Valuation (Amendment) (No. 2) Bill 2012: Committee Stage

I welcome the Minister of State at the Department of Public Expenditure and Reform, Deputy Simon Harris, and his officials to the meeting. The Valuation (Amendment) (No. 2) Bill 2012 was referred to the Select Sub-Committee by Dáil Éireann on 12 February 2015.

I remind members and those in the Gallery that all mobile phones must be switched off to avoid interference with the broadcasting of the meeting.

Section 1 agreed to.

I move amendment No. 1:

In page 5, between lines 29 and 30, to insert the following:

“(a) property which has experienced a change in circumstances which has significantly affected its net value,”.

This amendment covers one of my principal objections to the legislation. It deals with a situation where there might have been no material change in circumstances, such as physical alteration to the buildings concerned, but other circumstances might have significantly affected the net value of the property.

I have given the example of a town or a village being bypassed. The physical buildings of the shops or filling stations that used to do a certain amount of business in such a town or village will be still the same and the Valuation Office will say there is no material change in circumstances. While that might be correct from a physical point of view, the whole business environment in that area will have changed. There can be an active shopping centre in place but a new much bigger shopping centre may have been built a couple of miles away and this will take away all the business, or a large portion of it, from the shops in the original shopping centre and their business and profitability will reduce. Crime rates have increased in certain areas where there is a lack of policing and people no longer go to shops that are in a cul-de-sac or a secluded area. Again, there has been no physical alteration to the buildings in those areas, but there has been a significant change to their net value and the purpose of my amendment is to facilitate revaluations in such situations.

I thank Deputy Fleming for his amendment. I am approaching committee stage here in the same way I approach committee stage in the Seanad whereby if there are issues to be teased out we will endeavour to tease them out and I will be constructive in my responses. I think Deputy Fleming will know that from my responses to some of his amendments during the course of this debate.

I am not in a position to accept this amendment. If the intent of the amendment is to ensure that changes to the physical circumstances are taken into account, I can assure Deputy Fleming that this is already adequately provided for in the legislation. I think the Deputy accepts that. In fact, the definition of material change of circumstances in the Valuation Act 2001 includes a change in value caused by structural alterations, the total or partial destruction of a property, the sub-division of a property, the amalgamation of one or more properties or the exemption of a property from rates. The Bill, as passed by the Seanad, includes an additional circumstance whereby a property either becomes licensed or ceases to be licensed under the Licensing Act 1833-2011. However, if Deputy Fleming's intention is to widen the MCC to include economic factors this proposed amendment, in my view, would undermine the fundamental tenet of the valuation rating system as it currently applies to both the revaluation of entire local authorities and to the revision of the valuation of individual properties. The amendment would apply in both directions and would introduce a level of instability in relation to local authority funding and uncertainty and unpredictability for rate payers such as prevailed in the late 1980s.

As the Deputy is aware, there are two processes. Revaluation reflects the economic conditions at a point in time and the changes that have occurred in the circumstances since the revaluation was last undertaken. Revision is the second process and that provides for the maintenance of the valuation list between revaluations and takes account of new properties and the structural alterations which I outlined earlier. The revision process by its nature is ongoing, whereas revaluation, as we are all aware, is periodic. I do not think it would be sensible to mix these two processes as this amendment would attempt to do, and to provide for some kind of rolling revaluation by adding a new and very broad qualifying condition to what is regarded as a material change of circumstances.

To qualify for a revision there must be what is known as the material change of circumstances. That is defined as the erection or construction of a new property, a change in value caused by structural alteration, the total or partial destruction of the property, the sub-division of the property, the amalgamation of one or more properties or the exemption of the property from rates.

The MMC provisions determine whether a property can be revised as distinct from determining how a property should be valued. The objective of these provisions is to give certainty to both rate payers and local authorities as to the circumstances in which a revision can take place and to avoid repeated and possible frivolous attempts to change a valuation. It does bring stability to a system. As public representatives, I am sure we can all appreciate the importance of stability of funding for our local government structures. If one were to accept this amendment one would arrive at a scenario where the system would be in a constant state of change and instability in terms of the funding base of local authorities.

I note what the Minister says. I will press this amendment.

Amendment put and declared lost.
Section 2 agreed to.
Sections 3 to 10, inclusive, agreed to.

I move amendment No. 2:

In page 10, between lines 19 and 20, to insert the following:

“Amendment of section 25 of Principal Act

11. The Principal Act is amended by substituting for section 25(2) the following:

“(2) The result mentioned in subsection (1) is that a period of not less than 3 years and not more than 5 years elapses between the date on which any valuation list in relation to the area concerned is caused to be published under section 23 and the date on which the next subsequent valuation list in relation to that area is caused to be so published.”.”.

I ask the Minister to give his response.

I thank Deputy Fleming for the amendment. The primary purpose of this Bill is to accelerate the National Revaluation Programme. There has been much criticism of the pace at which it is proceeding and predictions that it will take until 2013 are predictions that I have heard in various debates in the Dáil. This is not the case and the figures show that the revaluation programme has now gained momentum. In the period between 2005 and 2011, one third of properties revalued to date were completed with the remaining two thirds completed between 2011 and the end of 2014. In the period since 2011, new valuations for almost 32,000 of the 146,000 rateable properties in the country have been published under the National Revaluation Programme. Additionally, the rateable assets of 12 public utilities have been revalued at more than €838 million. In total, some 58% of the entire valuation base in monetary terms has been already revalued. This momentum will be built upon by the measures in the Bill and, while we do not agree on all parts of the Bill, the measures to speed up the process of revaluation are in the interest of everybody looking for a fair valuation system.

I have heard possibly Deputy Fleming, or certainly others within his party, saying that it will take until 2013 to complete the revaluation of the entire country. This amendment aims to put those areas that have benefitted from revaluation onto a three to five year cycle. The impact of this is that those local authorities that have been revalued already will get onto this regular cycle and an increasing amount of limited resources will go on fulfilling this obligation when counties that have yet to be revalued will continue to wait. I do not believe that is fair. Surely we all agree that the first priority of revaluation is to get every local authority revalued for the first time in 150 years. Then we can, and indeed must, aim at lowering the interval between revaluations. In my view it makes no sense to lower the interval at this point. However, once the National Revaluation Programme is complete and the gap between revaluations is closer to five years than ten years I believe it will be vital that we enter the debate on the ideal interval between revaluations. However, the priority for this Bill has to be to get everywhere in the country revalued for the first time in 150 years. The ideal gap between revaluations is closer to five years than ten years. We should continue to keep this issue under scrutiny. The priority for this Bill is to get everywhere in the country revalued first. Therefore I cannot accept the amendment.

On that particular issue, we have probably come to the essence of the Bill. After 150 years we have not got this first round done and I do not share the Minister's confidence that we will get there in the timescale about which the Minister is talking. The system, therefore, is not working. From that point of view I will press the amendment.

Amendment put and declared lost.
Question, "That section 11 stand part of the Bill", put and declared carried.
Question, "That section 12 stand part of the Bill", put and declared carried.

Amendments Nos. 3 and 4 are related and will be discussed together.

I move amendment No. 3:

In page 14, line 31, after “shall” to insert “, within 2 months,”.

