Dáil Éireann díospóireacht -
Tuesday, 20 Oct 2015

Vol. 893 No. 2

Topical Issue Debate

Valuation Office

Deputy Áine Collins

I thank the Ceann Comhairle for the opportunity to bring this Topical Issue to the House. I thank the Minister of State for the changes made to the Valuation (Amendment) Act 2015, which exempt community child care facilities from paying commercial rates to local authorities, a major advantage to these very valuable child care facilities that provide great services to local communities. Many members of the House, including me, have lobbied on this issue for some years.

The Valuation Office is currently implementing the new provisions contained in the Act. From now on they will be of great benefit to voluntary community child care groups. However, they do not come into place until 2015 for 2016 rates. The Minister of State will appreciate the large amount of voluntary work that went into setting up and running these facilities. The expenses incurred have put significant financial pressure on these groups, yet despite this local authorities are still pursuing the collection of rates arrears.

The changes made in the Valuation (Amendment) Act 2015 imply that these facilities should not have been rated in the first instance.

Considering the major contribution made by the voluntary sector to child care, and in light of the recent budget and the new emphasis on expanding the service, we should consider issuing guidelines to all local authorities which would immediately allow them to write off outstanding rates. I understand this would have to come from the Department, and clarification on this matter would be of major assistance to these groups. It would allow them to get their finances in order and help them improve and expand their services.

Many of these facilities employ local women, who might work part-time, and they give back a significant amount to their communities. They also help women get back to work through providing affordable child care. The cost of these child care facilities is probably a little less than the cost of other child care facilities. They provide an all-in-one service as they are usually open very early in the morning and also provide after-school care for children. This is a great facility for parents who work, many of whom travel long distances and are not home until 7 p.m. It is a significant onus on them.

These are not-for-profit organisations which are barely keeping going. Some of them are looking at expanding in light of the budget announcement last week and will do so over the coming years. Many of them throughout the country are in arrears with rates and while they are trying their best to pay them, it would be a great relief and a major burden off their shoulders if we could address this issue and give clarification on it to the local authorities. I am sure they would be happy to do it, but it is outside their remit in some regards because all they do is collect the rates. Will the Minister consider giving clarification to the local authorities that it would be acceptable for them to allow these facilities not to pay their arrears in light of the new valuation legislation?

Minister of State at the Department of the Environment, Community and Local Government (Deputy Paudie Coffey)

I thank the Deputy for raising this matter and I am replying on behalf of the Minister, Deputy Alan Kelly. Local authorities are under a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the independent Commissioner of Valuation under the Valuation Act 2001. The Commissioner of Valuation has sole responsibility for all valuation matters. The Valuation Act 2001 comes under the remit of my colleague, the Minister for Public Expenditure and Reform.

I am aware the Minister for Public Expenditure and Reform included an amendment in the Valuation (Amendment) Act 2015 to provide for an exemption from rates for properties occupied by parties that provide early childhood care and education on a not-for-profit basis. This extension of the child care and education exemption removed an anomaly that existed whereby those that provided child care and education on a charitable basis were exempt but those that did so on a not-for-profit basis were not.

I understand the Valuation Office is in the process of updating valuation lists to give effect to this extension of the exemption so it will be effective for qualifying providers in 2016. The Valuation Office's interpretation of paragraph 10 of Schedule 4 of the Valuation Acts 2001 to 2015 means that those that only provide the early childhood care and education scheme are also exempt from rates.

The levying and collection of rates are matters for each individual local authority. In accordance with section 29 of the Local Government Act 1946, as amended, local authorities are obliged to make one rate for the whole financial year. This must be levied upon those liable for rates according to the valuation of each premises contained in the latest valuation list transmitted by the Commissioner of Valuation at the time of the adoption of the budget by the council. The annual budget is adopted before the start of each financial year. Rates bills issued to ratepayers in the current year are not subject to amendment by any alteration of valuations within that year. These remain a liability for the business under ratings legislation and it is a matter for the local authority to manage the collection of any outstanding debt.

