Amendment No. 1 in the name of Deputy Gilmore has been ruled out of order.
Motor Vehicle (Duties and Licences) Bill 2003: Committee Stage.
Section 1 agreed to.
SECTION 2.
Amendment No. 2 not moved.
NEW SECTION.
I move amendment No. 2:
In page 3, before section 2, to insert the following new section:
"2.-In so far as additional payments are made to the Local Government Fund by virtue of this Act which, but for this Act, would not be made, such payments shall be applied to the construction, repair and maintenance of tertiary roads.".
The Bill will give statutory effect to the Government's decision to increase motor taxation, which was announced officially after the budget and is now going into operation. As I indicated on Second Stage, the Labour Party is opposed to the increase in motor taxation, which we regard as another stealth tax introduced by the Government. However, given the size of the Government's majority, I do not hold out much prospect of us being able to reverse the decision. If the increase in motor taxation is to proceed, this amendment seeks to ring-fence it for tertiary roads.
On Second Stage, I spoke about the condition of tertiary roads, particularly those in housing estates in urban areas. They are not getting the attention or finance required for their upkeep. They are falling into increasing disrepair. They are tertiary roads in every sense of the road. They are third rate, Third World and a disgrace. Roads in built-up areas of cities and towns are literally falling apart. Many of them were built by the original developers of estates on which no work has been done in 20 or 30 years. They are falling apart, potholed, dangerous and in poor condition.
Local authorities are increasingly being told they have to address these roads from their own resources, but they do not have the money to do so. My local authority, Dún Laoghaire-Rathdown County Council, received an estimate from the county manager indicating it would cost about €10 million to reinstate the tertiary roads and bring them to an acceptable standard in our county. Even after considerable effort, the amount provided in the estimate is only about €500,000. Unless some additional money is provided to deal with these roads, there will be a more serious problem in years to come. What is today an issue of reinstatement, repair and in some cases resurfacing, will be a case of complete reconstruction at considerable additional cost to the State in a short time.
I want some money set aside to address this problem. I appreciate the amount that will be raised in the additional motor taxation, which I believe will be €40 million to €50 million per annum, will not in itself be sufficient to deal with the problem, but at the very least it should be ring-fenced. If motorists are to be asked to pay additional motor taxation, they ought to be able to see where that additional money is being deployed. There has been no announcement of additional money for roads since the announcement of the increase in motor taxation, it seems that the increase in motor taxation is intended to fill the hole in the Government's finances rather than fill the holes in the roads. The increase in motor taxation is intended to redress the fact that the Government this year effectively cut back on money to local authorities by freezing the Exchequer contribution to the local government fund rather than to address the roads problem.
If motorists are being asked to pay additional motor taxation, I want to see some return on that in the maintenance and upkeep of the roads with which motorists are most immediately familiar - the roads they drive onto every morning when taking their cars out of their driveways. These roads in housing estates and neighbourhoods are falling into disrepair. I want the increase in motor taxation ring-fenced and used to address that problem.
Is it possible to include in the Bill a provision for an increase in the local government fund in line with inflation and in addition to the €40 million that will be raised by the increase in road tax? If this is not included in the Bill, the increase will not be made.
I could not disagree with Deputy Gilmore's remarks on tertiary roads, whether they are in Dún Laoghaire-Rathdown or anywhere else. His amendment proposes to give primacy to these roads by ring-fencing extra revenue generated by the increase in motor tax as set out in the Bill. I have difficulty in accepting this as it gives statutory priority to a particular class of road, setting a most unwelcome and inflexible precedent for the local authorities.
The non-national roads effort is based on a whole-network approach, resulting in what is generally recognised as quantifiable improvements to the network. There are 87,150 kilometres of non-national roads in local authority areas, 11,349 kilometres of regional roads and 23,600 kilometres of local primary roads. In addition, there are 32,000 kilometres of local secondary roads and 20,000 kilometres of tertiary roads. The Deputy's amendment proposes to give absolute priority to the tertiary roads, which account for 23% of the non-national road network in county council areas. It is important to emphasise that the maintenance and improvement of non-national roads is a matter for individual local authorities and such works are funded from their own resources. These resources are supplemented by significant State grants and the record levels of 2002 have been maintained by us this year.