There is no provision in the Bill that places a binding obligation on the commissioner to appoint a revisions manager. This amendment proposes to insert a requirement that it shall be done within two months of a person making an application. In amendment No. 4 I want to reduce the period involved from six months to four months, but I know what the Minister of State's response will be.

I am positively disposed to what the Deputy is trying to do, if it is to ensure that the time period from the moment a case arrives at the door of the Valuation Office until the moment it is out the door is six months. If the purpose of the amendment is to ensure that a revision case should be concluded within six months of receipt, then I agree that this is something that should be provided for. While the Valuation Office endeavours to process all revision applications as expeditiously as possible, there is a weakness in the legislation, as has been pointed out - namely, that there is no limit on the period within which a revision case is assigned to a revision manager.

I ask Deputy Fleming to allow me to consider these amendments between now and Report Stage, and I will bring forward an amendment that will achieve the same objective but will take practical considerations into account. For example, a time period of 40 days has to be allowed for representations, and the period allowed for in the amendment is four months. I thank the Deputy for raising an important point. I will take his proposal on board and will propose an amendment on Report Stage to endeavour to achieve what he is trying to achieve.

I will withdraw the amendment.

Amendment, by leave, withdrawn.
Amendment No. 4 not moved.
Section 13 agreed to.
Section 14 agreed to.

Amendments Nos. 5 and 6 are related and will be discussed together.

I move amendment No. 5:

In page 17, between lines 23 and 24, to insert the following:

“(3) The Commissioner shall exercise the function provided for at subsection (1) within 2 months of the making by the revisions manager of the decision referred to at subsections (1)(a) or (1)(b).

(4) For the purposes of subsection (2) the revision manager shall comply with the Commissioner’s direction referred to at subsection (1) within 2 months of the making of the direction by the Commissioner.”.”.

I ask the Minister of State to respond to my amendment.

I thank Deputy Fleming. This amendment is at odds with the intention of section 15, which provides a discretionary power to the commissioner in exceptional circumstances in the interests of maintaining a correct, equitable and uniform valuation list. The proposed amendment would result in limiting this discretion by limiting the period within which the function could be exercised. This could have the unintended consequence, which I am sure the Deputy is not endeavouring to achieve, of creating an unfavourable situation for ratepayers by telling the valuation commissioner that he or she must use that element of discretion within a certain period of time.

The second part of the amendment is also problematic. Where the commissioner exercises this discretionary power, is it essential that it is exercised according to the timelines and other existing provisions in section 28 of the 2001 Act, as amended, including the period 40 days to make representations to the revision manager. Ample time must be provided to research the case details and applicable grounds, which may include a physical inspection of the property. An adequate period of time to consider representations must be allowed. Accordingly, I am not minded to accept this amendment.

Section 29A envisages a situation where the revision manager has concluded that no material change of circumstances arises and I wish to draw the attention of the Deputy to the fact that there is already an appeal to the Valuation Tribunal from that decision under section 28 of the Valuation Act 2001. Where the commissioner does exercise his or her discretion to direct the revision manager, there is an appeal from the decision of the revision manager under the new section 34. The proposed amendments would result in a separate appeal from a decision of the commissioner not to exercise his or her discretion.

It is important to note that this entire provision is intended to be an exception and remedy deficiencies in the existing material change of circumstance provisions, where the circumstances warrant this between revaluations, and not to provide a back-door appeal system. References have been made to bypassed filling stations and similar scenarios for which no provision currently exists. Furthermore, under the existing legislation the commissioner can only act in a manner consistent with the decision of the Valuation Tribunal or the higher courts. We are now broadening the situations in which the commissioner can act.

I should also point out to the committee that as a public official the commissioner is subject to the principles of administrative law in whether and how he or she exercises the discretion and must also have due regard to fair procedures and natural and constitutional justice. In summary, we have put in place enough avenues of appeal to have a fair system without a need for these amendments.

The Minister of State is correct. I am trying to remove the discretion from the commissioner because that level of discretion can operate unfairly in the interests of the taxpayer. He might say it could act to their benefit in some cases. The discretion is a problem, and I would wish to see a more prescriptive approach. That is why I have included the phrase "shall exercise the function" in both amendments.

These matters have been tested in court. People are told they shall do something, but that does not mean they have to do something. They can be directed to do something, but that does not mean it actually happens. I am trying to make things black and white, which would lead to a simpler system, rather than allowing things to be at the discretion of a commissioner. We probably have a different opinion on that. I will press the amendment.

Amendment put and declared lost.
Section 15 agreed to.
Section 16 agreed to.

I move amendment No. 6:

In page 18, between lines 3 and 4, to insert the following:

“(g) any decision of the Commissioner of Valuation under section 29A.”.

Amendment put and declared lost.
Section 17 agreed to.
Sections 18 to 26, inclusive, agreed to

I move amendment No. 7:

In page 21, between lines 32 and 33, to insert the following:

Amendment of section 49 of the Principal Act

27. Section 49 of the Principal Act is amended by substituting for subsection (1) the following:

“(1) If the value of a relevant property (in subsection (2) referred to as the ‘first-mentioned property’) falls to be determined for the purpose of section 28(4), (or of an appeal from a decision under that section) that determination shall be made by reference to the values, as appearing on the valuation list relating to the same rating authority area as that property is situate in, of other properties comparable to that property and any other relevant evidence concerning the net annual value of the property at the date of application.”.”.

I ask the Minister of State to respond.

I thank the Deputy for the amendment. At revision, properties are valued by reference to the values of other properties in the same rating authority area. The values are based on the actual physical characteristics of the property at the time of valuation, but reflect the economic conditions at an earlier date. If all valuations in a local authority were decreased between revaluations as a result of economic circumstances, then the annual rate on valuation, commonly known as the multiplier or the rate in the pound, which is set annually by the elected members of that local authority, would have to increase in order to bring in the same amount of rates income. The converse would also be true where valuations increased.

Revaluation, not revision, is the appropriate statutory valuation mechanism to address such movements in the property market. Every revaluation values all properties in that local authority area by reference to the economic and other conditions on a specific valuation date. Those new valuations become effective for rates purposes at the same time. On the other hand, revision, as we have already discussed, deals with individual properties at different points in time. Accordingly, the effect of this amendment would result in the proliferation of anomalies and undermine the principles of equity and uniformity which are at the heart of this Bill.

As the committee will appreciate, the hallmarks of any taxation system are fairness, transparency and predictability. Changes in economic circumstances are taken into account during revaluation. If revision was to have regard to economic factors then a ratepayer whose property was being revised would be at an advantage or a disadvantage vis-à-vis other ratepayers depending on the relative strength or weakness of the property market for that category of property at that time. This could be very unfavourable to particular groups of ratepayers. Not every property will qualify for a revision under the material change of circumstance condition. If one does happen to qualify and the revision valuation is done at a time of property market buoyancy, one would be paying a much higher rate than an identical property in the same local authority area. This could also happen in reverse. For those familiar with the system, this amendment could have a negative impact, for example, on a decision to expand a business. If the property market had risen since the last revaluation one would be put in a position of paying relatively higher rates than competitors until a further revaluation. The current system maintains that equity and uniformity of values between revaluations. The overriding principle is that the actual occupation of the physical structure is what is being valued, not the economic buoyancy or otherwise, for the business carried on within the building. I believe that much of this relates to the need for a system that carries out revaluations more quickly. This came up a lot in our Second Stage debate and it is at the heart of this Bill. The aspiration is to get every business onto a regular cycle of revaluations. This will ensure a greater correlation between a current valuation and the economic conditions under which it was set. Trying to bring economic conditions and economic buoyancy in during the intervening period really has an impact on stability. I know Deputy Fleming will not agree with me on this, but I believe there would be many unintended consequences for ratepayers.

