Seanad Éireann díospóireacht -
Wednesday, 21 Oct 1987

Vol. 117 No. 6

Death of Former Oireachtas Member. - Local Authority Funding: Motion (Resumed).

The following motion was moved by Senator Doyle on Wednesday, 14 October 1987:

That Seanad Éireann condemns the indiscriminate and unplanned cuts in Local Authority funding and calls on the Government to indicate in detail how it proposes to finance, secure and maintain services and employment for 1988.

Debate resumed on amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"take note of the level of local authority financing for 1988 and the Government's determination to restore order in the public finances as an essential prerequisite for national recovery."

—(Senator Fitzsimons.)

Mr. G. Reynolds

Last evening I was caught unawares. Now I have done a little more research into the actual motion. I hope the House does not mind if I give a few examples of how the proposed Estimates will affect my county. I know that the roads and infrastructure are the bane of many county councillors and local authorities. I will quote from a report by Leitrim County Council:

The maintenance of the county roads system is a problem and expensive compared to other parts of the country, because of, inter alia, low population density and associated high route mileage per head of population. The network provision on a per capita basis is double the national average.

The rural nature of the county, combined with its low population density gives roads a particular significance as the only means of transport over a wide area. The people of the county are heavily dependent on road transport.

The estimated cost at January 1987, of bringing county roads up to a satisfactory standard is of the order of £17 million and for regional roads in the county of the order of £3.75 million. Thereafter, the council would need an ongoing annual budget to keep county roads up to a satisfactory standard of approximately £3.5 million and a similar allocation of £840,000 for regional roads based on present costs.

The grant in respect of road works and related services has been cut by 10 per cent in the estimate.

If we need £17 million to bring the roads up to standard in a small county like Leitrim, what will it cost on a national basis? Cutting the grant by 10 per cent is very hard on local authority members, local authority workers and, above all, on people in rural areas who depend on roads for transport. It is a sad state of affairs that roads are beginning to become impassable and we will be back to the dark ages when the only thing that could get past was an ass and cart.

In county Leitrim in 1971 approximately 4,500 houses or 55 per cent were without piped water. While this was reduced to 22 per cent in 1987 the national figure is of the order of 5.5 per cent. The low density and dispersed distribution of population affect significantly the cost of providing water supply. From the figures in the Estimates there is no way that we in Leitrim can hope to provide a proper water supply or even reach the national average of 5.5 per cent without piped water. I find this totally unacceptable.

The number of houses in County Leitrim classed as unsuitable and beyond economic repair is 15 per cent of our housing stock. This is well in excess of the average throughout the country. I made a brief point last week that many local authority houses were in need of repair. If the Government decide not to provide money for building houses — we may not need as many new houses — the Minister should consider putting a great deal of money into the maintenance of the existing stock of houses and bringing them up to an acceptable standard. As a local representative I find that many people want specific work carried out to their houses and there is just no money to do it. The allocation in the Estimates has been cut drastically from £87 million to £50 million. I do not know how local authorities will keep going if they have to take that type of cut.

Grants to local authorities in relief of rates have been cut by 12 per cent. For example, in Leitrim we have 750 ratepayers, so we rely largely on the rate support grant. Over the past number of years services have been diminishing. But I feel that if these Estimates go ahead, it will be the final nail in the coffin of the local authorities.

I have a great bone of contention with the Minister's party. I do not want to bring politics into it very much. My first experience of elections was in 1985, and I had a difficult time convincing people that the charges had to be accepted if we were to provide services. Fianna Fáil, in their strategy, decided to campaign that there should be no service charges. In hindsight I believe they did irreparable damage, because they told people they should not pay their water or refuse collection charges. As a result local authorities find it very difficult to collect these charges. A property tax is now being talked about. However, I think people have got into bad habits. If they were not prepared to pay a small sum for such things as water charges, I would hate to see anybody going out trying to collect a property tax.

Local authorities, in my opinion, do not receive proper funding. Many local councillors at this stage are finding it increasingly frustrating to be part of a local authority. It would remind you of breaking into some place where the guard dog had no teeth. Local authorities will become talking shops if they do not get proper funding. It is a terrible tragedy that local authorities should be dealt with in this way, because they have been the backbone of both political and social life for the past 60 years. I would ask the Minister not to take away whatever powers they have left, but to give them proper funding so that they can carry out their functions in a proper manner.

Mr. D. Kiely

I would like to thank the House for the opportunity of speaking on this motion put down by the Opposition. I suppose one can say that the rot in local government has been going on for many years. I feel, as others feel, that local authorities should get more powers from central government to run their own house. You cannot run your house without a certain amount of finance. I think a whole restructuring of local authorities is needed to make them self-financing. Major schemes could be assisted from central government, and interrelated schemes could be assisted by neighbouring counties. One would have to look in depth at the overall picture of local authorities at present, and ask if they are giving a good return for the moneys they are receiving? One would have to question that in many fields. When I was elected to Kerry County Council in 1979 we had a waiting list of 1,500 people for local authority housing. At that time we discovered that there was a similar situation all over the country. At present in county Kerry there are about 100 people on the waiting list. Tenants who apply for local authority housing seem to be able to get houses now within a matter of months. One would have to question whether this is the proper approach and whether we are getting a return for our money from that sector, because in the Book of Estimates this year about £63 million was paid out for repairs and maintenance of local authority housing while about £40 million was brought back in revenue from rents received in respect of local authority housing. This is only one avenue that needs to be investigated.