The initial selection and prioritisation of projects or works to be carried out under the various non-national road grant categories is a matter for individual local authorities, which are best placed to do so. The restoration programme, which has been in place since 1995, has a duration of ten years and its purpose is to restore, by 2005, the regional and local roads which were deficient in 1996. It is undertaken on foot of multi-annual restoration programmes prepared by county councils and submitted to the Department.
The restoration programme has been a huge success and, by the end of 2002, nearly 30,000 kilometres of non-national roads had been restored to good condition. Priority would have been accorded to more regional roads and local primary roads with heavier traffic until now. Given the progress already achieved in this area, it is expected that further programmes will include many more local secondary and local tertiary roads.
A pavement condition study will be carried out this year. The Department is finalising its terms of reference and we hope that tenders will be sought shortly. The study will ascertain the extent of the remaining deficiencies in the network and will examine each class of road, including the tertiary roads.
Section 13(2) of the Roads Act 1993 places a legal responsibility on local authorities for the maintenance and construction of regional and local roads in their areas. I do not believe it would be in the best interests of the road network to accept an amendment that would give priority to one type of road over others. That is not to say the roads to which Deputy Gilmore refers are not important. There are approximately 20,000 kilometres of them, but priorities have to be made. His amendment, if accepted, would lead to inflexibility and might interfere with the decision making of local authorities. I do not wish to introduce any legislative rigidities into the funding programme for non-national roads. I assure Deputy Gilmore that local tertiary roads will receive attention in the future and I await the findings of the pavement study with interest.
The Deputy will recall that the programme for restoration has been in place since 1995 and will run until 2005. This year, 50% of the €434 million allocated for the non-national roads works programme will go towards the restoration of local tertiary roads. I hope the local authorities will accord some preference to these important roads towards the end of the term of the programme. It would be wrong to ring-fence funding.
We expect an additional €65 million this year. If this was ring-fenced for the third-class roads, other roads which might be as or more important and which might have heavier traffic would lose out. I accept that €10 million is required to bring these roads up to an adequate standard in the Dún Laoghaire-Rathdown area. This is frightening and we must deal with it. I appreciate that it would be cheaper to upgrade a kilometre of a local tertiary road than to upgrade a kilometre of a regional road. Therefore, the sooner we upgrade the latter type of road the better. Maybe the local authorities should deal with the most urgent cases for maintenance and restoration but it is a matter for the local democratic process.
When will the report on the Department's pavement study be available? Is the tender process under way?
It is being put out to tender fairly soon. The study will be extensive and comprehensive. It would be rather ambitious to say that the report will be available by the end of the year, but I expect to have it early in 2004.
That means that the neglected roads will be put on hold while the outcome of this study is awaited and that there will be no extra money available for them until 2005 at the earliest.
As the Deputy is aware, the local authorities have presented the Department with their multi-annual programme which will operate until 2005. I do not think any Minister or Department official would be averse to any slight changes if they had the support of the local authorities. We will not tie our hands and we will be pragmatic. If some roads are deteriorating rapidly and if the relevant local authorities want to make some amendments to address such problems, we will not have any great difficulty.
Until 2002, it was the practice of the Department to make an additional grant available to local authorities, usually in July or August, which many of them found useful in dealing with roads that required urgent attention. For example, is it envisaged that there might be some assistance this year to local authorities in that form, bearing in mind that there has not been an announcement on where the €65 million that will be raised under this Bill will be allocated?
I wish Deputy Gilmore was right but, unfortunately, that €65 million is incorporated in the €434 million provided for this year. We will not allocate a further €65 million. I take the point the Deputy made about what happened in the past in that some additional funding was provided over several years. We did not do that last year because savings did not become available. If it is likely savings will become available, we will do that but at this stage it appears that will not be the case. I realise that in the past the Deputy's local authority area, like other local authorities, got an allocation of €127,000 for class 3 roads. I am almost afraid to mention that figure when one compares it to the €10 million required, but the Deputy acknowledged that it is of some benefit. The Deputy can take it that if funding becomes available, we will be only too happy to do that but I do not want to give the wrong impression at this stage.
Did I hear the Minister say this money has been taken into consideration already? Will this money be ring-fenced for roads at the expense of a cutback in the local government grant or will that grant be maintained at last year's level, taking into account inflation, which is the key issue? People would not mind paying this tax if they knew additional money would be allocated to roads.
