I move: "That the Bill be now read a Second Time."
I welcome the Minister of State at the Department of the Environment, Community and Local Government, Deputy Jan O'Sullivan, and thank her for coming to the House to take the Valuation (Amendment) Bill 2013. It is a small but important Bill and I am grateful to my colleagues for giving me permission to table it on Private Members' time.
There is general recognition across all sides of this House that one of the most attractive elements of Irish community, commercial and social life is the fact that we have managed to retain vibrant and attractive town centres. Towns and villages have suffered the negative impact of the downturn of recent years but town centre businesses have worked hard to stay in operation through a difficult climate. However, in addition to dealing with the effects of the recession, traders are increasingly being hit by the triple blow of reduced consumer spending, the advent of local authority imposed street parking charges and new out-of-town retailers offering large free surface car parks. The competitiveness and openness of the Irish retail sector has allowed for a massive increase in retailers starting or expanding operations here. For example, the two German discounters have attained a significant market share over a relatively short period. We have also seen the development of retail parks and large retail supermarkets located on edge-of-town and out-of-town sites.
Competition is good for the economy and for consumer choice because it allows consumers to shop around for the best value and make the family budget stretch further. Nothing in this Bill seeks to impact negatively on competition, choice or services for consumers nor does it propose to impose new costs on consumers. However, it is critical that we examine the way in which the development of new out-of-town retail operations with large surface car parks are treated from a rates perspective in the light of the social and economic costs they impose on town centres. Under current Irish law, there is a glaring inequity in the governance of commercial rates which negatively impacts on the vitality and viability of towns. If left unchecked, this inequity will contribute to the erosion of the social, economic and community functions performed by town centres and increase dereliction, urban decay and the associated costs they impose on the wider society.
Most major town centres are subject to local authority imposed parking charges. Income from parking charges has become a significant source of revenue for local authorities, accounting for 28% of all income received by councils annually. Parking regimes are enforced rigorously through parking fines and clamping. At the same time, however, small retail businesses in urban areas contribute significant rates and other municipal charges such as licence fees for street furniture to local authorities. The advent of paid parking in town centres has also forced retailers with parking spaces in these areas to impose charges for parking on their properties to prevent people from avoiding parking charges by occupying the spaces. In simple terms, it costs money to park in town centres and local authorities are significant beneficiaries. By contrast, there has been major expansion in edge-of-town and out-of-town shopping facilities which depend almost entirely on car-driving customers. These new retail outlets come in various forms. Some are large shopping centres, almost always with a major grocer as anchor tenant. Others are smaller discount retailers which operate as a single unit or as part of a neighbourhood centre. Regardless of their form, they typically share two features. The first is that they are located outside the town centre and the second is that they offer free parking to their customers.
Planning and transport policy affords priority to town centres rather than out-of-town retailers on the grounds of sustainability and the social and economic functions of town centres. However, the legal basis for the levying of rates by local authorities goes in the opposite direction. If anything, the current structure introduces a disincentive for out-of-town retailers to charge customers for parking. Under the current law, a retailer which does not charge for parking is not liable for rates in respect of car parking spaces. Typically it is only where retailers charge for parking that parking spaces are subject to rates. The current system makes no sense in terms of consistency between planning and transport policy. The existence of free car parking and out-of-town retail outlets acts to draw car-based customers away from town centres, where they would be obliged to pay for parking and could face fines or clamping if they stay beyond the time for which they have paid. A decline in the level of trading impacts on the vitality and viability of town centres and reduced customer footfall in town centres impacts on the viability of retailers, particularly those trading in convenience goods which depend on higher numbers of low-spending customers. Fewer viable retailers mean fewer viable town centres, increased dereliction and urban decay which, in turn, create additional societal costs that are often borne by the Government and the taxpayer. The reduced footfall also impacts negatively on the local authority revenue stream through reduced parking receipts and, ultimately, lower yields from rates because of failing town centre businesses. This decrease in revenue is not replaced by alternative revenue streams from out-of-town centres. Ultimately, the current situation will lead to enhanced market power for out-of-town and edge-of-town retailers, reduced choice and opportunity for customers and a deterioration in retail diversity. It is also the case that many out-of-town retailers operate low-cost and low-employment models which militate against new employment creation.
To take an example, retailer A is a grocer based in a 7,000 sq. m store in the main street of a town centre and employs 30 full-time staff. The local council has introduced paid parking in the town, with the consequence that retailer A charges for parking in the small 50 space carpark attached to the store. Consequently, retailer A pays rates to the local authority on the shop and the car park. In addition, customers must pay for their parking, either to the local authority or to retailer A. Trade has suffered as a consequence of the downturn and the arrival of the new out-of-town retailer B which offers free car parking. Retailer B is a branch of an international chain which operates out of a 10,000 sq. m store and employs 50 full-time staff. The store is located on the outskirts of the town centre on one of the main entrance routes to the town. Retailer B does not charge customers for the large surface car park attached to the store, which means it pays rates on the store but not on the carpark.
Several measures could be taken to address the challenges that free out-of-town parking provision create for the vitality and viability of town centres. A step that should be taken immediately is to address the inequity that commercial rates are not charged for the provision of out-of-town retail carparks. The current legal provision contains no incentive for operators of out-of-town retail centres to impose charges on their customers and acts as a disincentive from applying charges. As such, it is counter-productive and inconsistent with Government planning and transport policy. To address this inequity, the Bill proposes to amend section 51 of the Valuation Act 2001 to stipulate that the space reserved for car parking associated or attached to a retail outlet should be separately valued in the calculation of the rateable valuation of a property. The rateable valuation should be based on the revenue that would be generated from the space if it was charged at the current value of street parking rates applied by the local authority in the adjacent urban area. Unless the retail centre operator charges a higher hourly rate, some mechanism could be inserted to ensure free parking spaces attract a higher rateable valuation. In addition, a measure would be required to ensure this new valuation is imposed with effect from 12 months after the date of enactment and with a facility for self-assessment to expedite the process of valuation.
The effect of this amendment would be to generate additional income for local authorities from the application of rates to car parking spaces and encourage operators of retail centres with free parking to make some contribution to the broader social and economic costs of using their parking facilities. It would impose a cost on a facility which, while currently free of charge, generates overall societal costs.
Section 2(1) amends section 51 of the Valuation Act by providing that where a property is a shop or retail outlet, the parking spaces for customers should be taken into account in assessing the rateable valuation. Section 2(2) introduces a mechanism to calculate the rateable valuation by reference to either the amount charged by the centre operator for parking spaces or, where no charge is imposed, the equivalent parking charges imposed by the local authority for car parking within the local authority area, whichever is the highest. This imposes a de facto valuation of the space involved with no less a cost than that charged for town centre parking. While the operator may absorb this cost, it will be a factor in the rates that are paid for car parking spaces, in other words, the commercial value of parking spaces will be calculated at a reasonable rate.
Section 3(3) provides for the valuation of properties covered by the Act within 12 months of its commencement.
This is a fair, proportionate and necessary measure which will address an inequity in the current legal position and ensure greater coherence and consistency in transport and planning policy. It will also introduce certainty to an area that is currently confusing and unclear and do so in a way that delivers broader societal benefits. Local authorities will welcome the additional revenue generated by the measure and ensure the additional funds generated are used to improve town centres as places to visit, frequent and shop. I commend the Bill to the House.
