Local Government (Rates) Bill, 1973: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

In their 14-point plan announced before the recent general election, the Government stated their intention to reduce local rates by transferring on a phased basis from local to central taxation the burden of health charges on local authorities and the cost to them of local authority housing.

On 30th March, the Government announced that, in the present financial year, 1973-74, the rate to be levied by each local authority for health services and local authority housing could be reduced by 25 per cent as compared with the rates levied for these purposes in 1972-73, this being the first phase in the total transfer of these costs to the Exchequer in a four year period. Prior to the making of that announcement, however, 11 county councils and three urban district councils had already adopted estimates of expenditure and determined rates in the pound for 1973-74.

Under existing law, there is no provision whereby a local authority can reduce a rate which has been properly determined. Therefore, in order that the ratepayers in those areas where rates had already been determined might benefit from the reductions announced by the Government, it was necessary that a legislative provision be made enabling the relevant local authorities to levy an amended rate.

This Bill is a simple and short technical measure designed solely to validate any modified rates in the pound adopted by the small number of relevant local authorities subsequent to the announcement of the Government's decision.

I shall be very brief. As the Minister has stated, this is a technical measure to give effect to the policy decision of the Government, arising out of the commitment made by the Government in their 14-point programme before the general election. It is welcome in so far as it gives relief to ratepayers. I will let time decide the wisdom of the decision: that will be a matter for future political debate.

In my view, the decision to transfer these moneys to the Exchequer and the decision in regard to removing the food subsidies from value-added tax are two Government decisions arising out of election commitments which they will dearly regret. Time will prove the validity or otherwise of my point. The first budget, already introduced, is indicative of how the Government, from the revenue point of view, have circumscribed themselves by reason of electoral commitments which were so specific that they had to be honoured, unless the Government discredited themselves. Having honoured these two commitments, both under this heading and under the heading arising out of the removal of value-added tax from food, the Government by adopting and following their commitments in these two areas have found themselves with a sort of Frankenstein.

We saw the first evidence of it in the budget where there was not sufficient revenue available to bring in a proper budget geared for growth that would provide the proper incentives both for people at work and for people seeking to invest. As far as the budget is concerned, it is a thing of shreds and patches arising out of the fact that the Government had so circumscribed themselves by reason of the commitment I mentioned, that is, the total amount of £12.7 million arising out of transferring the health charges and the housing subsidies from local authority rates to the Central Fund. That, allied to the £19 million odd under VAT, comes to something in the region of £33 million. This is the straitjacket in which the Government found themselves in the budget.

I believe it is relevant in this discussion to raise this matter, because at the time the Dáil was discussing it the budget proposals had not emerged. They have now emerged since the Dáil discussed this Bill on the Second Stage. In my view, the publication of next year's budget, if the present Government are there to produce it, will further endorse and emphasise the point I am making. This commitment of £12.7 million will be a rising feature in the next four years and is an inescapable commitment which will put the Government in a straitjacket in regard to revenue. It cannot lead to anything else except financial chaos.

The recent budget, which the people rejected in the Presidential Election, is the first example of the type of financial difficulties that political parties can get into when in government by reason of trick-of-the-loop policies. There was no need for the Government to produce the trick-of-the-loop 14-point policy because there was, by reason of the logical swing of the pendulum, a swing against the Government of the day in the last general election which would happen anyway after 16 years in office. There was no need for the Government to hold out the extra bait, and this Bill is evidence of one aspect of the extra bait that was held out to the electorate and is one of the matters that put the Government into a budgetary jam—I do not mean jam on bread; I mean a budgetary jam—and that particular straitjacket is one from which they will not escape easily. It will be a rising and a mounting factor which will not just put them into a straitjacket by the time the next budget comes around but will lead to a strangulation situation as far as the present Government are concerned.

As the Minister has stated in his speech, this is largely a technical Bill. A set of circumstances arose because certain local authorities did not defer the striking of their rate until the Government had an opportunity of honouring one of the items on their 14-point programme. The local authority of which I am a member, Limerick City Council, did in fact defer the striking of their rate in the belief, which was subsequently justified, that the Government would honour their commitment. In fact, instead of striking an increased rate of more than £1 in the £, as a result of the Government measure we were enabled to reduce our rate by 35p, which is quite a considerable saving.

I am interested to note the change that has come over Senator Lenihan since he became a member of the Opposition. Before, as a member of the Government, he was an unqualified optimist. He now seems to have become a prophet of gloom. Some of the subjects he has touched on might be more appropriately discussed on the Appropriation Bill when it comes before this House in due course.

