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Dáil Éireann díospóireacht -
Tuesday, 15 Apr 1997

Vol. 477 No. 5

Priority Questions. - Local Authority Funding.

Noel Dempsey

Ceist:

6 Mr. Dempsey asked the Minister for the Environment if he will make further payments to local authorities in view of the serious financial situation which has arisen following the abolition of water charges and his failure to bring forward the necessary legislation to implement his local Government package. [9947/97]

Máirín Quill

Ceist:

135 Miss Quill asked the Minister for the Environment the arrangements, if any, which have been made by him to compensate local authorities for the loss of revenue arising out of his announcement regarding water pending the enactment of legislation. [9951/97]

Ivor Callely

Ceist:

157 Mr. Callely asked the Minister for the Environment if motor tax on cars and motorcycles from Dublin Corporation citizens will contribute to the equalisation fund; if this fund will be distributed to local authorities which have lost income due to the abolition of domestic water charges; if he will make a statement on this issue particularly in view of the fact that there are no domestic water charges in the Dublin Corporation area. [9658/97]

I propose to take Questions Nos. 6, 135 and 157 together.

Pending the legislative changes required to assign motor tax income to local authorities, as proposed in Better Local Government — a Programme for Change, £100 million was provided in my Department's Estimate for 1997 by way of rate support grant to ensure local authorities would have sufficient income to enable them continue their operations. The full amount has been paid to all local authorities. Legislation to give full effect to the new funding system will be introduced in the House this week and, subject to the co-operation of Deputies opposite, should be enacted quickly. This will allow motor tax proceeds to be retained by local authorities to fund their services, subject to the equalisation arrangements, already announced.

All local authorities collecting motor tax will contribute to the equalisation fund on a basis to be provided for in the legislation. In 1997, the fund will be used, in the first instance, to ensure the income lost through the abolition of domestic water and sewerage charges and the rate support grant is made good to each local authority and that there is an equitable sharing out of the buoyancy the new system will deliver. A more comprehensive equalisation system will be introduced for next year and subsequent years.

I note the Minister has said legislation will be introduced in the House this week. That is the first I have heard of a definitive date for the legislation to be announced.

Published.

That is slightly better. What the Minister has indicated is a fundamental change in local authority funding. I do not think the way to proceed is by rushed legislation. I suggest, in light of an expected election within a number of weeks, he should not try to rush the legislation through the House. I would much prefer if he said he was increasing the £100 million allocation to local authorities and let us deal with the legislation after the election. The Minister has not addressed the question. I accept he has paid out £100 million to local authorities. Local authorities are now in serious financial difficulties. One local authority had 60 per cent less finance at 30 March 1997 than at 30 March last year due to the abolition of water charges. Will the Minister take account of this? While he indicated how much was received last year under the rate support grant, he did not take account of the fact that water charges were in place. Given their severe financial difficulties, will he take the amount local authorities had gained from water charges as at 30 March 1996 from the rate support grant and give them that money?

I am grateful for the Deputy's confidence that we will both be re-elected to this House.

It is the least we can hope for.

My allocation of £100 million was to compensate for rate support grant and charges. The total combined amount of rate support grant and charges will amount to £254 million per annum, or £24 million per month. I have already allocated £100 million, which would average £25 million per month. There should be no reason for anybody to be in deficit because the allocation not only compensates for any expected income obtained from rate support grant but also for charges that would have been levied for the first four months of this year, had the Government not wisely decided to abolish them from 1 January.

The legislation was approved by the Government this morning. I have explained it in detail in the programme for local government change. The Deputy will be aware that I will publish enabling legislation tomorrow on funding, entailing the establishment of the transfer of moneys from the roads fund to local authorities. Instead of sending this money to the Exchequer, local authorities will keep 80 per cent locally while 20 per cent will be remitted to establish the equalisation fund. The measures to be taken to establish this fund will also be detailed when the Bill is published tomorrow.

The second round of legislation will be dealt with in the second half of the year. I have promised that it will be enacted to coincide with the centenary of local government, which will be next year. It will include details of all the other measures, such as the strategic policy committees and the new changes. I hope to include initiatives regarding value for money and the establishment of specific targets, etc., in the Bill tomorrow.

While I am somewhat reassured by the Minister's remarks, I disagree on the use of motor taxation to fund local government services.

The Deputy may change his mind.

I doubt it. I do not agree with targeting one section of the community to pay for local government. I hope we will overcome the difficulties when I am on the other side of the House and the Minister is on this side.

If cashflow was evenly spread throughout the year, as the Minister suggests in the case of water charges, adequate funding could be provided to local authorities. However, in the past, local authorities made huge efforts to collect their water charges at the beginning of the year, receiving up to 60 per cent or 70 per cent of them in some instances. It helped their cashflow and enabled them to collect the outstanding charges throughout the year.

According to my research, local authorities, both urban and county, have had similar experiences to three local urban councils in County Meath. My town of Trim was 50 per cent down on cashflow at the end of March. It received a rate support grant last year, to 30 March, of £14,500 while it had collected service charges of £30,000. This year it received a grant of £22,000. At this time last year it had £44,000 at its disposal; this year it has £22,000. Navan is 33 per cent down and Kells is 60 per cent down. Will the Minister look at this problem as a matter of urgency, even as his legislation is pending, to assist the cash flow situation?

To date, charges have been normally collected in two moieties. The first moiety would have probably been collectable by now. The allocation of £100 million out of the total annual expected income of £254 million for a four month period is generous. While one would expect support at the rate of £21 million per month, £25 million per month has been granted.

If there are specific cashflow difficulties I will look at them again. However, I hope speedy enactment of the legislation to be introduced to the House this week will ensure that such difficulties are permanently resolved when a new buoyant system of local government funding is established. This will allow local authorities access to a good system of funding which will enable them to maintain and develop services. I look forward to the co-operation of Deputies on the other side of the House in enacting this legislation. It is not complicated because it is the first of two measures and it should be possible to enact it in reasonable time while allowing Deputies on all sides of the House to give it good consideration.

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