I welcome the opportunity to discuss with the committee my Department’s Revised Estimate for 2018, as well as the Votes for the Valuation Office and the Property Registration Authority, PRA, which, arising from a recent transfer of functions, are now also under the aegis of my Department. We have provided a briefing on the Department’s funding for 2018, as well as other key information to assist in the work today,.
Turning first to Vote 34, the Revised Estimate sets out my Department’s budget for 2018. Gross expenditure of €3.264 billion is budgeted for this year. This represents an increase of almost €1.2 billion or 55% on the provision in 2017. The gross provision for 2018 comprises €1.633 billion in current spending and €1.631 billion on the capital side. In addition, my Department’s programmes will benefit in 2018 from resources of some €621 million that will be available from the Local Government Fund. While some Exchequer-neutral technical adjustments are being made between the Vote and the Local Government Fund in 2018, which I will return to later, even allowing for this, the Estimate represents a significant increase in resources for my Department. It indicates beyond doubt the priority that the Government attaches to my Department’s programmes and, in particular, to supporting the initiatives set out in Rebuilding Ireland.
More than €1.8 billion is being made available in the Vote for housing programmes in 2018 – an increase of more than €500 million on the 2017 Estimate. In addition, local authorities will fund a range of housing services to the value of €92 million from surplus local property tax receipts, bringing the total housing provision to more than €1.9 billion - €778 million on the current side and €1.14 billion in capital funding. This investment will provide social housing supports for 25,500 households in 2018. More than €1 billion will support the delivery of almost 5,900 social homes through construction and acquisition. The balance of the funding will add further tenancies – and maintain existing ones - through the housing assistance payment, HAP, rental accommodation scheme, RAS, and long-term leasing. It will also fund other important housing supports and services relating to homelessness, regeneration, housing for Travellers, and programmes to upgrade existing housing, for example, energy efficiency improvements and adaptation grants. An allocation of €301 million - up €149 million on 2017 - is for the HAP, which will enable a further 17,000 households to be accommodated, as well as support the 32,000 existing active HAP tenancies. Funding of €134 million will support the operation of the RAS, including a further 600 new transfers from rent supplement.
With regard to services for homelessness, an allocation of €116 million, which is an increase of €18 million on the 2017 Estimate, will address the increased demand for emergency homeless services and assist in supporting homeless households to transition to long-term and sustainable housing solutions. In 2018, more than 3,000 exits from emergency accommodation are expected through the provision of social homes and tenancies under the housing assistance payment. The additional funding provided for 2018 will support the provision of a programme of scheduled services, expenditure on emergency accommodation and also the implementation of solutions to transition homeless households from hotel arrangements to more appropriate family hub accommodation.
The local infrastructure housing activation fund, LIHAF, will be supported by an allocation of €60 million in 2018. The fund will provide enabling infrastructure on key sites to open up lands for early development and has the potential to release the delivery of at least 20,000 new homes by 2021. At least 10%, or 2,000, of these new homes will be social housing through Part V, with additional social housing to be provided on certain State-owned sites. In addition, €15 million is being allocated in 2018 to provide infrastructure and services, for example, roads and paths, water connections and street lighting on local authority-owned sites in Dublin to facilitate the delivery of affordable housing to help households facing the greatest challenge with affordability and to create mixed tenure communities.
As the committee is aware, following the report of the Oireachtas Joint Committee on the Future Funding of Domestic Water Services and the enactment of the Water Services Act 2017, the costs of normal domestic water services fall to be met by the Exchequer. To improve the transparency of the new funding arrangements, the Government decided that from 2018 this funding is to be provided from the Vote of the Department rather than by a combination of current funding from the local government fund and capital contribution from the Minister for Finance. This is now reflected in the amount of €1.1 billion - €600 million on the current side and €500 million on the capital side - which is included this year in programme B of the Estimates for meeting Irish Water costs in respect of domestic water services and providing a capital contribution towards investment. The capital funding in 2018 is part of the overall funding of €8.5 billion earmarked in Project Ireland 2040, the national development plan, to continue to upgrade our national water infrastructure. The group water sector continues to be an important element of the water industry in Ireland. Reflecting this, a provision of €20 million was made in 2018 for capital spend under the rural water programme through which funding is provided for group water schemes, an increase of over €2 million on the 2017 Estimate.
The new multi-annual approach to the programme which was introduced in 2016 provides enhanced funding certainty for priority investment needs in order to support the implementation of proper planning and sustainable development in rural areas, meet the requirements of the drinking water directive for rural water supplies and support the delivery of measures identified in river basin management plans to meet the objectives of the directive.
The local government fund, LGF, has in recent years been funded principally by motor taxation and local property tax, LPT, which is collected by the Revenue Commissioners. A payment has also been made to the fund from the Department’s Vote. The main payments from the fund have been to local authorities, Irish Water, the Department of Transport, Tourism and Sport, as well as the Exchequer. In tandem with Irish Water funding moving from the LGF to the Vote in 2018, which I have already mentioned, we are now proceeding with other changes to the fund which aim to return it more fully to its original purpose of funding local authorities and to end circular flows of funds that had built up over the years. In particular, from this year, motor tax receipts will go directly to the Exchequer; payments in respect of road and public transport infrastructure, previously met from the LGF, will now be met from the Vote of the Department of Transport, Tourism and Sport; and there will be no further requirement for a payment from the LGF to the Exchequer. In 2018, after these changes, the position is that the income sources into the fund are estimated to be LPT of €470 million and a payment from the Exchequer of €124.8 million. My Department will make payments estimated at €620.7 million from the fund in 2018, including LPT payments to local authorities of €504 million.
LPT continues to provide a sustainable, stable, alternative source of funding for the local government sector. The 2018 LPT allocations to local authorities are broadly based on the same mechanism and principles as were agreed by Government in previous years, with 80% local retention to fund the delivery of public services and the remaining 20% being redistributed to provide top-up funding to local authorities that have lower property tax bases due to variances in property values and density across the State.
With regard to other programmes, in planning, €10 million in capital funding is being provided as the start of a multi-annual urban renewal fund amounting to €60 million in total. The fund will be directed to local authority-led projects to regenerate and revitalise urban areas. From 2019, Project Ireland 2040, the national development plan, will see greatly intensified action to transform our cities and towns through the new €2 billion urban regeneration and development fund aimed at achieving sustainable growth in these areas. Further areas of expenditure set out in the 2018 Estimate include meeting the costs of An Bord Pleanála at €17.2 million and Met Éireann at €20.9 million.
In 2017, the Government decided to assign to my Department responsibility for Ordnance Survey Ireland, the Valuation Office and the Property Registration Authority. A provision of €15.6 million is made in Vote 34 for Ordnance Survey Ireland, while the other two organisations have separate Votes amounting to €11.6 million for the Valuation Office and €29.3 million for the Property Registration Authority. These bodies are to merge to form Tailte Éireann and work is under way in my Department on this important project.
I have kept my remarks as brief as possible and focused on some, but by no means all, spending areas in order to allow for full discussion on the programmes of funding of my Department and related organisations this hear. I will be happy, along with the Ministers of State, to deal with matters members wish to raise.