Local Government (Rates) Bill 2018: Instruction to Committee

I move:

That, pursuant to Standing Order 200, Standing Order 154 is modified to provide that it be an instruction to the Committee, to which the Local Government (Rates) Bill 2018 may be recommitted, in respect of certain amendments that the Committee has power to make provision in the Bill in relation to:

(a) technical amendments to the Planning and Development Act 2000 to;

(i) provide one-off transitional arrangements to ensure that the Minister may issue a Direction to Regional Assemblies, if required, regarding their Regional Spatial and Economic Strategies, where the process commenced prior to establishment of the Office of the Planning Regulator; and,

(ii) underpin the special provisions for Cork City and County Councils to extend the period for review of their county development, for the purpose of incorporating the National Planning Framework and Regional Spatial and Economic Strategy into their development plans;

(b) amendments to the Residential Tenancies Act 2004 and the Residential Tenancies (Amendment) Act 2019 relating to;

(i) an exemption from the rent increase restriction in rent pressure zones in respect of the first rent setting only following works effecting a substantial change to the nature of a dwelling that is within or is a (proposed) protected structure where that dwelling has not been rented in the previous 12 months;

(ii) the provisions that apply to tenancies and licences in student-specific accommodation, and,

(iii) transitional arrangements for the commencement of provisions connected to student-specific accommodation and approved housing bodies, and

to change the title of the Bill and make other consequential amendments required to take account of these changes.

The core purpose of the Bill is to modernise various enactments that govern the powers of local authorities to levy and collect commercial rates. The Bill should make the commercial rates regime more efficient and effective for ratepayers and local authorities. Commercial rates are a vital source of local authority income, making up approximately one third of local government current income every year, making them the single largest source of income for local authorities and providing income to the sector of almost €1.5 billion per annum. This income provides between 16% and 53% of total funding for local services at individual local authority level and makes a vital contribution to the delivery of local services that businesses and communities benefit from.

The core objective of the Bill concerns improvements in commercial rates and further proposed amendments will include making additions to the valuation list immediately effective for rating. Furthermore, there are proposed critical and time-sensitive amendments to other legislation. For reasons of efficiency and urgency, it is proposed to include a number of additional amendments in the Bill. These were signalled on Committee Stage and members of the select committee were briefed by my officials.

As the House is aware, the Residential Tenancies (Amendment) Act 2019, enacted on 24 May, introduces a number of key measures and reforms designed to enhance enforcement powers for the Residential Tenancies Board, RTB, provide greater security of tenure for tenants and underpin further the operation of the rent pressure zone, RPZ, arrangements, along with further targeted priority measures. While the majority of the provisions in the Act have already been commenced, it is the Minister's intention to commence the provisions relating to student accommodation in July, ahead of the upcoming academic year. The remaining provisions, relating to annual registration, are scheduled for commencement in the first quarter of 2020, when the RTB is in a position to roll out annual registration.

The Minister has worked closely with the Minister of State with responsibility for higher education, Deputy Mitchell O'Connor, the Attorney General and members of the Joint Committee on Housing, Planning and Local Government to deliver these important protections for students, living in student-specific accommodation. It is important that the 4% per annum rent increase restriction in RPZs applies in this sector and that there is recourse for students to the dispute resolution services of the RTB. Students in both private and public residential accommodation are deserving of equal protection. Tenancy and licence registration requirements and the new RTB sanctioning regime for improper conduct will also apply to the student-specific accommodation.

The changes relating to the recently enacted student-specific accommodation provisions, including section 37, of the Residential Tenancies (Amendment) Act 2019 are primarily technical. The amendment to section 37 also has the effect of closing off a potential means of circumventing the application of aspects of the Act of 2004 to student-specific accommodation occupied under licence. Technical amendments are also proposed to clarify that the student-specific accommodation provisions and the provisions requiring annual registration can come into force separately and to replace "include" with "apply to" in the new section 3(1A)(a) that was inserted into the Act of 2004 by section 3 of the Act of 2019. The student-specific accommodation provisions are intended to commence in mid-July, prior to the later commencement of the provisions requiring annual registration that are expected to commence in quarter 1 of 2020, hence the urgency to address this issue before the summer recess.