I feel the time is ripe for the introduction of a new purchase scheme so that we can give back some bit of dignity to those people to purchase their own local authority housing. We have a record that speaks for itself; people get local authority houses for anything from £2 up to £10 per week, while the State subsidy is something in the region of £110 a week per house. I feel a move should be made immediately to give the tenants of those houses an opportunity to purchase them, because under the present system they would never own their own houses. I think if the proper scheme were introduced they would take up the option almost immediately.

One would have to look at other aspects of local authorities. The condition of the county roads bothers us. In the overall context of the roads programme we should ask again whether we are getting value for money. I feel that many smaller schemes — for example, bin removals and ordinary maintenance of roads etc. — should be put out on contract. At present if the scavenging service breaks down 50 miles from the depot, the driver of that truck has to get back to his depot rather than perhaps getting the repairs done at a local garage. The whole restructuring of local government will have to be looked at in depth.

When I was chairman of the General Council of County Councils I had the honour of dealing with three Ministers — Deputy Kavanagh, Deputy Boland and Deputy Flynn. I think there was a consensus at the time that the only way forward for local authorities was power, the reform of local government. I had the assurances over the years from all three Ministers, particularly in the past, that the reform of local government definitely would be forthcoming in 1988. This could be a sign of hope for local authorities of achieving autonomy. If local authorities are the people put into power, then they are the people who should bear the brunt for the way the county is run. I do not think that the onus should be put back on central government. All local authorities required new sewerage schemes, water schemes and sanitary services improvements etc. Each county applied for these schemes, and more than likely overspent. I am not ashamed to say that we in County Kerry overspent, because the sanitary services and the water services were required. I am glad we overspent, because at least we have the initial development on the ground for the people who want to develop further.

At present the repayments on the loans we had to borrow in County Kerry are something in the region of £4 million. If we did not have those repayments — and this goes back over a number of years — it would be very easy for us to put the extra finance back into our county roads. Local authorities would all want to look at the problem in depth in an effort to get out of the corner in which they find themselves. We must ask whether we can continue to go on developing in our local authorities and at the same time downgrade the moneys available for county road systems? The answer is that we definitely cannot, because all other local authority services have to be paid for before money can be spent on our county roads.

The mileage of county roads varies from county to county. We have 2,400 miles of county roads in Kerry, which is an enormous mileage. We do not have the number of rate payers other countries have. Large counties have a greater number of ratepayers than smaller counties. If we are to grasp the nettle, if we are to make local authorities meaningful, a new system will have to be introduced. Some kind of direct financing will have to be devised on an equal basis for all the people and not have the burden falling on the business people who at the moment are carrying the can. The 12 per cent of people who pay rates also pay water and other charges. These people literally cannot afford to spend any more money.

If there is to be any kind of reform there should be a shift somewhere along the line. The burden should be divided on any equal basis with people paying some kind of property tax or some type of small taxation which people will be able to afford as soon as the economic crisis is over. As I stated local authorities are mismanaged. As public representatives we have not questioned the accounts, we have not questioned the book of estimates we get at local authority level or scrutinised them to see where we can make savings.

Mr. Ferris

Kerry did.

Mr. D. Kiely

We can be very proud of our record in Kerry and that is why we attract so many tourists. People love coming to Kerry. I remember a time when there was no water to flush the toilets. Now we have.

An Cathaoirleach

Senator Kiely and Senator Ferris cannot have chats across the floor of this House.

Mr. D. Kiely

Parts of this country were far more developed than County Kerry and it took us a while to catch up. There is a need for a different type of financing. Local authorities are facing a major crisis and it was not today or yesterday it happened, but there is a future if expenditure is cut. Do we need all the architects and design people to design roads and new highways for which there is no demand?

These people should be redeployed in other services. Should we dispose of some of these engineers who are sitting in offices drawing big salaries without being productive? If there is to be pruning we will have to start looking into the cupboard and getting rid of the cobwebs. People have cushy jobs. I see engineers looking through their little tripods on all the roads of Ireland and designing highways. You would think we were going to have 707s coming down the highways in the future. I have travelled the length and breadth of most of the world and can tell you a funny thing.

People in other countries, design roads to suit the environment. They build cars to suit their own environment. In a scenic area of countries like Italy, Spain or France, there is no such thing as removing the side of the mountain to make the road wider. They kept their environment intact and have brought in smaller cars to travel on those roads. We should congratulate those people and take a leaf out of their book. I agree with the primary route systems in operation in this country. I see the need for getting goods moved from A to B. There is no need for vast amounts of money to be spent on highways in rural areas provided the roads are maintained and have a good surface. I am not denying the fact that there are plenty of potholes in my county at present but there were plenty of potholes there last year and the year before and it was not today or yesterday that these potholes appeared.