Commercial rates income makes a significant contribution to the current funding requirements of local authorities. However, local authorities recognise that these are difficult economic times for many businesses, and they work closely with ratepayers experiencing difficulty in the payment of commercial rates. In this regard, local authorities are facilitating the payment of commercial rates by instalments and will work with businesses to put in place flexible payment options that reflect the capacity to pay.

Deputy Áine Collins

I thank the Minister of State for his response. I also compliment the local authorities, which are very flexible, and I understand that rates make a significant contribution to paying for the cost of footpaths, lighting and all of the other great facilities our local authorities provide. However, my understanding is that according to the Valuation (Amendment) Act 2015 there was an anomaly and these facilities should never have been rated. While I appreciate it is the job of local authorities to collect the rates, they can only collect those covered by legislation.

Will the Minister consider writing to the local authorities to state that where community child care facilities are in arrears, they should not have to pay them because of the extra strain? I am very much aware the local authorities are very flexible in helping businesses to pay their rates, particularly in light of the economic times we have all come through, but these are not-for-profit facilities which are now exempt from rates. There was an anomaly in the legislation which unfortunately took quite a number of years to rectify. I appreciate what the Minister has done in clarifying this, finally, after much lobbying. I again ask whether it is possible for the Minister to consider writing to the local authorities and asking them to waive these arrears.

Deputy Paudie Coffey

As I stated in my introductory remarks, local authorities are under a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the independent Commissioner of Valuation under the Valuation Act 2001. The Valuation (Amendment) Act 2015, to which Deputy has referred, is under the remit of the Minister for Public Expenditure and Reform. It provides for an exception from rates for properties occupied by parties which provide early childhood care and education on a not-for-profit basis.

The Minister welcomes the extension of the exemption to not-for-profit child care, as it will bring a consistency of approach to a subset of the child care sector while respecting the principle that those who operate with the intention of making a profit remain rateable. As I stated, this exemption will be reflected in the ratepayers' bills from 2016. With regard to the outstanding rates to which the Deputy referred and the liabilities which accrue and are owed by businesses which will become exempt or partially exempt in future, the management of the collection of this debt is entirely and solely a matter for the local authorities. This is the situation. The Minister and the Department do not have a direct role in this. It is a matter for the local authorities. While I am sympathetic to what the Deputy has outlined, those businesses should engage with the relevant local authority in respect of the liabilities.

School Transport Tendering

Deputy Michael Healy-Rae

I thank the Ceann Comhairle for allowing this Topical Issue debate. This is a very important issue. Kerry Flyer has done excellent work in County Kerry over many years in providing much-needed transport which would not otherwise have been provided. Unfortunately, over the past while it has begun to tender and compete for work which had been done for decades by other private contractors. There have been instances in our county involving family businesses which have had school runs for 30, 35 or 40 years and were highly regarded in the locality. We feel it is unfair that Kerry Flyer can come in and take this work by tendering at a lower price, quite simply because it is subsidised. The Minister of State cannot get away from this fact. The Competition and Consumer Protection Commission must look at it closely. If someone is being subsidised to do work and someone else receives no subsidy, grant or assistance it is a no-brainer that the subsidised person will be able to be more competitive, but it is not fair. Somebody must look at this.

I thank Deputy Martin Ferris very much for his strong interest and work on this issue along with myself. We are highly concerned about what is happening in County Kerry. We really appreciate the private contractors for the work they have done. They have given excellent service.

Now, all their hard work is being taken away from them. I want Kerry Flyer to continue working and running its service but I also want our private bus contractors to continue running their services. Surely common sense can prevail. I again thank the Ceann Comhairle for allowing this debate.