The Act of 2019 also amended section 19 of the Act of 2004 to specify the types of works, including energy rating improvement works, that could qualify for the exemption from the RPZ rent increase restrictions that apply where a substantial change in the nature of the rental accommodation has been achieved that warrants a greater rent level. As protected structures are unable to qualify for this exemption on the basis of works to improve their building energy rating, it is proposed to further amend section 19(5)(a) of the Act of 2004 to allow the first rent set under the tenancy of a protected structure dwelling not rented in the previous 12 months to be the market rent.

I move now to the planning amendments referred to in the motion. An amendment is required to the Planning and Development Act 2000 to provide for transitional arrangements that are required, following the recent establishment of the Office of the Planning Regulator. This is a time-critical amendment in the context of the preparation of regional spatial and economic strategies, RSES, by the three regional assemblies, which are at an advanced stage. As currently enacted, the legislation provides only that the Minister can issue a direction in regard to the strategies on foot of a recommendation made to him by the planning regulator on the basis of the regulator having already been involved in the RSES process from the outset and having made submissions on the draft RSES document. However, the requirement relating to the planning regulator being involved from the outset cannot be satisfied for the current strategies as the process for all three had formally commenced prior to the establishment of the office. In all three cases, a draft regional strategy was published prior to the establishment of the Office of the Planning Regulator and submissions have already been made by the Minister.

The amendment now proposed provides for transitional arrangements to ensure that the Minister has a robust legal basis to issue a direction to a regional assembly, if necessary, that is not dependent on a recommendation by the planning regulator. The amendment will allow the Minister to issue a ministerial direction to the regional assemblies, if required, to ensure that the RSES is consistent with the national planning framework or other key Government strategies and national policies. This amendment has the effect of reverting back to the position that pertained prior to the establishment of the Office of the Planning Regulator. However, in the spirit of the Act, and in recognition that the new office has since been established, the proposed transitional arrangements include provision for the regulator to be requested by the Minister to enter into the RSES process in an advisory capacity. To facilitate this advisory engagement in the context of the current RSES process, the four-week timeframe for the Minister to issue a draft direction, which was the norm prior to the establishment of the Office of the Planning Regulator, is being extended to six weeks.

A further minor technical amendment is also being proposed to section 11(1)(b) of the Act to underpin the special provisions for Cork city and county councils to extend the period for review of their development plans, in order to incorporate the regional spatial and economic strategy into their plan. This ensures consistency in section 11(1)(a) and 11(1)(b) provisions.

In light of the urgent nature of the proposed amendments I have described, I commend the motion to the House.

I call Deputy Cassells, who is sharing time with Deputy Casey.

I thank the Minister of State for his contribution. I welcome the opportunity to speak on this rates Bill as we see it come to its final stages. I appreciate that, following on from committee last week, there are a number of additional areas that the Minister of State has outlined he wishes to see included.

When I speak on this matter, I always stress the fact that this is a huge part of our local government system. Our councils would not function without the moneys that are raised from local businesses in each county, and this always needs to be said. Some €1.5 billion was raised in revenues last year and, over the course of this decade, we have seen the cumulative total raised by some 14%, which should never be forgotten. I am always conscious of the role businesses play through their payment of rates in ensuring we have councils that can offer services. As the Minister of State said, anything that helps the system work more efficiently is to be welcomed and, therefore, many of the proposals being brought forward are to be welcomed.

I am disappointed that amendments brought forward last week on Committee Stage by Fianna Fáil were not accepted, in particular our proposals regarding the phasing of multi-annual payments in the case of a business that has been hit by a rates revaluation which leads to a significant increase in the rates payable by it. We believe businesses hit with a substantial increase should be afforded the opportunity of phased payments. I am even more disappointed that our proposals around an inability to pay clause were not accepted. Outside of the booming city of Dublin and other cities, there are towns that are struggling. There are main streets in which a huge proportion of properties are vacant. This issue has to be grappled with. Without money coming through the door, businesses do not have money to pay rates bills to the county council or to the rates officers looking for their pound of flesh. The insertion of an inability to pay clause would have been a positive move. I am disappointed that the Government, supported by Sinn Féin in this new right wing coalition of friends, voted it down.

