Dáil Éireann Debate, Tuesday - 19 November 2019
659. Deputy Shane Cassells asked the Minister for Housing, Planning and Local Government the communication he has had with each local authority in relation to changes to local government revenue due to changes to Irish Water commercial rates payments; and if he will make a statement on the matter. [47420/19]
View answerMy Department works closely with the local government sector through the City and County Management Association (CCMA) in the preparation of a consistent and evidence based approach to the various funding challenges facing the sector. This work has helped inform the decision making process to ensure that a coherent and sector wide view of the particular issues are presented. Of course, all such issues have to be considered within the parameters of the national and fiscal budgetary situation and the competing priorities presenting themselves at the wider Governmental level.
On its establishment, Irish Water was initially subject to commercial rates for 2014. In November 2014, the Government announced a new package of measures related to the financing of Irish Water. As part of these measures, section 12 of Water Services Act 2014 provided that Irish Water would not be rateable for the purposes of the Valuation Act 2001. This decision to exempt Irish Water from commercial rates was made to ensure that households and businesses paying water charges at the time would not have to meet this cost. Local authorities were compensated for this loss of revenue through the Local Government Fund. It was always the case that this compensation measure would only remain in place for as long as Irish Water was exempt from commercial rates.
In July 2017 the CCMA submitted a report concerning rates on water infrastructure and the financial impact of the Irish Water rates exemption to my Department. Among other things, it recommended that the exemption for Irish water from rates in the Water Services Act 2014 be reversed and that Irish Water be valued as a global utility undertaking in a similar manner to other national utility networks.
A new funding model for water services was developed in 2017 following on from the report of the Joint Oireachtas Committee on the Future Funding of Domestic Water Services, which was approved by both Houses of the Oireachtas in April 2017. The Water Services Act 2017 was enacted on 17 November 2017 and implemented key features of this new funding model. Section 61 of the Act contained a provision to remove the Irish Water exemption from commercial rates. This was consistent with the general approach applicable to the infrastructure of public utilities.
On 20 February 2019 the Minister for Justice and Equality made the Valuation Act 2001 (Global Valuation) (Irish Water) Order 2019 (S.I. No. 60 of 2019) which provided for the Commissioner of Valuation to carry out a valuation of relevant properties occupied by Irish Water. The Order provided that the global valuation be made by reference to 31 March 2018 and entered in the Central Valuation List by 18 October 2019. Further to this Order, the independent Commissioner for Valuation issued his preliminary national valuation on 18 July 2019. Section 61 of the Water Services Act 2017 was commenced with effect 18 October 2019, when the valuation was then entered on the Central Valuation List.
Earlier this year the CCMA submitted a further report on this subject to my Department, which highlighted the local government sector's concerns in respect of the rating of water and waste water infrastructure and the distribution of the Irish water valuation and considered the financial impact on local authorities. Most recently, following the issue of the preliminary valuation certificate for Irish Water in July 2019, the CCMA submitted a report concerning rates income impacts and Irish Water.
In all engagement and communication on the rating of Irish Water and the cessation of compensation in lieu of rates from Irish Water, my Department indicated that it was actively monitoring the financial impact of this transition on individual local authorities in the context of their overall financial position. This is an ongoing process and engagement takes place on a bilateral basis between officials in my Department and individual local authorities. My Department has been in regular discussions with the nominated local authority representatives regarding the potential implications of the valuation of Irish Water from March 2019. These discussions took place during the Reval 2019 process and the development and passage of the Local Government Rates and Other Matters Bill, and had a particular focus on the financial implications for local authorities. I am satisfied that there was sustained and robust engagement with the local government sector on this matter.
