On behalf of the committee, I welcome the Minister of State and his officials. We are considering the Committee Stage of the Urban Renewal Bill, 1998. A list of proposed amendments has been circulated. It is proposed to group amendment Nos. 3 and 9, 7 and 8 and 10 and 11 for the purposes of debate. All other amendments not listed above and in order will be discussed individually.
Urban Renewal Bill, 1998: Committee Stage.
Chairman
Sections 1 to 6, inclusive, agreed to.
SECTION 7.
I move amendment No. 1:
In page 6, subsection (6)(a)(i), line 24, after "pattern" to insert "which shall include the co-ordination and upgrading of shop frontages,".
This provision seeks to insert a further specific phrase in subsection (6). It is not intended to be limiting but to draw attention to the fact that the shop frontages in many towns could do with refurbishment. It is the policy in a number of local authorities to require such refurbishment. In Sligo, for example, a worthwhile campaign was carried out to integrate and harmonise shop frontages. Wexford is another such example and other local authorities are now making an effort to beautify streets by removing neon and plastic and replacing them with more traditional materials.
I hope the Minister of State will accept the amendment as a nod in the direction of further refinement.
Section 7(6)(a)(i) provides that an integrated area plan may, where appropriate in relation to the area to which it relates, include objectives for the renewal, preservation, conservation, restoration, development or redevelopment of the streetscape layout and building pattern of the area.
This amendment seeks to introduce a mandatory provision to the effect that these objectives must include the co-ordination and upgrading of shop frontages. Objectives relating to the co-ordination and upgrading of shop frontages are likely to be appropriate for inclusion in many integrated area plans and the provisions of the Bill relating to the content of such plans are broad enough to allow for such objectives to be included in plans where considered necessary by the local authority or company preparing such a plan.
The difficulty about making the inclusion of objectives related to shop frontages mandatory for all plans is that it might not be appropriate in all cases, for example, plans for areas where there are large areas of dereliction or environmental degradation. In the circumstances, it is not possible to accept the amendment.
In areas of dereliction there are no shop frontages and where they do not exist this amendment cannot be a problem. Subsection (6) provides that the integrated area plan "may, where appropriate, .... include..". The subsection is conditional, not mandatory. It simply illustrates what the content might be.
Is the Minister of State be prepared to accept a rephrased amendment on Report Stage? The wording could be changed from "which shall include", which he considers mandatory, to "including, where appropriate, the co-ordination and upgrading of shop frontages". The amendment mainly seeks to support something that is already happening in a number of local authority areas and which has been demonstrated to be useful in a modest way. A nod in that direction by the legislation would be useful.
I hope many of the integrated area plans will include proposals to upgrade shop frontages. That has been a feature of some modern developments in towns throughout the country. The integrated area plans can include proposals for upgrading shop frontages under the legislation as drafted. The amendment provides that the plan shall include the co-ordination and upgrading of shop frontages. The word "shall" makes it mandatory. If the Deputy wishes to draw attention in the legislation to co-ordinating and upgrading shop frontages per se, I might be prepared to accept the word “may”. The mandatory word “shall” is not necessary and might cause difficulties.
Subsection (6) states: "Without prejudice to the generality of subsection (4), an integrated area plan may, where appropriate, ....include..". None of the provisions in the subsection is mandatory. It does not matter what language is used further in the subsection because it is governed by the phrase "may, where appropriate, ...include..". Would the Minister of Stage agree on Report Stage to accept a different wording, for example, "including where appropriate the co-ordination and upgrading of shop frontages". It must be borne in mind that the phrase is governed by the earlier phrase "without prejudice to the generality of subsection (4), an integrated area plan may .... include". That would not render it mandatory.
The phrase "where appropriate" is already included in the subsection.
I am all for elegance of language. The words "which shall include" can be changed to "including the co-ordination and upgrading of shop frontages". It still will not be mandatory.
The subsection, if amended, would state: "Without prejudice to the generality of subsection (4) an integrated area plan may, where appropriate, in relation to the area to which it relates, include..... objectives for renewal, preservation, conservation, restoration .... which shall include the co-ordination or upgrading of shop frontages". That might not always be appropriate. The amendment provides for specifics whereas the subsection is a general provision which permits the upgrading of shop frontages. It is already provided for.
If the Minister of State is going to parse the wording thus, we could entertain ourselves indefinitely. The text he is proposing mentions objectives for the renewal, preservation, conservation, restoration, development or redevelopment——
Of streetscapes, not shop frontages.
Renewal, restoration, development or redevelopment broadly mean the same thing so the Minister of State is not averse to redundant language in order to specify what he wants to do. I cannot understand why he should find it offensive that we might seek to make something that is implicit a little more explicit by referring to co-ordination and upgrading of shop frontages. It is a good scheme and where it is implemented it works well. It would be useful to nod in this direction in the legislation.
I have offered to accept the word "may" which inserts the objective in the Bill, although I do not believe that is necessary to achieve it.
Will the Minister of State come back to it on Report Stage?
Yes, on the basis of using the word "may". I said that some time ago.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 6, subsection (6)(a)(vii), line 39, after "facilities" to insert "and infrastructure".
This amendment refers to the objectives of the integrated area action plan for the development of community facilities.
Many communities which have not experienced improvements as a result of urban renewal schemes require massive development of their infrastructure. There are cases in my constituency, west Tallaght, where there is huge need for facilities and infrastructure. The inclusion of infrastructure in this subsection will strengthen the programme of renewal that must occur under the plans.
Section 7(6) provides that an integrated area plan may, where appropriate, include objectives relating, inter alia, to the development of community facilitates. Integrated area plans may also include objectives for the improvement of the environment, infrastructure and transportation. In these circumstances, I do not see a need to add the words suggested in the Deputy’s amendment. The term “community facilities” is wide enough to encompass a wide range of such facilities. Adding an additional reference to infrastructure beyond what is already provided for in section 7(6) would cause unnecessary confusion.
Amendment, by leave, withdrawn.
Chairman
Amendment No. 3 is related to amendment No. 9 and both may be discussed together. Is that agreed? Agreed.
I amendment No. 3:
In page 6, subsection (7), line 46, to delete "may" and substitute "shall".
Amendment No. 3 refers to the consultation which must occur for integrated area plans to be put together. Section 7(7) states: "In preparing an integrated area plan the local authority or authorised company concerned may consult with such other persons as appear to it to be concerned with or interested in the matter". We should include the word "shall". From listening to some contributions on Second Stage, an area of concern which many Deputies highlighted was the level of consultation within the community and with the major players in it.
The community infrastructure and landscape is totally different today than it was ten years ago given the mushrooming of partnership companies, enterprise boards and the other bodies which make up that cohort of community activity. As was stated when we discussed the Housing (Traveller Accommodation) Bill, 1998, earlier today, we are also dealing with a new departure in local government where SPCs will have a greater role in terms of the community sector. The inclusion of the word "shall" will emphasise the determination of all sides of the House that when an integrated area plan is considered it will be done in conjunction with other persons who appear to be concerned.