Fianna Fáil has put forward an amendment in regard to the public consultation process and rates abatement to allow for a more transparent process, which, I hope, will be accepted. I understand the time sensitive nature in terms of many of the issues outlined by the Minister of State. Fianna Fáil will work with the Government over the next couple of days to ensure the passage of the Bill.

I thank the Minister of State, Deputy Phelan, for his statement and his engagement over the last number of years in regard to this Bill. My colleague, Deputy Cassells, outlined the critical role that commercial rates play in our local authorities. Fianna Fáil welcomes the majority of the provisions in this Bill, which seeks to modernise the commercial rates system and give our local representatives the power to introduce incentive schemes where they believe they are need, which is good for the democratic process. Equally, I welcome the amendment we discussed last week in committee in regard to the global and national revaluations. Local authorities such as Wicklow County Council will not be affected because it is having a national revaluation in the same year as a global revaluation but the council will not miss out. One of the controversial issues that arose last week was the revaluations by Irish Water which will commence this year, the impact that process will have on local authorities and how receipts will be divvied out to ensure that local authorities which have been rating their water infrastructure will not lose revenue because of the Irish Water valuation.

On the planning provisions of the Bill and the proposed amendment, my understanding is that this is required because the planning regulator office's was not established in time in regard to the process of the regional assemblies being brought forward and that it seeks to give the planning regulator an additional two weeks to review the draft plans with a view to confirming to the Minister that they are consistent with all national and regional policies but the Minister retains the power to take action, if required, to have the regional assemblies review them. Perhaps the Minister of State would confirm if my understanding of the amendment is correct.

Deputy Cassells mentioned the issue of inability to pay and the need for harmonisation of commercial rates in the case of properties that have not been revalued for 20 or 30 years and are hit with a revaluation. This is not the fault of the property owners. Rather, it is the fault of the system yet the property owner is asked to meet the cost of the revaluation, which in some cases can be a 200%, 300% or 400% in one year. Fianna Fáil's proposal, which was not supported, sought to harmonise payments over a number of years to remove the initial hard hit. Fianna Fáil's proposal on public consultation in regard to alleviation or abatement schemes is important. As a commercial ratepayer I know that a lot of commercial ratepayers do not understand the system. Anything we can do to bring transparency to the system and a greater understanding of how it works has to be welcomed. I am delighted the Minister has agreed with our amendment. I thank the staff for their work on the wording of the amendment.

The elephant in the room, which we all have to address at some stage, is the antiquated valuation process. I understand the Minister of State proposes to do work on it in the autumn. We need to bring an understanding to the valuation process because businesses cannot get their heads around it. Trying to explain that under zones A, B and C, the first 1 m in the door is rateable at a particular rate and the next 5 m is rateable at another rate and so on and how the value is calculated is complicated. This is the aspect that we still need to address going forward.

In general, Fianna Fáil is happy with the Local Government (Rates) Bill 2018 and we are willing to support it.

The motion before us a technical one that seeks to give the Minister permission to introduce amendments to the Local Government (Rates) Bill 2018 that have nothing to do with that Bill but are related to the Residential Tenancies Act 2004, the Residential Tenancies (Amendment) Act 2019 and the national spatial strategies. I do not propose to speak to the Local Government (Rates) Bill 2018 or the substance of the amendments being proposed because I can do that on Report Stage later in the week but I do want to comment on this practice. This is the third time detailed technical amendments have been introduced to legislation on Report Stage by the Department of Housing, Planning and Local Government. This is not a good practice. I support some of the amendments and I do not support others but the Minister of State and I can tease out them on Report Stage tomorrow or Thursday.

