Dáil Éireann díospóireacht -
Thursday, 16 Oct 2003

Vol. 572 No. 5

Adjournment Debate. - Local Authority Funding.

David Stanton

Ceist:

10 Mr. Stanton asked the Minister for the Environment Heritage and Local Government if his attention has been drawn to the fact that an average of ?1 in every ?4 of local authority budgets comes from commercial rates and that over the past decade the average cumulative increase in commercial rates has been almost double that of inflation; the areas from which the funding will be found to pay for the cost of benchmarking to local authorities, which will be approximately ?160 million in 2004 and ?220 million in 2005, since there is no correlation between the amount of rates levied and the profitability of a business; and the areas in which he expects local authorities to get that money. [23478/03]

Minister for the Environment, Heritage and Local Government (Mr. Cullen):

Rates may be levied on occupiers of liable property according to the valuation of that property as determined by the Valuation Office and the annual rate adopted by the local authority elected members. Rates are an allowable legitimate business expense against taxable income.

While in nominal terms rates income, as with other local authority income and expenditure, has increased over the past decade, it is noteworthy that rates income as a percentage of local authority overall current income has fallen from 27% in 1993 to 24% in 2002. Over the same period, overall current and capital expenditure of local authorities has increased from €2.1 billion in 1993 to €6.5 billion in 2002, an increase of 223%. Rates in 2002 contributed to an estimated 11.6% of overall local authority expenditure, or about €1.16 in every €10, compared with 17% in 1993.

Regarding the costs of benchmarking, as outlined in reply to Question No. 1, local authorities fund their expenditure, including expenditure on pay, from a variety of sources, including specific State grants, commercial rates, rents, fees and charges for services and general purpose grants from the local government fund. The issue of benchmarking costs, as with other current expenditure demands, will fall to be dealt with by local authorities in the context of their annual budgetary process. The amount available from the local government fund will be settled in the context of my Department's Estimates of expenditure for 2004 and I will advise local authorities of their general purpose allocations for 2004 as soon as possible.

Although the current system of funding has served the local government system well in recent years, given the changes in the economy and the increasing demands on local authorities going forward, I have decided that an independent wide-ranging review of the funding of local government should be carried out. I have invited consultants wishing to carry out the review to make proposals on the matter by 7 November and the review will be commenced as soon as possible thereafter.