Amendment No. 9 refers to monitoring the implementation of the integrated area plan and I propose the inclusion of a new subsection. My amendment is important because the effective implementation of an integrated area plan will depend on key players in a local authority area driving it forward. It is right that the views of all interested parties in a functional area are taken on board and considered when an integrated area plan is being monitored for implementation. The amendments are similar and I encourage the Minister of State to accept them.
Section 7 covers the preparation by local authorities or authorised companies of integrated area plans and their submission to the Minister for the Environment and Local Government. Where a local authority decides to prepare such a plan, section 7 goes on to specify the issues which must be addressed in it. A range of issues, which may be addressed depending on circumstances in each case, is also specified.
Essentially, it was a matter for each local authority to decide on any area or areas for which a plan or plans were to be prepared and to put the procedures and arrangements in place for the preparation of any such plans, including the arrangements for consultation with other interested parties. In that context, I was anxious not to be overly prescriptive in terms of specifying the detailed arrangements to be made at local level having regard to the varying circumstances which may apply in different areas. That is why the provisions in subsection (7) with regard to consultation are of an enabling rather than a mandatory nature. As I made clear on Second Stage, however, an extensive consultation process is clearly provided for in the guidelines on the preparation of IAPs and the extent to which this has occurred will be an important factor in the assessment process in relation to IAPs which is now under way.
Section 12 requires local authorities or authorised companies to make appropriate arrangements for monitoring the implementation of any integrated area plan within the area of which sub-areas are designated for urban renewal tax reliefs and in doing so, to have regard to any guidelines which the Minister for the Environment and Local Government may issue for this purpose.
The section goes on to provide that regular reports must be furnished to the Minister on the outcome of the monitoring arrangements which have been put in place. The guidelines which issued to local authorities last year on the preparation and content of integrated area plans, while recognising that the precise arrangements for monitoring are a matter for each authority, suggest a model which would involve the establishment of a wide, cross-sectoral steering group, including representatives of various local interests, which would have an ongoing monitoring role throughout the period of the plan.
The proposed monitoring arrangement is one of the factors being taken into account in the current assessment of the integrated area plans which have been submitted and I will insist that these be strengthened in any case where I am satisfied they are inadequate at present. In view of the requirements for the ongoing involvement of all relevant local interests in the monitoring and implementation of integrated area plans I feel the additional subsection to section 12 requiring local authorities or authorised companies to consult with other interested persons before making a report to me is unnecessary. In the circumstances, perhaps the Deputy might consider withdrawing these amendments.
I fully support Deputy Hayes's views on providing for the widest possible range of local consultation, but I see a difficulty with including the word "shall" in this subsection in terms of somebody challenging the legality of the plan thereafter. If there is a legal requirement for the local authority to consult any such persons as appear to be concerned, where does it begin and end? A requirement for the local authority to consult all such persons would be an onerous responsibility to include in law. I do not know if there is a way in which the consultation process could be signalled to be a strong requirement of the Bill without putting an impossible burden on local authorities. Has the Minister any ideas on that?
I support the idea behind amendment No. 3. Consultation is something we all support. In recent years a greater number of people in County Kildare seem to have involved themselves in planning matters. One of the sins of the past was that major decisions were taken without much consultation with groups or individuals. As Deputy Howlin said, it is difficult to know where to draw the line with individuals or groups. It would perhaps create a legal nightmare if we took this amendment on board and we would create problems rather than solving any. The amendment is unnecessary.
I understand from where Deputy Hayes is coming and have a certain sympathy with that view. Is there a provision imposing a statutory obligation on the local authority to place an advertisement for a specific period requesting submissions from all those who are interested? One residents' group could be contacted and could hold a public meeting, but others may not be aware of it. Is there a statutory provision whereby the local authority must advertise in national newspapers for a specific period? It is something worth exploring because I am concerned at the possibility of there being less consultation in future than we would like.
I am puzzled why some Deputies have trouble with this. Deputy Hayes suggests the local authority or company should be required to consult with such other person as appeared to be concerned with or interested in the matter. Deputy Power thinks that potentially casts the net widely and Deputy Howlin thinks it is uncertain. In case they may have overlooked it in their scrutiny of the Bill, I invite Deputies to have a look at section 7(7) which provides that, in preparing an integrated area plan, local authorities or the authorised companies concerned "may consult with such other persons as appear to it to be concerned with or interested in the matter".
It says "may".
The result is the same.
The problem is that, while the wording "may consult with such other persons as appear to it to be concerned with" is fine, the word "shall" leaves it open to legal challenge later. The argument could be made by a group that it had an interest and the point of law would be whether it was appropriate for the local authority not to have consulted it.
That is not well founded. Regardless of whether the words "may" or "shall" are used, once any consultation takes place, someone who was not consulted and feels he ought to have been will have a gripe.
It would be a lesser gripe if there was not a legal obligation on the local authority to consult him.
Deputy Howlin's stout defence of this provision may be partly influenced by his participation in paternity on the Bill.
We drafted the original guidelines.
I would have thought he would have seen the benefits of Deputy Hayes's proposal.
Regarding my first amendment, which changes the wording to "shall", the intention is to put the emphasis on the local authority where it appears to it that groups are interested in the matter. This would put an obligation on local authorities to consult with all interested parties. However, I respect the view of the Minister of State on this.
I am less respectful of his position on my amendment No. 9. There is no requirement in the legislation for communities worst affected by urban decay to have their voices heard at the monitoring stage. What power exists for a community interest in the middle of a plan or when annual reports are being made to have its views put to the Minister? No such power exists and such groups do not have financial resources. If we are serious about our new approach to urban renewal, we should specify in law that they must be consulted. It is all very well to mention guidelines but the view from Members on a cross-party basis on Second Stage was that all groups were not being consulted by local authorities. By putting it in law, we will provide a greater involvement for those groups at the monitoring stage.
The guidelines referred to were issued in April last year and the process has since begun. Integrated area plans have been lodged prior to the end of March of this year and almost all of them were on time. More than 70 have been received. They are being examined by the expert advisory group which will make recommendations regarding their compliance with the guidelines and the areas proposed to be designated. Decisions will have to be made then between the Minister for the Environment and Local Government and the Minister Finance.
Concern was expressed on Second Stage about the level of consultation in all those areas.
Extensive negotiations took place with regard to most of the IAPs which have been submitted. In some cases, local authorities advertised in the paper bringing the matter to public attention. In other cases, community organisations were extensively involved in the discussions. A wide range of consultations took place in the case of almost all plans.
It emerged on Second Stage that it was not as extensive in some areas as one would have hoped or liked and that the guidelines had not been fully complied with. It was laid down in the guidelines that it was expected that wide consultation would take place and that the process was different from the manner in which designated areas were selected previously which was rather arbitrary. This time it was more sophisticated and targeted and was done from the bottom up. It was not done at ministerial level but at local authority level with the involvement of local community organisations and councillors.
An excellent scheme.
Yes, and we support that approach.
Why, therefore, exclude that element of consultation when it comes to monitoring? What recourse has a community group with a gripe that nothing has happened in its area as a result of this wonderful urban renewal scheme?