We are probably at the heart of what I believe is wrong with this legislation and the valuation process. I believe we need to scrap valuation legislation and move to a self-assessment system, as is the case for all other taxes. Stamp duty has been wheeled out as not being self-assessed, but practically every other tax, including income tax, is. For most businesses, their VAT returns, their PAYE returns, their PRSI returns, their income tax returns and their corporation tax returns are all self-assessed but subject to audit, so it can be determined whether they have done anything wrong. This is the old anomaly, as we have said, going back to the 17th or 18th century, whereby a business tax is determined based on a physical asset with no reference to the value of that asset to the business. We also have the situation in which a State body or local authority applies a multiplier to arrive at a rates bill for that taxpayer. This taxation method is totally out of sync with everything in a modern society. We have two State organisations, the Valuation Office and the local authority, telling the business person what his or her tax bill is in that area. Even people who have no valuation skills compared to most business people know what their assets are worth and have a better ability to come up with a proper assessment of rates for their local property tax. I am not saying there should be a reduction in rates but that it should reflect the business environment people are in. It would be similar to all taxes. However, I know the Minister of State wants a fixed tax based on property.

I also believe it is unfair that these revaluation issues are ring-fenced from local authority to local authority. My business in Cork is not in direct competition with businesses in Killarney or Waterford, but essentially every business in Ireland is in competition with others in Ireland. There is no logic to having the rates structure linked into the local authority. If somebody came up with this system today it would not even get out of the starting blocks. The rates for businesses in Waterford are set relative to Waterford conditions, even though that business might be doing most of its business in Wexford or Cork. The concept of the local authority setting the multiplier based on a valuation does not hold from a business point of view. We are all, by and large, competing within the State, and people are exporting. To return to what I said on Second Stage, the problem is the idea that when a revaluation takes place it starts on the basis that the rates bill in that county is €10 million, and when the process is finished it must still be €10 million to make sure that the county council is looked after. That is not any way to run a business. The first priority in this current model is to look after the county council, and that is not appropriate any more.

Economic activity increases in different parts of the country. For example, I am sure the level of business activity in Kildare over the past ten or 20 years has increased enormously with the spread of business from the greater Dublin area, but the rates bill will be capped to ensure the local authority gets its figure. Business could have gone down in Offaly in the same period, but the smaller number of shrinking businesses there have to continue to give Offaly its €10 million, whether or not there is €10 million to be found. The businesses next door in Naas or Kildare are much more capable of increasing their contribution to the national rates bill. Rates should be a national tax. Ireland is too small for 31 local authorities to have different rates of tax. There is no correlation between the rates bill for a business in Kildare versus an identical business in Offaly, which makes no sense, because businesses do not stop at county boundaries. This is why I am opposed to the whole concept behind revaluation.

I did not put down an amendment with regard to my final point, but I want to raise it and discuss it. The Minister of State and his officials will be aware that some of the members met with the Irish Wind Energy Association, IWEA. We have seen examples in which, because of this ludicrous county-by-county way of doing business, the rates bill for a wind farm in Cork has gone from €6,333 per megawatt to €19,762 in the revaluation. That puts the bill at about €50,000 per turbine if the turbine produces about 2.5 MW of electricity. The same turbines in another county, depending on the rates bill payable to that county and what is required, may not have that 200% increase. A situation is building in which the exact same businesses in different counties come in with fundamentally different requirements because their councils have different financial requirements. The councils get the first slice of the cake. I know the IWEA met with the Minister of State's officials to request a reclassification of the definition of "rateable asset" for rates purposes and a removal of a significant portion of the rateable asset. I do not know the details, but the IWEA says this happens in the UK and in Scotland.

Another way of looking at this is the unfair burden of rates applying to wind energy compared to other non-renewable sources of energy producing the same amount of electricity by megawatts. There is one point that the IWEA did not take into account in its submission to reduce the rates bill by about one third. A move to a system in which one third of an asset was classified as not rateable would mean that other businesses in the county would have to pick up the tab. The total rates bill in a county is ring-fenced for the county council before we start, which is nothing to do with the value or the level of business. Even in areas of economic decline, where population and business output are decreasing but the local authority still wants its X million euro, the council will get that figure from a smaller and smaller number of businesses. It is harder for the businesses to survive. It is no wonder that in small rural towns where business is tough they are just upping sticks, packing up and moving out of the main street. The rates concept, linked to a physical asset and unconnected to the business activity, is past its sell-by date. I ask the Minister to comment on this. We are discussing this section and I believe we are getting the main debate on this issue out there. When I met members of the IWEA last week, I said to them up front that there might be a difficulty because of the mixed views on the number of wind turbines around the country, and that it would be a sensitive issue. I said that if the only exemption or rate reduction in the entire Bill was given to wind turbines, it would open up another can of worms.

I was honest enough to say it is a politically sensitive issue. They were not approaching the argument from that point of view, but it is not unconnected to the world in which we live.

I am sure the Minister of State understands my point of view on this. There must be some linkage between rates and the business that is paying those rates, but that does not happen under the valuation system.

The Deputy raised issues not connected with the amendment.

I said it was broadly related.

I understand Deputy Barry also wishes to speak on the issue.

I have also come across the issue with wind turbines. We cannot undermine the wind industry with this Bill, which would be an unintended consequence. I have briefed the Minister of State on the matter and I ask him to bring it to the attention of the Minister for Communications, Energy and Natural Resources, Deputy White, because it crosses over into that area. While we all have our views on rates, this is a valuation Bill as opposed to a complete review of the rates issue, which would be a discussion for another day.

How stands the amendment?

The Minister of State is to respond.

I apologise.

We will not let him off that lightly.

I would not be happy not to have an opportunity to respond because there is quite a lot in that. Deputy Fleming and I possibly disagree on the national versus local approach. I have a different perspective, as does the Local Government Reform Act 2014, in terms of giving more powers for revenue raising to locally elected members of the Deputy's party, my party, every other party and Independents to have a say in how they want to run their community. We have now empowered local authority members to make decisions on the local property tax, regardless of one's view on it. The multiplier level is also decided by councillors in every local authority. I believe that when we elect people to local government, we give them the tools to run their county and local government structures. That is by the by, but I think it is quite important.

I have sympathy for Deputy Sean Fleming's point of view. He has made the point that businesses have gone through a difficult number of years and that while many bills have reduced, the one bill that is largely fixed is the rates bill. I am not unsympathetic to that view, nor is Government. It is question of how to rectify it.

The purpose of a valuation Bill is purely to attach a value. The most helpful thing the Government can do is in the quickest manner possible to give the Valuation Office every tool possible in its kit to carry out revaluation, something that has never been done in the history of the State, in order to revalue every property, bearing in mind the economic conditions at a more relevant and realistic point in time than that at which it might have been valued previously.