However, this measure is one that is generally welcomed. It is unfortunate that certain local authorities did not wait a little bit longer: if they had, this Bill would probably not have come before the House. Now that it has done so, it should be universally welcomed. It is merely a technical adjustment and proves once more that the Government intend to honour their 14-point programme, and this House should unreservedly welcome it.

It is now painfully obvious that the 14-point plan announced by the Government before the election was grossly dishonest. The Minister has told us today that the announcement stated their intention to reduce local rates by transferring on a phased basis from local to central taxation the burden of health charges. That 14-point plan was dishonest in this way: the Government should have told the people before the election that it was their intention to cut the health estimates in the present year. I am chairman of the North Western Health Board and only two days ago we learned to our horror that the estimate for this year has been cut by almost £1½ million out of a total estimate of less than £8½ million. The Government should have told the people in Counties Sligo, Leitrim and Donegal before the election that they would not be able to do the work they intended to do.

An Leas-Chathaoirleach

I think these remarks are not relevant to the Bill which is before the House. Would the Senator speak on the Bill?

I am merely discussing the opening remarks of the Minister. In their 14-point plan announced before the recent general election, the Government stated their intention to reduce local rates by transferring on a phased basis from local to central taxation the burden of health charges. I am submitting that the Government are not doing what the Ministers claims in his opening remarks that he undertook to do. I am stating that they reduced the expenditure to provide the money necessary—in our region alone by £1½ million. There are eight regions in this country and if one multiplied eight by one and a half, we find in all probability that the health estimates in the present financial year amount to £12 million less. Senator Russell wanted us all to praise the 14-point plan. If it is in order for Senator Russell to ask for praise for that plan, I am entitled to criticise it.

An Leas-Chathaoirleach

May I remind the Senator that the Local Government (Rates) Bill, 1973, is before the House?

What is before the House is a Bill asking us to agree to, I presume, the retrospective decision taken by the various local authorities. I am referring to the opening remarks of the Minister in his speech here a few minutes ago and to the 14-point plan which Senator Russell asked us to praise.

I asked the House to give a welcome to this Bill, not the 14-point programme—that would be asking too much.

An Leas-Chathaoirleach

I would ask Senator McGlinchey to confine his comments to the Bill before the House.

I can only say that this Bill has become necessary because of the announcement by the Coalition when they were buying their way into office. It was a dishonest announcement. It has fooled the people for the moment but I have no doubt that before the year is out the people will learn how dishonest that announcement really was.

I should like to point out to Senator McGlinchey that Fianna Fáil made a valiant endeavour to outbid them.

In a much more satisfactory way.

We made a slight mistake in proceeding with this Bill instead of item No. 11 on the Order Paper. Could I get agreement, for the sake of the Minister for Labour, that we take No. 11 immediately after the tea break at 7.15 p.m.? No. 11 should have been called instead of this Bill.

An Leas-Chathaoirlech

I must apologise to the House. I am sure you are aware it was just at the time when I took over from the Cathaoirleach. I had been informed that item No. 11 was next but there appears to have been some confusion, and the Minister for Local Government arrived.

I do not want to interrupt the Senator on this discussion, but could we have agreement to take item No. 11 after tea?

Will the order stand under which the EEC motion begins at 7.30 p.m.?

It should not delay it at all. If it is delayed it will only be a matter of minutes.

I do not wish to delay the House but I should like to make one point which I think is of some substance. The proposal in the 14-point plan which, as the Minister has told us and we remember very well, is to reduce the local rates by transferring in a four year period the burden of health charges from local rates to the Central Exchequer, was an extraordinarily misdirected one. The cost this year is —£12.7 million. The cost next year and successive years will be at least that and with inflation running as high as at present and the continuing improvement in health services, which inevitably grow ever more expensive, the cost in future years will clearly be even more. I feel it not unreasonable to say that four years from now the annual cost of this proposal will be in the region of £55 million or perhaps £60 million. That is a very large sum of money. It is worthwhile considering what the benefit to the ratepayer will be.

All of us know that of all forms of taxation, the most unpopular and in many respects the most burdensome is that of local rates. There are people of course, who can afford to pay them but there are many others who can not. I am thinking particularly of retired people, widows perhaps living in large and heavily rated houses on very small incomes who find themselves with these very heavy burdens in rates to meet.

The result of all this very large expenditure which the present Government have undertaken is to leave these people essentially no better off. I know the Minister will tell us that but for this proposal they would be even worse off this year. Nevertheless he must agree that essentially retired people and widows, the rate-paying public in general, are no better off this year than they were last year: the burden of rates on them is just as heavy. There is a saving in some cases of perhaps three pence in the £. In other cases there is no difference and in others there may be one penny or so in the £ extra to pay. But, essentially, this extraordinarily expensive scheme, which will cost in the region of £60 million a year in another four years, will at the end of all this time and as a result of all this enormous expenditure leave the rate-paying public, the ordinary private householder, in the position he was in in the financial year 1972-73. This seems to me to be a classic instance of a totally misdirected, extravagantly and foolishly planned scheme.