Local authorities have been hungry for money for the past four or five years and just because this Government have grasped the nettle everyone is crying and shouting and roaring. Previous Governments had let the economy run wild, and somebody had to call a halt. Fair enough, this Government have called a halt. We all have to halt. We all admit that we had to call a halt as something had to be done. The Estimates will be discussed in every local authority over the next couple of weeks. We have to go through them as ordinary citizens elected by the people. Do they want us to make a political issue out of the crisis? Do they want more local authority houses built at a cost of £110 subsidy per week from the taxpayers of this State when houses are abundant. They are cheaper by the dozen. I fought very hard for housing schemes in my own village and I know at least two or three of those houses are vacant today. We cannot even get tenants for them. In many housing estimates, including in this city, local authority houses are boarded up. They cannot get tenants for them. We cannot continue building houses when we have no people to put into them. We have to run our counties in an economic way and we have the opportunity to do it now for the first time in a long time. We have the estimates for each local authority brought forward for the first time months in advance.

We can scrutinise our accounts and run our counties in a fair way. I hope we can achieve that for the future of our people and for the future of our country because, as it is going at the moment, not alone are all the local authorities going down the tubes but the country is going down the tubes as well. I am delighted something is being done to rectify that.

Mr. Cregan

I will try not to be negative. I am conscious of the fact that at the moment we have a housing surplus. In 1979 and in 1981 we did not have a surplus. We implemented some schemes.

We recognised that there were people in local authority accommodation who did not need to be there, and the £5,000 grant scheme proved that. At this time we have a surplus of housing. Schemes were implemented with £5,000 grants to local tenants plus £2,000 first time buyer grants and a £2,400 grant over a three year period. They got £9,400 to leave accommodation and we got back houses to accommodate people who are less well off in our society. I make no apologies for that. There was a revolution in housing. With the elimination of these grants in a very short period people will be living in areas where I do not like to see them living in and, in particular, people who cannot afford to house themselves. I resent that very much. I hope that within a short period we can say to people who are in accommodation that there is subsidisation for them. Over a period of less than 14 months in my city we got back 750 houses and that proved it. In the city of Dublin over 5,000 houses were handed back. I do not make any apology for saying we were accommodating people.

People were under the impression that they were entitled to get accommodation at a very small rent. I hope that scheme was only deferred and can be implemented again, perhaps in another way, so that people who have improved their position over a period can accommodate themselves with some assistance.

Other grants were eliminated and I resent that. I particularly resent the fact that grants to the disabled were eliminated. This matter should be considered with a view to giving these people some small amount. This is an area where people need some assistance and I ask the Minister to keep that in mind.

The rates relief grant has been reduced by £20.5 million this year. There has been an improvement in infrastructure in some local authority areas and it is now probably at a quite satisfactory level. At no time can we say that we are at the same level in this regard as other European countries. Why are we reducing the rates relief grant?

Senator Reynolds referred briefly to local property charges. I make no apology for saying that I envisage an increase in local charges. Unfortunately, people in Opposition at the time they were introduced said they would not in any circumstances agree to local charges. Fianna Fáil gave the impression at that time that charges should not be paid. I know Deputies who voted against those charges and said they should not be paid in any circumstances. It was most unfair of them to give that impression.

Cork Corporation should collect £1.6 million in local charges every year but they collect less than £700,000. What exactly is happening? The impression was given that a Fianna Fáil Government would not allow local charges. They even said people should not pay them with the result that people were brought to court.

That is a very irresponsible attitude to take. A short time later the Government reduced rates relief grants and other grants. They told local authorities it was up to them to collect local charges and I have no objection to that.

There are waiver forms for the less well off, of which I am very conscious. If people are paying charges locally they must get the relief locally. Central Government must suffer the consequences of charging such moneys. For instance, the ratepayer — and I pay a lot of rates — who pays rates and local and domestic charges, should get tax relief on those charges. If people pay local charges of £60, £70 or £100 they should get the appropriate tax relief. That gives the incentive to pay the money. People who do not pay will not get tax relief. That would be a fair system and would show people that we are doing something locally to collect moneys.

A man with three children earning £140 a week pays taxes and yet he is asked to pay another £100 in local charges on which he gets no tax relief. That is most unfair. At the same time the person next door may not pay the charges, or the farmer down the road may not have to pay at all. Where is the credibility of any Government, irrespective of who is in power, in saying they recognise that some persons are paying too much and other people are not paying anything at all? I resent that very much. How many local charges are collected throughout the State? I understand the figure is in the region of £8 million or £9 million, but I may be totally wrong. It would be of benefit to the Government to give tax relief on local charges.

In that way the local authorities, who have responsibility in this area, would succeed in collecting these charges and the Government would get the best out of local authorities councillors and people who vote for them. The person paying locally for his services will recognise that he will get tax relief on that money. I know this cannot be implemented immediately, but it certainly should be considered. I see no reason it cannot be considered.

When are we going to recognise that some local authorities work better than others? When are we going to recognise that some people do not spend their money in the right way? Local authorities should have responsibility for spending money in the way they think is best for their areas. I made representations to the Minister several times when he was in office previously for £50,000, £100,000 and even £200,000 for the local authority. We should not have to go to the Minister at national level for that money. He should give a block grant to the local authorities. Cork Corporation spend in the region of £22 million every year which we get from the State. The block grant should be given to them to do what is best for that city, for Skibbereen or any other place in their area. They should not have to go back to the Minister for more money. By giving a block grant to local authorities they would be able to work better and would have the responsibility of having to work better. That is what we are all trying to emphasise and I make no apologies for saying that.