If we adjust a business's valuation mid-valuation cycle on the basis of economic activity, we would pit the chemist against the butcher and the newsagent. If the pharmacy is doing well then that business will pay more rates. It creates huge instability and fluctuation. It would end up choking the Valuation Office rather than getting on with the job of work we need to do.

Should there be a broader discussion on how to fund local government? Between now and the next general election it would be very welcome to have a very honest debate about everybody's proposals on how to fund local government. I do not direct this comment at Deputy Fleming, who has been very constructive and sincere on this, but some people in this House do not believe in the property tax and want to get rid of rates. However, services have to be paid for and we need to have that honest debate.

There could be an unintended consequence of basing it purely on economic activity at a time when we are trying to encourage SMEs to grow. Last year two thirds of new jobs were created by SMEs. If a business does well economically and decides to expand and hire more people, it could then find it is slapped with an extra rates bill mid-valuation cycle. That could be a disincentive.

I am glad the Deputy raised the issue of wind energy. I have received a considerable amount of correspondence and my officials met representatives of the IWEA last week. Since taking the Bill through the Seanad and up to now, I have been very strong in holding the line that this cannot be a Bill that decides policy in a range of other departmental areas. I approach the Bill from the basis that a business that generates a profit or is established for the purpose of generating profit should pay rates. In the small tweaking I have done, exemptions in the Bill have been targeted at not-for-profit organisations.

I know the Deputy has a subsequent amendment on this matter. For example, a child care entity that is set up for profit will pay rates whereas one that is not set up for profit is different. A sports club running a bar that is in competition with a bar across the road will pay a rate. It is rated on that; it has a rateable value. However, the other parts of the club are not rateable. That is the approach I have taken by differentiating between organisations set up for profit and not set up for profit.

Wind energy is not being treated differently from any other business here. The Bill does not endeavour to undermine in any way shape or form the wind energy sector. If a wind energy company is doing worse than it was previously, it could benefit from revaluation. If it is going up, it is based on the economic reality of that scenario.

I have quite an extensive note and it would be useful to read it into the record. Wind farms have been revalued as part of the revaluation of all commercial property in Limerick. This revaluation has led to large increases in the valuation of wind farms and, subject to appeal, many of their rates will rise. A revaluation distributes the rate burden based on contemporary property values. A revaluation can cause significant shifts in rates liability between different sectors, particularly where a considerable period has elapsed since the last similar exercise.

From experience of revaluations to date, up to 65% of ratepayers in general can see a reduction in their rates. Given that the total revenue from rates is capped after a revaluation, the reductions enjoyed by the 65% will result in an increase for the other 35%. Those that experience an increase are in sectors or locations that are performing well relative to others. That is an obvious logic of the system we have. While a rates increase is clearly not welcome, it is often an indicator of the health of a sector or the health of a location. The increases experienced by wind farms as a category of rateable property are on the higher end of the scale across the board. In recent revaluations, some individual properties in certain categories, such as nursing homes, multi-storey car parks and service stations, have also experienced some rate increases.

Limerick is the first revalued rating authority with a significant number of wind farms. The ten Limerick wind farms recently revalued under Part 5 of the Valuation Act 2001 are very modern, have large generating capacity and date from approximately 2008 onwards. They comprise some of the latest technology in a rapidly developing area. During the revaluation, detailed financial information was provided on a number of these properties, allowing valuations to be assessed on current, up-to-date financial and economic evidence. This information was analysed and a new valuation scheme was derived from it, leading to the net annual values placed on the individual properties.

This contrasts with the position heretofore. The first wind farm valued by the Valuation Office was developed in the early 1990s in County Mayo. The valuation assessed on that first wind farm in County Mayo was subsequently relied upon as a basis for valuing all other wind farms, including the Limerick wind farms before the revaluation process that came on stream, all of which were valued under the revision provisions set out in Part 6 of the Valuation Act 2001. This reflected the state of wind energy technology in the early 1990s and the financial and economic conditions in this country that prevailed in the late 1980s.

The valuations now assessed in Limerick are taking a view of the current state of the wind energy industry and the economic conditions that prevailed in late 2012. This is what is required by Part 5 of the Act in carrying out a revaluation. The approach adopted by the Valuation Office to the valuation of wind farms in Limerick and the conclusions drawn from the economic and other evidence provided to the office is now subject to an appeal to the Commissioner of Valuation and is very likely to be tested through that process, including, one would imagine, before the independent Valuation Tribunal.

The Commissioner of Valuation is independent in the exercise of his function and the Valuation Act does not accord the Minister any function in the valuation of a property or in an appeal. The legislation provides for a number of avenues of appeal. There is an appeal to the Commissioner of Valuation, a subsequent appeal to the Valuation Tribunal and an appeal to the High Court on a point of law. It is important to allow for the independent process of valuation and appeal to take its course without any knee-jerk reactions before it concludes.

The Deputy is correct that wind energy representatives are calling for some form of exemption for wind energy facilities. As a rule, rates exemptions are only given by exception and almost exclusively to those who operate on a not-for-profit basis, as I outlined. A rates exemption is a crude policy instrument as it is difficult to predict the type of subsidy that it gives and it will change over time for many reasons, including the value of other property and the annual rate and valuation set by individual local authorities, and therefore may not be uniform throughout the country. It could undershoot or overshoot the level of support intended for the sector.

It also raises expectations in other sectors, or other sectors feel aggrieved as they cannot benefit from similar favourable treatment. This is an important point.

The issue of wind energy is a matter for the Department of Communications, Energy and Natural Resources. I will relay the sentiments, as requested by Deputy Barry, to the Minister for Communications, Energy and Natural Resources. However, that is my thinking on the matter. My officials are due to meet some other representative groups between now and Report Stage. I am open to hearing views and amendments. However, I think it will be accepted that the absence of amendments today demonstrates the difficulty in framing them and the potential unintended consequences of supporting one sector over another, or, as the Deputy and I both recognise, passing on an additional rates burden to one sector to compensate another. It is quite a tricky area, and that is where the position lies.

I appreciate the Minister of State reading the extract into the record because it was news to me when I received the presentation last week. The Minister of State said, essentially, that they were undervalued up to now and that is why they have a high percentage increase in value. The representatives make the point that they are paying a much higher amount in terms of their output relative to megawatts of electricity produced by gas or coal or some other heavy use of carbon. Referring to the logic the Minister of State has used against me all along, it is not really about the business output or the profitability of a business. A part of the essence of the argument made was the cost of it relative to the net profit. The Minister of State has said to me that business profits go up and down and that this should not be the yardstick, but he has said he will look at it again. There is no commitment from the Minister of State to bring forward an amendment. At this stage, I ask the Minister of State to study it further. I will wait and see what comes out of this process. I understand that if this were passed today, by the time we get to Report Stage we would probably have every other group in the country making representations to us. I understand the situation is complex and that this legislation was not intended to make changes for specific industries. We will raise the issue again on Report Stage and I will wait for the Minister of State to report then.

