Select Committee on Housing, Planning and Local Government debate -
Thursday, 30 Jun 2016

Vote 34 - Environment, Community and Local Government (Revised)

Chairman

I draw attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Opening statements submitted to the committee will be published on the committee's website after this meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. At the request of the broadcasting and recording services, witnesses and those in the Public Gallery are requested to ensure that mobile phones are turned off completely or switched to flight mode for the duration of the meeting, depending on the device, and not simply to silent mode.

The purpose of this morning's meeting is to consider the Estimates for the Department of the Environment, Community and Local Government. I welcome the Minister for the Environment, Community and Local Government, Deputy Coveney - whose Department will be renamed to cover housing, planning and local government - the Minister of State, Deputy Damien English, and their officials. They are most welcome here this morning for the first meeting of this new committee. The meeting will consider the Estimate for the Department for 2016, including an examination of the financial allocations and associated output targets for the current year. Copies of the Vote 34 Estimate for housing, planning and local government and the Department's briefing have been circulated to members. I invite the Minister to make a brief opening statement.

Minister for the Environment, Community and Local Government (Deputy Simon Coveney)

I congratulate the Chairman on her appointment. I hope and think it will be a very busy committee. We have made no secret of the fact that housing is a major priority if not the biggest priority for Government and we want to work with everyone on the committee to solve the multilayered and complex problems around housing. A number of members of this committee were also members of the Committee on Housing and Homelessness which was established to prepare a report and make recommendations on an all-party consensus around the approach we should take to housing. We will be producing, in a few weeks, our own Government response to the report and to the housing challenges we face. I look forward to coming back to tease through the detail of that. It may also be an opportunity to talk about the all-party committee's report.

I am conscious of the fact that the annual Estimates process is an opportunity not only to talk through the figures but also some of the policy behind them. Essentially, however, this is about financial decisions which were taken six months ago. There are some revisions because of changes in the structures of the Department and some issues around water, which I want to go through in some detail. Obviously, we can go through the Estimate section by section and I will try to be as open as I can in terms of the answers. I welcome my colleague, Deputy Damien English, who is working with me on all areas in the Department and who is also here to answer questions. We also have all of the key experts in the Department with us from the Secretary General down. If people have technical questions to which I do not have the answers, we will get input from those experts.

I would like to get an opportunity at some point in today's proceedings to raise the issue of the water legislation we need to pass. We are, in effect, suspending water charges from tomorrow and the legislation to address that must be facilitated through the system as quickly as possible. It is a short Bill. I will introduce two fairly straightforward amendments on Committee Stage, the detail of which I have already signalled and the purpose of which is to provide more clarity. We have been in contact with the committee with a view to scheduling Committee Stage next week. I appeal to the members to facilitate that earlier if possible. It is not going to be a long Committee Stage, although that will be up to the members. People will want time to put amendments together, but this is a Bill that was drafted in exceptional circumstances and, as such, I would appreciate other parties and the committee facilitating the debate on it as early as possible next week.

I welcome the opportunity to discuss my Department's Revised Estimate for 2016, which is based on the Estimate published last December. It sets out my Department’s budget as a gross total of €1.425 billion. This represents a gross reduction of €67.219 million on the Estimates published last December and reflects the transfer of rural development functions from my Department to the restructured Department of Arts, Heritage and the Gaeltacht. The latter, which is to be renamed the Department of Rural Development, Rural Affairs, Arts and the Gaeltacht, has been assigned responsibility for the Leader programme, an expanded town and village renewal scheme, the Tidy Towns scheme, the Western Development Commission, the implementation of the report of the Commission on the Economic Development of Rural Areas, the Dormant Accounts Fund and social enterprise. Members will be aware that responsibility for the environment, including climate change, will also transfer to the Department of Communications, Energy and Natural Resources which, again, will be renamed to reflect the transfer of functions. The transfer of these functions has not formally been completed and, therefore, the environment programmes continue to be reflected in my Department's Estimate, which will change in the next month.

The amended Estimate also reflects a reclassification of the water conservation grant. This amendment is a result of the proposed suspension of water charges. An amount of €110 million was originally provided in 2016 for the purposes of meeting demand under the water conservation grant. With the proposed suspension of water charges and the discontinuance of the grant it is proposed to realign the funding and apply €109.7 million to supplement the subhead D3 payment to the local government fund. This will enable the fund to meet a portion of the loss of revenue to Irish Water as a result of the decision to suspend water charges and cover the costs of readjustment to the financial supports for the group water sector. A sum of €300,000 is being retained in the water conservation grant subhead to cover nominal administration costs that will arise in 2016.

As I have previously stated, housing is an absolute priority for this Government and that is clearly evidenced by the range of commitments which are set out in the programme for a partnership Government. As the Minister with specific responsibility for housing, planning and local government, I intend to focus intensively on the challenge of tackling the housing crisis. I take this opportunity to express my appreciation to the Oireachtas Committee on Housing and Homelessness which worked diligently over the past weeks and months. I commend the work of the committee and welcome the report which was published on 17 June last.

The first full year of implementation of the social housing strategy 2020 was 2015 when over €760 million was expended on the delivery of social housing which facilitated the delivery of over 13,000 social housing units. This represented an 86% increase in delivery on the figure for 2014. Building on this progress, the overall Exchequer provision for housing has increased by almost €145 million in 2016. The combined capital and current housing allocation for 2016 will result in an Exchequer investment of almost €821 million across a range of housing programmes. In addition, certain local authorities will fund a range of housing services from local property tax receipts to the value of over €112 million, bringing the total housing provision in 2016 to €933 million. This funding will see the household needs of over 17,000 households being met under a range of social housing initiatives. Under capital programmes, 1,500 units are targeted for delivery through construction and acquisition by local authorities and approved housing bodies. Local authorities will also return a further 1,500 voids back into productive use. Under the social housing current expenditure programme, 3,000 units are targeted for delivery through the acquisition, leasing or construction of houses and apartments by local authorities and approved housing bodies. In addition, 1,000 units will be delivered under the rental accommodation scheme, with 10,000 households being assisted under the housing assistance payment scheme, HAP.

I am committed to meeting the targets for 2016 and my ambition is to exceed them, if possible. In this regard, I have asked all local authority chief executives for their ideas and proposals to expedite delivery of social housing this year. I have recently been joined by Minister of State with responsibility for housing and urban renewal, Deputy Damien English, and, as Members are aware, we have been tasked with preparing an action plan for housing working with our Government colleagues and key stakeholders and drawing on the work of the Oireachtas Committee on Housing and Homelessness. The plan will be delivery-focused and build on the considerable work already carried out or under way in my Department. It will include specific actions to expedite and boost supply of all types of housing, including social housing, in the immediate, medium and longer terms and focus particularly on households who have most difficulty in accessing the housing and rental market. It is recognised that a lot has been done in recent times to increase the resources available for housing and the focus now must clearly be on accelerating delivery. The action plan will be published in July and its implementation will already have begun at that stage.

The local government fund is funded principally by motor tax and local property tax receipts which are collected by the Revenue Commissioners. Local property tax continues to provide a sustainable, stable, alternative source of funding for the local government sector. The 2016 allocations of local property tax receipts to local authorities are based on the same mechanism and principles agreed by the Government in the previous year: 80% local retention to fund the delivery of public services, with the remaining 20% being redistributed to provide top-up funding for local authorities that have lower property tax bases due to variances in property values and density across the State. These measures are necessary to ensure a balanced system of funding local authorities. The Government has devolved more powers to local authorities by giving elected members discretion to vary the rates of local property tax by up to 15%. This allows for greater transparency and accountability at a local level. Some 11 local authorities voted to reduce local property tax rates for 2016, while 14 reduced their rates for 2015. We are seeing a slight reduction in the numbers making the decision to reduce.

The income sources to the local government fund this year are estimated to be motor tax receipts of €1.075 billion, local property tax receipts of €437 million and a payment from the Exchequer of €396 million. My Department will make payments estimated at €1.921 billion from the fund in 2016, including local property tax payments to local authorities of €453 million, payment of €348 million to the Department of Transport, Tourism and Sport for the maintenance of non-national roads and public transport and a payment from the Exchequer of up to €360 million. As highlighted, the water conservation grant which is being discontinued will be applied to enable the local government fund to meet a portion of the lost revenue to Irish Water as a result of the decision to suspend water charges and to cover the costs of readjustment to the financial supports for the group water sector. We have more or less agreed that with that sector and it seems to be happy with it.

The Vote also provides funding for the social inclusion and community activation programme, SICAP, which will be managed and implemented through the new local community development committees, as the new governance model for local and community programmes in each local authority area. The allocation of over €42 million for 2016 will allow further good progress to be made in this vital area.