Local authorities are expected to comply with the guidelines and that is written into the Bill. They cannot be gloriously ignored. In monitoring progress, we will seek to establish what levels of consultation took place.
It does not say that in the Bill, where the monitoring of integrated area plans is mentioned. It should say it and that is the point I make.
Section 12 deals with the specific circumstances for monitoring the implementation of the integrated area plan and specifies that, in so doing, "the authority or company shall have regard to such guidelines as may, from time to time, be issued by the Minister for the purposes of this section".
On monitoring?
The intent is to have extensive local involvement so that it is not something imposed on areas as was done previously, although many cases under that old system were very successful. Following the review, it was deemed that progress and achievements had been made and that it was time to recognise that, as well as advantages coming from designation, there were areas which lost out. There was overshadowing with areas losing companies and businesses which moved into the designated areas. That was all examined and it was recommended that a more targeted approach be adopted to any future tax designation and that is what is happening. The intent was to work it up through the local authorities, ensuring their members and the wider public were aware of what was going on, that they had an input and that their views were taken into consideration before plans were finalised.
Written into the plans which have been received will have to be detail of the consultation which took place. I recall one plan where there seems to have been extensive local consultation and everyone in the town knew about it and had an opportunity to have a say in it. That did not happen throughout the country but consultation was widespread. I would not have any fears about that. That will be taken into account and may influence the decision about what is agreed concerning what is being sought. The consultations will be a part of the monitoring process.
I accept the Minister's word on this matter.
Amendment, by leave, withdrawn.
I move amendment No. 4:
In page 6, after line 49, to insert the following subsection:
"(8) The adoption of an integrated area plan shall be a reserved function of a local authority.".
I assumed the adoption of an area plan was a reserved function of a local authority. This amendment would be a welcome development in the new climate in which we are trying to devolve more powers to councils. The Minister of State has outlined the level of consultation which will take place under this legislation. When introducing legislation we have to be conscious not to take power away from members. What are the Minister of State's views on this amendment?
The proposed framework for the new urban renewal scheme was notified to each county and city manager on 14 May 1997. Within that framework it was indicated that the selection and prioritisation of areas for integrated area plans and the preparation of plans for priority areas would be the responsibility of the relevant city corporation or county council. No indication was given of any intention to make the selection and prioritisation of areas and the preparation of plans a reserved function. Accordingly, it was a matter for each authority to decide on its own arrangements with regard to the exercise of its functions on integrated area plans. The guidelines issued on the selection of priority areas for the purposes of the new scheme and the content of IAPs emphasised that wide cross sectoral consultation and involvement should form an essential element in the preparation of each IAP.
The process of identifying priority areas and preparing IAPs has been under way since last autumn with the requirement that completed plans be submitted to the Department by the end of March. While the extent of consultation may have varied from one area to another, my understanding is that, in general, most plans were brought before and considered by the relevant elected members before being submitted to the Department.
In any event the process has now advanced to the assessment stage involving the expert advisory panel which I have appointed. For this reason it would not be practical to revisit the completed plans through accepting the amendment. I have noted what the Deputy has said and will ensure that further consideration is given to the reserved function issue if the question of a process such as this arises again. It was not included at the time and councils have acted in good faith and in compliance with the guidelines which urged them to have extensive consultation. Most of them did so and, for future reference, I agree that matters such as this should be a reserved function. However, the process started before I took office and is at a stage at which it cannot be reversed.
Why are we here then? Is this not the point?
The Government supports the way in which this has been done up to now. I am happy that it has been done in line with the guidelines. I have not received the official report from the advisory group studying the plans. It is charged with indicating to what extent the plans submitted comply with the guidelines issued to local authorities. In almost all cases it has included extensive consultation with the involvement of local councillors. From the level of knowledge of plans received from local authorities, Deputies seem to know what has come in from their areas. No one seems in the dark as to what was going on.
I am probably best placed to make the admission that if the requirement for the adoption to be a reserved function was not included in the guidelines it was a serious omission. It was my belief that all the integrated plans submitted had been formally adopted by the relevant local authorities. I am anxious to know if the Minister of State has checked that this is the case. I would be surprised if any local authority submitted an integrated plan without having a formal debate and resolution of adoption supported by a majority of councillors in the area affected. There would be a difficulty if that was not the case and I regret it if that was not explicit in the guidelines issued last May. There was a consensus among Members of the Oireachtas that that was and should be the case in relation to an important function of future designation and urban renewal.
I cannot answer the question with regard to each IAP submitted as all integrated area plans have not come before me yet. Some local authorities sent a copy directly to me. I have only seen two or three of the plans. Until the advisory committee assesses the plans and gives its recommendations I do not know what its opinion will be. It would be premature of me to offer a detailed comment on the level of consultation. There seems to have been widespread consultation but I do not have the specifics with regard to any case.
I understand the Minister of State's difficulty on this matter. However, is it possible that he could come up with an amendment between now and Report Stage specifying that in terms of any future scheme, the power to accept an IAP would reside with local authority members? This is also a local government committee. We have all seen the diminution of local authorities as a result of the centre grabbing all the power, not consulting with local authority members and not devolving powers. I am glad the amendment has developed the debate slightly. Is there a possibility that the Minister of State might propose an amendment on Report Stage stating that, in future, integrated area action plans would be a matter for members?
The Deputy mentioned power being taken by the centre. However, in this instance the opposite is the case. These plans were developed at local authority level. The Department was not involved in any of the decisions. When areas were being designated previously it was done in an arbitrary fashion. I will not say any more.
We will have more about that on this Bill.
Several Ministers and Governments have designated areas but nothing of this nature has ever been attempted. This is a bottom up approach. It is subsidiarity in operation. It is the sort of local government I have been encouraging for the past 15 years.
I see the Minister of State's thumbprints everywhere.
Will the Minister of State be present when the Ministers for the Environment and Local Government and Finance decide on which areas will be designated?Who will infuse the Holy Spirit into the Minister of State?
This is getting into the realms of the ridiculous.
Is it the Minister of State's view that any future scheme or plan should be a reserved function?
Yes.
Will he enshrine that in legislation?
I will look at this before Report Stage to see if there are any implications for future IAPs but not in relation to current plans.
Amendment, by leave, withdrawn.
Question proposed: "That section 7 stand part of the Bill."
I am not attacking anyone present when I say it is unsatisfactory to legislate on this basis as everything we are providing for already exists. Section 7 is not the only section of which that can be said. Does the Minister intend there to be a further round of provisions? He is not in a position to make any deeply binding or convincing commitments for the next two to three years.
There are a couple of factors which could be borne in mind in the future in regard to the provisions of the section. Section 7(4) refers to the provision of social and economic renewal on a sustainable basis in any area to which the plan relates, but "sustainable basis" is not defined in the Bill. I take it this does not refer to sustainable development in the sense contained in the excellent environmental policy document issued by the previous Government but that it means sustainable in the sense of sustainability through time rather than on an environmental basis.