As has already been pointed out, the then Fianna Fáil Government at a late period in the election proposed a different scheme. I would put it to the Minister and to Senators generally that our scheme was a far better one. Under it, all the burden on the private householder would have been lifted and the eventual cost to the Exchequer would have been no higher, I suspect perhaps even lower, than under the proposal in this Bill.

The Minister was asked in the Dáil a week or so ago what proportion of all rates came from private hereditaments as opposed to factories, licensed premises and business premises of all kinds. He sought to evade the issue by saying "the great bulk". I am not an expert on semantics and I do not know what "great bulk" means, but to me, and I suspect to most people, when someone says the great bulk of something is in question this would suggest 70, 80 or 90 per cent. When the Minister was pressed he admitted that on one way of estimating the thing 49.56 per cent of all rates were collected from private householders and on another more favourable way of estimating it, 53 per cent. Fifty-three per cent he stated was the bulk, but this does not seem to be so.

We have the situation that almost half the total remission of rates in this Bill and in successive measures of the kind during the next three years will go to the businessmen, owners of factories, large blocks of flats,et cetera, and will not go to the ordinary private householder. This extraordinarily expensive scheme is entirely misdirected and the money could be spent more profitably either as we proposed by completely freeing the ordinary private citizen from rates or by further improving social services or such schemes.

As a member of a local authority which over a number of years have been deeply concerned with the increase in local taxation, I and the other members of the local authority deeply appreciate the manner in which the relief has at last come. At this point in time it is ridiculous to say that health charges should still be continued as a charge on local authority rates. In the local authority of which I am a member the local rates, until the present relief came from the Government, were £8 in the £. The health proportion of that £8 was £5 and this left very little for the development that was required locally for sewerage, lighting,et cetera. If the Government's decision had not been implemented or if the Fianna Fáil policy had continued we would very shortly have the position where only health charges could be met by the local rate-paying community, many of whom, as Senator Yeats has stated, are retired persons, persons in a small income, et cetera. The gesture to remove in the first instance one-fourth and absorb all the current year's increase was a major one.

Senator Yeats stated it means no relief. It is true that some local authorities did not say much but at least they developed their local services due to the extra relief. They are building more houses, they are developing more water and sewerage schemes and they are spending more on public lighting, which is helping the local citizens to whom they have a responsibility. I know from my own local authority and from many others associated with municipal authorities that not only Labour and Fine Gael but Fianna Fáil members have for years pleaded to have the impact of the health charges removed from local rates. This is a good start and is deeply appreciated by those who represent the ratepayers in my local authority.

I am a little puzzled by some of the arguments being made against this because I am not quite sure if I should accept Senator Lenihan's statement that the Coalition would have won the election whether they had introduced this scheme or not or the suggestion which has been made by Senator McGlinchey that it was because of the scheme announced in the 14-point plan that the National Coalition won the election. I should not like to have to decide this for them.

I am surprised at a person of Senator Yeats's eminence in this field making comments which he will have to admit even to himself, if he takes a look at them in the printed report, are extremely foolish. What he is, in effect, saying is that although rates in this city, for instance, were not increased—though they would have been increased by well over £1 in the £—there was no saving to the ratepayer as a result.

I said they would pay the same as last year.

"They would pay the same as last year." If the National Coalition had not got into office they would have been paying more than £1 in the £ more. On a £50 valuation they would be paying more than £50 in the year more. This is a fair point. It was a good saving and has been much appreciated.

Senator Yeats's comment on the question of the increase which is bound to occur during the years because of inflation or for any other reason is the strongest argument which can be put up by anybody for a responsible Government taking over those charges from the rates. It would be unreasonable to ask ratepayers to continue to pay for them. He trotted out a little hare which was trotted out in the Dáil but did not run very far. This related to whether 53.56 per cent of the rates is or is not greater than 46.44 per cent.

That is not what I said. "The great bulk" was the phrase.

None of us has to be a genius to understand that 53.56 is the greater portion of a division if the balance of 46.34 is on the other side. It is futile to argue over this. The fact is that the greater portion of this is being paid by people who are resident in houses and not people who own factories or business premises. I should like to point out that those who own factories and business premises and who are getting away with a reduced rate if they are making a profit on their buildings are repaying up to 50 per cent of that in taxes to the State. The amount they will ultimately get will be very small.

I thank the House for dealing with the matter so expeditiously.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for final consideration and passed.