I have kept my remarks as brief as possible. It will be useful to have a full discussion on the activities and funding of the restructured Department and I look forward to hearing members' thoughts and contributions. I have made some briefing material available to the committee which I hope it found useful. It is more detailed than what we provided in the past and it is a good basis for a good and transparent discussion on how money will be spent this year. I will happily take comments and questions at this stage.

Chairman

I agree with the Minister that the briefing document was very helpful to look through. It was great to get it so early and to have time to absorb the facts and figures in it. We will be taking questions on programme A 4.1, housing. Does Deputy Pat Casey have questions for the Minister?

Deputy Pat Casey

Does the Chairman mean questions specifically on the housing programme?

Chairman

Yes.

Deputy Pat Casey

My concern is that the total spend up to 23 June did not even reach one quarter of the total allocation. Is that normal? Of a total allocation of €538 million, only €117 million was spent up to 23 June. Is the money not being spent? Is it normal for spending to take place in the second half of the year? As this is my first attempt at this, I do not know what has happened historically. Perhaps it catches up and the money is spent at the end of the year. If there is any money left over, will it be allocated on top of the normal amount allocated? I am concerned that the normal level of funding not be cut.

Deputy Eoin Ó Broin

I thank the Minister for his presentation. I acknowledge and welcome the breadth of the documentation we have been given. It sets a very good precedent for the engagement between the Departments and the committee. I acknowledge the stated commitment of the Minister, Deputy Simon Coveney, and the Minister of State, Deputy Damien English, to work collaboratively with the committee. This is good and to be welcomed.

I have a question on underspends. In addition to the general underspend in the social housing budget, on which there has been much public commentary, I am interested in any comment the Minister may have to make on underspends in the budgets for Traveller and rental accommodation scheme, RAS, accommodation. I am still unclear on whether the mortgage-to-rent budget, through the Housing Agency and local authorities, fully comes from the Minister's Department and if there are underspends in that area.

The second question is on statistics and how they might be presented in the future. We are all keen to see the extent of delivery of the social housing programme, irrespective of our differences. One of the issues I have with the statistics relates specifically to HAP tenancies. Some are new tenancies, while others involve a move from the rent supplement scheme to the HAP scheme. There is a change, but tenants remain in the same property. It would be sensible in the future for some distinction to be made purely for the purposes of information, particularly given that there will be about 10,000 HAP tenancies this year.

Perhaps I am being a little cheeky in asking my final question, but we welcome the announcement earlier in the week on the HAP thresholds. Perhaps the Minister might provide some clarity on the policy. There was a sentence in the joint press release of the two Ministers that informal top-up arrangements could be compensated for.

While there are illegal informal top-up arrangements with respect to rent supplement, there are also permitted top-up arrangements with respect to the housing assistance payment, HAP. Is the new arrangement applicable to those top-ups for the HAP? Has the Department got its head around how it will guide community welfare officers, in this case local authority officials, to make assessments around that? How one evidences an informal top-up might be difficult to do.

Deputy Mattie McGrath

I welcome the Minister and his officials and thank them for this detailed briefing. I am concerned about the overspend and meeting targets. Local authorities - the ones I deal with anyway - have not delivered on the housing numbers we expected for several years. Since the Celtic tiger, there has been a reliance on the private sector for housing provision. The local authorities have not reignited the passion they had in the darkest days when they were able to build thousands of houses. I also welcome the increased payments announced this week for the HAP and rent allowance. Will the Minister clarify how the top-ups will be amalgamated into the system?

I look forward to engaging with the committee and giving it my best contribution.

Deputy Simon Coveney

On the spend so far, it was something I faced when I was in the Department of Agriculture, Food and the Marine, namely, much of the capital spend to get projects ready in Departments is drawn down in the second half of the year rather than the first. To give an indication of the sense of urgency to get things done this year versus where we were last year, at this point in 2016, taking Exchequer funding and local authority’s self-funding from the local property tax receipts, in housing capital expenditure, we have spent two and half times compared to last year. This time last year we had spent €45 million of the proposed spend. So far this year, we have spent €117 million. We will be trying to ensure we spend all of it by the end of the year.

Last year, the underspend on housing came to €28 million. We actually managed to carry forward €29 million into the next year. That money was not lost but was added to this year's figures.

Deputy Eoin Ó Broin

Is that €29 million included in the €117 million figure?

Deputy Simon Coveney

Yes.

Deputy Eoin Ó Broin

Technically speaking, the underspend-----

Deputy Simon Coveney

I take the Deputy’s point. If we were not rolling on with the continued expenditure programme, if we stopped it now, then that money would be lost. However, we are rolling on from year to year.

The reason we are not building enough social housing is not necessarily because of money. Money and funding are part of the issue. Building the number of social housing units the housing committee asked us to build will require much money. However, there are also structures in place, decision-making processes and so on, that mean projects are not happening at the pace we need them to happen. This is a process issue, as well as an organisational, project management and funding issue. That is evident from the figures in question.

Mortgage-to-rent is recouped through local authorities. However, this scheme has not been as successful as we would have liked it to be. When it was launched, people were talking about 10,000 applicants availing of it. It has only been a fraction of that, mainly in the hundreds, however. We are looking at the mortgage-to-rent structure again to see if we can relaunch it and redesign it, if possible, in the context of the housing action plan. That is an option that needs to be available to people but it is not being taken up at the moment. I had some views as to why that is but it is a programme into which we need to put more thought.

Deputy Eoin Ó Broin

What is the underspend on the mortgage-to-rent scheme?

Deputy Simon Coveney

For this year, it will depend on progress and how successful it is. I suspect there is more money allocated than is being drawn down. I will get an exact figure for the Deputy but it will be more accurate at the end of the year.

All of these figures need to come with a health warning to a certain extent. We are planning to launch an action plan for housing in two weeks’ time, which may impact on what we can and cannot do for the remainder of the year. There also might be a need to spend more money in certain areas and to make a case for that. This is the most accurate Estimate we can publish at this point.

Up to 63% of the HAP tenancies are new tenancies. Some people dismiss the HAP as double counting, claiming it really is people on rent supplement switching over to the HAP. Actually, two thirds of the people on the HAP are new social housing solutions. The appetite to take up the HAP is gaining momentum. People were fearful of it at the start because they felt, once on it, they were not on the housing list per se but the housing transfer list. These suspicions are being addressed in many areas. We are hoping to get an extra 10,000 people on to the payment this year. Hopefully, we will be able to accelerate that next year. Nineteen local authorities have made the HAP available. The big jump will be to take on the Dublin local authorities. At the moment, they only have it for homelessness. In 2017, we hope it will be rolled out to every local authority. People switching over from rent supplement to the HAP will obviously see a dramatic transfer of funding from the Department of Social Protection to our Department.

It is interesting that we had a mix of compliments and criticisms for the decision to increase rent supplements and the HAP, as one would expect. This proves it is not a straightforward issue in terms of the impact it might have on rents broadly. Certainly, it was the right decision. This is about keeping people in their homes in the context of more people being priced out of the rental market. Next year, it will cost €55 million in total, €12 million of which will be for the HAP. For the remainder of this year, it will be a much smaller figure because it is only a half-year figure.

Top-ups, or under-the-counter payments as some people call them, are happening around rent supplement. They should not happen but we need to be honest and practical about that. For people to stay in their homes, they get money from different sources, sometimes from other family members, to top-up their rent, which is already being supported through rent supplement. That is not what is supposed to be happening with the scheme. However, it has been a practical response by some people to deal with landlords who are behaving in a way they should not be. What we are trying to encourage is for people to come forward and be upfront as to what they have been paying under the counter. At least then, we would understand, from a revenue perspective, what landlords are actually being paid. Accordingly, we then can end the under-the-counter payment element of that.

The HAP is slightly different because it is not illegal to do that but neither do we encourage it. We did not pick the increases out of thin air. The numbers are based on the figures we have been given regarding the 35th percentile - in other words, the bottom third of prices in the rental market. What we are trying to do, and what we have done through the Residential Tenancies Board, is to get an accurate picture of what people are being asked to pay in the market at the moment. That is the figure that we have increased the support to meet. The big challenge is simply the numbers in terms of supply. Even if one is in theory being offered sufficient supports to be able to get access to market rents linked to the 35th percentile calculation, whether the actual properties are available is certainly a fair point. That is why all these pressures will only be alleviated when we have a dramatic increase in supply both in the private rental sector and in social housing.