My officials have already been in contact with the Department of Communications, Energy and Natural Resources, which is the Department which deals with policy in this area. I do not intend for this valuation Bill to be involving itself in policies outside of its remit. Our remit is to attach a value. I want to attach values which reflect economic circumstances at the end of 2012 to all rateable properties and premises as quickly as possible. My officials and I will continue to engage on the matter and I am open to hearing from Deputy Fleming on Report Stage.

I ask the Minister of State, on Report Stage, to get information for us, through the Department of Communications, Energy and Natural Resources, on the practice in England, Scotland and other EU countries. Is there an exemption from rates in these countries? That has been stated to me, but I have no way of checking it out.

It has also been stated to my officials. It is not necessarily comparing like with like.

Will the Minister of State get a note on it?

I will report back to the Deputy on Report Stage, although I am not giving any commitment on the issue.

Amendment put and declared lost.
Section 27 agreed to.
Sections 28 to 37, inclusive, agreed to.

I move amendment No. 8:

In page 28, between lines 36 and 37, to insert the following:

“Amendment of Schedule 3 to the Principal Act

38. Schedule 3 to the Principal Act is amended by inserting the following before paragraph 1:

“A1. All buildings and facilities used in connection with water and wastewater but not including group or private water or wastewater treatment systems.”.”.

This brings us into a debate on Irish Water. The Minister of State has an amendment on this, but these are not grouped together. Am I correct in saying that this amendment is to be discussed on its own?

The Deputy's other amendments are grouped.

I am proposing an amendment to Schedule 3 in the Valuation Act 2001, which is the principal Act. This Schedule specifies what is relevant property for valuation purposes. I tabled an amendment to include all buildings and facilities used in connection with water and wastewater but not including group or private water or wastewater treatment systems as relevant property for valuation purposes. I am trying to capture Irish Water within this provision. All other commercial semi-State companies are rateable. This sub-committee recently dealt with the Valuation Office as part of the Estimates debate with the Minister for Public Expenditure and Reform, Deputy Howlin. We got a list of the global valuations which applied to the ESB and Bord Gáis, which is the parent company of Irish Water. Bord Gáis is paying rates on its network, but its subsidiary, Irish Water, is not. Eircom, Vodafone and others have facilities throughout the country. A national valuation is carried out by the Valuation Office and an amount is then paid to each local authority based on population if a facility relating to the company is in the local authority's area. This is how global valuation works. The Bord Gáis network might not be in every county in Ireland, but generally there is a pro rata reduction for the mobile phone companies and the ESB. If Irish Water is a real commercial semi-State company, there is no reason it should not join the big boys and pay its rates like everyone else. If it is not a real commercial semi-State company, I can understand why the Government might not want it to pay rates. It might feel it is not really a commercial semi-State company and it could not be burdened with the rates bill.

The Secretary General of the Department of the Environment Community and Local Government and his staff recently attended a meeting of the Committee of Public Accounts to discuss Irish Water. We discussed the figure of €59 million which is being paid by the Department of the Environment, Community and Local Government in lieu of the rates of Irish Water. There are a lot of issues arising from this. This amendment refers to Irish Water because the Schedule deals with what comes within the remit of this legislation. I do not get the logic in having the taxpayer pay the rates bill of Irish Water but not paying the rates bills of Bord Gáis or the ESB. Is it a mechanism to remove costs from the cost structure of Irish Water to help it pass the market corporation test? As far as I am concerned, it is. The CSO will be invited to attend before the joint committee to discuss this particular issue shortly, because it is the body looking after the public interest in that regard.

How did the Valuation Office come by the figure of €59 million? As late at this morning, the Minister, Deputy Kelly, stated in the Dáil during Question Time that all of the liabilities and assets in relation to public private partnerships that are operating water and wastewater treatment plants throughout the country will not be transferred to Irish Water until June. How have we arrived at this figure to be paid by the Department instead of Irish Water which is the owner of the property?

I am obviously excluding group water and private water schemes. This fits the Government's own definition. They are not-for-profit community organisations. They do not exist to make a profit. I did not want, by definition, to include people who have family wells and their own private septic tanks. Therefore, water and wastewater treatment facilities owned by private individuals or group schemes are excluded.

This brings me back to the wastewater treatment systems and the water services controlled by Irish Water. Many of the wastewater treatment plants throughout the country have been built under a design, build and operate model. Ringsend in Dublin is the biggest one. The plant was designed and built and is operated and occupied.

It is the occupier who pays the rates. Are the PPP projects - which exist, by the Minister of State's definition, solely to make profit - paying rates? Companies do not come over from England to manage the water treatment plant in Ringsend in Dublin because they like the Irish; they come over here to make a profit. There are more than €1 billion worth of such treatment plants spread all over the country. There are 20 individual sewage treatment plants with a PPP contract value of in excess of €20 million each. They are there to make profit for the operators or occupiers. Are they paying rates and do they come in under this? If they are paying rates to the local authorities, and now they come in under Irish Water, will the rates bill be removed from them because it will be picked up by the taxpayer?

Essentially, this boils down to a simple issue. If Irish Water is a stand-alone, off-balance-sheet commercial semi-state company like the big boys such as ESB, it should pay its commercial rates. If Irish Water does not meet that test, the Minister of State should put his hands up and state, as I believe to be the case, that it is not really an off-balance-sheet commercial semi-state company to start with. I will accept the argument that Irish Water is not able to pay the rates because it is not a commercial organisation. That is the essence of this amendment.

I will go through the amendment piece by piece. First, the amendment would duplicate what is already provided for in Schedule 3. Buildings and facilities used in connection with water and wastewater are already included in Schedule 3, specifically in paragraphs 1(a), 1(b) and 1(n). Including buildings and facilities used in connection with water and wastewater in Schedule 3 would be like including an amendment to Schedule 3 that states, "Buildings used in connection with retailing or manufacturing, etc.," which would only lead to confusion. It is not required. The amendment excludes group water or wastewater treatment systems from consideration as relevant property under Schedule 3. This is superfluous.

Does the Minister of State mind my asking him to slow down a little?

I have Schedule 3. He might take me through the part we are talking about again. I want to follow this.

Would the Minister of State start again?

This amendment would duplicate what is already provided for in Schedule 3. Buildings and facilities used in connection with water and wastewater are already included in Schedule 3, specifically in paragraphs 1(a), 1(b) and 1(n). Including buildings and facilities used in connection with water and wastewater, as the amendment suggests, in Schedule 3 would be like including an amendment to Schedule 3 that states, "Buildings used in connection with retailing or manufacturing," which would only lead to confusion. It is a small technical point.

The amendment also tries to exclude group water or wastewater treatment systems from consideration as relevant property under Schedule 3. This is also superfluous. Group water schemes will be exempt from rates under paragraph 21 of Schedule 4 of the Valuation Act 2001, as inserted by section 12 of the Water Services Act 2014. I understand that group water schemes will be licensed under section 79 of the Water Services Act 2007 after this Bill is enacted.

The amendment also excludes private water or wastewater treatment systems from consideration as relevant property under Schedule 3. It is not wholly clear what is meant by private water or wastewater treatment systems.

I refer to private water or group water schemes.

I know well. Let me show Deputy Fleming the difficulty from a legislative point of view. Would this mean, for example, that part of a hotel or part of a factory premises, or a large multinational with its own facilities, could end up being exempt? I am well aware that is not the Deputy's intention, but merely our interpretation of the potential consequences of the amendment.