On the matters which may be included in the integrated area plans, section 7(6)(a)(v) specifies objectives for employment, training and education, particularly for persons resident in a particular area. It is desirable that such factors are taken into account. However, by their nature, many of these plans will not be able to have any effect on those issues. They may have some effect on employment but may have none at all on training and education because the relevant sections of Government will not necessarily be involved in drawing up the plans.
Section 7(6)(b) requires a plan to indicate the nature and extent of the investment required to achieve the objectives specified therein. A good deal of that investment will be investment over which the authorities preparing the plan will have no control as it will come from the private sector. I am aware the intention of the scheme is to stimulate private sector investment by providing, where possible, that certain public investments will be undertaken, or incentives given, to make an area more attractive for such investment. I had the pleasure yesterday of having a presentation made to me on the plan for the town of Tuam, County Galway. The plan is extremely well articulated and is the only one which has come from County Galway, a deliberate decision made by the county council.
That decision followed widespread consultation.
Yes, it followed widespread consultation about the idea of making only one proposal.
Widespread consultation was not undertaken in Tuam itself.
Widespread consultation was undertaken in Tuam about the contents of the plan. The people of Tuam, its town commissioners, Chamber of Commerce, Lions Club and community council will be very unhappy if one of the areas outlined in the plan is not selected for designation.
It is a pity other local authorities did not adopt the approach adopted by Galway County Council.
A number of them did.
Many local authorities chose to submit a number of plans to the Department and let the Department and the expert advisory committee decide on them.
Others, such as Kildare County Council, opted to back one of three possible proposals.
More than one proposal was received from Kildare County Council.
The council decided to recommend Athy for urban renewal.
It prioritised it.
Yes, but it stated that if only one area in Kildare were to be designated, it should be Athy. I will have more to say on that when we come to the relevant section.
The provisions in the Bill will remain quite theoretical unless we engage in a further exercise of this kind. If such an exercise is entered into, distinction should be made between investments and incentives which are the direct function of the schemes and those which are not. A certain burden is being placed on local authorities to propose plans which must, necessarily, be speculative. Some of the provisions of the Bill, and section 7 in particular, comprise issues over which local authorities have no control and can only speculate about. It is not always wise to include so many aspirations in legislation of this nature; I am not arguing against the general concept but perhaps they could be refined somewhat in the future in order that people do not develop expectations which cannot be fulfilled.
Question put and agreed to.
Section 8 agreed to.
SECTION 9.
I move amendment No. 5:
In page 7, line 28, after "plan," to insert "and having satisfied himself or herself that the council of any corporation or urban district whose functional area is wholly or partly within the functional area of the local authority concerned or to which the authorised company concerned relates has been given a reasonable opportunity to make observations thereon,".
I raised this matter in the course of my Second Stage contribution. My point relates to situations where county councils did not adequately engage, if indeed they engaged at all, with all the urban authorities within their functional areas before reaching a conclusion in regard to priorities which should be set. It is not too late for the Minister to rectify that. If we are talking about subsidiarity and the devolution of powers to the lowest functional area within counties, other authorities operating within county areas should have their cases heard prior to decisions being made. I had hoped such bodies would have been listened to prior to the adoption of a plan and its submission for consideration but there is a possibility now for the Minister and the Minister for Finance, prior to making their determinations, to ensure they satisfy themselves that the council of any corporation or urban district whose functional area is wholly or partly within the functional area of the local authority concerned or to which the authorised company concerned relates has been given a reasonable opportunity to make observations thereon. The Minister, in response to the Second Stage debate, indicated his surprise that inclusive dialogue had not occurred within each county. However, that is the case and I urge the Minister to ensure it is rectified at this stage.
Section 9 provides that the Minister for the Environment and Local Government may, having considered an integrated area plan submitted under section 7 and any recommendations contained in or accompanying such a plan as provided for under section 8, recommend to the Minister for Finance that he or she should make an order directing that an area or areas located within the boundaries of an area to which an integrated area plan relates shall be a qualifying area for the purposes of one or more of the urban renewal tax areas provided for in Chapter 7 of Part X of the Taxes Consolidation Act, 1997.
As I stated previously, it was a matter for each local authority to decide on the priority areas for which integrated area plans should be prepared and on the arrangements to be put in place locally for the preparation of such plans. However, the guidelines in regard to the selection of priority areas for the purposes of the new scheme and on the content of the IAPs emphasised that wide cross-sector consultation and involvement should form an essential element in the preparation of an IAP. The extent of the consultations which have taken place in the preparation of plans with all relevant interests, including elected members at county, borough and urban levels, will be of the utmost importance in considering the issue of making recommendations to the Minister for Finance on the basis of the integrated area plans which have been submitted to the Department.
Given the stage the process has reached, however, I am reluctant to introduce a retrospective requirement which would, in effect, make it mandatory for all councils of corporations or urban districts with functional areas within the functional area of the relevant local authority to have been formally given an opportunity to make observations on the integrated area plan concerned. It is not possible to accept the amendment.
I do not accept the Minister of State's response. The Department has not reached the stage of making a determination under section 9. The Minister of State said he has only seen two of the plans so some time has yet to elapse before a decision will be made on which areas will be designated.
The notion of wide cross-sectoral consultation is fine but we are discussing democratic, structured and legal local authorities which have a right to an input in this process. The Minister of State should satisfy himself that the right was vindicated in each case. He should refer each of the 70 submissions to the sponsoring council with a request that observations and comments from all other functioning local authorities in their area be forwarded to the Department. If that delays the process a little, the delay would be justified. It would vindicate local democracy at every level rather than simply at county level.
There is little I can add to my initial response. I understand the point made by the Deputy but I cannot reopen the process retrospectively.
It is not retrospective. Determination under section 9 has not yet been made.
The plans were submitted within a specified time. The level of consultation will be examined by the advisory group and by both Ministers before a final decision is made on the proposals. The strength of a plan will be helped by the level of consultation that took place. It is not possible to accept the amendment. The Deputy will appreciate my position.
I appreciate it. In future, however, there should be a legal requirement for such consultation on any plans to be submitted.
I have no difficulty with that. However, Deputy Dukes suggested some time ago that I might not be in office in a year's time. I believe I will be in office for four years given how things are going.
What about promotion?
Things are extremely satisfactory between both parties.
Is the Minister of State sensitive about it?
I cannot be.
Why is he saying it then?
I am pointing out that I cannot speak for the future——
Can we quote him on that?
I can only speak for the Bill before the Committee. However, I agree with the sentiments expressed by Deputy Howlin.
Amendment, by leave, withdrawn.
Question proposed: "That section 9 stand part of the Bill."
This section makes nonsense of what the Minister of State told the Committee earlier. He admonished Deputy Howlin that in previous cases Ministers made decisions in a non-transparent way. There were no better people than the Minister of State and his colleague, Deputy O'Malley, when they were in Opposition to give out yards about people making decisions in a non-transparent manner.
However, this section effectively says: "damn the bottom-up consultations and planning, we will make the decisions". The attitude is that there can be as much consultation and participation as people want so long as only proposals are made and the real business of making decisions is left to the Minister for the Environment and Local Government and the Minister for Finance. Nobody except the two Ministers will know why the decisions are made.