Deputy Martin Ferris

Deputy Healy-Rae and I, along with others, met the private operators a number of weeks back. These people lost their jobs as a result of the tendering process, and they argued very eloquently that the process took place on an uneven playing pitch. Kerry Flyer, which has entered the market, tendered for eight bus runs and it was successful in five of those. That means five operators lost their jobs. I say it was an unequal competition because the State has subsidised Kerry Flyer with considerable funding over the years, particularly in the past two years, with €180,000 in 2014 and €174,000 this year; it will get €174,000 next year. This money has been awarded and some of it has been paid. The company may use some of the money for drivers, insurance, diesel, running costs such as maintenance and servicing and motor tax. One must also consider that Kerry Flyer has another advantage in its charitable status, meaning somebody must compete with that. Five operators have gone out of business as a consequence.

We suggested that these people should go to the Competition and Consumer Protection Commission. They did so and received a straightforward reply that from the information available, it did not find in the operators' favour. The commission indicated its "considerable" interest from the advocacy perspective and that it is currently preparing practical guidelines for policymakers to assist them in assessing proposals that may have implications for competition. It is clear that the commission is indicating that the policymakers - those of us in the Chamber - are not living up to our obligations and responsibilities.

Minister of State at the Department of Education and Skills (Deputy Damien English)

I thank the Deputies for raising this matter today. As they know, Bus Éireann operates the school transport scheme on behalf of my Department and it is a matter for Bus Éireann to make suitable arrangements for the procurement of contractors to provide services on its behalf for school transport purposes, taking cognisance of public procurement requirements.

Almost 90% of the vehicles used to deliver school transport services are provided by private operators under contract to Bus Éireann, which consist predominantly of smaller vehicles and includes over 800 taxis. Bus Éireann is obliged to tender all works, goods and services in line with the European directives on public procurement, including the services provided on its behalf under the school transport scheme. The procedure is a two-stage pre-qualification, PQQ, and tendering process separated out with different closing dates and times, conducted in accordance with the negotiated procedure under EU Directive 2004/17/EC. A contractor that satisfies the criteria set out in the PQQ will be invited to tender stage.

Bus Éireann has confirmed that on the basis of legal advice, the recipient of Government funding cannot be automatically excluded from participating in a public procurement tender competition. In these circumstances and with respect to Kerry school bus contractors, it is not open to Bus Éireann to exclude Kerry Flyer from this public procurement competition on the basis that it receives Government funding. I understand from Bus Éireann that Kerry Flyer was awarded five operating routes for the provision of school transport services for children with special educational needs in the tender competition for the provision of school transport services, fifth cycle. Bus Éireann further advises that these services are currently operating successfully.

I know a number of people have raised concerns but we must work this within procurement rules. Receipt of Government funding does not preclude the company from the process.

Deputy Michael Healy-Rae

I thank the Minister of State and I appreciate his response but he is not addressing the issue. I am asking, in a very straightforward way, if it is right that one group of people which is tendering is State-subsidised, leaving the group with an unfair advantage over private operators. In the tender document, did that group declare if it was in receipt of State funding, as it was required to do? The Department has stated that no funding was used but the funding provided goes to support the salaries of the manager and staff, who in turn support the administration of the school contracts. The question must be asked as to whether the company will employ additional drivers to deliver these services or use drivers who currently deliver its own programme.

If the latter is the case, the company has an unfair competitive edge over private operators, which cannot subsidise employees without State funding. It is wrong. The Minister of State is a fair-minded man and can see the point we are making. What is happening now is not fair or right. There must be a rule somewhere that illustrates how this is not on at all.

Deputy Martin Ferris

I thank the Minister of State for his reply but it misses our point. Money has been supplied to Kerry Flyer, such as €180,861 in 2014, for staff, including a driver. I do not know if the driver was driving the bus. It is noted as "operational funding" and it is clear that this can be used for motor tax, insurance, diesel and maintenance and repairs of the vehicle. In 2015, some €174,000 was allocated, and this will be repeated in 2016. That is the current position.

Many of the private contractors borrowed money to upgrade vehicles, in some cases making them wheelchair accessible, etc. They invested much money but these people are out of work because State funding is being used by an organisation. It is unfair competition at the very least. Having charitable status means the company is not obliged to pay tax but private companies must do so. They cannot compete as a result.