The impact of this amendment would be far-reaching and would necessitate a revisiting of the valuations of thousands of properties, which could result in a reduction in their valuations and a shift in the rates burden to those who would not benefit from this amendment. This type of partial exemption would be random and potentially unfocused. It is not targeted at those that operate on a not-for-profit basis and thus is contrary to the core rating principle that those that operate for profit should pay commercial rates.

The proposed amendment would not make Irish Water ratable. Irish Water's properties are already captured in the various paragraphs in Schedule 3, be that its buildings, land or networks. Including water facilities in Schedule 3 makes no difference to the ratability of Irish Water as the exemption from rates for Irish Water is now provided for by paragraph 21 of Schedule 4 of the Valuation Act 2001, as inserted by section 12 of the Water Services Act 2014. Effectively, we would be listing Irish Water here but stating, in Schedule 4, it was exempt.

That applies only since last Christmas.

Yes, but it is the legal position now.

Would the Minister of State go back through that paragraph again?

If we include the water facilities in Schedule 3, as Deputy Sean Fleming's amendment wishes to do, it would make no difference to the ratability of Irish Water, as the exemption from rates for Irish Water is currently provided for in paragraph 21 of Schedule 4 of the Valuation Act 2001, as inserted by section 12 of the Water Services Act 2014.

That was not the case when the Minister of State took the Bill through the Seanad.

It was. I am trying to think when we went through the Seanad.

It is a recent change.

The Deputy is correct in stating that this has only been the case since the Water Services Act 2014 was passed.

Since Christmas.

That is correct.

The reasons for making the exemption are well rehearsed and were fully debated when the Water Services Bill 2014 was making its way through the Oireachtas. For similar reasons, as I have commented on previous issues, it is a policy position that has been taken, and has been passed by both Houses of the Oireachtas under the Water Services Act 2014. Therefore, I do not intend to accept the amendment.

I understand what the Minister of State-----

I apologise; I do not wish to interrupt Deputy Fleming, but he asked me a question about the €59 million. The €59 million is based on the valuation lists of certain local authorities but is mainly attributed to the four Dublin local authorities and the Waterford local authority.

Why so? Is it because they have been revalued?

It is because that is where the bulk of the infrastructure lies, and because they were revalued.

The €59 million relates to the five local authorities that have had relatively recent revaluations. We discussed this on Second Stage. Does this represent approximately 40% of the estimated valuation of property in the country?

The €59 million is the estimate for all of the water infrastructure that has been valued in the entire country.

When did the Valuation Office, which has not been able to get out and value buildings for the past 150 years, value all of these places?

It is based on all available valuations with certain local authorities. As I stated, the bulk of that available valuation is the four Dublin authorities and the Waterford local authority, but there are others in other local authority areas. I can provide the Deputy with information on these if he wishes.

On that particular issue, when those water and wastewater systems were under the control of the local authorities, they were not rateable. There were no rates payable. Will the Minister of State explain the system?

That was a matter for each local authority, but they were rateable.

They charged a rate on themselves and paid it to themselves. Did any of them do that?

Not that I-----

I would not think so.

I can certainly provide Deputy Fleming with more information on where valuations appear on valuation lists, but the information I have available is that the bulk of it lies in the four Dublin local authorities and the Waterford local authority, and other available valuations.

To cut to the chase, I believe Irish Water should pay its rates like every other semi-state company.

Amendment put:
The Committee divided: Tá, 1; Níl, 7.

  • Fleming, Sean.


  • Barry, Tom.
  • Cannon, Ciarán.
  • Creed, Michael.
  • Doherty, Regina.
  • Harris, Simon.
  • Twomey, Liam.
  • Walsh, Brian.
Amendment declared lost.

Amendment No. 9 is in the name of Deputy Fleming. Amendments Nos. 9 to 11, inclusive, are related and will be discussed together.

I move amendment No. 9:

In page 28, after line 38, to insert the following:

“(a) by inserting the following before paragraph 1:

“A1. Any building used for the purpose of providing childcare, including crèche and pre-school services.”,”.

This is an issue I am taking up on behalf of members of the Minister of State's party who are backbench Deputies. They specifically raised it during the Second Stage debate, and asked that buildings that are used for the purpose of providing child care facilities, including crèches and preschools, be exempt from commercial rates. I agree with those members of the Minister of State's party who said that on Second Stage. As they are not members of the committee, I obliged them by tabling the amendment they suggested on Second Stage for consideration. I would have tabled it in any event but I was delighted to learn in the Second Stage debate that there was such agreement on the matter among the members of the Government parties.

Schools and public buildings are generally exempt from rates. As the Minister of State indicated, not-for-profit organisations generally do not have to pay rates. The question then arises about child care facilities, some of which are community-based and therefore exempt from rates while others are in the private sector, but which provide the exact same facilities and services. Both types of facility get the exact same money from exactly the same Department for the ECCE year for the same number of children, yet the private sector facilities have to pay rates. It is unfair that those in the private sector who are in competition with those in the community sector are not exempt from rates.

One preschool is exempt from rates and the other has to pay them. This change is necessary to ensure there is a level playing pitch in this area. The Minister of State said this is not policy and is a matter for the Department of Education and Skills. However, properties exempted from rates come under Schedule 4 to this Bill. There was a time when the traditional national school was exempted from rates. We are now providing facilities which children attend before going to national school. Given that primary and secondary level schools are exempt from rates, properties in which preschool facilities are provided should be also exempted. That appears to me to be logical.

We have all met with various providers. While many providers went through the full planning process and did everything by the book, following which the relevant information was forwarded to the Valuation Office, there are other providers who set up preschools in extensions to their homes or in garage conversions, in respect of which they did not have to engage with the system. In the latter case no information was sent to the Valuation Office because they are not on the radar of the local authorities. This means that the providers who did everything legitimately are the only ones paying commercial rates.

Amendment No. 10 provides that any land, building or part of a building used by a body for the purposes of caring for sick persons, for the treatment of illnesses or as a maternity hospital should be exempt from rates. Generally, hospitals are exempt from rates. While the Minister of State might say they are rateable, no rates are paid on them. I am not sure of the technical reason for this. Generally, hospitals are public buildings, in respect of which no rates are payable. There are a number of public hospitals in which private practice takes place. It is a fundamental part of the consultants' contracts.

Many public hospitals have an element of private practice for profit being carried on within them. There are no rates attached to such practices. However, if a consultant builds rooms next door to the hospital, in which he or she conducts a private practice while still continuing with his or her public practice in the hospital, he or she is liable for rates on those rooms. It is unfair that this is the case because the private practice operates out of a separate building. Are we in the business of collecting rates from health care facilities? Perhaps, we are but it is valid to suggest that health care and educational facilities, be they preschool, primary or second level facilities, should be exempt from rates. The same may be necessary in respect of health centres. I presume the HSE owns health centre properties which it rents to general practitioners. There is a vacancy for a doctor in my own area and I have heard that the HSE is seeking applications in respect of that practice for which the successful applicant will be charged €20,000 in rent. That is a new one on me. I am sure the doctor here will understand what I am talking about. Perhaps the real intention is to not fill the vacancy, which is another example of what is happening in rural areas.