There have been reductions in rates relief grants, housing allocations, road allocations and so on. There is no thinking behind those actions. There is a need for improvements in particular areas. I will not talk about Cork only. Let us concentrate on the inner city of Dublin. Are we really saying it does not need improvements? Are we saying it should not get priority? Are we saying that the inner city of Cork should not get priority? Of course it should. Which of the planning by successive Governments over the years was not needed? There should be a revitalisation of inner city areas in particular and also in town areas. I drive regularly through many towns late in the evening and they are dead. There is no need for this. We should give people an incentive to revitalise their towns with some help from central government or from local government. This is an area where local authorities could supply money from block grant allocation to ensure that towns and cities are developed and revitalised.

There have been cutbacks in rate relief grants. There have been cutbacks from £87 million this year to £50 million next year in housing. The construction industry is in a bad state. Promises were given to that industry but they were not fulfilled. I do not want to be political in saying this. The Government said they would put £200 million into the construction industry but instead they took away the grants and will continue to take more.

I am not saying there is need for many new starts but there is need for motivation and for incentive and that is what I would like to see. Local authorities should be given the block grant which would give them the incentive to work better. The Deputies and Senators within the different areas, can be the hawks of central government. If some local authorities are not working properly they can report back to the relevant Minister. In that way we can be seen to be constructive.

Grants have been eliminated, even in areas where people cannot provide for themselves, and I resent that very much. Fianna Fáil gave people the impression that they would not have to pay charges and for that reason, people voted for them. Those people's sons and daughters will probably have to pay a lot more to private investors for accommodation because there is no housing available. That was totally irresponsible. It was the Fianna Fáil people in 1985 who created that situation. We are being most unfair to the people and we are not rationalising properly. Local authority workers are saying to me at present: "Maybe I would be better off taking the redundancy because in two years' time there might be no redundancy".

Minister for the Environment (Mr. Flynn)

What response is the Senator giving to them?

Mr. Cregan

These people are on £98 nett per week — and the Minister is aware of this because the same applies in his area. If the Minister, as a man who represents the people, is saying that a person on £98 per week should get redundancy that would be most unfair to that person and his family because he would get only £84 unemployment benefit. He is working for £15 per week more than he would get in unemployment assistance and he is prepared to take redundancy. We are prepared to say to him that he should be laid off. That, to me, is not logical thinking. Perhaps the person on £20,000 a year or the people working in offices, architects and so on, could be made redundant. But I am talking about the ordinary man on £98 per week, who can afford to buy only one or two pairs of shoes a year and whose children need things for school. Yet we want to make him redundant. If that is the way the Minister thinks, he does not have my support. I see no reason why we should not rationalise in a proper way. We should be responsible and sincere about it. The removal of the grant from the disabled was equally as irresponsible, because these people cannot provide for themselves.

Mr. Farrell

The motion we are debating condemns the indiscriminate and unplanned cuts in local authority funding and calls on the Government to indicate in detail how they propose to finance, secure and maintain services and employment. Local authorities will, first of all, have to come to grips with this point: are they an employment agency or are they a business running on business lines? If they are an employment agency then they will need more money in order to give more employment regardless of what the productivity would be. I suggest that they should operate on the same lines as any well-run business.

We all know that, during the good years, no matter how much money local authorities received they were never satisfied, Indeed, whenever they asked officials why they were getting only up to 10 per cent of an increase on the previous year, they were told that there was not enough money. This has always been the stock answer when something needs to be done. During those years there was much development and many administration staff and engineers were employed. Today every county council in Ireland has only about 50 per cent of the road workers they had four or five years ago. But is there any reduction in the administration staff or the engineers? I know that is the case in my county and in my neighbouring counties. We have to come to grips with the situation and see if we are efficient.

In each local authority area there is an area engineer, a planning engineer and an assistant, a sewerage and water engineer, a housing engineer and a roads engineer, plus many other people right up the pyramid. It is time we realised that one area engineer could look after all the services in that area; perhaps not the entire planning, but surely he should be able to do quite an amount of it. A health inspector should not have to go out and examine for planning permission, look into a hole that the contractor has dug and tell you whether or not it is porous. That should be an engineer's job — to be able to tell you the quality of the soil for building purposes — rather than a health inspector's job. We have built up a bureaucracy that is top heavy, but you are all afraid to grasp this nettle and to do anything about it. We have to face reality. Sometimes when engineers at local level agree on a road plan, officials from the Department come down from Dublin, rule them out of order sometimes and maybe rearrange the whole plan. Autonomy is needed in this area. Big savings can be made in local government in general.

Mr. G. Reynolds

In Leitrim County Council——

An Cathaoirleach

Senator Reynolds, we must have order. I must say to the House there is a lax kind of atmosphere here this evening on a very serious debate. Every Senator should allow the speaker to continue without further interruption.

Mr. Farrell

Those are the areas in which we can make big savings. It is time we considered contract work. When we start working on a road, for instance, we continue until the money runs out and then we stop. If that road was let out on contract the job would have to be organised and would have to be done properly. It would be worth considering contract work in the interests of economy, because the emphasis must be on value for money. Everyone realises that we have come to a stage in this country where money is not available for such work. That is the simple fact. This Government are facing up to their responsibilities. In fairness, all right thinking politicians in this House realise that there is a problem in this area.

Mr. Ferris

I am not convinced.