Deputy Mattie McGrath has left the room but he pointed to the fact that our construction industry has not been functioning at any kind of normal level for a decade now, whether in Tipperary or Dublin or anywhere else for that matter. Our job is to try to manage that in order that we get a sustainable but also quite dramatic injection of activity to get movement going to try to deal with the supply deficit, which is causing many other problems that we are left to deal with through social housing, emergency accommodation, homelessness services and so on.

I think I have answered most of the questions.

Chairman

Does Deputy O'Dowd have a question?

Deputy Fergus O'Dowd

Yes. I welcome the Minister's initiative on housing and the question of HAP. I know that the averages have increased by €120 per month for a family with three children, which is significant and welcome. Part of the complaints we are getting as a result of the release of that information into the public domain is that some landlords still refuse to accept people on HAP or rent allowance. Is there a possibility that the Government could consider making it more attractive for landlords to enter into a five-year rent agreement? In other words, if they opt into an arrangement for a period of five years or a period longer than, say, a year or two, could a tax incentive be introduced for them to accept that payment? I apologise for being hoarse this morning. I was not shouting for Ireland or any other team last night.

According to the Government strategy, 75,000 more houses are needed in the private sector. Those are extra houses to be supplied by 2020 and will not be local authority or public housing units or built by communities. The supply of 75,000 private units to the housing market will be a huge challenge. I note that in County Louth there are only approximately 400 houses for rent at the moment. How can we incentivise greater release to housing applicants from the private sector into that area?

Chairman

We are dealing with the Estimates this morning. The questions the Deputy has raised have more to do with the housing committee and we will have ample time to go through them, but the Minister-----

Deputy Fergus O'Dowd

With respect, I am happy to have my questions stand, if the Chairperson does not mind, please.

Chairman

No problem. What I was going to suggest-----

Deputy Fergus O'Dowd

I would be happy to get answers to them, if she does not mind.

Chairman

I was going to suggest that the Minister might address them but that when we are going through the agenda, we like to stick to questions on the Estimates, if that is okay. They are very relevant points.

Deputy Fergus O'Dowd

To be very clear to the Chairperson, as a member of this committee and having listened to debate on the housing assistance payment, I believe all my questions are perfectly fair and reasonable to ask-----

Chairman

I am not questioning that.

Deputy Fergus O'Dowd

-----and I would like to have them answered, if she does not mind.

Chairman

I will ask the Minister to answer. I am just saying I would appreciate if in future we might keep to the Estimates, if that is okay.

Deputy Fergus O'Dowd

Of course.

Deputy Eoin Ó Broin

I have two final questions. First, regarding the capital spend, just so I understand the figures correctly, is the €29 million carried over included in the total capital allocation for this year of around €400 million? Second, if it is carried over, does that mean that only an additional €88 million has been spent when the underspend from last year is taken out so that the spend to date is a little less than would otherwise have been the case if all the money had been spent last year? It might be a slightly esoteric question but I would appreciate if the Minister could answer it.

Regarding HAP, and again this is Estimate related, I propose that when the Minister releases the figures at the end of each year he differentiates between the new HAP tenancies and the standing ones for precisely the reasons he has outlined, as I have done. For most of the local authorities that have been running the HAP scheme until now, South Dublin County Council being one of the larger ones, the HAP tenancies have been primarily focused at new entrants into the housing system. That has now changed, and Intreo has been writing to long-term rent supplement recipients since early this year. I suspect, and this is why I am keen to see the figures reflected at a later stage, that when there is a start to moving into the 10,000 HAP tenancies that are the target for this year, the number of new HAP tenancies will reduce as a percentage of the tenancies overall. It would be useful for us to have those figures.

It might not be departmental policy but HAP top-ups, unfortunately, are encouraged. How does the Department intend to advise local authorities to process a claim by HAP recipients when they come to the desk to say they have been paying a top-up? What kind of evidence will they be asked to provide? Will guidance issue to local authorities? While the HAP increases are very welcome, they are still significantly below market rents in some high-need areas by €100 or €200.

Chairman

Unless there is any point of clarification after the Minister's response, we will move on to the next item.

Deputy Simon Coveney

There were some very relevant questions. To respond to Deputy O'Dowd's questions first, we introduced some incentives for landlords to rent to HAP tenants in the last budget. If they take on a tenant for more than three years, they get preferential tax treatment. This is to incentivise an end to what Deputy O'Dowd rightly referred to as a bias that some landlords certainly have against tenants whom they see as being local authority tenants or whatever. We need to try to get away from that, and one of the big themes of our housing strategy will be trying to create diverse communities where social housing, private housing, affordable housing and rental accommodation are intermingled in order that there is no stigma attached to people who need assistance either with their rent or finding or paying for a house. That is something we need to try to do in the context of building a lot more social housing in the next five to ten years.

Deputy O'Dowd is also right that much of the talk that we have had about housing has understandably concerned the need to build an awful lot more social housing, but that will never meet the current demand on its own. If we do not have a private housing sector that builds a lot of houses every year to meet the demand, we will have more and more people relying on social housing because there will simply not be options in the private sector. We will then get into a dangerous cycle of more and more people who would normally aspire to buying, financing and owning their own homes being forced to rely on the State to provide that housing or supported housing. We will create more and more demand, which will then create more and more need for supply, and we will get into a very difficult area. We therefore need a balanced housing strategy that drives the private sector, which is totally undersupplied at the moment, particularly in Cork and Dublin, but also to a certain extent in Limerick, Galway, Waterford and other urban centres.

There is an unusual phenomenon in the housing market in that although there is serious demand to buy new houses, there are no huge queues to do so because people cannot get finance. Many first-time buyers have been essentially locked out of the market for a number of years. They are unable to get the finance to buy a house because there are no houses at prices they can afford. Although we have significant demand, we do not have the capacity to match that demand. This means houses are not being produced for that demand.

In the past, house prices were driven by extraordinary demand because everyone was getting ridiculous mortgages with low financing costs or interest rates. This fuelled the property market. Developers were building far too many houses and many people were buying for the purposes of speculation. The opposite is now the case. There is considerable demand but an inability to finance mortgages. Therefore, we have a strange broken structure in the property market, with considerable demand for houses but an inability to finance and buy them - even if they were available to buy. Developers maintain that there is no functioning first-time-buyers' market for them to supply by building houses, even though there are first-time buyers throughout the country who are seeking to purchase houses. It is a difficult issue to resolve. To be honest, the only way to resolve it is either to reduce the cost of building a house and reduce prices somehow or increase the capacity of people to raise the finance needed to buy a house at current prices. Without one or both of these issues being addressed, we are going to continue to have real problems in the private sector.

Deputy Ó Broin made some points on the capital spend. When there is an underspend in a Department and a carryover into the following year, the Department of Public Expenditure and Reform often nets off the underspend in some Departments with the overspend in others. The Department of Public Expenditure and Reform will also agree to allow a certain amount of carryover from one year to the next, under certain conditions, especially in the area of capital spending, and that is what has happened here. This happened in the Department of Agriculture, Food and the Marine as well. There were numerous payments in December and January under various schemes and the payments carried over two years. Some of the projects we are financing for social housing will have a carryover spend from one year into the next, depending on delays in getting those projects up and running or whatever. It is true to say, I suppose, that if we could have spent the €28 million allocation last year on social housing, it would have yielded a better outcome and we would have had another spend again this year. In any event, the money is being carried over and we will continue to try to finance projects as quickly as possible.

A question was asked about top-ups and the housing assistance payment, HAP. Tenants sometimes choose to pay a top-up if they have been in a house for a while and are keen to stay there. There are legally allowed to do that, although now that there are increased support payments for HAP we are keen to encourage less of that. HAP is rather different to rent supplement. If someone gets a HAP tenancy and then goes back to work and increases his income, then the support under HAP begins to reduce as his incomes starts to increase. That person may then decide to make an extra payment to a landlord or whatever and we try to factor that in. The flexibility around HAP makes it a more sustainable model than rent supplement in dealing with people's changing incomes - hopefully, these incomes are changing for the better.

There was a question on how we calculate the numbers switching from rent supplement to HAP. We do not see rent supplement as solving a social housing need as such. It is like a temporary solution, whereas we see HAP in that category. A total of 63% of people who are coming into HAP are new to a rent support system that provides a social housing solution, if we can call it that. They are new to the system. Other people are switching over from rent supplement, which is a less sustainable way of maintaining supports for someone as a social housing solution. These people are moving from rent supplement, which is seen as a temporary solution, to HAP, which is seen as a more permanent social housing solution given the flexibility that it facilitates and so on.