I was glad to hear the Minister say he did not wish to interfere with the democratic process of local government because there have been two blatant examples of that involving both the current Minister and the previous Minister. The previous Minister allowed county managers to remove the authority from members to adopt waste management plans while the current Minister is proposing to remove the authority in regard to service charges from local government. Perhaps the Minister of State would have a word with the Minister with a view to maintaining the democratic process of local government.
The Minister said the €65 million was included in the €434 million allocation announced earlier this year. If that is correct, we are now looking at a cut of almost €70 million in the roads budget. If my memory serves me correctly the allocation for non-national roads last year was approximately €438 million. The €433.9 million represented a cut in that regard. When the Government announced that there would be an increase in motor taxation, it was also announced that it would go into the local government fund for use on roads. Most of us understood that to mean that there would be an extra allocation of money to local authorities for roads this year. The Minister is now telling us that is not the case and that the €65 million will be deployed to replace a cut of almost €70 million in the roads allocation over last year. That is astonishing. Motorists are now being asked to pay extra motor taxation while getting nothing in return other than a cut in the allocation of roads money.
The local government fund this year is €1.047 billion made up of €626 million from motor tax, which incorporates the €65 million we expect this year, the €420 million from the Exchequer and interest in excess of €1 million. The bottom line is that the €65 million we hope to raise will be part of that. If the motor tax had not been increased, the national roads grant would have been cut. The figure, therefore, is the same as that for last year.
The impression was given on Second Stage that this was extra money that would be ring-fenced for the roads grant but we are now discovering that it is to make up a shortfall in the roads grant. That is a serious situation.
It is additional to the local government fund, not necessarily——
It is additional to the local government fund but it is only making up the shortfall from last year's local government fund.
That is the position. The figure is €1.047 billion, and I have given the breakdown in that regard. If we did not have an increase there would have been a reduction in the funding for roads, which matches last year's record levels.
These Committee Stage debates are very useful because this is the first time the public is being told there will be no return to the motorist or in terms of the state of our roads from the increase in motor taxation. When the original announcement was made just after the budget, and it was dressed up as an increase in motor taxation which would go to the local government fund and be used in roads, I distinctly recall that being expressed in language which conveyed a message to motorists that they would pay additional motor taxation but that there would be extra money for roads. The Minister has now admitted that is not the case. There was no mention of that when the increase was announced, when the measure was debated in the Dáil by way of a motion before Christmas or on Second Stage. There was no mention at any stage from any Minister that motorists were being hit for an additional 14% on their motor taxation to make up the money for a cutback of almost €70 million the Government was implementing in the roads budget. This is the first time we are being told that. It is shocking news because while I had expected that some of the money would be clawed back in the form of the various cuts, savings and freezing being done in the local government fund, I genuinely expected that there would be some additional money for improvement of our roads from the increase in motor taxation. That is manifestly now not the case. This is very shocking news for motorists who will pay additional motor taxation and get nothing in return for it.
I do not believe I indicated in the Second Stage debate that this additional €65 million would be over and above the full allocation. As the Deputy is aware, it is not ring-fenced for roads but for the local government fund, part of which goes to the non-national roads and approximately one and a half of the ratio is used for general purposes. When the Minister made the announcement towards the end of last year, he indicated this money would go to the local government fund.
When something is announced as being ring-fenced, it is meant to be ring-fenced for that purpose. It is taken as being extra money.
When the motion was before the Dáil in December, I pressed the Minister, Deputy Cullen, on a number of occasions to indicate when he would announce additional money for the roads, and that is reflected in the Official Report. At that stage the local authorities had not been notified of their 2003 non-national roads allocations from the Department. I asked if it would be reflected in that or if there was to be a supplementary estimate announcement. He was given ample opportunity to tell the House and admit to the public that the additional money generated by motor taxation would be transferred to the black hole of the Government cuts, but he did not do so.
There has been an ongoing form of deception, with the Government announcing the bad news that there would be increases in motor taxation while concealing the fact that it would be raised to meet a cut in expenditure on the roads programme of approximately €70 million. The Government never announced this, but it was apparently decided some time ago and before the decision was made to raise the level of motor taxation. The motorist has now been asked to make up the shortfall.