Mr. Farrell

The problem is there. We have not got the money. The Government are facing up to their responsibilities and must continue with their present policies. They deserve our support and congratulations for taking a mighty step forward. They are getting our finances right. Within two or three years we will be able to get back to that much-hackneyed word, planning. We will be able to plan and, let us hope, we will plan more sensibly in the future. Mar a deir an seanfhocal, bhíomar ag caitheamh as ciste an amadáin for far too long. We have been spending out of a fool's purse for far too long. We are spending what we have not got and the day of reckoning has come. We have to realise now that we must cut back.

The scheme that was introduced to encourage local authority dwellers to buy their own houses was not a good one because it wrecked communities. It encouraged the people with organising abilities — and, let us face it, we are not all blessed with the same abilities — to leave the local authority houses with the result that many good houses in cities and towns which cost a lot of money to build are now lying idle or are not used to the maximum. We set out to build communities and while our intentions were good they resulted in syphoning off the more ambitious and we still have not solved the problem. Anybody living in those communities will tell you they are the poorer for it.

Private houses can often be bought in the country for £10,000 or £12,000. Instead of providing one of those houses we decide to give a person a county council house or a specific instance cottage which costs a lot of money to build. If a county council cottage was run down we would repair it so why not buy one of those houses from the private sector which would fill a housing need? If we thought along that line we would make better use of the amenities and the properties in our areas for the betterment of all.

Everybody wants to see this country progressing. When we took it over it might have been poor but it was not in debt. It has now run into debt and it is up to us to do something about it. If everyone of us decided to give one week's work in the year to our country it would enhance and improve our finances. That approach was adopted in Germany after the war and also in other countries. It would be a real patriotic move. We hear a lot about patriotism. For far too long patriotism has been regarded as dying for your country. We should regard it as working and living for our country and doing the best for it. For far too long everybody has been saying: "The country owes you a house, a job, a living, it owes you everything". A country can do nothing for you. It is the people of the country who must do things for themselves. In the present financial position we should all try to do our utmost to ensure that we get this country back on its feet so that our families will not be faced with these problems.

Minister for the Environment (Mr. Flynn)

I am happy to avail of the opportunity to respond to the motion from the Opposition condemning so-called indiscriminate and unplanned cuts in local authority funding. The allegation is not true and it failed to be substantiated in any kind of detailed analysis. I ask that the House support the amendment to the motion put down by the Leader of the House: "to take note of the level of local authority financing for 1988 and the Government's determination to restore order in the public finance as an essential prerequisite for national recovery."

Mr. Doyle

Does the Minister have a copy of his speech?

An Cathaoirleach

No; this is different from legislation.

Mr. Flynn

Senator Haughey, in his contribution last week said he interpreted the motion as not condemning the cuts but that they were indiscriminate and unplanned. He was quite right in his interpretation but the Opposition have not substantiated their allegation that they were indiscriminate and unplanned. I am not here to attack the Opposition's motivation in putting down this motion, that is not necessary. I am happy to advocate the Government's position in relation to local authority funding. When one realises that between current and capital expenditure local authorities will spend in excess of £1.6 billion in 1987, it has to be recognised that this area of expenditure constitutes a significant proportion of total public expenditure. There is also an important area of expenditure of relevance to the whole country and each part of it. Local government activities impinge on nearly every service we utilise in our day to day lives.

As Members of this House will realise, most of the local authority funding emanates from the Exchequer. Taking 1987 as an example the Exchequer contribution to the current funding of local authorities is estimated to be £800 million in the form of grants, for the most part coming from my Department. This represents in excess of 60 per cent of the day to day spending of local authorities. Since 1983 the level of State grants to local authorities has increased by 33.33 per cent from £600 million in 1983 to £800 million in 1987. Such a level of increase in State grants exceeds the rate of inflation for the period by a very substantial margin. The reality is that the source of this local authority funding, the Exchequer in this instance, has been getting deeper and deeper into debt in continuing to sustain such a high level of funding and it would be irresponsible of the Government not to recognise that basic truth.

When the Government came into office just seven months ago we set about restoring order to the public finances, recognising that it was one of the essential factors for national recovery. We felt, as did everybody, that there would have to be reductions in public expenditure and that, in order to arrest the tailspin of going deeper and deeper into debt, these reductions in public expenditure would have to be substantial.

We have now published the Book of Estimates for 1988 indicating the amount the Oireachtas is being asked to provide for each Department of State. It was not a rushed exercise and it is unfair to suggest in the motion that it was. Members of the Government spent considerable time during the summer period examining every area of public expenditure and we made our decisions. Some of them were tough and harsh but we are absolutely convinced they were fair. We are united that in the national interest we are adopting the correct and sensible course of action. Any expenditure, retrenchment of savings that have been identified have been willingly handed up by every member of the Government in support of the basic effort to get the public finances back in order.

The level of Exchequer funding of local authorities will be reduced in 1988. I do not deny that, nor in any sense do I feel that I have to apologise for it. The local authorities are not being singled out to bear the brunt of the burden; it is shared by every sector and rightly so. I have been a member of a local authority for almost 21 years and I have a fairly good understanding of what local government is about. I know local authorities are faced with many demands for the extension of new services and the improvement of existing services. They would clearly desire to be in a position to provide the best and the most extensive services to the people, whether in the provision of new houses, the provision of water and sewerage facilities, the provision of libraries, or the provision of local amenities. These services cost money and it is an inescapable fact that there is only so much money available to meet all the demands.