Amendment No. 6 deals with that.
I do not like to anticipate.
It is a reasonable amendment.
I am not referring to the amendment, I am discussing the iniquitous section the Minister inserted in the Bill under which there is no consultation or involvement with anybody else. To say that things were done without consultation on previous occasions is not an answer.
While I support the objective of the Bill, my fundamental criticism is that it is not possible to read the Bill, look at the 78 proposals and feel any confidence in deducing from the Bill which of the proposals that includes a proposal for designation will be passed. Legislation should make it possible to know what the effect of a Government action will be, what will be its scope, how it will affect the matters treated in it and what type of result it will yield. We do not know that with this legislation because at the heart of the Bill is a straightforward, non-participative decision by two Ministers about which areas will be designated.
I do not suggest that the Ministers will make bad or ill-intentioned decisions or decisions which will not be as good as other decisions they might make. However, their decisions in this instance will not be transparent. The Minister of State's party is in favour of transparency yet this Bill contains the most opaque provision of any legislation passed since this Government took office.
On Second Stage, I asked the Minister of State, more in hope than expectation, if he would change that aspect of the Bill. He has not done so, probably because he would have to throw it out and start again. As he politely explained several times on Second Stage and Committee Stage, the process is too far advanced for a rethink. However, it should be put on record that "this is no way to run a railroad". The effect of this legislation cannot be predicted by anybody outside the two Ministers because at its heart is a decision which is as arbitrary as the previous decisions about which the Minister of State preached earlier. That is not a good way to frame or apply the law. It is a bad way to draft law which has an effect on how our tax system operates.
This Bill is saying there will be provisions in the tax code, which is what the designation ultimately is, which will operate in an arbitrary manner. They might be good provisions which will have positive effects and I hope they will assist the development of the towns to which they will apply. However, it is undesirable that provisions of the tax code should operate in this arbitrary fashion. The Minister of State cannot put a gloss on this legislation to suggest that it will be otherwise. It is entirely arbitrary and we should not legislate on that basis.
Deputy Dukes is fast earning a reputation for making outrageous exaggerations. His argument is ridiculous. We are moving from an era when Government arbitrarily designated areas to which attractive tax concessions were made available, in many cases, on no known basis other than a preference of a Minister or Government. In this case, the opposite is happening and it is outrageous for the Deputy to suggest that this is arbitrary when he participated in Government in other decisions where none of this consultation process was in place.
Two Ministers will decide which areas are designated.
Deputy Dukes had a long innings during which he spoke absolute rubbish about this Bill. Sometimes I believe the Deputy does so for devilment.
I must have hit a sensitive spot.
No.
The Minister of State is clearly embarrassed.
I am not a bit embarrassed.
The Minister of State should be embarrassed.
I will deal only with what the Deputy said. I do not know his reasons because he knows well that a major advance is being made here. What is extraordinary about this is that Deputy Dukes was in the Government which adopted this programme and issued the guidelines to the local authorities. I did not want to go down this avenue, but the Deputy had the audacity to sit here and seek to make allegations about the way in which this matter will be decided, either by the Minister for the Environment and Local Government or the Minister for Finance, while completely ignoring the provisions laid down. A chain of sequences must be gone through, all of which——
I did not allege anything; I am simply reading the section.
Local authorities are involved and an advisory group, which is independent of the Minister and the Department and comprises people from a wide spectrum who will bring their expertise to it. They will vet, assess and make recommendations. We are an era when information is made available. People may examine these document subsequently to see how it was done. The group working on it will make the recommendations. It will first assess how the integrated area plans have complied with the guidelines set down by the previous Government of which Deputy Dukes was a member. To seek to introduce a strange idea that what is being done is not an advance on the old way does not do the Deputy justice.
I am not introducing any such strange idea. I simply said the decisions on the areas to be designated will be made by two Ministers.
The Deputy said arbitrarily, but decisions will be based on the recommendations of the advisory committee.
If the Minister had said, which he did not, that every plan vetted by this committee and put to the Minister would be passed, then I would accept that there is not an arbitrary element in this. However, the Minister said that this expert independent group, with which I do not argue, will vet the plans, decide whether they conform with what is set out in the Bill and will decide whether to recommend them to the Minister for the Environment and Local Government, who will decide which of the proposals for designation he will recommend to the Minister for Finance. Both Ministers will decide which recommendations will be adopted.
We do not know how many will be adopted, and I do not believe the Minister of State can tell us how many will be adopted. We know that a substantial number of proposals for designation will not turn up with a designation. The people who will decide which plans receive designation are the Minister for the Environment and Local Government and the Minister for Finance. That is arbitrary and is not a good way to run tax law. That it was done in the past without this consultation is no reason to say this is a good way to do it.
I am not accusing the Minister of State of bad faith. If he is saying I should not blame him because he is taking up something which was there and has run with it, fair enough. Let the criticisms land where they are deserved. It is arbitrary to apply tax law in this way. I would be happier if there were more stringent conditions which we could all see in a Bill which made clear that where a proposal conformed to these criteria, it would succeed and if it did not, it would not succeed. That would be a fair application of tax law - an non-arbitrary application of tax law. What is here is arbitrary in that two Ministers only will decide.
Question put and agreed to.
Chairman
I remind the committee that we must complete consideration of this Bill at 9 p.m., if possible. I appeal to Members to shorten their contributions and allow us to motor on within the regulations of the Road Traffic Act.
NEW SECTION.
I move amendment No. 6:
In page 7, before section 10, to insert the following new section:
"10.-The Minister shall lay before both Houses of the Oireachtas a statement of the reasons for making or refusing to make any recommendation under section 9.".
I do not entirely agree with everything, certainly not the nuance criticisms of the most excellent guidelines commented on by Deputy Dukes. This is extremely good legislation which gives a level of transparency and participation at local level to a scheme which was very centralised and, in the past, arbitrary. For that reason, the last hurdle in the chain for designation is left exclusively to the Minister for the Environment and Local Government and the Minister for Finance. A good deal of concern was expressed on Second Stage on this matter.
Technically, the two Ministers may recommend no area for designation or all areas. There is no requirement for them to justify their decision and that is the problem, as I see it. I have no difficulty with the Minister ultimately making the decision once due process, which is an elaborate one, is in place. Often I fight for the right of elected Ministers to make decisions rather than so-called independent quangos because the Minister is amenable to the House, elected by the people and will face election again.
In the interests of justice and transparency, there is a requirement for a justification of decisions. My amendment proposes that the Minister lay before the Houses of the Oireachtas a simple statement of the reasons for making or refusing to make any recommendation under section 9. To use a very bad analogy, it is like the Tidy Towns Competition when a town gets a very bad mark. Telling the town the reason is much better than telling it that it is always in the running but will never be successful.
There must be an objective reason for including or excluding an area or for approving or not approving a plan. Given the climate today and the spirit the Minister of State outlined, there is a strong case to accept the amendment which proposes that a statement of reasons be laid before the Houses of the Oireachtas so that everyone knows the whys and wherefores of those which are included and excluded.