Anyway, I take the point made. When we are discussing HAP we should probably differentiate given the numbers. However, I have no wish to suggest that switching people from rent supplement to HAP is switching someone from one equal solution to another. One is far better than the other and provides a more permanent and sustainable solution, and should be seen in that light. For example, last year when we calculated the provision of 13,000 solutions in terms of people getting keys for social housing, that factored in HAP but did not factor in rent supplement. This year the corresponding figure will be over 17,000 and that will include approximately 10,000 under HAP.

Deputy Eoin Ó Broin

Some of those 13,000 solutions from last year included keys to houses in which people were already living. That is my point.

Deputy Simon Coveney

Yes, but they were given a far more sustainable solution for the houses in which they are currently living.

Deputy Eoin Ó Broin

That is a separate issue.

Deputy Simon Coveney

It is a separate issue - I accept that.

Chairman

We will move on to programme B and programme C.

Deputy Simon Coveney

Sorry, I meant to answer the question on Traveller accommodation. The increase in the Estimate from last year to this in respect of Traveller accommodation is significant. It is an increase of approximately €1.5 million starting from a rather low base. The percentage increase is approximately 17%. It is important to put this into context because the actual figure in the Estimate is still relatively low, particularly in light of the issue that needs to be addressed. Let us consider an increase to €4.2 million from €3.6 million by comparison with the figures seven or eight years ago when there was a far greater figure for Traveller accommodation. That is because a policy decision was made to try to accommodate Traveller families within mainstream social housing solutions, whether HAP or the allocation of social and affordable housing or whatever. The idea was to try to mainstream solutions for Traveller families within the broader social housing provision. A considerable number of Traveller families will be on social housing lists, for example. They will be treated like others in terms of getting priority and so on.

We need to recognise that there are Traveller-specific accommodation needs as well. These include halting sites and other types of Traveller-specific accommodation designed to meet specific needs. We are looking at that figure for next year. I imagine we will have a debate on the budget, but we are looking at whether that figure needs to be increased significantly between now and next year or whether we want to maintain the approach of trying to deal predominantly with the needs of Traveller families through the general budget for social housing. How best to do that comes down to a question of judgment.

Chairman

I thank the Minister. We will move on to programmes B and C. These include water services, environment and waste management. Are there any questions for the Minister?

Deputy Eoin Ó Broin

I have two questions on water and one on the environment. My first question relates to the funding of the meter programme in the Estimates. My understanding is the metering programme is planned in two phases. The first is almost complete and the second includes apartment complexes and units that are more difficult to meter for a variety of reasons. I understand there is an underspend in the first phase of the current metering programme because of, shall we say, difficult-to-reach areas.

There is also some uncertainty about when the second phase is due to start. Can that capital, which in my understanding is somewhere between €50 million and €100 million between the two phases, be shifted from the metering programme to other areas of capital investment for water if either Irish Water desires it or the Department thinks it is a good thing to do?

My second question relates to the first. There are ongoing infringement proceedings under the urban waste water treatment directive. While additional capital investment will be given to Irish Water over the period to 2021, I am interested to know where in the Estimates is the fund of how much extra the Department is directing towards capital investment to tackle this to ensure we do not end up in the European Court of Justice and having fines under those infringement proceedings.

My last question is on the environment. This came up in an informal meeting of the committee yesterday. There is some uncertainty from our point of view as a committee because the environment functions will transfer out. We do not know when. Should we assume as a committee that until such time as they are formally and legally transferred it is the responsibility of this committee to track those? Does the Minister have any indication of the notional timescale of when that will be transferred? None of us wants to take our eye off the environment ball because we think it is leaving and miss something between now and whenever it transfers to the relevant committee.

Deputy Fergus O'Dowd

I agree with my colleague on the environment issues. I regret very much that it is not staying with the Department because in my mind when people see the Custom House the first word that came into their heads is “environment”. I am sorry that will not be the case from now on. Housing is obviously extremely important as well, but I regret that this is happening.

On the water metering programme, does the Minister have the current costs to date of the programme? Is it within its budget? I am not sure whether my second question relates to the same issue as raised by Deputy Ó Broin but it concerns houses that would have been in the second phase of metering. Those are houses built during the 1950s or whenever it was. What is the position there? Will the metering programme continue anyway?

My final question relates to waste management, which is part of this section as well. I raised an issue with the Minister last week about tagging bins. I do not know whether there is an update on that. If there is not, could he give it to me some other time? I acknowledge that this might not be a matter for right now, but the problem that arose was that people who paid by lift only were being forced by some providers, certainly in County Louth, to pay a monthly charge as well as a lift for the bin, which meant they were being screwed to the wall by a waste service provider that they had no choice but to accept.

Deputy Pat Casey

This is not specifically on the figures, but it is around them. First, it relates to the subvention of Irish Water from motor taxation of nearly €586 million. Coming from a rural community and seeing local and regional roads deteriorate over the last few years, the fact that only 30% of the motor tax fund has been spent on road infrastructure is a concern.

My other question relates to revenues for Irish Water from the commercial water rates. When will Irish Water take these over? I do not know how many different commercial water rates there are but the sooner we get to the endgame on this the better so we will find out exactly what we are subventing Irish Water.

On the environment, the landfill levy has gone down again by another 25%. This is worrying, because in Wicklow I see waste wrapped in plastic, stored and shipped abroad to be disposed of. Something has gone wrong in the system if the landfill levy is going down because waste is not going to landfill, but also if it is cheaper to wrap our waste in plastic, store it, put it on a boat and ship it somewhere else to dispose of it.

Deputy Barry Cowen

With regard to the piloting of the takeover of group water schemes by Irish Water, what is the takeover by Irish Water in comparison to local authorities? Local authorities have taken over a certain percentage of group water schemes. What is the comparative percentage taken over by Irish Water? Piloting has been mentioned this year. Is this the first phase in terms of the taking in charge by Irish Water of group water schemes?

Deputy Simon Coveney

It is, I think.

Chairman

Deputy McGrath has a question and then we will finish.

Deputy Mattie McGrath

I too am disappointed that the committee is losing scrutiny of the environment.

Certainly something is going wrong with the situation on landfill if we can export our waste more cheaply than we can put it in landfill, although I am aware that we lack capacity in landfill. Also, on water metering, different opinions were given in the past, but how long do we estimate the batteries in the current meters will last? As with watch batteries, they will run down. Will we have to change the whole meter at that stage and add a cost in the process? Also, the group water schemes have to be supported because they are the enablers in terms of their own schemes. I am looking on aghast at what is going on with water in many areas.

Chairman

I call on the Minister.

Deputy Simon Coveney

I will start at the end, because it was the most recent question. We will support group water schemes. We met with the federation that represents those schemes. We had a good discussion and reassured it that we will return to the level of support for group water schemes before the introduction of the water conservation grant. The federation seemed happy with that.

Generally, the transfer of water assets from local authorities to Irish Water is happening over a phased period. Every now and again I, as Minister, sign off on a next phase of transfers. Clearly, Irish Water cannot take everything in one go, but as capacity builds we transfer the management of water assets from local authority management to Irish Water, which is the whole purpose of trying to switch to a single utility water model to try to create economies of scale, of knowledge, of capacity and so on. I see the group water schemes in that context. For that to happen for group water schemes, two thirds of those in a scheme have to sign up to it. It happens on the say-so of those involved in the group water schemes. A bit of democracy is involved to make sure this is happening with the support of the people affected.

We have not changed the landfill levy. It is €75 a tonne. If you look at how that compares to our closest neighbour, it is significantly less. Ireland does not charge a lot in comparison to other countries - certainly our closest neighbour - for landfill. Having said that, the landfill levy is designed to divert waste away from landfill and it is having the desired effect. That is a combination of people producing less waste, but also of some waste going abroad. Much of the diverted waste is recycled here, but yes, a lot is being shipped abroad for recovery in thermal treatment facilities. That reflects the fact that the economic downturn in recent years resulted in spare thermal treatment capacity in some EU countries. It also reflects the underprovision of thermal treatment capacity here in Ireland and significant pressure on space in landfill sites.

Waste is being transported from the west to Kildare for landfill.

We have pressures on available landfill capacity and we need to encourage more recycling, reuse, composting and waste minimisation. This was the thinking behind pay by weight, which we had hoped to introduce this summer but on which we have had to change tack in order to ease the transition in a way that households are more comfortable with. We should not see waste as simply material that needs to be sent to landfill but as a resource that can be recycled, reused and put to other uses as a fuel source and so on.

I will read a note on water to give members a sense of the numbers. There are big numbers changing as a consequence of the decision to suspend water charges.

