunity of becoming the owner on day one and give him or her responsibility for insurance and maintenance and so on. That will be introduced as a pilot scheme straightaway. The tenant purchase scheme administered through the local authority systems will continue.

Senator Norris spoke about heritage houses. There is an exemption in the legislation for those who are deemed exempt under the relevant legislation. He also spoke about mobile homes. There will be an amendment dealing with them. The Senator asked how this would affect the Travelling community. That would not arise because the mobile home is a Traveller's primary residence.

I take Senator Quinn's point about tourism which is a vital component of revenue. The more people holiday at home and use the facilities we have here the less money leaves the country and more comes into the Exchequer. He asked whether timber homes were different from mobile homes. Those on fixed foundations will be deemed to be homes. Anything that can be moved by crane or whatever will be deemed a mobile home.

Senator O'Donovan asked what deems a house habitable. Some of the greatest destruction in the 1950s and 1960s occurred when people removed not only chimneys but also roofs in order to avoid paying rates. The roofs of some fine buildings were removed allowing rain to damage the structure. I hope local authorities will take a practical view of this provision.

With regard to private rental accommodation, earlier in the year I brought forward new regulations on standards for rented houses. These apply to all private rental accommodation and most of them are now law. Those not yet in place require structural work to be completed. One part, which will take four years to implement, deals with my intention that bedsits in cities, particularly Dublin, will no longer be part of the housing structure. I could not introduce their exclusion immediately because too much cost was involved. I have provided for a four year lead-in period for people to carry out the important structural work involved.

The Bill is relatively direct, and straight forward legislative measures will apply, broadly speaking, to the owners of non-principal private residences. In my view, those of us fortunate enough to own a second property should not find the obligation to pay €200 per year towards services provided by local authorities unduly burdensome. The Bill is estimated to generate approximately €40 million annually for the local government sector. Its importance is not adequately reflected in the amount of revenue to which it will give rise, rather it represents a new genuinely local source of funding for local authorities and reduces their dependence on central Government. This is a very important principle which we should welcome.

It has been said that the ideal taxation measure is equitable, simple and flexible. The Local Government (Charges) Bill scores well under the criteria of simplicity and flexibility. It is simple and cost effective to administer and it will be simple to understand and comply with. It will generate revenue on a continuing basis and will not be subject to the volatility we have come to associate with transactions based on property taxes. In this sense, it has the flexibility to cope with the varying economic conditions while maintaining a stable yield. It must be acknowledged that the Bill does not include a valuation-based component, something which would make the system far more complex and difficult to administer and comply with. Against this, the amount of the charge is relatively modest at €200. At least it can hardly be described as inequitable given the amount of the charge involved.

I look forward to a high compliance rate with the obligation to pay the charge. This is in everybody's interest. The point was made that it is simple common sense to pay it when it falls due. Evasion will incur significant late payment fees which will have to be paid at some point. The longer the delay in paying the charge, the more expensive the late payment fees will become and the resale of the property is likely to prove exceptionally difficult if the charges and late payment fees are left outstanding.

I thank Senators for their contributions to the debate.

Question put and agreed to.

An Leas-Chathaoirleach

When is it proposed to take Committee Stage?

Senator Camillus Glynn

Committee Stage will be taken at 2.15 p.m. today.

Sitting suspended at 1.45 p.m. and resumed at 2.20 p.m.

Seanad Éireann debate - Wednesday, 1 Jul 2009

Local Government (Charges) Bill 2009: Second Stage.

Seanad Éireann debate -
Wednesday, 1 Jul 2009