Amendment No. 11 provides that any land, building or part of a building occupied for the purpose of caring for elderly, handicapped or disabled persons should be exempt from rates. There are community hospitals in every constituency that do not currently pay rates as they form part of the HSE. However, in recent years community hospital services have been contracted out to private nursing homes. This means the same service is being provided and paid for by the taxpayer through the fair deal, be that in a community hospital or a private nursing home. There is a case to be made for education and health facilities to be exempted from rates. On the one hand, the HSE is paying people, be it through fair deal or otherwise, to run the facilities which care for elderly, handicapped and disabled persons while on the other hand another arm of the State is asking these facilities to pay rates. This applies not to HSE-owned buildings but to privately owned buildings. I am looking for a little consistency between community health and preschool providers and those operated by the HSE. That is the essence of the three amendments. I am sure members of the Minister of State's party will thank me for tabling these amendments, many of which were specifically called for by them on Second Stage.

It is great to see such cross-party consensus in this committee.

I am not sure if I contributed to the Second Stage debate on this Bill. However, I have spoken previously to the Minister about this issue. There is a case to be answered in respect of the points made by Deputy Fleming, particularly when it comes to the ECCE aspect of child care facilities operated in the community and private sectors. As I understand it, what is being proposed is that an exemption from rates be granted in respect of community-based facilities which provide child care services, including the ECCE year, which is a State sponsored service delivered via the community and private sectors. It is difficult to sustain the argument that one can treat both differently. I could be convinced where a child care service is operating the full range of options to parents, including after-school services, pre-ECCE year child care services, creche facilities and so on, but when it comes to comparing like with like, in terms of the delivery of the State scheme, we are in difficult territory. I would urge the Minister of State to give serious consideration to these amendments. There are communities that are served exclusively by the community sector, in respect of which this will not be an issue, but there are other communities that are served by the community and commercial sector and it would not be fair to put one community at a competitive disadvantage over the other. That is the issue that arises.

A service provider who has complied with the planning requirements and meets all of the legal obligations with regard to staff, schedules and so on who is, effectively, competing with a community-based service, should be competing on a level playing pitch. Rates is one of the issues that comes into the equation in terms of that level playing pitch. This reminds me of the situation that existed previously with regard to sports club facilities, part of which were exempted from rates because they were not commercial while the other part was liable for rates. It should be possible for commercial providers to have facilities used by them for the purpose of the ECCE year exempted from rates. Perhaps rather than divide the committee on the issue today the Minister of State will undertake to come back to us on it on Report Stage.

Following on from what Deputy Creed had to say, I have tried at all Stages of the Bill thus far to be as constructive as I can in teasing out all of these issues. In my view, we made considerable progress on this matter during Committee and Report Stages in the Seanad. However, I am happy to tease them out further today.

Deputy Fleming referenced his concern for my parliamentary colleagues. What my parliamentary colleagues are effectively doing with this Bill is taking the opportunity to do a number of things which Fianna Fáil, during passage of the previous valuations Bill, chose not to do, including rectifying the anomaly with sports club bars which Fianna Fáil voted down on the last occasion it was in government and my party was in opposition. We are also addressing the issue of child care, which I will explain later, and modernising our valuation structure so that the target of having revaluation of all premises in the country for the first time in 150 years is not just aspirational. We are already seeing momentum in this regard.

I do not believe the valuation Bill is the place to create a kind of hierarchal view of societal good. It is not for the Valuation Office to decide which businesses or business activities are more important than others. That is ultimately what we are talking about. I have been consistent in my approach, as has the Cabinet in its acceptance of amendments throughout this. The differentiation is whether it is a business and whether the business endeavours to make a profit. If the business makes a profit, it is rateable. If it does not endeavour to make a profit, it is not rateable. That is how I approach this at the starting point.

It is important to say that child care facilities that only provide the ECCE year exclusively, even if they are established for profit, are exempt. They can be ECCE-only and for-profit and still be exempt in recognition of the fact they are providing the State service, as Deputy Creed rightly suggests. However, I believe there is a very different category involving community child care facilities that are not businesses and that do not endeavour to make a profit, including quite a number of large operators, which is important. I did look at the issue of the ECCE part, and I debated this extensively in the Seanad. I considered whether we could, as Deputy Creed suggested, do what is done with sports clubs. However, I do not think this is comparable, for a number of reasons. For example, this is a revaluation that can stick for five to ten years but the number of children can vary and children move. I do not mean to be flippant with that remark as we are talking about physical spaces and how we define the physical space is not that clear. I would be happy to hear the views of members and would be happy to continue to tease this out.

The bottom line is that for every single person and business we exempt, somebody else pays. We all have to be responsible on this. If I go ahead and exempt all of these people, the committee members and I may go back to our main street and say "Sorry" to the guys running the butcher, the baker and the candlestick maker because their rates have gone up because we have decided that other businesses are more important in the service they provide. That is not a value judgment that I believe is best placed for the valuation Bill. There are other ways and many other policy instruments whereby the Government can decide it wishes to support, for example, nursing home care or child care, and there are more works and schemes underway at an interdepartmental committee. Private hospitals, as Deputy Fleming knows, pay rates whereas public hospitals do not. Some private schools pay rates whereas public schools do not. Again, I believe we are quite consistent in this regard.

The other issue that played on my mind in regard to exempting the community not-for-profits was the fact there seemed to be a number of inconsistencies around the country, where it could be seen that some counties had not charged rates to the community crèche but then had done so a couple of miles up the road. This is to provide clarity once and for all that the not-for-profits are exempt. I believe that clarity is welcome to the not-for-profit sector.

I will go through the official note in response to each of the amendments. Page 8 and page 14 of Schedule 4 to the Valuation Act already provide that a hospital or premises used for the care of elderly, handicapped or disabled persons are exempt from rates as long as they are used by a body which is not-for-profit where the expenses incurred are defrayed wholly or mainly out of moneys provided by the Exchequer. The Bill as passed by the Seanad introduces a new exemption for the providers of early childhood care and education where occupied by a not-for-profit body. In addition, the Bill clarifies that, in regard to premises used for the care of the elderly, handicapped or disabled persons, defrayal by the Exchequer does not include income from what is known as the fair deal scheme.

The common theme in all of these exemptions is that the occupier of the premises does not operate for profit. I believe we would find ourselves in quite a peculiar scenario if Deputies were to arrive at a suggestion that those who set up to provide health care for the elderly or the disabled, or provide any other such societal service, for a profit should be exempt from rates. It is for that reason that I believe the exemptions or the tweaking of exemptions we have made in this Bill to date have been very carefully done.

Although I know Deputy Fleming disagrees with the premise of this, the rates pie in every county stays the same. For everybody we exempt, somebody else picks up a greater slice. I had to have very compelling arguments. I thought there was a compelling anomaly in regard to the sports that we could rectify and there was also a compelling anomaly in regard to not-for-profit child care. However, for the reasons I have outlined, I am not prepared to accept these amendments.

