Dáil Éireann díospóireacht -
Tuesday, 3 Dec 2002

Adjournment Debate. - Local Authority Funding.

Mr. Murphy

I wish to share time with Deputy Allen. The Government is forcing local authorities to increase commercial rates this year by up to 10% and waste collection charges by up to 300%. However, when everything is considered there is still a shortfall of approximately €0.5 billion in the Estimates. Each household will pay up to €400 next year for refuse collection. Small businesses, under pressure due to massive increases in insurance costs, will again be hit with significant increases in rates. Farmers, pub owners and restaurateurs will have to suffer increased water charges. The farming community must survive more increases as prices for its products continue to decline and it cannot pass on the increased costs. Rates hikes and soaring insurance costs will be passed on to the consumer, thereby increasing inflation at a time the Government is calling for wage restraint.

Cork County Council will need an extra €22 million to meet the wage and salary increases agreed by central government. The deferred PPF current round will cost €4.1 million, the initial payment under benchmarking will cost €10.3 million and additional staff as a consequence of the Government's decision to introduce better local government will cost approximately €8 million. This does not take into account increases under the new national agreement.

In addition, a waste levy of €3.2 million must be paid to central government. This will mean that the council will run a deficit of €37 million next year. which equates to the total rates support grant that it received from the Government last year. What services does the Government want local authorities to cut because of its unwillingness to compensate them for wage increases? Local authorities will be forced to cut back on their housing programmes and reduce spending on county roads, water and sewerage schemes, fire services, library services, town and village renewal programmes and all services needed by citizens on a day-to-day basis.

The Government must take responsibility for these cutbacks. The Taoiseach and the Minister for Finance must fund local authorities to implement benchmarking, better local government and the new national wage agreement. There is no point in Fianna Fáil trying to play Government in Opposition locally on this issue. Cuts at local level will be the result of cuts in local authority funding by the Government and no matter how much Fianna Fáil Deputies and councillors protest locally, the bottom line is the cuts would not happen if it were not for the total mismanagement of the economy by the Government, which is kept in power with their support.

Every Fianna Fáil Deputy and councillor and their PD collaborators will be held responsible for these cuts. The Government cannot expect to fool all the people all the time.

Mr. Allen

Deputy Murphy has set out the stark scenario in which local authorities find themselves. The Government is raising taxes and increasing charges to cover up its mistakes and mismanagement over the past number of years and the public will have to pay in terms of higher prices, cutbacks, traffic congestion and poorer roads. Appendix U of the Estimates outlines the stark reality. The estimated spend for local authorities in 2002 is €1,039 million and, if inflation is factored in at 4.5%, a further €41 million is required giving a total of €1,080 million. However, local authorities have only been allocated €975 million leaving a shortfall of €105 million before benchmarking and other salary increases that are due are considered, as Deputy Murphy pointed out.

We have been reading about proposals to cut back services and increase charges by a number of local authorities. My local authority is proposing an increase of more than 40% in refuse collection charges. The vast array of new charges and cutbacks mean that since 1997 the total amount raised by way of increased charges is equivalent to the addition of 1 cent or 2 cent to the basic income tax rate and that is unforgivable.

Mr. N. Ahern

I thank the Deputies for raising this issue. I have been involved in local government for many years. I know at first hand the important role that local government plays in delivering services to all the citizens. I share the concerns expressed about the need for local authorities to have adequate funds at their disposal to provide their customers with quality services and to fulfil the range of functions entrusted to them because I know what is expected of local government and what local government expects of itself.

Since I became involved in politics, local government funding has always been a thorny issue. There is never enough money for local authorities to do everything they would like. The story is no different at central government level. The stark reality is there is no bottomless well of funding from which we can keep drawing. If there was, local authorities could justifiably and effectively spend significantly more in improving the range and quality of services they provide to the public.

However, the Government has gone a long way towards closing the gap between what we all wish could be achieved at local government level and what can be achieved. In the current year, €593 million has been allocated to local authorities from the local government fund in general purpose grants. That represents an increase of 75% in five years and an increase of 10% over the 2001 baseline allocations. These increases are well ahead of inflation and, by any yardstick, represent massive strides in empowerment of local government based on resources. While next year might be as good, an increase of 75% over five years cannot be dismissed lightly.

The House should acknowledge the scale of this achievement and the extent to which the Government has contributed to putting local government on a sound financial footing after a long period in which it had to struggle financially from one year to the next. The introduction of the local government fund by the Government has seen grants for non-national roads increase by more than 100% since 1997. It is not true to say Governments have wasted money. In the past couple of years much of the money has been invested in services and in capital development. Spending on non-national roads has been increased by 100% in five years. That is a significant move forward.

Mr. Allen

What about the NDP, which is 62% over budget?

Mr. N. Ahern

While much has been achieved, we must also look forward. The Minister is at present finalising proposals for the 2003 local government fund general purpose grant allocations and these will be notified to authorities within the next week or so. The Minister is keenly aware of the issues raised here this evening about the potential cost increases and demands facing authorities next year.

All options are being examined to ensure that an appropriate level of general purpose grant can be made available to each local authority. While these grants are of critical importance they contribute only about one fifth of local authorities' current income. It is important for local authorities to look at all their sources of income. They cannot expect everything to come from central funds. As much as 80% of local authorities' funds are sourced in other ways.

It is not true for Deputy Murphy to claim that housing, water and other programmes will be damaged. All those programmes are funded from capital grants. The Estimates refer to current expenditure and not to housing or road programmes.

In framing the Abridged Estimates the Government took many hard decisions in light of the need to consolidate the public finances by bringing expenditure growth under control. This is a lead which local authorities should follow in managing their affairs and framing their budgets for 2003. The Minister has removed the cap which restricted local authorities in what they could do to commercial rates. It is up to local authorities to manage their business, work on all possible sources of income, look at their expenditure and try to get the best value they can. This is a time for sound and responsible financial management and local authorities should take appropriate decisions to balance their expenditure against income from central and local sources.