Arising from the suspension of domestic water charges, Irish Water has estimated that it will require an additional funding requirement from the State in 2016 in the order of approximately €181 million. This level of funding is on the basis that there is no significant change in Irish Water's scale of operations and capital programme from that set out in its business plan. As savings in customer costs and domestic bad debt provisions are reflected in these estimates, it is proposed that the increased subvention amount of €181 million will, in part, be met by the conversion of the planned 2016 working capital amount of up to €58 million to subvention, which was factored in anyway. This will reduce the amount of additional subvention net of the working capital amount to €123 million. When account is taken of the savings from the suspension of the water conservation grant, for which €110 million was allocated in 2016, the cost of suspending domestic water charges is unlikely to exceed €20 million in cash flow terms in 2016.

A big chunk of this is being met by the €110 million now not going to the conservation grant but, instead, going into the local government fund to fund the water services that Irish Water is investing in and providing. The net cost of the decision will be less than €20 million, and may be considerably less. The figure will be worked out between now and the end of the year.

The transfer of environment functions from my Department to the Department of Communications, Energy and Natural Resources will happen before we break up for the summer. Climate change, air quality, waste management and the Environmental Protection Agency, EPA, are transferring over. There are parallels in the Department of Communications, Energy and Natural Resources with climate change and environmental issues, given the impact energy has on the overall emissions regulations. It is a reasonably good fit and will work well. We cannot factor in the changes in the Estimates until it formally happens. They will be factored in afterwards.

The urban waste water treatment directive sets out the requirements for the collection, treatment and discharge of wastewater in urban areas. In September 2013, the European Commission formally commenced infringement proceedings regarding non-compliance with requirements of the directive. Its letter in September 2015 outlines specific concerns in more than 70 areas, and the Commission does not view the list as exhaustive. A response issued in January 2016 and a follow-up meeting with the Commission took place on 25 February 2016. At this meeting, the Commission acknowledged that progress is being made and noted, in particular, the current national framework in which water services are being delivered. It also acknowledged that the significant funding allocation for investment in wastewater treatment, in the period to 2021 and beyond, would ensure compliance. The investment that is committed to between now and 2021 in this area is €2 billion of the €5.5 billion capital plan in the Irish Water business plan.

I am to meet the Commissioner next week. He is a very practical and sensible Commissioner and I have got to know him well through his role as Commissioner for the marine. I am meeting him primarily to explain why we are suspending water charges, how the process during the nine-month period will work regarding the work of the expert commission, the details of which we announced yesterday, and that feeding into an Oireachtas committee will produce recommendations on how Ireland should fund domestic water supply and domestic wastewater treatment. Let us see where the debate takes us. I will seek flexibility and accommodation from the Commission regarding what we are trying to do, which is to have an informed review and debate on where the financing of domestic water lies in Ireland so we can make a democratic decision in Parliament in nine months' time. I hope we will be facilitated to do this.

Deputy Alan Kelly has suggested this is illegal. I do not accept that and I am not sure where he is coming from. If Ireland decides to abolish water charges, there will be issues. Let us wait and see what our expert commission has to say about it regarding its judgements on our obligations under the Water Framework Directive. It does not serve a useful purpose to have the debate now, given that we have a group of experts who are there to make these assessments.

Approximately 850,000 water meters have been installed. We all know why some meters have not been installed. There has been community resistance in some areas. We should finish phase 1 of the metering programme which, in time, will be seen as value for money when meters are being usefully used in terms of understanding how we are using water, where leaks exist and the percentage of leaks that apply to localised infrastructure to people's homes.

Deputy Eamon Ryan put it well when he said we live in a world where we want data and understanding of we use natural resources. If we do not have meters, we do not know how we are using one of the most fundamental natural resources of all, namely, water. We do know nearly 50% of water leaks through pipes before it reaches its supposed destination. Although much of this happens on the main water infrastructure pipelines that do not go to people's houses, some of it happens in people's own infrastructure. The water metering programme is a good thing and in time it will be seen as a good thing. Some 40% of customers who are using water meters are paying below the cap because they understand what they are using. This is changing the mind-set on how water is used as a resource.

Proposals for potential savings on metering are included in the €5.5 billion for other investments. Along with the regulator, we will review phase 2 of metering in terms of how and when it proceeds. We do not have to do it now. The issue is finishing phase 1, which should and will proceed where practicable. That is happening.

The current phase 1 metering programme is due to end before the end of this year. It is virtually coming to an end as things stand. The revised target for that is between 870,000 and 880,000 homes, which is a very significant portion of the overall percentage of homes that would have meters. I am not aware of any country which has rolled out metering at the pace we have tried. If there is one fair criticism of what we have been trying to do around the whole water debate, it may that we have been trying to make too much to happen too quickly and expecting Irish Water to achieve it. That has put huge pressure on Irish Water and many households were not ready for the pace of change. That has raised a lot of political problems, concerns and frustrations which are genuinely held by many. Hopefully, the next nine months will allow us to address some of that frustration.

Chairman

Does Deputy Ó Broin have a clarification?

Deputy Eoin Ó Broin

I have a couple of follow-up questions, partly because the Minister did not answer either of the questions I put to him. On metering, my question was not on whether metering should happen. That is not a discussion for this meeting, which is on the Estimates. My specific question arises from my understanding that Irish Water does not consider that phase 1 of the metering programme will be completed by August or that phase 2 will start or be completed as early as it is. Given the nine-month interregnum, there is a question as to whether the money which would have been spent on metering during the period could be better spent on other aspects of the capital programme as per the Estimates, irrespective of whether metering is reintroduced at a later stage. My specific question is whether those funds, which in the view of Irish Water will not be spent on metering in the current Estimates, could be better used now. The issue of metering will then be dealt with.

On the wastewater directive, I could have told the Minister the figure was €2 billion because he told me so two days ago in reply to a parliamentary question. What I am asking specifically is how much of the capital expenditure in the Estimates before us is specifically dealing with the upgrading of the system to deal with the request of the Commission. A simple way to put the question is to ask how much of the €2 billion from now to 2021 is in the current Estimates.

My supplementary question is on the capital expenditure allocated by the Department to Irish Water this year of €522 million. In response to a parliamentary question I asked earlier this week, the Minister referred to that aspect being funded through a mixture of debt and equity. Can that be explained in plain English? When most of us hear that €522 million of capital expenditure was given to Irish Water, we think that a lump of tax revenue has been given. Clearly, that is not the case in this instance. It is relevant to this year's Estimates and next year's. As such, I would like to understand in plain English how much of the €522 million is tax and how much is debt. What is the debt aspect, in plain English? How much is equity and what is equity, in plain English?

Deputy Barry Cowen

Has phase 2 metering been contracted? Has it been signed, how much is committed and does it have to be paid?

Deputy Mattie McGrath

The Minister will probably say it is not in the Estimates but on wastewater there is a huge anomaly where residents had a quasi-public sewer at the backs of their houses. The majority of them were built and installed by local authorities. In the memorandum of understanding on the hand-over from local authorities to Uisce Éireann, that seems to have been deleted or neglected or was not handed over. It is no-man's land. There is a lost hardship in every small village and town and perhaps even in the cities. Certainly in the small towns that I represent something needs to be done to address the issue. Local authorities did not hand them over in the memorandum of understanding. They are now not allowed to touch it and Irish Water will not touch it.

Chairman

We might get clarification on that for Deputy McGrath after the meeting. It is not really relevant to the Estimates.

Deputy Simon Coveney

On Deputy Ó Broin's questions, any underspend in regard to the metering programme will be reallocated within water infrastructure. My understanding is that it will be prioritised for water connections and water access for new housing and such like. The money will not be lost.

Deputy Eoin Ó Broin

Can it be shifted to somewhere else in capital investment in Irish Water? That was my question.

Deputy Simon Coveney

Exactly. That is my understanding.

Deputy Eoin Ó Broin

Do we know how much the underspend is likely to be?

Deputy Simon Coveney

I do not have an exact figure on that.

Deputy Eoin Ó Broin

If the Minister can provide it at a later stage, that is fine.

Deputy Simon Coveney

I can.

Deputy Barry Cowen

If the contract has been paid for, there will be no underspend. A contract was signed to pay so much in phase 1. Is a contract signed in respect of phase 2? How much is it and has it been paid?

Deputy Simon Coveney

The target spend under the Estimate was €539 million excluding VAT. The revised target is €410 million excluding VAT, which means there is an underspend of up to €148 million which has the potential to be reallocated. My understanding is that it is not tied up in terms of having to be paid on the contract.

Deputy Barry Cowen

Is a contract signed for phase 2?