There is no question of any deception. As I recall, when the Minister introduced the measure he indicated that he would maintain the non-national roads grant at the unprecedented expenditure levels applicable in 2002.
It has amounted to an extra tax.
That may be the Deputy's opinion, but the situation is as I have outlined. If motor tax had not been increased, the grant for non-national roads would have been reduced by a corresponding amount. The increase in the tax has been transferred to the local government fund in line with statutory obligations. This has helped to increase the general purposes grant for all local authorities, something called for by all sides, given the increased demands on local authorities.
It would have been more honest had it been spelt out in the way the Minister of State has done. The explanatory memorandum states:
Since the establishment of the Local Government Fund in January 1999, all motor tax receipts including driver licences etc. are paid into the Fund. In addition to the proceeds of motor taxation, the Fund is also supplemented by an Exchequer contribution. The Fund is ringfenced exclusively for local authority purposes and distributed to local authorities as discretionary grants in respect of day-to-day spending requirements and also as grants in respect of expenditure on non-national roads.
While this is in accordance with the explanation provided by the Minister of State, it gives the clear impression that this was extra funding. That was also the impression given on Second Stage, when the Minister of State corrected my contribution and that of Deputy Gilmore when he said that the figures we had given regarding the cut-back in the roads programme were not correct. He indicated that in the absence of this increase in motor tax being used to make up the shortfall, expenditure on the programme would be at the same level as in the previous year. Clearly, a wrong impression was given.
On Second Stage, I described this proposal as a crude measure to raise extra revenue for the Exchequer. The disclosure that there will be no extra allocation to the road fund is shocking. The Estimates effectively imposed a 16% cut in the budget for the road fund, which is partly being made up by this crude measure. The Minister misled the House on this.
We have maintained last year's record level of expenditure. That is what the Minister indicated when announcing the increase. As required by statute, it will be transferred to the local government fund. This year's increase to the fund brings the overall increase to 100% over a period of five years. There is a major reconstruction programme. While we all appreciate the financial difficulties for this year, it is vitally important that in order to maintain last year's record level of expenditure it is necessary——
The record levels of expenditure last year and in previous years were maintained without increasing motor tax, whereas this year motor tax will have to be increased.
That is not factually correct. As I recall, there was a 3% increase in 1998, while there was a 3% increase at the beginning of the following year. There was also an increase of between 4% and 6% in 2000 or 2001.
The proposed increase this year is 12%.
Over the period to which I refer, the increase amounted to 12% while inflation was approximately 33%.
That is not the case. Inflation over the entire decade would hardly have reached 33%.
I am referring to the period comprising the previous ten years. There was an increase prior to that.
The local government fund was not established until 1998. This is the nub of the issue and it has taken until this debate to flush out the Government's intention in raising motor taxation. From the making of the announcement last November, the statement by the Minister in the House last December, the responses to the questions raised by Deputy McCormack, Deputy Allen and me and the tenor of the Second Stage debate, I was left with the impression that the increase in motor taxation would yield approximately €48 to €50 million - we are now told it will be €65 million - and that of this amount, perhaps €20 to €25 million would be clawed back.
There was a cutback of approximately €5 million in the roads allocation for 2002 while the Exchequer contribution to the local government fund was frozen this year. That would perhaps account for some of the allocation by way of inflation. However, I was under the impression that the increase in motor taxation would ultimately still yield some amount of additional money for the roads, particularly the roads referred to in the amendment - namely, the smaller tertiary roads in housing estates, with which we are all familiar and which are falling into disrepair.
Now we are told that is not going to be the case. Not a single cent of additional money will be provided by the Government for the repair and upkeep of the roads, despite the fact that the motorist is being asked to pay 14% more for the fund which is used to maintain the roads. The Minister is pleased that the Government is maintaining last year's level of expenditure, but those maintaining it are the motorists. The Government has conned them. It has increased motor tax, but will not improve the state of the roads.
This amendment is at the centre of what the Government is trying to do. It is not putting one additional cent into our roads. As far as motorists are concerned, they will now have to pay more in vehicle tax even though the roads on which they have to drive will continue to disimprove, particularly in local areas. It is not acceptable, either in equity or from the point of view of motorists, that, having announced this measure last November, the Government has left it until the latter half of this month of March to admit publicly that this additional taxation will not result in any improvement in the roads and that there has been a cut of almost €70 million in the roads allocation which was not disclosed until today.