There is a reason we have Committee Stage followed by Report Stage. It gives Members, including the Opposition, time to tease out with the Minister and the officials not only the intent of the legislation but the implications of it. Where a provision is allowed to pass on Committee Stage, we can discuss and reflect on it with colleagues or third parties before making a final decision on Report Stage. None of us objects to amendments being introduced on Report Stage to legislation in respect of which there is an urgency. The fact this is the third time this has happened in the case of a Department that has not had to draft that much legislation in the past two years shows it is becoming a trend. I know this is not the responsibility of the Minister of State, Deputy Phelan, or the officials who are here diligently paying attention to this discussion, because they are dealing with the Local Government (Rates) Bill 2018 but this is a real concern. For example, one of the amendments the Minister of State is seeking permission to introduce by way of this motion is an amendment to try to close a loophole to the definition of student-specific accommodation in legislation we recently dealt with. This suggests to me that officials in the Department when drafting that legislation were probably put under a significant amount of pressure from the Minister to meet the deadline for that Bill, which was substantially later in its passage through the Oireachtas than the Minister originally proposed despite the fact that it was facilitated it in a collegiate way by the Oireachtas committee. That makes me nervous because if there was a mistake, error or something not noticed under pressure in that legislation what is to say the same has not happened with some of the legislation by way of the amendment that we are dealing with today. This is not in any way a criticism of any official. I do not envy the job of the officials having to a lot of this work under extreme time pressure. The fact we will not have had the opportunity to properly consider the text of the amendments on Committee Stage is bad practice. I acknowledge the officials who attended the Joint Oireachtas Committee on Housing, Planning and Local Government to brief it on the intent of the amendments. While it was very welcome, it is not good practice. I urge the Minister of State, Deputy Phelan, to bring back my views to the Minister, Deputy Eoghan, which, I think, are widely held views on the housing committee. I say that as somebody who supports most of the amendments the Minister of State is bringing forward.

On the technical motion before us, Sinn Féin will not oppose it. We will also facilitate the amendments but on behalf of the housing committee, I ask that it not become standard practice where with all legislation in the future, we deal with other technical details. For example, the amendment in regard to the spatial strategies was a big issue for us.

The officials provided a clear explanation but it is a very technical amendment. It is eight pages long. That is as long as some entire Bills. I do not question the intent behind it but I have less time as an Oireachtas Member to go through the technical detail and be confident in my view before I vote in favour or against it than I otherwise would. I appeal to the Minister of State not to make this standard practice. Of course we will facilitate him today as we have done before but let us not be here in a few months, if this Government is still in place, dealing with the same problems. Strictly speaking, Report Stage is for amendments to the Bill that are consequential to what we have already discussed. There is a rule that we have to raise those issues on Committee Stage so that it is all flagged in advance. I am increasingly uncomfortable with the way in which additional amendments, some of which are as long as entire Bills, come before us on Report Stage. It is not great.

We will not obstruct this motion either because these are things that need to be done. I share Deputy Ó Broin's concern about the process. We did not deal with the issues at the appropriate time. I am especially concerned about student accommodation, a relatively recent issue for the Houses of the Oireachtas, which we all campaigned for and welcome. Dealing with it in this way is not ideal in the context of how we do business. I am not a member of the Joint Committee on Housing, Planning and Local Government so I have not been involved as much in the detail as others, although I recognise that I have the right to attend, but I am a member of the Joint Committee on Education and Skills, which takes up a great deal of my time.

I am concerned about the process. The elements of it that the Minister of State outlined are understandable, relating to the Office of the Planning Regulator, for which the timing is important, the issue of Cork City Council and Cork County Council, which is self-explanatory, and student-specific issues. We want to ensure that the parts relating to student-specific matters work well because we have all seen protests outside Leinster House about the provision of student accommodation, where rents were substantially increased. We want to see them included in the rent pressure zones. While I am talking about rent pressure zones, I welcome the extension to include the rest of Limerick city, something for which I had been campaigning for a long time. There are many other things that I could say about what we need to do in the context of rent protection but I welcome the fact that Limerick city north and Limerick city west will join Limerick city east on the list of rent pressure zones. There are other areas just outside some of the zones, including some of the counties represented here, that will come under pressure. That is not relevant to what I am supposed to be speaking about so I will go back to the motion.