Deputy Damien English

It is not a case of not knowing the point being made because I can see the point. There is no issue in that regard and I understand what the Deputies are trying to say. They have asked about specific tender details but I do not have those documents and am not privy to them. I can try to see if I can get some information to enlighten the Deputies on the policy.

The difficulty is that Bus Éireann must operate within the rules, as the Deputies can appreciate. Those rules currently do not allow Bus Éireann to exclude Kerry Flyer or any other social enterprise solely because it has received Government funding. The procurement issue is that it cannot be prevented from tendering, and the company won the tender.

I will certainly get some of the answers to the Deputies' questions. Deputy Healy-Rae asked if there is some rule against this somewhere but there is none of which I am aware. Bus Éireann has taken strong legal advice and it is within the rules. The company can also see the points being made and everybody can appreciate the logic. The rules allow for this and Bus Éireann has no choice but to allow Kerry Flyer and other groups to tender for the routes. The rules are implemented in the same way throughout the country, and there are many rules concerning school transport that people may not like in a local area. They are the same throughout the country and they must be implemented in a standard way across the board.

I see the point made by the Deputies and I will certainly try to get the information they seek. I have not seen the contracts and that is not something that would come across my desk. It is the job of Bus Éireann to analyse the tenders within the rules of the policies set out.

Acting Chairman (Deputy Liam Twomey)

Deputy Derek Keating has four minutes for his Topical Issue.

Deputy Derek Keating

I thank the Ceann Comhairle for selecting the issue for debate tonight. I also thank the Minister of State, Deputy English, for coming in. Given the importance of this subject and the opportunity available to me under Standing Order 27A, as amended in October 2013, I would like to have this matter deferred until the Tánaiste and Minister for Social Protection or the Minister of State at the Department of Social Protection is available.

Acting Chairman (Deputy Liam Twomey)

I thank the Deputy.

Enterprise Support Schemes

Deputy Dara Calleary

I thank Deputy Keating. This evening, we note the loss of Mr. Hugh Cooney, the former chairman of Enterprise Ireland, who did massive work for this country in that role and, more particularly in the past number of weeks, as an advocate of better health care particularly for men. I pay tribute to him and mark his passing. We had the Enterprise Ireland management team with us today at the enterprise committee and they reflected on a very successful 2014. Many of the initiatives that drove that success were ideas or visions that Mr. Cooney, as chairman, put in place. It is a very sad night and we wish his family, friends and colleagues every good wish at this incredibly difficult time.

The coverage of last week's budget focused on some welcome initiatives for the self-employed, namely, the tax-free allowance and some other issues, but it gave the impression that it was a bumper budget, particularly for the self-employed, when the reality is very different. A comparison of the likely outturn of the Department of Jobs, Enterprise and Innovation's budget this year versus what is promised next year shows a €44 million cut. There is no increase in the budget for the new local enterprise offices, even though they have all hit the ground running in their localities and are generating more activity. That was some of the feedback from our meeting today.

There has also been a cut in capital funding for Údarás na Gaeltachta and there is significant confusion and frustration in Gaeltacht communities regarding the role of Údarás, its interaction with other agencies and the lack of support available to Gaeltacht areas from other enterprise agencies.

The capital gains reduction for entrepreneurs is welcome, but it is still far off the mark compared with what is happening in Northern Ireland and in England. We are increasingly in competition with the Six Counties and with England, Scotland and Wales for people to establish businesses. The tax arrangements in those other jurisdictions are far stronger and more encouraging than those here.

The employment investment incentive scheme continues to be a drag and continues not to work. We are continuing to tinker with it, but it is still not taking hold. The Minister of State knows that too.