My Department, as one of the big spenders of public money, have to take their share of the expenditure cuts. We have to be practical and we have to cut our cloth to suit our measure. The same applies to all public sector organisations, Departments, agencies and all areas where public finances are involved. I am a realist and I acknowledge that local authorities will not have an easy time in 1988. Difficult decisions will have to be made when they sit down to draw up their estimates for 1988. I have laid my cards on the table. Some time ago I told the local authorities the amount they will receive in rates support grants in 1988. I took the initiative, long before the Book of Estimates was published, and told local authorities in good time their 1988 allocation. I also deliberately brought forward the prescribed period for the preparation of their estimates.

There is the benefit to the local authorities of giving them information earlier, in that they have more time to consider how their budget for 1988 can be framed and adopted before the start of the next financial year to allow the collection of incomes to take place from the very start of the year. I consider the practice in the past of having local authorities adopt estimates at a stage when up to a quarter, and sometimes even more, of the year had already elapsed to be totally unsatisfactory. It militated against the realisation of income projected for the year and it made expenditure control difficult when already a significant portion of the year had elapsed. That practice had to be stopped.

I would like it to be recognised by everybody that it was a deliberate measure taken by me to tell local authorities in advance how much they were getting and to give them time to sit down as members of the authority with their finance officers, with their managers and among themselves to decide how best they could accommodate the services and the domestic services that they would have to provide from the money being made available to them. I invite the House to examine the various amounts that have been provided in my Department's Estimates for 1988. It will be seen that some of the provisions have in fact been increased. This gives the lie to the impression being created that everything had been chopped in an unplanned way. That is not the case. It will be seen that some of the provisions have been increased, notably the subsidy provision to assist in the servicing of capital debt. Other grants available for local authorities have been reduced by varying amounts. This only serves to further rebut the criticism that these cutbacks are indiscriminate or unplanned. I am pleased that those subsidy provisions have been maintained without change in 1988 since they relate to non-discretionary expenditure for the repayment of capital loans.

I am pleased also that the House will soon have an opportunity of discussing legislative proposals, now being considered in the other House, to provide for the elimination of the system of capital loans, whereby my Department provide subsidies towards those loan repayments, and instead to introduce a simple system of capital grant financing of these programmes. This will lead to better financial management by eliminating wasteful circular transfers of funds between the Exchequer and local authorities. I would like to think that all sides of this House would see the wisdom of that measure. I feel that you will also welcome these proposals in due course when they come before you.

Another area of expenditure by local authorities — road works — is also of special consequence. I know the particular interest that Senators, TDs and all public representatives, both at local and national level, have in so far as road exepnditure is concerned. While the reduction in the overall level of rate support grants will have an impact on the finance available for road works in 1988, I emphatically reject again the suggestion that this reduction is either unplanned or indiscriminate. At my meeting with the city and county managers on 3 September I informed them that local authority allocations for county road strengthening and a block grant for roads would be broadly at the same level in 1988 as they were in 1987 while there would be some reduction in the funding available for improvement projects. I want to point out that the county road strenghtening grant and the block grants to be allocated to each road authority will be exactly the same as in 1987. The overall provision for maintenance in 1988 is now £30 million, which represents a small increase of just £200,000 on the provision for 1987.

There have been some increases where I thought the best use and the best need and the greatest need existed for those increases. In other places there had to be reductions and on occasions there had to be terminations. The information on the block and county road strengthening grants is of particular importance to local authorities in the preparation of their estimates because these grants are generally designed to supplement expenditure from their own resources, unlike grants for national roads, which meet the full cost of the works. Local authorities have therefore had fairly firm information on both the general level of road grants and the rate of support grant since 3 September. This give them sufficient time to plan their road expenditure programme for 1988 in the areas where they have the main discretion as to spending, namely, county and regional roads. That is where the discretion is for county councillors and urban district councillors. I have given them advance notice of the money that is available and I have told them that they will not have less than they had this year. I think that is significant. I also hope to issue next month details of the actual individual allocations to local authorities. This is in contrast with other years when the first indication given to local authorities of their roads allocations was late January and often later in the year.

My decision to maintain the level of the block grant and county road strengthening grant at their 1987 level, when State expenditure on roads is generally being reduced, was influenced by my concern for employment and the state of our country and county roads. The roadworks undertaken with the assistance of these grants provide the most significant employment potential in the roads area. Most of our workforce are engaged on those type of roads and they represent about 92 per cent of the total road network. In straitened times I thought it was proper and prudent to maintain as best I can, the workforce on the road network, who service 92 per cent of the total network. That is the reason for the decision. It was planned that way.

I am satisfied that the decision which I have taken and conveyed to managers will enable local authorities to undertake a properly planned and significant programme of road works in 1988. There will, however, be a reduction in the provision for major road improvement projects on national and major urban roads, which will mean a slow down in the programme. Progress on these will be kept at as good a level as I can and, hopefully, other areas of investment in infrastructure might become available during 1988 which will allow us to take up again the major road network programmes we have become accustomed to.

Senators may be aware that I have indicated that the setting up of a national roads authority will be announced, and I will be giving details about that in the near future. They will have a job specification in regard to private investment in roads, further EC investment, the question of tolls and a whole range of related matters concerning national roads. I expect that when that is in place we can get back to providing what I regard as an essential infrastructural need: the most efficient operational structure.

