(Dublin West): Why not bring them back?
Private Members' Business. - Local Government Bill, 1998: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time"
Minister for the Environment and Local Government (Mr. Dempsey): Before the adjournment of the debate, I referred to an amendment to the Bill which I wish to table on Committee Stage. It is concerned with a gratuity scheme for local councillors. I envisage that this would operate for a defined period in 1998 from a date subsequent to the enactment of the Bill and to a specified date before the end of the year. In the period concerned, it would be open to any councillor with at least five years' qualifying service by the date of the local elections in June 1999 to apply for the gratuity. Local authorities would issue eligible applicants with written notification of their eligibility for a gratuity which would be payable to former members following the June 1999 elections, save in the case of those applicants who, notwithstanding receipt of notification of eligibility, stand for election. This means that, although a person may have been told they are eligible for a gratuity, they will not receive one if they stand for election. Persons in receipt of a gratuity who become local authority members subsequent to June 1999, for example, if they are co-opted a year or 18 months later, will have to refund the gratuity.
There are two purposes to the gratuity. First, it gives modest recognition to the sterling service many councillors have given on a voluntary basis over many years. The system of local government is being renewed and I hope to introduce a local government Bill containing many reforms so that a new system of local government will be in place from the June 1999 elections. Those who have served many years under the current system should have that recognised if they are bowing out. The second purpose of the gratuity is to make it possible, as councillors retire in advance of the next local elections, to open the door for a wider spectrum of candidates to enter local government. I hope this measure will address some of the imbalances which already exist and that it will encourage young people and women to contest the next local elections and to participate more fully in local government which needs fresh blood and a new impetus. In saying that, I do not wish to denigrate the service given by long-serving councillors. Some of them will want to continue serving and, if they so choose, there is no doubt their experience will be invaluable in the new system.
I believe this measure as well as other initiatives, such as the introduction of the SPCs, will contribute to a renewed and reinvigorated local government system. It will make it more responsive, flexible and relevant to modern needs. I know the general outline of the gratuity system is welcomed by Members and that local authority members welcome the recognition it affords. The system will operate on a once-off basis and will apply to those who retire before the next election. I do not intend it to continue. I hope to have in place through the medium of the next local government reform Bill measures which will make it unnecessary to repeat the exercise of paying a gratuity following future elections.
Criticisms were levelled at the change in the funding of local government and the lack of discretion on the part of local authorities which Opposition Deputies alleged was contained in the Bill. Deputy De Rossa spoke of the loss of local discretion and local accountability which will arise from the termination of the local authorities' powers to vary the rates of motor taxation locally. Those comments are the product of politicking. The proposed local variation power would have offered no discretion to local authorities. Cynics would have said it was no more than a sop to local democracy, discretion and accountability. The 6 per cent increase in motor tax for the average car would have amounted to an increase of £10 per annum on the average car of 1,200 cubic centimetres. Surely no one in the House would claim that empowerment of local authorities to levy such an amount would promote local discretion or local accountability. Given the inadequate base of the existing funding system, just about all local authorities would have levied the 6 per cent, if not in the first year then over the two years. That would have amounted to a potential £18 million for all local authorities which represents less than 1 per cent of total local authority expenditure. That is hardly local discretion.
The other point about the 6 per cent increase which Deputy De Rossa did not seem to know, although he was a member of the Government which introduced it, was that once it was implemented, no further increases could be imposed. No Deputy would regard that as local discretion. Furthermore, the decision as to whether there would be a local variation rested with the local authority which collected motor tax. This meant urban district councils and borough councils, which do not have a motor tax facility, would not have that power and that it rested instead with county councils.
Another issue referred to as interfering with the discretion of local authorities was the capping of commercial rates. Deputies Dukes, Wall and De Rossa charged me with undermining local autonomy by proposing to cap commercial rates. I believe local authorities in general behaved responsibly when they had the power to levy rates without the cap and I acknowledge that. However, there is little doubt that the commercial sector has borne the brunt of deficiencies in the overall funding system with which local authorities have had to live over the past two decades. Local authorities, which were starved of resources and which had increased responsibilities and functions placed upon them by central Government, had little option but to increase rates at levels greater than inflation. My proposals are intended to strike a balance between the financial needs of local authorities while ensuring that rates increases do not affect the competitive position of the commercial sector. I am considering the different options on capping rates and will announce the specific capping proposals in plenty of time for those local authorities preparing their 1999 estimates.
The cap on rates must be seen as part of an overall package of funding which the Bill will deliver. That overall package will substantially enhance, not detract, from the autonomy and discretion of local authorities by putting greater resources at their disposal. The fundamental point here is that discretion without resources is a contradiction in terms. It is a paradox and I will not perpetuate the system by telling local authorities that they have widespread discretion. We could tell them in the morning to do anything they like but if they have no funds nothing can be done.