What the Minister of State said about protected structures concerns me somewhat. I know that this about the content of amendments rather than what we are doing right now. I understand that the owners of protected structures cannot avail of some of the measures relating to energy ratings, etc., but I am concerned that the first rent set for a tenancy in the previous 12 months is deemed to be the market rent. The Minister of State will presumably explain the position during the debate on the Bill but I am concerned that this is an open-ended way to set rent. Other than that, I think the issue of regional assemblies, etc., is understandable. I will not try to stop this from happening but we certainly need appropriate debate on all of these issues, especially where long amendments are being proposed at this stage in the legislative process. We will have an opportunity to address the matter but it would have been better if we had more scrutiny and if we did not deal with complex Bills by adding provisions that do not deal with the relevant issue, which is the case with some of the proposed amendments.

I echo some of the comments made by previous speakers regarding the method being to facilitate these amendments. That method makes matters difficult when scrutinising amendments and having a proper debate on them. It also affects the primary legislation and has an impact on getting it passed in a timely fashion and ensuring that it is workable. Some of the amendments relating to the Residential Tenancies Act and student accommodation are worthwhile but they are very detailed and complex and should be dealt with specifically in that context of that legislation. The Residential Tenancies (Amendment) Act 2019 is the measure that this amendment will change. It is worrying that these Acts have been passed while these things are still missing and that the way to get it back in again is to add it to this Bill rather than having it as a stand-alone measure so that it could be the subject of proper scrutiny and discussion. The latter would have been far more preferable. It would probably cause a certain amount of embarrassment for the Government to have to amend an Act that has just been passed. Perhaps that is why this is being done. It appears that we are discussing the Local Government (Rates) Bill but we are not; we are discussing the other two Acts that the Government is amending. That probably covers it as far as the Minister of State is concerned. These should subjected to the scrutiny and discussion that they deserve. Who is to say that more anomalies or problems will not be identified further down the line that will require amendments to amendments? We do not know because this will not be looked at fully.

The primary Local Government (Rates) Bill has some potential and there are good aspects to it. The Minister of State is keen to pass it. Putting the Bill through the Committee Stage process again will delay implementation. Local authorities deserve better than that. This legislation should be implemented as needs be. We will not stand in the way of this happening but I share the concerns of other Members about the problems with this. These amendments do not really relate to the Bill, they have been tagged on.

I welcome the opportunity to speak on this motion. Rates have been a vexed issued for local authorities and local businesses for many years. We all accept that the system is essentially broken and requires urgent reform. I have been working for some time to have Tipperary County Council urgently reconsider its operational approach to the delivery of the N24 Davitt Street road improvement contract in Tipperary town and in respect of many other towns in which work has to take place on badly needed infrastructure. Some consideration must be given in drawing up the contract to temporary bypasses that could be introduced. We should stand behind the counters of the businesses and understand, from the point of view of their owners, how hard it is to keep the doirse ar oscailt - the doors open. Little or no consideration is given to that, however. Given the scale of the adverse impact on the financial viability of local commercial premises in Tipperary town, I also requested that the local authority apply an immediate reduction in respect of chargeable commercial rates. This would be a temporary, once-off measure. It is a matter of deep regret to me that the council has confirmed that it intends to refuse this request. It is a real punch in the teeth for hard-pressed ratepayers. I am talking about ratepayers who want to pay and who have a good record of paying, not the fly-by-nights that do not want to pay for anything. I salute the business people.

As part of its reply, the council noted that it is disappointed to hear that the businesses are being affected so badly. It stated that the contractors involved are making every effort to reduce the impact on businesses as they carry out works throughout the town. I am sure that, like me, the Minister of State will find the council's use of the word "disappointed" very revealing. Disappointment is no good. The council is in charge and should have consulted, engaged and tried to work with the ratepayers.

After all, they are their customers. A business person who treated a customer like that would be out of business. The connectivity is very poor. The council betrays an extraordinary level of detachment from the commercial reality in the town since the commencement of works several months ago. If the work extends down the entire street, it will go on for two years.