There is the whole issue around the credit guarantee scheme amendment Bill. The credit guarantee scheme was first independently identified as having issues in October 2012, even though we had been pointing out those issues for some time. We are three years in now. I know the delay is not in the Department, but, apparently, in the drafting office in the Attorney General's office. However, it is not good enough, because there are specific provisions within the credit guarantee scheme amendment Bill to allow businesses that are restructuring their finance because the banks are exiting the market to access the guarantee fund. They cannot do that until this legislation is passed. Many businesses - the Minister of State and the Chairman do not need to be told this - are being forced into a position of refinancing their packages because their banks are exiting. There are so many issues.

The changes to employer PRSI go nowhere towards covering the increase in the minimum wage and many employers are going to be out of pocket. We welcome the increase, but the manner in which the changes to PRSI are being made will leave many employers out of pocket. I encourage the Minister of State to look at that in the context of the Social Welfare Bill. Finally, when we look at the range submitted by the Department and the Minister of State as part of the ministerial team to the Department of Finance, we have to ask about the influence of the Department of Jobs, Enterprise and Innovation at the Department of Finance. Given that many of the proposals the Department of Jobs, Enterprise and Innovation submitted came from our committee or from its engagement with businesses all over the country, an engagement that has not been had in the Department of Finance, there is a great deal of frustration at issues like finance and supports within the business community at the moment. There is a need for a signal that those frustrations will be taken seriously.

Deputy Damien English

I join Deputy Calleary and other members of the committee in offering condolences to the family of Mr. Hugh Cooney. The impact he had when it came to enterprise development and job creation goes without saying. He had a major influence on policy in that respect. I agree with Deputy Calleary and second his good wishes to his family at this time. It is a difficult time for them, but we recognise the work carried out by Hugh over the years.

The initial topic of debate was the supports and measures taken to encourage start-ups and entrepreneurship. That is a key part of what we are trying to do in Government. The first entrepreneurship strategy was produced by this Government. There were many Governments that went before it, made up of all the parties represented here tonight, which did not bother producing an entrepreneurship strategy, plan or policy statement. The idea of that is to focus the needs and concerns of all Government Departments, including the Departments of Education and Skills and Jobs, Enterprise and Innovation, on what needs to be done to drive a new culture of entrepreneurship. That will feed into successful start-ups now and in the future. It is an important step and there is an implementation body behind that, chaired by the Minister, Deputy Richard Bruton. There were 96 actions across that policy statement and we are making progress on all of them. They are all part of the wider drive to support entrepreneurship. I know the Deputy also wants to focus on the budget, so I will come back to that, but there is a recognition that we have to do that and change the culture. I recognise that too. The enterprise committee had a role in some of the actions. Mr. John O'Sullivan chaired an initial forum to fit into the strategy that produced that document. Many key actions in that have been implemented, and rightly so. Key parts of that are mentoring, access to finance and a culture change to encourage people to think of being an entrepreneur. That is why we had the start-up gathering in early October, to drive that thinking and to advertise what is available to the start-up community, both locally and internationally. The start-up gathering had a big impact throughout the country, with over 400 events to get the message out that we are supporting start-ups.

The budget must be seen in context. I see it as a step in the right direction. It does not do enough for anybody in any sector, but it is a show of intent, to start pointing in the right direction that we want to do much more for entrepreneurs and for those who are in business. We had the new tax credit and we have committed to closing that gap over the next three years. Maybe if the economy allows it, we will close it more quickly. Why was it there in the first place? This is the first opportunity the Government has had to correct it. It is a signal of intent. It is worth €550 this year and we are committed to changing that in the next two years, so it is a very clear issue.

On capital gains, we know it does not go far enough to compete with our competitors. However, one must also review how it started in the UK. The tax percentage was higher, but there was always a €1 million level as well. That has increased in the UK. Likewise, I would see it as something we want to progress here. It starts at €1 million. We have a finance Bill and we can discuss it then and hopefully we can increase it over the years ahead as well. The 20% rate is a big improvement on the 33% rate. I understand what Deputy Calleary is saying, that it is not enough when compared to the UK or across the Border, but we have to accept that, again, this is a budget that tries to put us on the right footing. There is no magic pen to do everything we want to do in one year and one budget. We are signalling our intent of where we are hoping to go with this.