I would be more taken with Opposition arguments for the necessity of local discretion and financing if the same Deputies had not taken away the power of local authorities to raise approximately £60 million per year when water charges were removed.
I was not referring to Deputy Higgins. I thought he fought his campaign on the basis of abolishing water charges. Is he now calling for their return?
(Dublin West): No, but if this is being done why not bring water charges back?
Deputy Higgins mentioned amnesties in his contribution when decrying previous Governments for tax amnesties. He then called for an amnesty for those who refused to pay water charges. Many of those defended by Deputy Higgins may have availed of tax amnesties.
(Dublin West): I doubt that.
The people Deputy Higgins claims to represent would qualify for waivers and reductions of their charges
(Dublin West): That is nonsense.
The Minister, without interruption.
(Dublin West): The Minister should be accurate.
Deputy Higgins is being disingenuous in condemning previous Governments for granting tax amnesties and then calling for an amnesty in this matter. He should be consistent. What about the decent poor people who made the effort to pay water charges because they were then legally dischargeable bills? They should be considered as well.
(Dublin West): They do not have to pay them any more.
They do not have to pay them any more——
(Dublin West): Because of the people who fought.
It is called anarchy.
—— but is Deputy Higgins saying that those who paid should suffer? Those who did not pay, and who could well afford to pay, are being defended by the Deputy.
(Dublin West): That is rich coming from the party which gave millions to the super rich in a tax amnesty.
The Deputy cannot be selective about amnesties.
Several Deputies mentioned equalisation.
Deputy Dukes suggested for the second time that the previous Government had come to some form of agreement with local authorities on equalisation. The Deputy might enlighten me and others in the Department as to where this agreement is. Perhaps he will make that information available to us under the Freedom of Information Act.
I do not know who briefed the Deputy on this matter, but I corrected him before about it. He has repeated his suggestion, but there is no such agreement. The equalisation issue was left hanging by the previous Government which did nothing to address the fair redistribution of funding to local authorities. If Deputy Dukes can prove me wrong I would be delighted. Deputies who have debated this matter will know that we are trying to work towards a scientifically based method of equalisation.
Deputy De Rossa's contribution suggested that we are throwing equalisation out. We are committed to real equalisation, and this year we introduced a limited form of equalisation on a scientific basis. Local authorities were given points based on a number of factors and money from the motor tax fund — which will become the local government fund — was distributed to all local authorities. Those with particular needs under this points system got more money. It was imperfect, perhaps, but it was the first attempt by any Government to make money available to local government on a scientific basis. It shows that we are committed to equalisation. The provisions in this Bill largely echo the previous Bill on the issue of an equalisation council.
Deputy Dukes seems to have great difficulty with the scientific approach, but in the long-term, we intend disbursing the money on the basis of a needs and resources study which is currently focusing on Galway County Council, Galway Corporation and Ballinasloe UDC. We are trying to draft a model that can be applied to all local authorities, and when that model is in place every local authority will be examined in reference to the study criteria. Local government will be funded on that basis. I have given a commitment that no local authority will get less money than the 1998 base. That base will apply so it will benefit all local authorities. It will not be done on the whim of any particular Minister but on a scientific basis.
Deputies Dukes and Wall expressed concern about section 11 of the Bill, while Deputy Olivia Mitchell welcomed it. That is due to her knowledge of local government. The purpose of this section, as Deputy Mitchell rightly highlighted, is to remove the absolute statutory requirement that every permanent local authority office for which a professional qualification is required must be filled by the Local Appointments Commission. This provision will put posts requiring professional qualification on the same level with all other administrative posts. The Minister of the day can declare the level at which the LAC can fill the post directly. I intend to have the LAC continue to fill all senior technical and administrative posts in the local authority services. As evidenced by some of the information I got, some fears were expressed or stirred up that this will not continue to be the position. Such fears are unfounded.
I propose this limited change in the recruitment mechanism for three reasons. First, there is a glaring need to enable LAC operations and interviews to be streamlined. By freeing up resources currently devoted to filling a myriad of lower and middle technical professional posts we will be able to speed up the LAC process in general. Second, the LAC and others admitted that the LAC has great difficulty in coping with the volume of recruitment demands, particularly for assistant and executive engineers, with the result that posts remain vacant at local level for far too long. It is essential for the efficient operation of local services that posts should be filled without delay when vacancies arise. Recruitment at local level in those areas is the fastest and most efficient way of doing that. Third, there is a statutory requirement that all posts requiring professional qualification must be filled by the LAC. This has meant a significant number of engineers and other professionals are employed on a long-term temporary basis by local authorities. Many have been temporary for years. Such is the length of service of many of them that there is a strong case in equity for some way to be found to allow them become permanent employees. This amendment would remove the statutory barrier and pave the way to provide the flexibility to allow their position to be regularised. Some people have been lobbied about this and may have got a steer on it for whatever reason. I will not delay the House by going into the detail of this, but I will let Opposition spokespersons have a detailed note explaining the issues involved and giving them a greater understanding of it. I am anxious to facilitate those who have been in temporary posts for a considerable period.