Before we take a vote, what extra funding will be made available to local authorities to administer the scheme for collection of motor taxation? What level of support is currently provided to local authorities to administer that scheme? I am aware that Cork County Council is not getting any funding to administer the scheme and is threatening not to collect motor taxation in the Cork city area because of the massive increase in overheads. Will there be any provision, out of the €65 million, to enable local authorities to administer the scheme? A noose is being tightened around local authorities as a result of the costs involved.
The increase in motor tax will not necessarily result in an increase in the number of transactions. The number of vehicles that have to be——
There might be fewer, but that is not the point I am making. What support will be given, from this fund, to local authorities to administer the scheme? I am advised that Cork County Council has to find the money from its own resources to run the motor taxation offices and is seriously considering dealing only with motorists in its own functional area, to the exclusion of the Cork city area.
To answer the Deputy's first question, the amount made available for administration is about €38 million.
What increase over last year does that represent?
The amount is about the same as last year. As the Deputy is aware, Cork County Council also collects for the city area. As I indicated in the Dáil, we expect the system to go on line later this year and that will result in fewer transactions for the local authorities. In effect, therefore, their position will be similar to last year or slightly better.
Deputy McCormack asked a question earlier about ensuring an annual increase in the Exchequer contribution. That is incorporated in the legislation, which provides for an amount at least equivalent to the rate of inflation, as measured by the consumer price index against a 1998 base line. Over that period, the Exchequer resources secured for the fund have increased by 13%, or €204 million, over and above the minimum required under the legislation for the period 1999 to 2003. Accordingly, it is well in excess of the statutory obligations. If it were possible, the Government would be glad to make additional funding available. The factual situation is as I have outlined it. At the risk of repetition, there was no intention to deceive on my part or on the part of the Minister, Deputy Cullen. It was my view that the matter was totally transparent.
Is the amendment being pressed?
It most certainly is, Chairman.
Amendment put.
The Committee divided: Ta, 3; Níl, 8.
Tá
- Allen, Bernard.
- Gilmore, Eamon.
- McCormack, Padraic.
Níl
- Brady, Martin.
- Fox, Mildred.
- Gallagher, Pat The Cope.
- Glennon, Jim.
- Haughey, Seán.
- Moloney, John.
- Power, Seán
- Ryan, Eoin.
SECTION 3.
I move amendment No. 3:
In page 4, line 15, to delete "30" and substitute "25".
As I said on Second Stage it is unacceptable that, at a time when inflation is 4% to 5%, we are experiencing an increase across the board of approximately 12%. The economy is contracting and car sales for the first two months of the year are down substantially on last year. This is effectively a stealth tax and it comes on top of a huge range of punishments which have been meted out to the public since the election. There were 12 other major increases since the election, but this one is hitting motorists hard. Motorists have been taken for a €65 million ride. Money we were told was being used to upgrade roads is effectively being used to replace a €65 million cut in Exchequer funding. That is unacceptable.
This amendment reduces the upper limit, from 30% to 25%, payable for quarterly discs as a percentage of annual discs. At present, the percentage is 28.25%. The reason the quarterly disc is set at that percentage is primarily to cover administrative costs but also to encourage annual renewal. The effect of this amendment would be to eliminate altogether the existing relatively low surcharge that applies to taxing cars on a quarterly rather than an annual basis. As fractions of a euro are rounded down for motor tax purposes, the amendment would make it cheaper to tax a car on a quarterly rather than an annual basis and there would be no sound basis for that. It would encourage a far greater degree of quarterly taxing and, in turn, would have the effect of increasing the administrative costs involved in the process. The latter would consequently reduce the amount available to the local government fund. The second effect would be an increase in queuing time in motor tax offices and a slowdown in time taken to turn around tax renewals.
The effect of the amendment would be that with the exception of motorists in the two lowest CC bands all other motorists who tax quarterly would pay less than they paid last year. This would militate against the intention of the Bill, which is to raise money for the local government fund.
I am aware of the difficulties of those unable to tax on an annual basis and to assist such motorists the surcharge was reduced by the Government by regulation in 2001. That represented a 1% saving. In addition, when the rates were converted to euro last year, the cent element of all rates was disregarded. For quarterly taxing, the practice of rounding up the nearest whole unit was replaced with rounding down to the nearest euro.