There are many offerings available to start-ups and existing businesses to encourage them to increase employment. Over 70% of businesses say they are confident they will increase the numbers they employ this year or next year. Supports are in place to encourage them to do that, including JobsPlus. There were different schemes over the years. Recommendations came from the committee to make it simpler and more straightforward and now it is quite straightforward for companies to say: "We will employ somebody off the live register. There is a grant for that and we will avail of it." There are many supports there. There have been 1,000 actions over the past three and a half years on the Action Plan for Jobs process. Over 90% of them are directly useful to SMEs, start-ups and companies.

Deputy Dara Calleary

I welcomed the policy statement on entrepreneurship at the time, but when another wing of the Minister of State's Department, the National Competitiveness Council, published the Irish competitiveness scorecard in 2015, it said that "elements of Ireland’s environment for entrepreneurship are relatively poor in an international competitiveness context; in particular, reducing the time and complexity of procedures associated with enterprise start-up". That was published some nine months after the enterprise strategy was published.

Second, the small business review group identified several issues. One of them, as the Minister will remember from his time as chairman of the enterprise committee, was the whole area of personal guarantees and the continued insistence of banks on personal guarantees from entrepreneurs who want to start up a business or grow a company. Has there been any action on that? I recall that the Minister of State once described as archaic the fact that we are one of the few countries in the world that still insist on people doing that. What is the position on the proposed change in bankruptcy laws? Will it be done before the Government finishes up?

The Minister of State will know that I am really passionate about the area of entrepreneurship in education and I welcome the young entrepreneur programme. That has taken off very well and I see it invading schools in the same way the green flag project has done for the environment in schools. In terms of the curriculum review of entrepreneurship in schools, it cannot be taught; it must be fostered. The practicals, the encouragement and the experience of entrepreneurship cannot be learned from a book or learned by rote. It must be fostered and created. What supports are both the Minister of State's Departments putting in place to get some sort of cohesive sense of fostering an entrepreneurship culture in our schools?

Deputy Damien English

A couple of issues were raised there. First, I want to go back to the credit guarantee scheme. It is a priority of the Minister, Deputy Bruton, to bring that in.

On the issue of entrepreneurship in education, the entrepreneurship strategy singled out very clearly six top priorities, of which education is one. It cannot just be addressed in second or third level; it has to start at primary level.

A proper strategy will be put in place. I am very interested in getting this correct at primary and secondary levels and in third level education as well because, as Deputy Calleary correctly stated, we want to develop a culture of entrepreneurship. One cannot merely teach it. It must be part of one's ecosystem and education as well. That is a key priority also.

There were two other key questions. Deputy Calleary mentioned the regional plans but he failed to mention the local enterprise offices, LEOs, which are doing great work. There is funding to continue the great work LEOs are doing and to increase and expand their services also.

Science Foundation Ireland, SFI, is also doing great work and encouraging more SMEs to get involved in the research community. That also brings me back to the knowledge patent box, or "knowledge box". There is an impression that the knowledge box is not for small Irish companies. That is completely untrue. Over 2,000 companies on a yearly basis avail of the research and development grant and they are well able to use the knowledge development box to add to what they offer and increase their products and services, and sales. That is to encourage start-ups.

We are very much focused on start-ups and supporting businesses. The supporting SMEs online tool goes through in detail the 80 different Government supports that are available. I keep stressing to companies that it is difficult to give financial supports to companies that compete with each other on the high street. This is why many supports are directed to companies which export, and that is what we are trying to do. The internationalising agenda is our major focus and most companies understand that now. However, there is a range of soft supports available to encourage those companies to grow. Even the online tool is available in that regard. There are many issues there.

There is a competitive fund set up under the regional plans. Local areas, counties or regions can come together to avail of and compete for those funds to be able to back up something that they are doing well locally. That is another major area that we will be funding.