It is an underlying principle in the new approach to urban renewal that decisions on the designation of areas for urban renewal reliefs will in future be based on carefully prepared integrated plans, which set out a basis on which designation on a selective and targeted basis would assist in achieving the objectives of such plans. The legislation, accordingly, provides that integrated area plans may contain or be accompanied by recommendations from a local authority or authorised company to the effect an area or areas within the boundary of the area to which the plan relates shall be a qualifying area for the purposes of urban renewal tax reliefs.
Section 9 provides that the Minister for the Environment and Local Government, having considered an integrated area plan and any recommendations contained in or accompanying the plan, may recommend to the Minister for Finance that the latter should make an order directing that an area or areas within the area to which the plan relates shall be a qualifying area for the purposes of urban renewal tax reliefs. It is then a matter for the Minister for Finance to make a decision on whether to make any such order having regard to all the issues involved, including the extent and nature of any designation proposed and potential cost to the Exchequer.
It is my intention that the outcome of any submission by a local authority or authorised company in the context of an integrated area plan will be communicated to the local authority or authorised company concerned, including as much information as it is possible to give with regard to the grounds for any decision taken in response to the local authority's or authorised company's proposals. The provisions of the Freedom of Information Act will also apply to material within the Department relating to consideration of the plans submitted. However, the making of recommendations by the Minister for the Environment and Local Government is just one step in a process which starts with the preparation of IAPs by the local authorities or authorised companies and which must cross various hurdles before there is any decision on whether and to what extent incentives are to be applied in a case. I would be reluctant, therefore, to introduce a formal reporting requirement along the lines set out in the amendment proposed by the Deputy which would apply at a certain stage in a process which would not have terminated and which would need a degree of flexibility built into it. I cannot, therefore, accept the amendment.
The recommendations of the Minister for the Environment and Local Government are not just one step in the process; they are the most important one. The rest is a matter of sifting analysis and recommendations. This is the final level of decision making and it is obvious there would be dialogue between the Minister for the Environment and Local Government and the Minister for Finance. Areas recommended may well and probably will be designated by the Minister for Finance and it is equally clear that areas not recommended will not be designated by the Minister for Finance. We are all agreed on that. Therefore, it is reasonable and not that big a step beyond what the Minister proposes, since he is accountable to the Dáil, that a statement of reasons would be laid before the Houses of the Oireachtas so that Members and the sponsoring local authorities or approved companies would know the reasons decisions are taken. Other groups involved, such as the expert group or anyone else appointed by the Minister to sift and analyse, are not accountable to the Dáil. The Minister should think again about this because it is an important element in transparency.
Under the Freedom of Information Act, the documents comprising the 78 integrated area plans can be seen by anyone but a memo of discussion between the Minister for Finance and the Minister for the Environment and the Local Government cannot. That is the key issue. All the amendments we have discussed relate to guidelines established a year ago and it is accepted that they cannot be changed because the entire scheme would change. This amendment relates to a future practice because the decision has not yet been made. It would be a sign of good faith from the Minister if he was to accept the amendment or the generality of the point, given that it relates to a future decision.
The Minister mentioned that flexibility is required but that is not evident. In tax law, certainty is needed. It is not a question of whether flexibility should be applied in certain cases and that is the case here. I do not know how many recommendations will be made for designation or how many will be accepted. I doubt if all will be. I may be wrong, but there is no way of knowing. Since the Minister has reminded me of things which happened in the past, I am secretly admiring the elegance and comprehensiveness of the coverage granted by Deputy Howlin's suit.
The process is not the creation of the Minister for Finance or the Minister for the Environment and Local Government. It is something initiated at local authority level and which is then sent to an advisory group. The House knows the group has been appointed, is working on the plans at the moment and will make recommendations. Its documents will also be in the public arena under the Freedom of Information Act. The process then moves on for the Minister for the Environment and Local Government to make a recommendation to the Minister for Finance regarding each plan. The important aspect is that the Minister for Finance must have flexibility regarding the areas designated, their extent and the tax reliefs applied. He must have control of taxation policy for budgetary reasons.
When the Bacon report was made available to the Government, one of the recommendations made regarding controlling house prices and the factors leading to exorbitant increases was that section 23 concessions would be removed from their current state. That decision was not implemented by the Government. We wanted to retain the availability of section 23 relating to residential development in certain circumstances in some of the integrated areas. That decision was consciously made on the grounds that the Minister for Finance would be in control of the situation regarding how extensive his tax concessions would be. That is where flexibility enters the equation. The IAP idea is a flexible one. It is not about blanket designation of an area. It is selective in that certain areas are chosen to achieve specific socio-economic objectives set out in the Bill. For those reasons and others I stated earlier, I cannot accept the amendment and there is not much more I can add.
I reiterate my strong belief that this should be included and I will argue it further on Report Stage. For the moment, I withdraw it.
Amendment, by leave, withdrawn.
Section 10 agreed to.
Section 11 agreed to.
SECTION 12.
Chairman
Amendments Nos. 7 and 8 may be discussed together.
I move amendment No. 7:
In page 9, subsection (2), to delete lines 38 to 40, and substitute the following:
"shall, in relation to each year in which it causes the monitoring referred to in subsection (1) to be carried out, make, as soon as may be after the end of that year, a report in writing to the Minister of the results of that monitoring.".
Section 12(2) provides that local authorities or authorised companies must furnish reports to the Minister for the Environment and Local Government from time to time on the outcome of the monitoring arrangements put in place under section 12(1). Amendment No. 8 submitted by Deputy Hayes seeks to replace the "from time to time" requirement by providing that a local authority or authorised body shall make the required report each year. I agree that such a report be made every year but, in the interests of preciseness in terms of when the report should be made, I have tabled an alternative amendment which provides that, for each year in which monitoring under the provisions of section 12(1) is carried out, the local authority or company concerned will furnish a report in writing to the Minister after the end of that year.
I thank the Minister for replying positively to this section. It is important these plans are reviewed annually and that we monitor as best we can the implications of these urban renewal schemes. I withdraw amendment No. 8.
Amendment agreed to.
Amendments Nos. 8 to 10, inclusive, not moved.
I move amendment No. 11:
In page 9, subsection (3), line 44, to delete "and".
This is a technical drafting amendment to delete any unnecessary use of the word "and" following the semicolon at the end of the first paragraph in section 12(3).
Amendment agreed to.
Section 12, as amended, agreed to.
Sections 13 and 14 agreed to.
SECTION 15.
I move amendment No. 12:
In page 10, line 28, after "plan" to insert "except in so far as such modifications would provide for an increase in the residential component of that plan".
Why is the Minister of State so set against modifications which might substantially alter the nature of the master plan for the Dublin Docklands development project? This amendment would leave the way open for an increase in the residential component of the Dublin Docklands Development Authority master plan. Where we can do so we should increase the residential component of city centre developments, both to give a living centre to the city and to rationalise traffic flows at peak periods. If substantial numbers of people live in the centre of the city we will have some chance of moderating the heavy flows of traffic towards the centre of the city early in the day and outwards in the evening.