The Minister of State outlined why we are postponing the local government elections from 1998 to 1999 and I will not elaborate on that. I reiterate there is a major programme of local government renewal under way. It involves trying to get new people to take up local government membership, a review of electoral areas and the establishment of SPCs. It is fair the shape of a revised and improved local government system should be known to people before they are asked to cast a vote. It is also fair that those who intend to try to become members of local authorities should know what will be the shape of the local government system. If people are informed about the system we intend to operate, which they will be by way of this Bill and a further Bill we hope to introduce before the end of this year, it will attract some people to contest local elections.
A number of Deputies spoke of the need to ensure we get value for money from local authorities. Some thought this was not adverted to in the Bill. It is not directly adverted to but I have visited practically every local authority since I came into office and every time I spoke about the new funding system for local government I spoke about value for money. It is the cornerstone of the policy I want to pursue and I intend to do so vigorously with local authorities. Some Member said I was paternalistic about value for money and that the electorate should decide if people are getting value for money. The electorate will decide, but I have an obligation, as would any other person in my office in the Custom House, to ensure the tax-payer, who will henceforth fund the local government system, gets value for money and that local authorities operate in an efficient, effective and economic manner. I make no apologies for trying to ensure that is brought about. If that is not done there is a waste of money at local authority level which brings the democratic system and politicians into disrepute.
I intend value for money will be top of the agenda. Work is ongoing in the Department in this area. I am developing a range of performance indicators on value for money studies by the VFM unit in the Department and by VFM audits of local authorities by local government auditors. We will have a consultancy in place shortly to advance the area of performance indicators. Local authority members who complained in the past about not knowing whether the system was working effectively or efficiently will be reassured by these indicators.
I accept the point made by a Deputy that local authority members will be anxious to ensure that every pound available to a local authority is wisely spent. At present they can only take the word of the people spending the money, but it is important to have objective standards and performance indicators. We intend to ensure they are in place. It is also important that we should be able to compare the performance of one local authority with that of another. That will not be done to denigrate any local authority, but best practice should be identified and local authorities should learn from each other and provide value for money for taxpayers.
I acknowledge Deputy Perry's point on the rating and valuation system. The rate system, which is the direct responsibility of the Minister for Finance, is under review. It is intended to introduce a valuation Bill this year and some of the points raised by the Deputy will be taken up in the review. I look forward to the Bill's publication.
Deputy Wall complained about the centralisation of the local government fund. To back up his argument he quoted from section 3. Section 3(2) states the Minister shall manage and control the fund and the fund shall consist of such accounts as the Minister may determine. Section 3(4) states the said accounts shall be in such form and be prepared in such manner as the Minister may determine. Deputy Wall used that section to suggest I wanted to hog all the money and distribute it at my discretion or whim. That is not the way I operate and I hope it is not the way any of my successors will operate.
I mentioned equalisation and how we will try to ensure, on an objective basis, that local authorities get a reasonable amount. The wording in that section is a direct restatement of the provisions of Section 4 of the Local Government (Financial Provisions) Act, 1997, which my predecessor and Deputy Wall's colleague, Deputy Howlin, guided through the Oireachtas. The local government fund which I propose is no more centralised than the equalisation fund which Deputy Howlin put in place. Deputy Wall can claim he was not a Member of this House when that Bill was passed, but he was a Member of the other House.
The funds from the local government fund will be distributed to local authorities on the basis of needs and resources. It is valid to state that there should be that discretion and an objective dispersal of the funds as far as possible, which we are endeavouring to do. We will not get this right on the first shot but as we achieve a more scientific basis, we will get it right eventually. If it was easy to get it right the first time, over the past 20 years, some Government would have tried to put proper equalisation in place. If people have suggestions on equalisation and how it might work, I will be delighted to listen to them.
This debate started with promises made in our programme for Government. Since taking office I have had extensive consultations with local authority staff, elected members, LAMA, the AIMI, the GCCC, the chambers of commerce, management, engineers and with Members of the Opposition through the committee of the House.
The proposals in the Bill did not appear over-night. We carefully crafted them to ensure that local authorities will have the resources to face the problems of the next millennium. It will give local authorities extra space and £125 million more than they had in 1997. It will be good for local government. However, it is only a beginning. Other reforms need to take place.
I thank Deputies for their contributions to the debate. It has been about empowerment, local democracy and communities. It is about making local government more responsive, more representative and better resourced to work for and with local communities. Local government can only benefit from the provisions of the Bill. I ask Deputies for their support in facilitating it through both Houses. The Bill will improve local government and I will try to ensure that in the next few years there will be further improvement.
Question put.
In accordance with the Order of the House today, the division is postponed until immediately after the conclusion of Private Members' Business on Wednesday, 13 May 1998.