I hope the committee agrees that quarterly renewals have been dealt with in a fair and reasonable manner for the last few years. In these circumstances I do not propose to accept the amendment.
Amendment, by leave, withdrawn.
Section 3 agreed to.
SECTION 4.
Amendments Nos. 4 to 8, inclusive, are related and are to be taken together by agreement.
I move amendment No. 4:
In page 4, lines 20 to 22, to delete all words from and including "substituting" in line 20 down to and including "Schedule" in line 22 and substitute the following:
"increasing the figures contained in Part 1 (inserted by the Act of 2001) of the first-mentioned Schedule by 5 per cent".
It is unacceptable that motorists are being screwed to the wall with a 12% increase across the board when inflation is at 4% to 5% already. In the past six months, the average family will have incurred an increased tax burden of at least €400. Visiting a hospital casualty department costs an extra 26% and VHI costs are up, as are ESB bills and college registration fees. The threshold for the drugs payment scheme has increased. Local authority service charges and refuse charges have also increased. The TV licence fee has increased by 40%. Bus fares, bank charges and car charges have increased. This 12% increase is the ultimate insult to consumers. It has had a knock-on effect in terms of the number of new cars being bought. It is a crude measure imposed to pay for the Government's mismanagement and incompetence. Motorists are being taken for a serious ride.
Is the Minister of State considering an alternative source of motor taxation based on emissions or is he considering the concept of a carbon tax? When will we get away from this arbitrary form of taxation? How will the Minister of State respond to the EU, which frowns on this type of charge on motorists?
The purpose of increases in motor tax is to boost the level of funding for local authorities in 2003. The increase provided for in the financial resolution, as passed by the Dáil in December, and in this Bill is to set a 12% increase across the board. Deputy Allen's amendment proposes to reduce the increase to 5%, which would mean a reduction of €40 million rather than an additional €65 million.
As indicated on Second Stage, increasing tax is not popular. None of us want to do it and such a decision is not taken lightly. If a smaller increase was feasible, it would have been proposed. It must be remembered, however, that the decision to increase motor tax rates was taken against a background of an increase in inflation of 33% in the past ten years. During that period, there was only a 12% increase in motor tax, including 3% at the end of 1998, 3% at the beginning of 1999 and between 4% and 6% in April 2001. In that context, the increases cannot be considered unduly excessive.
As I said on Second Stage, the increases for the majority of motorists will be between 29 cent and 58 cent a week. The increases set out in the Bill have been introduced for a good reason. The revenue generated by the motor tax increases will be used to fund local government. The revenue will go into the local government fund which, in turn, will be used to finance general purposes and supplement local authority funding for non-national roads. While it is not the case in every local authority, a number of them have been responsible for reducing their own resources this year. It has not happened across the board, but a number of local authorities who were in difficulty immediately reduced their own resources. Perhaps we should consider a ratio so that this would not happen again. There has been a reduction in this regard.
If Deputy Allen's amendment was accepted, it would reduce significantly the level of funding to local authorities this year for general purposes and the roads infrastructure. This is something I cannot accept in light of current demands on local authority funding and the Government's desire to maintain non-national roads spending at 2002 levels. I regret I am unable to accept the amendment.
The Deputy referred to changing motor tax to a cardon dioxide or CO2 assessment. The Department's examination of relating car tax to CO2 emissions is under way. We are addressing the issues of equity, real emission reductions and revenue safeguarding. There must be an enticement and this is currently being examined. I hope in the fututre to be able to outline the outcome of the examination.
Amendment put and declared lost.
Section 4 agreed to.
Section 5 agreed to.
SECTION 6.
I move amendment No. 5:
In page 4, line 42, to delete "€43" and substitute "€40".
Amendment put and declared lost.
I move amendment No. 6:
In page 4, line 44, to delete "€255" and substitute "€240".
Amendment put and declared lost.
I move amendment No. 7:
In page 5, line 5, to delete "€28" and substitute "€25".
Amendment put and declared lost.
I move amendment No. 8:
In page 5, line 7, to delete "€62" and substitute "€60".
Amendment put and declared lost.
Section 6 agreed to.
Sections 7 to 9, inclusive agreed to.
Schedule agreed to.
Title agreed to.