Deputy Simon Coveney

No. In terms of what is meant by "equity" and what is meant by "debt", equity is capital input. Equity is €184 million from the Minister for Finance in 2016 and the balance is from debt and other revenue charges. That is debt that has been raised by Irish Water from various sources. Within the charges, there is an Irish Water subvention of €479 million and a working capital loan of €58 million, which gives the total of €537 million for this year.

Deputy Eoin Ó Broin

Is it the capital programme for this year?

Deputy Simon Coveney

That is current.

Deputy Eoin Ó Broin

It is the €522 million capital for this year in which I am interested.

Deputy Simon Coveney

Of that figure, €184 million comes from the Minister for Finance and the rest is financed through debt and charges.

Deputy Eoin Ó Broin

Just so I am clear, does that mean that in terms of taxpayers' money going into this year's capital programme, the sum is only €184 million? Irish Water has to borrow the rest with interest charges from whatever sources.

Deputy Simon Coveney

That is it, yes.

Deputy Eoin Ó Broin

Direct State investment is actually only €184 million rather than €522 million.

Deputy Simon Coveney

That is capital. On the current side-----

Deputy Eoin Ó Broin

It is just the capital I am interested in.

Deputy Simon Coveney

That is my understanding, yes. Deputy Ó Broin asked a question about the infringement proceedings. What was that again?

Deputy Eoin Ó Broin

Of the €2 billion from now to 2021, what is the portion of that in the Estimates before us for 2016? If the Minister does not have the figure, he can send it to me at a later stage.

Deputy Simon Coveney

That is part of the €184 million.

Deputy Eoin Ó Broin

Do we know how much?

Deputy Simon Coveney

That is a capital contribution against Irish Water's business plan. It is the Irish Water business plan, which is the response the Commission is looking at. That is across multiple investments. The Exchequer contribution towards that is €184 million, but there is a bigger contribution towards dealing with the issue because of the other funding Irish Water provides for itself.

Chairman

With the agreement of members, we will move on to programmes D and E on local government and community. Are there any questions for the Minister?

Deputy Eoin Ó Broin

I have three questions. The first relates to the €16.65 million in the Estimates for the local government fund to local authorities this year as the one-off payment to meet the shortfall from the utility rates revaluations. It is a technical question. I presume that is just in the overall figure of the local government fund in the report.

The amounts of money involved are significant for many local authorities. I have tabled parliamentary questions to the Minister on this matter but I am still not clear on the position. Will he indicate if the Department is currently looking at repeating that subvention of €16.65 million for next year or has a decision been taken that it absolutely will not be rolled over? The impact on local authorities will be huge. For example, the amount in the Chairman's own local authority area was €752,000. In Deputy O'Dowd's area of Louth it was €287,000 and in Deputy Mattie McGrath's area of Tipperary it was €409,000. In Wicklow, it was €500,000. The amounts of money involved are significant. Perhaps the Minister will clarify where the money to which I refer is located in the Estimates, if discussions are taking place in the context of including it in next year's Estimates or if there will effectively be a cut of €16.65 million in the local government fund to local authorities?

I have two other questions. Is it intended to review the social inclusion and community activation programme, SICAP? It is just a relatively new programme. Perhaps the Minister will also clarify the situation with regard to the RAPID programme. I am assuming RAPID will stay with the Minister's new Department along with SICAP?

Deputy Barry Cowen

Could the Minister clarify where we are in respect of the rates revaluation country wide? I know it is ongoing but how far advanced is it? Perhaps the Minister could indicate if he is prepared to look at the possibility of overhauling the entire process relating to rates calculation and the system that is in place? We believe the system is outdated and that it should be more attuned to turnover associated with business and with a subdivision of business types in order to meet the demands people are facing in the context of the economy. There is an over-reliance on local authorities to accept those values without taking into account the changed atmosphere and different challenges. Ultimately, there is no correlation between rates, business types and services and the ability of entities to survive or thrive.

Deputy Pat Casey

I am concerned about the calculation of the local government fund, specifically the surplus of €112 million that local authorities are being forced to spend on housing. This has implications on other services provided by local authorities. In our county, we have suffered big time in trying to retain libraries services and recycling centres because of the way the local government fund is calculated. The difference between the local government fund and the local property tax is to be spent on housing. I have no problem spending on housing but it is now putting pressure on other services within the local authority.

Deputy Fergus O'Dowd

I have a question which relates to a combination of the issues involved. Local government is very inefficient. No matter what the State, the Government or the Oireachtas does, there is never enough money to do the job and it is never done. Local authorities' roads, housing and infrastructure are in a bad mess - notwithstanding the income from the local property tax. People are supposed to be getting value for money but I do not believe they are. I appreciate that this is a meeting to discuss the Estimates meeting and not policy but the question must be asked, taking Deputy Cowen's comments into account, as to whether it would be worthwhile looking at a review of the entire funding structure. Could an independent authority or consultant be appointed - I hate to use the word "consultant" with Deputy Cowen beside me - so that we might have a real root-and-branch reform of local government, how it is funded and how it operates in order to make it more accountable?

Chairman

I have one supplementary question with regard to local government funding and the budget times for local authorities. Information is given to local authorities at the very last minute when they are trying to finalise budgets for central funding. Is there a mechanism to do that at an earlier stage rather than at the last minute, which has been the protocol in recent years?

Deputy Simon Coveney

Could the Chairman please clarify?

Chairman

When local authorities are calculating their budgets, there are certain allocations of money which they may have to keep or give back. They do not know the proportion of this money or how much they are going to have to self-finance. Is there an early mechanism that could come into play?

Deputy Simon Coveney

Is the Chairman referring to the 80-20 issue and seeking earlier decisions so people know what they have to spend? My officials have just informed me that we will try and do that at an early stage so that when budgets are being put together in September, there would at least be some clarity as early as July. This might give local authorities some lead-in time rather than obliging them to try to cope with the dramatic change in budget just before they have to put it together. We will endeavour to give a much clearer signal earlier to allow them to plan.

With regard to the rates issue, I share the view that we are raising hundreds of millions of euro through rates each year and it is really only a tool to raise revenue. We could be using rates to do lots of other things. We use tax as a revenue-raising measure but we also use it to change behaviour or incentivise certain types of approaches. Local authorities in different towns and cities should have more flexibility in how they use rates and in how rates are calculated in order that they might be able to encourage certain types of investment. In areas where there is very high unemployment, I am of the view that companies should be given a rates reward for locating into those areas to try and improve the quality of life in certain parts of cities or towns. Likewise, in certain rural areas, if businesses are willing to relocate to locations where there is a real need for investment, I would like local authorities to be able to use rates to try and change that type of behaviour. If businesses are making a significant contribution towards the public realm in terms of the condition of their buildings and contributing to the quality of the main street of a town, I would like there to be a more considered calculation of rates that may go beyond simply the valuation of the property. That obviously opens up a whole debate on how one uses rates. Primarily, we need to make sure that it is business friendly so we are not putting people out of business by overcharging them. However, rates should be a much more significant tool for local authorities to encourage people to locate into areas and to see the kinds of businesses local authorities need on main streets and so on. There will be a consultation process around that and we will have a review. We will not rush it because rates have a big impact on businesses so we need to be careful with how we manage matters. We could and should be doing more to help businesses that perhaps feel they are being overcharged on rates and also to empower local authorities to be able to make more informed decisions about how they use the very significant rates revenue stream to be able to impact on business behaviour and so on. The straight answer is that, yes, we are going to look at that issue and I would like to return to the committee before we make any decisions on it to get some feedback from members as to what they think about that.

With regard to housing taking up a significant part of local authorities' funding, most of the new initiatives for housing involve new money for local authorities. Local authorities need to gear themselves up in staffing and expertise to get back into the business of building houses in order to meet the needs of those on the social housing list. To be fair to the former Minister, Deputy Kelly, he fought for and received a significant increase in capital expenditure for social housing provision which is feeding into the local authority system.

Some 420 staff have also been granted across the local authority system for housing. In terms of staffing ceilings this shows an increased commitment on spend but also increases the capacity within local authorities to be able to respond to the housing needs. I agree that housing is probably a bigger percentage of overall spend in local authorities now but that reflects the priority that needs to be given to the area. It is, currently, the biggest challenge for local authorities in responding to the needs of the people they represent.

A one-off payment of €16 million was made to local authorities last year for the valuation of utilities within local authorities. As this valuation happened mid-stream, or during the year, local authorities were, in effect, asked to cope with something without having had any notice of it. A one-off payment was made to try to recognise that and compensate for it. This is not an ongoing payment that will be made each year. Local authorities will essentially be asked to address their overall financial management in the context of the change that was made last year to the system of rating utilities. In other words, we will not be handing out another €16 million this year.