The plans for the Dublin Docklands area include provision for a residential component. However, I note from recent reports that some of those involved in development in the area take the view that they have not received enough assurances about section 23 to be sure that all the residential development will go ahead. One might question what else they would say. However, there are some grounds for feeling that there could be some set back to components of residential development in the short-term if not the long-term.
This is part of the problem with the provisions of this Bill to which I will not return again. There is no lack of clarity on the nature of the provisions but a lack of certainly in the extent to which they will apply. That is not good and one should not set out to be deliberately vague. Why did it seem necessary to include in section 15, in the amendment to the 1977 Act, a specific warning against modifications which would substantially alter the nature of the Dublin Docklands master plan?
Under the Dublin Docklands Authority Development Act, 1997, the council of the authority is required to arrange for the preparation and adoption of a master plan for the Dublin Docklands area and must review and update that plan at least once in every five years. The purpose of the amendment to section 20 of the 1997 Act, provided for under section 15 of this Bill, was to allow for the making by the council of necessary minor variations in the master plan arising from changed circumstances in the period between the date the plan was adopted and the full review and update of the plan required at least every five years, with such a full review being possible more often if required.
The new paragraph added to section 20(1) of the 1997 Act by section 15 of the current Bill, makes it clear that the modifications to the plan provided for can only be of a minor nature. The effect which the amendment proposed by Deputy Hayes would have on the new subsection 20(1)(3) is not clear. If its intention is to allow the authority to make substantive changes in the residential components of the master plan, consideration of such changes would be more appropriate to the full review procedure provided for under subsection 20(1)(1). On the other hand if the intention is to exclude very minor variations in the residential component of the plan to the arrangements for minor variations now being provided for, I would not see any justification for singling out the residential component as opposed to any other element of the plan for exclusion from the provision.
There may be occasions when a minor variation in the residential component could be justified, such as if Dublin Corporation adopted a new city development plan which changed existing non-residential zonings in the docklands area to residential use. Any such changes can only be of such a nature that they do not substantially alter the nature of the plan.
I am satisfied the issue of reviewing and updating the master plan at least every five years and making any necessary minor variations in the intervening period, is adequately addressed. Having regard to the uncertainty to which this amendment could give rise I ask the Deputy to consider its withdrawal.
I do not accept that this amendment would give rise to any uncertainty. The scenario I am talking about is the first one mentioned by the Minister of State in the last section of his reply. This is not concerned with minor changes in the plan which might be necessary from time to time. The Minister of State has provoked this by referring to modifications to the plan not being modifications which would substantially alter the nature of the plan. I know that he would prefer to see substantial alterations to the plan take place not more often than the five year interval provided for. I understand that view. The purpose of the amendment is to leave the way permanently open for an expansion of the residential component of the docklands development. We should systematically promote residential development in the centre of our cities and larger towns. This is for reasons of traffic flow and others I have indicated. I am happy to withdraw the amendment if the Minister of State answers one question. In the last part of his remarks he referred to the interaction between Dublin Corporation's development plan and the Dublin Docklands plan. He seemed to be saying that the Dublin Docklands master plan will prevail in the case of a conflict. Is that correct?
No. In adopting its plan Dublin Corporation is obliged to take the docklands master plan into consideration.
Having taken account of what is in the docklands plan, if in adopting its development plan, Dublin Corporation makes decisions which substantially alter the docklands plan, is it entitled to go ahead with its development plan?
As I understand it - yes.
Amendment, by leave, withdrawn.
Sections 15 and 16 agreed to.
SECTION 17.
Chairman
Amendment No. 13 is out of order. The amendment seeks to make provision for grants to support schemes of co-ordination and upgrading of shop frontages. As these grants would come from moneys provided by the Oireachtas, the amendment is inadmissible, in accordance with Standing Order 142(3), on the grounds that it would involve a charge on the Revenue.
If the Minister had made an argument about my amendment he would most likely have said there was no need for it because it could be included among the things contemplated in paragraph (a). If that is the case may I withdraw the amendment with leave to re-enter an alternative amendment on Report Stage?
Chairman
As it stands it is out of order.
Would I be out of order in suggesting on Report Stage that paragraph (a) be amended as follows:
the promotion of urban and village renewal, including physical, economic and social renewal and the co-ordination and upgrading of shop frontages, or
I understand the amendment has been ruled out of order.
Chairman
That is correct.
Am I in order to put down the amendment I outlined on Report Stage?
Chairman
That is not for this meeting to decide.
Nor is it for the Minister of State to decide.
Amendment No. 13 not moved.
Sections 17 and 18 agreed to.
NEW SECTION.
I move amendment No. 14:
In page 13, before section 19, to insert the following new section:
"19.-Chapters 7 and 8 (inserted by the Finance Act, 1998) of Part 10 of Chapters 7 and 8 of the Taxes Consolidation Act, 1997, are hereby amended-
(a) in section 372B(1), by the substitution of the following paragraph for paragraph (b):
(b) where such an area or areas is or are to be a qualifying area for the purposes of section 372D-
(i) one or more of the categories of building or structure mentioned in subsection (2), shall or shall not be a qualifying premises within the meaning of that section, and
(ii) subsection (6) of that section shall not apply in relation to that qualifying area, and:
(b) in section 372D-
(i) by the substitution in subsection (2)(a) of 'subsections (3) to (6A)' for 'subsections (3) to (6):
(ii) by the insertion in subsection (6)(a) after 'Notwithstanding subsections (2) to (4)' of 'but subject to section 372B(1)(b): and
(iii) by the insertion of the following subsection after subsection (6):
'(6A) Where an order made under section 372B(1) directs that subsection (6) shall not apply in relation to a qualifying area, subsection (4) shall apply in relation to that area as if-
(a) the reference in paragraph (a)(iv) of that subsection to 50 per cent were a reference to 25 per cent, and
(b) the following subparagraphs were substituted for subparagraph (ii) of paragraph (b) of that subsection:
"(ii) the following paragraph were substituted for paragraph (b) of subsection (2) of that section:
'(b) As respects any qualifying expenditure, any allowance made under section 272 and increased under paragraph (a) in resepct of that expenditure, whether claimed for one chargeable period or more than one such period, shall not in the aggregate exceed 50 per cent of the amount of that qualifying expenditure,',
and
(iii) subsections (3) to 7 of that section were deleted." ',
(c) in section 372N-
(i) by the substitution in subsection (2)(a) of 'subsections (3) to (6B)' for 'subsections (3) to (6): and
(ii) by the insertion of the following subsections after subsection (6):
'(6A) Subsection (6) shall apply in relation to capital expenditure incurred in the qualifying period on the construction or refurbishment of a qualifying premises only where the qualifying premises is at any time in that period the subject of a qualifying lease (within the meaning of section 372O) granted to a person who occupies the qualifying premises for the purposes of a qualifying trade or profession (within the meaning of that section).