On a related matter, at the start of this year I called on the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, to clarify the reason his Department has failed to conduct a review of the economic impact of local authority rates on small and medium sized businesses. That was after the Minister confirmed the absence of the review to me despite acknowledging that the annual rate of valuation, ARV, increased each year from 2016 to 2018. We now know that from 2015 to 2017 local authorities collected more than €4 billion in rates nationally, with €1.34 billion of that coming in during 2017 alone. That is an enormous amount. The latest available figures for County Tipperary, from 2016, showed that while €34.1 million in commercial rates was due to be collected, only €26.4 million was actually collected, leaving arrears of €7.07 million. We know the reason for that was that business is so dismal in the county. It clearly demonstrates that businesses are struggling to pay existing levels of commercial rates, never mind having to deal with year-on-year increases such as those confirmed by the Minister today.

It is vital that businesses and SMEs are supported, especially in light of the challenges that Brexit will inevitably have on them. For this reason, I welcome many of the measures in the Bill. I ask the Minister of State, Deputy Phelan, to clarify the issue of rates calculation for service stations. That is a major issue. The Minister of State is nodding and looking at his officials. I hope he will clarify the position. I am aware of a wonderful young businessman, Mr. Alan O'Donnell, his father Noel and his family, who have a service station in Cahir. He undertook a significant expansion and gives much employment and service to the public. On the basis that he is selling petrol on the forecourt, his rates this year jumped fourfold from €5,000 to €21,000. Such an increase could not be factored into the borrowings and investment on such a major project. Many other long-standing motor factors and service station businesses in Cahir are similarly affected. They cannot sustain the increases. There are high costs attached to the sale of petrol and diesel and the turnover is low. Something must be done to help such businesses. Was an impact analysis carried out as to how the decision on forecourts and service stations was reached? We cannot have such issues arising. I seek a reply in that regard from the Minister of State.

What does the Bill propose? Among the measures included are provisions to allow local authorities to restate a charge or rate to be levied on each relevant property for which the current occupier or owner of the property will be liable. That is very important because people change. We want to rejuvenate towns. If the rates continue to be punitively high, we will not get rejuvenation and we will not get living towns back again. The uptake of the living city initiative is very slow because it has not been marketed. I am aware that people applied for certain schemes but the response from Tipperary County Council was totally lethargic and inept. The council was slow in giving approval for schemes and it found every reason in the world to deny access to schemes. Long delays were experienced when worthwhile projects were put forward for disused premises, some pubs and shops. The scheme should be simplified. If premises are closed for a certain period, applicants should be able to get a break. That would do two things. It would boost the living environment of the town and bring footfall back and it would also deal with the housing crisis. The Minister of State, Deputy Phelan, is a junior Minister in the Department of Housing, Planning and Local Government. We must encourage people to develop units into apartments or promote schemes such as the previous living over the shop scheme. The schemes should be made more accessible and more effort should be put into them to encourage people to move back into town centres and to get rid of the blight of disused buildings.

The Bill proposes to provide greater enforcement powers by local authorities in their collection of rates through the appointment of an authorised officer with the necessary powers to carry out certain duties under the proposed Act. I am concerned about the proposal because we do not want too much power to be provided. The vast majority do not mind paying rates. We paid them. My late father paid them when there were rates on farms. Rates were always paid. With the stroke of a pen, as an election gimmick, a party of which I was a member at the time just wiped them away. We never recovered. I celebrated the abolition of rates at the time but it was foolish. It was devised by Professor Martin O'Donoghue at the time. He was the first of the so-called messiahs that came along and left us in the mess we are in now. I do not know where he is now but I hope he is alive and kicking.

It is good to repent even 40 years later.

I repented long ago because we do not have the money to spend.

Does Deputy Mattie McGrath want farmers to pay rates again?

Farmers always paid their way. It was a folly at the time, as was the car tax. We need to have a reasonable look and adjustment. We must support the ratepayers who are paying. I seek clarity from the Minister of State on what will happen with forecourt retailers and service stations. The significant increase in their rates this year cannot be sustained.

No. There is no provision for a response.

We are back in the House tomorrow to discuss the Bill.

I am sure the Minister of State is anxious to speak but he will have to find another opportunity.

We will be back for the debate tomorrow. I am very anxious to respond to Deputy Mattie McGrath. I will do so tomorrow.

Perhaps the Minister of State could arrange a bilateral meeting.

On a forecourt near you.

Question put and agreed to.