Deputy Eoin Ó Broin

I assume there will be no need for discussions between the Departments of the Environment, Community and Local Government and Finance about repeating that payment for a second year. Am I right in saying that is just not on the table?

Deputy Simon Coveney

At the moment, it is not on the table.

Deputy Eoin Ó Broin

At the moment.

Deputy Simon Coveney

There has been no discussion in my Department with me in respect of this issue. I do not anticipate that there will be another payment of this kind.

The local authorities that are having to self-fund some of their housing programmes from local property tax are being asked to use just a portion of their overall gain from that tax. They still have additional moneys left over from the local property tax. They may choose to use those moneys for local property tax reductions rather than service improvements. Obviously, that is a democratic choice for each local authority.

I hear the accusation all the time that people's motor tax is going towards paying for Irish Water. The truth is that motor tax has been contributing towards the cost of water delivery in local authorities for many years. This was the case long before Irish Water was even thought of. Motor tax funds the majority of the local government fund, which has been used to fund water provision for many years. I think it is a bit of a cheap shot, in some ways, for people to now make a big deal of the fact that a certain amount of motor tax money is going through the local government fund into the water services that are being provided by Irish Water. It is as if people are saying they are now paying motor tax to fund Irish Water. Irish Water is providing water services in a more co-ordinated way than was the case before now. Local government funding has always been used to fund those services. They are now being funded through Irish Water.

Deputy Eoin Ó Broin

I think that is the point people are making. Perhaps the Minister misunderstands it. Their point is that they have always been paying for this service. I appreciate that this is not a matter for this discussion.

Chairman

That is a debate for another day.

Deputy Simon Coveney

As we discussed earlier, it is a contribution towards the service that Irish Water provides. Irish Water has many other revenue streams. I do not think anybody is pretending in the current environment that Irish Water will be able to raise all of its money from a charging system which is about to be suspended. As we are deciding how to fund water provision, we have to strike the right balance between some contribution from the local government fund, some contribution from the general Exchequer and, perhaps, some contribution from individual households, especially in the context of changing behaviour, etc. I think I have answered all the Deputy's questions.

Deputy Eoin Ó Broin

I also asked about the SICAP and RAPID programmes.

Deputy Simon Coveney

Some €42.5 million is being provided in 2016 for SICAP, which will be subject of a value for money review and a programme review this year. A review of the targets has already been completed. We can provide details of that review to the Deputy if he wants them. Preparations are already under way for the post-2017 SICAP. There is a focus on building vibrant communities through a range of measures, including SICAP, the urban regeneration schemes and the social inclusion programmes.

Some €500,000 has been provided for existing RAPID commitments. The programme for Government contains a commitment to roll out an enhanced RAPID programme. We will examine ways of financing that. I assure the Deputy that the programme is staying in our Department. He has probably seen some of the evidence of how we are prioritising certain urban regeneration projects to try to get them up and running. We signed off on a €29 million project for the north inner city yesterday. I hope we will be in a position to pursue a number of other urban regeneration projects, particularly in Dublin, before the end of the year.

Chairman

I understand Deputy Casey wants to seek some clarification.

Deputy Pat Casey

At local level, each council decides on its local property tax rate in September even though its budget is not agreed until November. There is a complete disconnect in that regard. It seems to me, as someone who was a local authority member until a few months ago, that it is almost the case that the real budget decision is made in September when the council decides whether to set the local property tax at 15%. Is that process going to be harmonised? It can be difficult to get the budget through on budget day when the real decision has been made in September. The Minister suggested that some local authorities have a surplus because of their intake from the local property tax. Wicklow County Council did not reduce the local property tax rate last year. Its surplus over and above the local fund had to be spent on housing. I had no problem spending it on housing, but there was no democracy there because we did not have the flexibility to spend the council's extra money on any other local authority services.

I assure the Minister that I did not take a cheap shot at him with regard to Irish Water. As a rural dweller and a commercial user, I have paid for water all my life. We need to get to the end game with regard to the funding of Irish Water. There are discrepancies in commercial water rates throughout the country. Various rates are being charged to commercial businesses. Wicklow has the most expensive rate in the country even though it is providing Dublin with all of its water free of charge. When will we get to the end game? The other huge revenue stream for Irish Water is the provision of services for housing. There is a huge revenue stream there. When, if ever, will Irish Water become self-sufficient? The only argument I was making is that rural roads are beginning to suffer because of a lack of investment. I was not taking a cheap shot when I made the point that just 30% of the motor tax intake is being spent on roads.

Deputy Simon Coveney

The Deputy was not the subject of my comment.

Deputy Eoin Ó Broin

Deputy Casey should know that I am the only person here who takes cheap shots.

Deputy Pat Casey

I am learning.

Deputy Simon Coveney

I have heard people talking about this matter as if water was never-----

Deputy Eoin Ó Broin

The Minister is talking about Fine Gael party meetings.

Deputy Simon Coveney

No, no.

Deputy Damien English

It always has an impact.

Deputy Simon Coveney

We have good robust discussions at meetings of the Fine Gael Parliamentary Party. This case is often made as if motor tax did not fund water services for years. The only point I am making is that motor tax was used in that way.

I take the point that the big decision that is made in September really determines what is possible in the budget a few months later. I am told that Revenue insists on having that decision in September because it has an impact on decisions it needs to make. I take the point. I remind the Deputy that the budgetary cycle for the Government has changed too. The budget has moved to October. It used to be introduced in November.

I was also asked about the discrepancies and differences in terms of commercial water rates. I think the regulator will need to look at this area to try to get more consistency across the country in relation to commercial water charges. My understanding is that this is something which needs to be done.

Deputy Casey made a fair point about regional roads. We have been through a very difficult period in terms of successive Governments having money available to spend. It is a question of prioritising what is available. I think housing is now getting the priority it needs. The Deputy knows as well as I do that regardless of what is happening with the housing crisis or whatever, the condition of roads is undoubtedly a major political issue in rural constituencies, particularly at local elections. We are cognisant of that when we are providing funding. It is a question of trying to prioritise available resources where they are most needed.

Chairman

I thank the Minister. We will proceed to the final items, programme F, planning, and programme G, Met Éireann.

Deputy Barry Cowen

I have a brief question which is not specific to the Estimates but which relates to them. I wish to raise issues on the process surrounding county and regional development plans. That process could almost be suspended when efforts are being made to address the housing emergency. It is a matter for a procurement agency or housing authority to consider. The formulation of the county development plan is a long and difficult process. When I was a councillor, I noticed that it is difficult for local authority members to be completely engaged in the way they should or could be in the work relating to development plans. I think this is due to the lack of expertise available to them when their opinions may be contrary to those of the executives of local authorities. Where councillors veer away from the opinions of the executive, they could be personally culpable and/or responsible in the event of issues arising from their amendments to the development plan. It should be incumbent on the Department to provide finance for expertise to be available to local authority members in order that they might have at their disposal an independent assessment of the recommendations they feel are necessary. I ask for consideration to be given in 2017 for the funding of the necessary resources?

Chairman

I agree with that point, especially as it relates to budgets and development plans.

Deputy Eoin Ó Broin

The allocation to An Bord Pleanála in the Estimates is €14 million. In the context of the discussions during the sittings of the Committee on Housing and Homelessness, I know the Minister is considering - in the context of his action plan - the lengthy delays in the decisions of An Bord Pleanála. What portion of the €14 million is for staff costs? Is consideration being given in terms of next year's Estimates to expanding the staff numbers to try to shorten the waiting times?

I know Met Éireann is the burning topic for the committee, but I am under the working assumption that this is one of the functions that will move from the Department.

Deputy Simon Coveney

No, it will remain in my Department.

Deputy Eoin Ó Broin

Is there a rationale for that decision? May I compliment Met Éireann as it has one of the best short-range weather-forecasting services in the European Union? It should be complimented on that.

Deputy Mattie McGrath

Having been a member of a local authority - I still work with local authority members - I am aware that there is no expertise or advice available other than that of the local authority management. If one does not accept the legal advice of the local authority, one has to get one's own. How can there be proper discourse or debate if there is not independent legal and or professional advice available? That is a major anomaly. We might have troublesome issues in respect of development plans. It is not fair to councillors. The latter need to be supported. They are often bullied because they do not have access to any other advice.

Chairman

Are there any other questions?

Deputy Pat Casey

I agree with both comments regarding the service being provided for councillors, especially when it comes to development plans. One of the most frustrating aspects of An Bord Pleanála process is the lack of decision-making and the trend of kicking things down the road for six months and then another six months. In the context of resourcing that organisation, is there any chance that we could consider imposing a fixed timeframe similar to that which applies in respect of the planning process? I think it is unfair on people who are waiting for decisions and whose cases are being repeatedly kicked down the road for six months at a time.