I thank the Minister of State for his clarification on the ECCE year. The fact the commercial operator who exclusively provides the ECCE year is exempt makes the case, given what has happened with the sports facilities, for that exemption to be carried across to the person who provides the diversity of service for child care, be it crèche facilities, ECCE or after-school services. It is possible to quantify this in terms of square metres per child in that there is a size requirement for the level of service being delivered. I ask the Minister of State to reconsider this. I know from negotiations I have had with the sector and with the Department of Children and Youth Affairs that there is a space per child requirement and it is possible to extrapolate from that what element could or should be exempted.

I will be happy to do that before Report Stage. As a final point, I hear an awful lot about the competition between community-based and commercial child care. I wonder how much that is actually the case, particularly in large parts of the country. I say this more as a question and as something we might tease out. Are the community child care facilities really in competition with the commercial operators? Many of the services provided by community child care are provided in places of significant disadvantage or rural isolation, where there may not be a breadth of choice. To be very clear, the differentiation here was made for one reason and one reason only, namely, the community child care facilities are not businesses. They do not make a profit or aspire to make a profit, whereas commercial child care facilities do. That is the difference. Nonetheless, I am happy do as the Deputy asks.

I take the Minister of State's point but it is only a couple of weeks since we had the industry and - perhaps I should not use the term - the service outside the gates of Leinster House making the case about that service having become a low wage sector. One of the costs on that service is rates. The Minister of State is now going some part of the way on behalf of the community services and I hope that concession will be reflected in the salaries. I can give chapter and verse on the locations in my constituency where the two co-exist side by side, and where it will become an issue in terms of the capacity of one provider to perhaps be more competitive in terms of rates it charges. It is a bit like the position with the sports clubs. On foot of the level of service they provide through the ECCE, that provision is to be exempted, as it is exempted already for the person who provides that service exclusively and does not provide the other range. I cannot see it as being other than a logical step to move that across to the person who provides the comprehensive set of services.

First, the issues of low pay and so on are much broader. I do not think there is any parent in Ireland who finds the cost of child care to be low. The issue with regard to the people providing these vital services earning low pay are broader Government issues and I am pleased the Minister for Children and Youth Affairs is looking at this at an interdepartmental level.

In regard to the broader point the Deputy makes, my mind is not shut on it. I am not persuaded but I am open to having a conversation and teasing it out between now and Report Stage.

It is a useful discussion and the Minister of State can see it is genuine. At best, one would question the profitability of even the private sector in this area. They operate on a shoestring and, if they operate for a profit, they are waiting for that profit and are just about lucky to get their own wages out of it. Like Deputy Creed for his area, I can list all the towns in County Laois where both services exist quite close to each other. While I know where the Minister of State is coming from, both services are operating in quite a few provincial towns.

Let us have this conversation on Report Stage. I will give the issue further consideration before then.

I believe the Minister gets the net point in regard to the early childhood year. If there is a second year down the road, it will become an even bigger issue because the facilities will have to expand if there is double the number of children in these places.

Amendment, by leave, withdrawn.

I move amendment No. 10:

In page 29, between lines 38 and 39, to insert the following:

“(b) by substituting for paragraph 8 the following:

“8. Any land, building or part of a building used by a body for the purposes of caring for sick persons, for the treatment of illnesses or as a maternity hospital.”,”.

Amendment, by leave, withdrawn.

I move amendment No. 11:

In page 29, between lines 42 and 43, to insert the following:

“(c) by substituting for paragraph 14 the following:

“14. Any land, building or part of a building occupied for the purpose of caring for elderly, handicapped or disabled persons by a body.”,”.

Amendment, by leave, withdrawn.

Amendments Nos. 12 and 14 are related and will be discussed together.

I move amendment No. 12:

In page 30, to delete all words from and including “paragraph” in line 3 down to and including “land,” in line 5 and substitute the following:

“paragraph 21 (inserted by the Water Services Act 2014):

“22. Any land,”.

These are simply technical amendments to renumber a paragraph and update the citation. Since the Bill was passed in the Seanad, there has been an amendment to Schedule 4 of the Valuation Act 2001 by the Water Services Act 2014, to insert a new paragraph 21. Therefore, the new paragraph that this Bill is inserting, to exempt not-for-profit child care, will now be paragraph 22. I know Deputy Fleming is excited by the word "water", but the amendment simply renumbers the paragraphs.

I will go through this again. Since the Bill was passed in the Seanad, there was an amendment to Schedule 4 of the Valuation Act 2001 by the Water Services Act 2014. This amendment inserts a new paragraph 21. As a result of the insertion of the new paragraph, the exemption in regard to not-for-profit child care now needs to be renumbered as paragraph 22. The citation is being updated to reflect that amendment by the Water Services Act, in terms of the renumbering, and also that we are now in 2015. Therefore, the Acts will be cited together as the Valuation Acts 2001-2015.

Is the Minister saying the Water Services Act 2014 amended the Valuation Act and that all that is involved here is renumbering?

It is just renumbering.

I thought it would make some adjustment.

It is simply renumbering of paragraphs 21 and 22 and changing the year to 2015.

I still object to what the Government did for Irish Water by amending the Valuation Act.

Amendment put and declared carried.
Question proposed: "That section 38, as amended, stand part of the Bill."

Before we proceed, I would like to ask the Minister of State whether any change has been made to the rateable valuation of offices of public representatives. Are all public representatives, including councillors, exempt from rates?

Constituency offices of Members of the Oireachtas are exempt, but councillors' offices are not. There has been no alteration in the position. The provision relates to any building or part of a building occupied by a Member of either House of the Oireachtas or a representative in the European Parliament which is used exclusively for the purposes of accommodating his or her constituency office and where the whole or part of the expenses incurred in maintaining that accommodation are defrayed by that Member or representative.

I had not planned to raise this point, but does that relate to a single office only? If a representative has two offices, does the provision extend to the second office?

As many as one has.

That is interesting. I had a second office, but my local financial director queried this and was to charge me rates on the second office.

My understanding is the provision relates to any constituency office, once it is wholly used for that purpose by the Oireachtas Member. The provision is made in Schedule 4, paragraph 19.

Question put and agreed to.
Sections 39 to 43, inclusive, agreed to.

I move amendment No. 13:

In page 33, line 20, to delete “section 30(1)” and substitute “section 30(1) of the Principal Act”.

This is a technical amendment. Section 44 currently references section 30(1). It should, for clarity, say that the section being referred to is section 30(1) of the Principal Act.

Amendment agreed to.
Section 44, as amended, agreed to.

I move amendment No. 14:

In page 33, to delete lines 23 to 25 and substitute the following:

“(2) The Valuation Acts 2001 to 2014, section 16 of the Health Service Executive (Financial Matters) Act 2014, section 12 of the Water Services Act 2014 and this Act may be cited together as the Valuation Acts 2001 to 2015.”.

Amendment agreed to.
Section 45, as amended, agreed to.
Question put: "That the Title be the Title to the Bill"
The Committee divided: Tá, 5; Níl, 1.

  • Barry, Tom.
  • Creed, Michael.
  • Doherty, Regina.
  • Harris, Simon.
  • Twomey, Liam.


  • Fleming, Sean.
Question declared carried.

I thank the Minister of State, Deputy Simon Harris, and his officials for attending. I also thank all Members who were present for staying the course during the afternoon.

Bill reported with amendments.