There are other aspects of Government policy also which will work to the benefit of local authorities this year — but I noticed that they seemed to pass some of the speakers by without recognition. One of the principal means of reducing public expenditure is through reducing manpower levels to match the lower levels of works being undertaken. This applies particularly to local authorities. The difficulty is, however, that redundancies are costly for local authorities, particularly the lump sums which have to be paid. The Government's new voluntary redundancy package recognises these difficulties and provides that local authorities will be recouped the lump sum and severance costs involved. This will be of major benefit to local authorities in 1988. I would like Senator Doyle to appreciate that is my intention that the manual workers will not be the only ones who will have to bear the brunt of any lay-offs that become necessary. I would like to think that it would be spread across the board. That is the way it is planned by me and it is the way it is going to be implemented if I am able to do it.

Mr. Ferris

Will it be voluntary?

Mr. Flynn

It is going to be voluntary. The redundancy package is to be voluntary and, following that, there is the question of redeployment. As far as I am concerned, quite a large number have indicated already their willingness to avail themselves of the redundancy package. Not everybody can be accommodated, even of those who were interested and willing to accept it at this stage. Services have to be maintained. People in critical areas have to be kept on, but I believe that the vast majority can be accommodated in the way that has been set down by Government Ministers. Since the Government took office interest rates have come down and have stayed down. Inflation has similarly fallen and future trends are encouraging. Local authorities are benefiting from lower interest rates and will continue to benefit in 1988. This is not often referred to but is well worth mentioning here because local authorities have the use of that downward trend in inflation and interest rates to accommodate some of their expensive programmes.

The Government's message is clear in relation to local authority funding. Order had to be restored to the public finances and this involves reductions right across the board in every public sector organisation, not just with local authorities being singled out. That has not been the game play of the Government in this critical period of decision making for our country. It is right across the board in every Department including every agency and every authority. It was willingly done as distinct from fighting your corner. In the past Ministers were blamed if they let down the side or let down the Department. "Did you give in easily?" It was not a question of giving in. It was a question of giving rather than trying to hold the line. Otherwise it would be a nonsense. Criticising us stood for nothing. It would mean one Minister trying to outdo another Minister. This was a Government decision taken by consensus. Once the initial decision had been taken that the fundamental problem of the economy was to be tackled in a collective way we all approached it from that point of view. The Department understand that new drift and that new challenge and are accepting them and providing the necessary backup to Ministers to accommodate that Government attitude.

The Government are leading by example in cutting their own budget. All Government Departments have had to take reductions both in terms of their allocation and staff numbers. I appreciate that some people would argue that some changes might be more severe than others. The motion put down by the Opposition and some of the exaggerated comments in some of the contributions do not justify support and do not deserve it. There is no question of the reductions in local authority funding being unplanned. The planning and budgeting are done locally. This is the central role of local authorities in dealing with their own area. They must, of course, act within the limits of the money available to them by way of grants and their own resources. They have the power and the information and it is their job to plan those resources. That is what they are doing right now. I do not want to take that power from them. There are those who would suggest it but I have never been a supporter of that view; in fact I canvassed the alternative.

Local authorities have a major role to play in an independent democracy such as we have. They can only have that independence when they have control over the resources available to them. That is why I do not want to be seen as a Minister who will in any way limit the autonomy or the independence of the local authorities and it would be an easy option to do it. I am not that kind of Minister for the Environment.

There are a couple of further points I would like to make before responding to a number of the points raised by Senators in the debate.

An Leas-Chathaoirleach

The Minister has one minute.

Mr. Flynn

I understood from the Cathaoirleach that I had no such restriction.

An Leas-Chathaoirleach

According to the rules of the House Ministers have whatever time they require for ordinary legislation but the rule governing motions, such as this is that the concluding speaker or the proposer of the motion must be called 15 minutes before the end.

Mr. Flynn

I regret my interjection.

Mr. Doyle

Give him five minutes.

An Leas-Chathaoirleach

The concluding speaker may like to forego five minutes to accommodate the Minister.

Mr. Flynn

I appreciate the Senator's gesture in the matter. I would like to deal with the area of capital funding of local authority programmes. I think that is important. There are many who say that borrowing to finance capital investment in the provision of infrastructural development is a good thing and that such borrowing is sustainable. I agree with them in principle but I would also like to say that it is not all one way traffic. There can be no such thing as limitless capital investment. We have to structure capital investment in such a way that it provides the best possible return for the investment. It must take into account our ability to repay the money borrowed and such repayments must be provided for each year. The notion is that somehow capital is expended and never has to be repaid. Unless capital is put into a project that has the capacity to repay the interest and make a contribution to the capital refund as well, it should not be entertained. All current and capital expenditure has to borrowed annually. That is the way it is.

Mr. Ferris

That is what was said about Knock Airport.

Mr. Flynn

That particular project is up and running and making money.

Senators

Hear, hear.

Mr. Ferris

I have not seen any of it.

Mr. Flynn

The only response I can give on that is that you do not see it in the Estimate where it has to be sustained by the Government.

