The cost, including publication, of the recently published study in the financing of local government was €291,100. On the basis of different methods of projecting expenditure, the consultants identify that by 2010, local authority expenditure will increase by €1 billion to €2 billion in nominal terms over 2004 levels. Funding this expenditure will be met by a combination of the buoyancy in the existing funding system, some additional funding and the achievement of efficiencies over the period.
As regards the existing funding system, there is significant natural buoyancy in the current revenue sources of local authorities. For example, at local level, the valuation base has grown rapidly as a result of major commercial developments. This produces revenue which is paid directly to local authorities. In addition, revenue from motor taxation, which is paid directly into the local government fund, continues to increase without any increases in the rates of this taxation. In 2006, the fund will amount to some €1.4 billion. I was in a position to announce record levels of general purpose grants to local authorities from the fund amounting to €875 million for 2006. This was an increase of 8% on the 2005 allocation and 2.5 times more than the allocation in 1997.
To supplement the existing income sources, a number of initiatives will be pursued. I am considering ways of bringing issues such as planning fees, which are fixed by regulations, into line with the economic cost of dealing with planning applications. I will introduce legislation to make commercial properties liable for rates from the date of valuation as opposed to the beginning of the following year. This simple move will generate an additional €25 million in revenues for local authorities per annum.
To boost income to the local government fund, I am tackling tax evasion. A number of issues must be dealt with here. Additional revenues will be complemented by a range of efficiency initiatives. In partnership with local authorities, I propose to examine the scope for greater sharing of services between local authorities. I will develop a standard costing system for the sector to deliver enhanced management information, particularly on unit costs. I intend to develop proposals to enhance arrangements for local audit committees, which councillors will welcome. I will continue to ensure that the value for money unit in my Department undertakes in-depth analyses of local authority activities and identifies best practice.
The availability of good information is a key to good decision-making and I have started a process of publishing key financial data on my Department's website. I am gratified by the fact a number of people have welcomed this initiative.
Additional information not given on the floor of the House.
I have set aside €2 million this year for an innovation fund to identify ways of delivering further efficiencies and to disseminate best practice in this regard to all local authorities. I will be announcing details of this during the year.