(6B) Where subsection (6) does not apply in relation to capital expenditure incurred in the qualifying period, subsection (4) shall apply as if-
(a) the reference in paragraph (a)(iv) of that subsection to 50 per cent were a reference to 25 per cent, and
(b) the following subparagraphs were substituted for subparagraph (ii) of paragraph (b) of that subsection:
"(ii) the following paragraph were substituted for paragraph (b) of subsection (2) of that section:
'(b) As respects any qualifying expenditure, any allowance made under section 272 and increased under paragraph (a) in resepct of that expenditure, whether claimed for one chargeable period or more than one such period, shall not in the aggregate exceed 50 per cent of the amount of that qualifying expenditure,',
and
(iii) subsections (3) to (7) of that section were deleted." ',
and
(d) in section 372O-
(i) by the substitution in subsection (3) for 'trade or profession' (where that expression first occurs) of 'qualifying trade or profession (being a trade or profession specified by regulations made by the Minister for Finance to be a qualifying trade or profession for the purposes of this section)', and
(ii) by the insertion of the following subsection after subsection (5):
'(6) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éirenn within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall le annulled accordingly, but without prejudice to the validity of anything previously done thereunder.,.".
The tax incentive schemes of urban and rural reliefs provided for in the Finance Act, 1998, included a measure granting a double rent allowance for tax purposes to persons carrying out trades or professions in leased industrial or commercial premises in the qualifying urban and rural areas. The EU Commission, whose approval is required regarding incentive schemes of this nature, has now expressed itself as being opposed to the granting of the double rent allowance except in very exceptional circumstances. In effect, it should only be available for small scale activities carried out in areas where there is social dereliction or high unemployment and then only where services or activities are provided to the local community or market.
The problem with the EU has emerged in the context of the new EU regional aid guidelines which are shortly to come into force. The Commission officials consider that the double rent allowance is not compatible with these new guidelines in the context of Ireland's improved economic position and, therefore, maintain that the measure should not be granted except in the very limited circumstances mentioned.
The result of this is that the double rent allowance as a component of both the urban and rural renewal schemes can, in future, be of minor significance only. As a counter balance to this erosion of the double rent allowance it is now proposed that 100 per cent capital allowances should be made available in the case of commercial buildings in cases where entitlement to the double rent allowance will no longer exist. This 100 per cent will apply on the same basis as that already available for industrial buildings, that is, up to 50 per cent in year one for an owner occupier and up to 25 per cent in year one for a lessor. The remaining expenditure can be written off at a rate of 4 per cent per annum. This enhanced level of allowance should be especially welcomed by, and be of special benefit to, owner occupiers of commercial buildings who would not have been entitled to the double rent allowance in any event. The double rent allowance applies only to the lessees of premises.
For the new urban renewal areas, the curtailing of the double rent allowance in line with EU requirements will be achieved through the mechanisms of designating areas as qualifying areas for relief purposes. The new urban renewal scheme already incorporates a more flexible and discriminating approach than earlier schemes which saw designation of areas for the purposes of a full menu of tax reliefs. The legislation now provides that an area may be designated for the purposes of one or more tax relief measure depending on the needs of the area. Thus, adherence to EU requirements will mean that most areas can no longer be designated as qualifying areas for double rent allowance purposes.
However, the amendment provides that in such cases an area, depending on its needs, may now be designated as a qualifying area for the purpose of 100 per cent capital allowance for expenditure on the construction or refurbishment of commercial premises, as compared with 50 per cent allowances hitherto. In the event that an area can be designated for doulbe rent allowance purposes in the limited circumstances permitted, allowances for commercial premises, where they apply in such cases, will be at the level of 50 per cent as is the position at the moment.
Unlike the urban renewal scheme, the rural renewal scheme is not subject to the preparation of integrated area plans or the designation of particular areas for tax purposes. In effect, the whole area is already designated for the purposes of the reliefs provided. To align the scheme with the requirement of the EU Commission, the amendment provides that the double rent allowance in the rural renewal area will only apply in accordance with regulations to be made by the Minister for Finance.
The regulations will specify the type of activities which can be carried on in a rented premises for which a lessee can obtain the double rent allowance in respect of rent paid. The list of activities will be cleared with the EU Commission in the context of formally notifying the Commission of the rural renewal scheme. Like in the urban renewal areas, the amendment also provides that where the double rent allowance does not apply capital allowance of 100 per cent will be available for expenditure on the construction or refurbishment of commercial buildings.
The changes proposed in this amendment are necessary to gain EU Commission approval for the new urban and rural renewal schemes. As provided under the Finance Act, 1998, both of these schemes will come into effect when the Minister for Finance makes the appropriate orders. It is intended to formally notify the two schemes to the EU Commission next month and to commence the schemes by order whenever Commission approval is obtained.
I hope the Minister of State is as indignant with himself as he appeared to be with Deputy Hayes for introducing a number of late amendments.
I apologise for the late introduction of the amendment.
He can blame the EU Commission.
The Deputy may recall I indicated there would be such an amendment on Second Stage.
Another facilitating measure was before the House this morning to allow this to happen.
A financial resolution.
I gather this means that the scope of the reliefs that may be given in areas which the Minister for the Environment and Local Government and the Minister for Finance decides arbitrarily to designate will now be restricted compared with previously and that in a substantial and unknownable number of cases where the double rent relief would have applied it will not now apply and it will be replaced by this system of capital allowances in the urban areas. I have not fully grasped the import of this measure in rural areas. It appears that because there is less discrimination in the rural areas than in the urban areas, the Minister will be forced more in the direction of the capital allowance in the rural area and they will have less discretion with regard to the rent allowance in the rural areas than in the urban areas. Will the Minister of State indicate if I have understood him correctly?
The Deputy will appreciate that these matters have not yet been clarified by the EU Commission. The Commission has made clear its views on the double rent allowance and has indicated that limited circumstances in which it might favourably approve the granting of such allowances. They appear to be very restrictive. It is possible because of the socio-economic aspect of the Bill and the areas being put forward by the local authorities that some areas may qualify for the double rent allowance. In that case the capital allowance for commercial buildings will only be 50 per cent. If the double rent allowance is not granted the capital allowance will be 100 per cent.
I cannot give a definitive answer on the difference between the urban and rural schemes at this stage other than indicating that it is likely there will be more scope for them to benefit urban areas.
Will the Minister tell us when this will be clear?
We are coming back in a month's time and it will be clarified after that although I am told that it might take longer.
So we are likely to be looking at this in the autumn?
We may be. If the Deputies would like a copy of the note which I read out I will be pleased to give it to them.
Will this delay the decisions concerning the area action plans?
It will have an effect on their coming into operation. There would have to be clarity on the tax concessions available. It would affect investment plans if they were made without knowing exactly what was available.
I understood a decision was to be taken in August.
That was the intention. This matter has since arisen and I warned the House that it could cause a delay some weeks ago.
Will the Minister circulate that note before we commence Report Stage tomorrow?
It will be in the Deputy's pigeonhole tonight.
Amendment put and agreed to.
Section 19 agreed to.
Title agreed to.