Deputy Fergus O'Dowd

I am not up to date on the procedures relating to An Bord Pleanála. I do not know if they have changed. One might have a very long hearing that could, perhaps, go on for weeks. The inspector recommends that planning be given or refused and then the board overturns the planner's decision. There is no transparency about the method of overturning that decision. Members of the board of An Bord Pleanála are appointed and they have to sign their names to decisions but I do not think that is good enough. It is unacceptable, especially to community groups that have won their argument but who lose the battle with the bureaucracy.

Chairman

Most of those issues were raised already. When one is elected to the Oireachtas, one sees the level of support that is available to Members, even with the service provided by the Library. As a local politician, one does not have that support and one is on one's own. Councillors fund their own support. They come in for harsh criticism and they have to make crucial decisions. Training allowance and so on have all been diminished during the years but we might look at the possibility of training or management programmes to strengthen local government. When people have knowledge, they can excel further so I think we need to support local government and consider an allocation in future Estimates.

Deputy Simon Coveney

I do not disagree with any of that.

In respect of Met Éireann staying with my Department, I must point out that the organisation is building capacity around medium-term flood forecasting. I think we learned some very expensive lessons in the past few years around the predictability of flooding. We have looked at what other countries can do and what we cannot do in terms of having the expertise and management systems around being able to predict more accurately floods and when they will occur. Obviously, our system will involve a combination of Met Éireann, the OPW and local authorities, which have the primary responsibility in terms of providing emergency flood management and so on. For all those reasons, we think Met Éireann will remain linked to us. The reality is that Met Éireann is pretty much autonomous. The Department funds Met Éireann but the latter predicts the weather and all that goes with that, linking it in with emergency flood management, etc. It is probably a better fit for Met Éireann to remain with us than for it to go to the other Department. There was a discussion on it and one could probably make the argument either way, but Met Éireann is remaining with us.

On the issue of planning and the availability of resource to provide advice to councillors, there is an onus on local authorities to be able to ensure councillors are given the resources they need, particularly in respect of the process relating to county development plans. I served on Cork County Council many years ago and I am familiar with the development plan process as it then obtained. To be honest, it was not a satisfactory process. I hope it has improved since then. Certainly, councillors will say to me that they get very frustrated in terms of the decisions they have the powers to make. They have real powers in respect of the development plan process and budgeting. These are really important powers. Unfortunately, poor decisions were made in some instances in the past. In the context of lobbying and the interaction between councillors - who must make informed decisions - and their management teams, local authorities must ensure councillors have the resources available to them to be able to make the right decisions. I take that point. I think it is primarily the responsibility of local authorities to ensure such resources are in place. More generally - I made this point yesterday when I was responding to parliamentary questions - we are looking at the resources available to councillors in terms of ensuring that they are valued and that they have the resources they need to be able to do the job that people expect of them. People have become much more demanding of public representatives in terms of obtaining immediate solutions, feedback and information. Long gone are the days of people waiting for a clinic in a week or two weeks' time or expecting a response to a letter the following week. They now want immediate responses to questions on social media, e-mail and so on. We are looking at that.

Let us be clear that the An Bord Pleanála is not fully funded by the Exchequer. There is significant non-Exchequer income coming from fees towards costs. The overall pay provision for An Bord Pleanála in 2016 is in the region of €9.5 million - not €14 million.

Deputy Eoin Ó Broin

The difference between €9 million and €14 million is fees.

Deputy Simon Coveney

That is made up by the other income streams available to An Bord Pleanála.

The €14 million is to meet other costs for offices, including rental. Nearly €1 million is being spent on IT systems. There are other costs in running An Bord Pleanála simply beyond salaries.

Deputy Eoin Ó Broin

I understand that.

Deputy Simon Coveney

My understanding is total salary costs are €9.5 million. We are looking at whether An Bord Pleanála needs more staff. It would be ridiculous, if we are trying to build significantly more houses - we are talking about an expenditure programme in the billions - to slow the process down because we need half a dozen staff in An Bord Pleanála. It is a little like getting fire certificates in Dublin. It seems to take a long time to sign off on certain developments. If and where we need to intervene to increase the human resources needed to get things done efficiently and quickly, we will do so. It represents a good spend.

Deputy Eoin Ó Broin

How many staff does it have?

Deputy Simon Coveney

I will get the Deputy the breakdown, but the figure is over 100. Obviously, there are the board members, but there is a whole infrastructure around them. A comprehensive review of An Bord Pleanála was finished a few months ago. We have not started implementation or the assessment of it for implementation. That will get under way in the coming months.

On turnaround times, we often hear criticisms of An Bord Pleanála, but we do not often hear the positive side. It is important to say because the statistics will show it that 83% of all cases before An Bord Pleanála are determined within the 18-week statutory period. They often involve one-off houses; therefore, they do not involve complexity. I remember asking An Bord Pleanála when I met it recently how many applications it had received for developments of more than 200 houses, for example, to get a sense of the level of activity. I think the figure was only about eight; therefore, it is very small. If we are to make an impression on the supply deficit problem, we will need to have many of the bigger developments come through the An Bord Pleanála process. We will need to have a properly resourced system to make decisions quickly.

Deputy Eoin Ó Broin

I am sorry for interrupting, but did An Bord Pleanála tell the Minister the turnaround time for the larger developments, even ones with over 100 units?

Deputy Simon Coveney

If there is a requirement for further information, it is impossible to have it done in the 18-week period. An Bord Pleanála is also trying to set a target for larger schemes for 18 weeks, but that is challenging unless we can give it more resources. We have said we want it to prioritise large-scale residential developments in order that we can get the right decisions made in the system as quickly as possible. To be accurate, it has 146 staff. Just in case €9.5 million sounds like a lot of money - in case anyone is looking for a headline - it is broken up between 146 staff. The committee will see some initiatives on An Bord Pleanála in the housing action plan in a few weeks time.

Chairman

That is on page 33.

Deputy Simon Coveney

By the way, requiring by law a period for a decision to be made by An Bord Pleanála is not as straightforward as the committee might think. It has a quasi-judicial function in making judgments. It is true that it is a planning authority, but it is also an appeals body. My understanding is it is not straightforward to simply require it to make a decision, particularly if there are other issues in cases with which it has to deal. We will instead probably look at having an agreement with it on setting and meeting targets, as opposed to legislating, like we do for local authorities which have to make a decision within eight weeks or else planning permission is given by default. I do not think we can do that in the case of An Bord Pleanála, but we can do something to try to ensure we have decisions made within 18 weeks, where possible.

Chairman

That completes our consideration of the Estimates for the Department for Housing, Planning and Local Government. The clerk will convey this message to the Dáil in accordance with the Standing Orders. Is that agreed?

Deputy Eoin Ó Broin

I was just going to remind the Chairman about matters to be raised under the heading of any other business.

Chairman

I was going to ask the Minister about the Water Bill and timeframes.

Deputy Simon Coveney

I do not want to be difficult about the Water Bill. We have clear guidance from the clerk on what is standard practice, such as there is a period of four days to put amendments together. I ask the committee to look at going beyond the norm, given what we are trying to deal with. Certainly for the three parties represented here and I suspect the Independents, I have had no indication that people are trying to block the legislation. We want to get on with it. We certainly do not want it to be jammed into the schedule for the last week, if we can avoid it. If it is possible for the committee to meet an unusual number of times, I think we could get it through Committee Stage in an hour. If we could do that on Tuesday, it would be very helpful because we could then schedule Dáil time to take Report Stage next week, which would allow us to send legislation on which we could agree to the Seanad to be concluded the following week. It will, however, be difficult if we go through the standard, scheduled procedure whereby we would have the Water Bill next Thursday, with Report Stage being taken the following week and we would then simply run out of time. All of a sudden we would have to schedule late sittings to deal with it in the Dáil. I do not think that is necessary. If this was 50-page legislation that we needed to tease through line by line, I would understand that, but it is very simple, straightforward two-page legislation to suspend water charges for nine months. All of the other things not included in the legislation will be triggered by it. If we could do it on Tuesday, with the indulgence of the committee, it would make life easier for everybody, including the Seanad, which would have to deal with it at a very late stage before it breaks up.

Deputy Barry Cowen

I propose that the committee is in agreement.

Chairman

Out of urgency, if there is a mechanism to do so, is Deputy Barry Cowen's proposal agreed to? Agreed. I thank the Minister and all of the officials in his Department for the immense amount of work put into preparing the Estimates. I also thank the clerks for the amount of time and effort that go into preparing for meetings. We look forward to a close relationship with the Department.