We will continue to provide capital funding to local authorities for their capital programmes but it will be at a reduced rate in 1988 towards funding construction works in progress. One area where there has been a significant reduction in the past year relates to local authority housing construction. This reduction must be viewed against the substantial fall in applicants for local authority houses in recent years. That has been expressed by both sides of the House. It is universally accepted that there is no need for the enormous level of investment of three or four years ago in this area.

There is one further very important aspect relating to local authority funding on which I would like to comment. I am not satisfied with the present system of local authority current funding. I have already initiated a review of local finances within the Department with a view to developing proposals for long term reform of the system. The review is at an advanced stage now in the Department. I will be putting proposals to the Government shortly to put local authority funding on a sound and stable footing for the future. I think a cheer will go up in every local authority in Ireland once that is in place and running.

Senators

Hear, hear.

Mr. Flynn

I should like to finish by saying I am pleased to be here to get a chance to advocate the Government's position in relation to local authority funding. In common with every public sector area they will experience reductions in the level of State grants but they will not be asked to bear a disproportionate share of the burden. That is agreed by the Government. I have no doubt that local authorities will make prudent use of the funds available in 1988 and that essential services will be maintained while, at the same time, obtaining the best value for money. For my part I will continue to foster local government in this country. I am a supporter of it.

Senators

Hear, hear.

Mr. Flynn

I ardently believe in the system of local government and I will do my utmost to contribute to its future development with the financial framework to support that development. Changes are inevitable. Some of the changes both in the structure and the financial gearing of local authorities are overdue. It is a huge area of activity and it is not easy to get it in place. I would like to have had both in place before the Estimates were struck for 1988 because that would have set a pattern people could have worked on and planned over a period of years. Regrettably, it was not possible to do it but hopefully and, assuredly, we will have it in place for the 1989 Estimates.

Mr. Hogan

The Minister made a very substantial contribution to the House on matters of local government. This motion is an extremely important one. The funding of our local authority activities is fundamental to local public representatives and the local government system in Ireland. It is regrettable that any political party in this House should have to bring a motion before the Seanad calling on the Minister to provide adequate finance for local authorities.

The recent publication of the Book of Estimates makes this motion even more urgent. The 1988 financial allocations to local authorities make dismal reading, despite the Minister's efforts to put the best appearance on them. I was amused that the Minister considers redundancy to local authority workers as a benefit to local authorities. The fact that he is giving county managers 100 per cent recoupment of redundancy benefits in 1988 is now seen as benefit to local government.

Mr. Ferris

And nothing in the Estimates for it.

Mr. Hogan

The Minister spoke about bringing forward the Estimates for this year. I think that that is a very good move on the Minister's part. It gives councillors time to look at the financial allocations they will receive and put into operation for 1988. I certainly applaud the Minister's efforts in doing that. However, I think the Minister should have told councils at this stage what the road and housing allocations are for 1988. Up to yesterday most of them had not received them.

Mr. Flynn

I told them on 3 September.

Mr. Hogan

On 3 September the Minister told them that there would be a £50 million reduction in the amount of finance he could give them in 1988. Now it turns out to be £93 million.

Mr. Flynn

I said there would be a 14 per cent reduction on their rate before VAT. I said they would get the same block grant and county road improvement grant as this year.

Mr. Hogan

The Minister also issued a statement to the effect that there would be a reduction of about £50 million in total local government expenditure.

Mr. Flynn

The media said £50 million, but I kept saying it was a 14 per cent reduction.

(Interruptions.)

An Leas-Chathaoirleach

The Chair would be very happy if Senator Hogan would be allowed to continue without interruptions from any direction.

Mr. Hogan

The total Estimate, as Senator Ferris has pointed out, is £98 million of a reduction to local government, which is a savage decrease in current and capital expenditure for 1988. Even though the Minister said he had no apologies to make about the finances he was providing to local government, he should apologise for a reduction in finance to local authorities, especially when one considers his attitude last year. Last year it was very difficult for the Minister and his party colleagues to refrain from telling the electorate during the election campaign that they were going to abolish service charges and abolish land tax. Now the Minister has put himself in a position of his own making, where he is finding it extremely difficult to get adequate finances to maintain the services and maintain the employment that councils and local authorities presently have.

Mr. Flynn

Caused by local authorities themselves.

(Interruptions.)

Mr. Hogan

In Kilkenny County Council we had the spectacle of 21 workers being let go about one month ago. It was sad to see people who had given long service to their county council being faced with that situation. Many of the local authorities — in particular members of the Fianna Fáil Party before they came into Government — were against the principle of service charges as a source of local government finance and against land tax, which was another source of local government finance. The Minister is also not prepared to clear the air in this House in relation to property tax. Is the Minister in favour of property tax as a funding source for local government, or must we wait for the county managers to introduce their own estimates to find out?

These are the matters we are very concerned about as public representatives. Indeed, I applaud the discipline the Minister has instilled in his local government representatives throughout the country because they are certainly bowing to his wishes on this occasion. They seem to be totally happy with the allocations they have got and the sentiments expressed by the Minister over the last few weeks.

The roads allocation has been reduced by 10 per cent on 1987. No major road project will commence in 1988 in rural Ireland. With the rates relief grant reduced by 12 per cent it will mean that regional and county roads will be reduced to the standard of country boreens in some cases. Up to now we were in a position to tar a road one year in ten. Now that has been increased to one year in 29, as stated by our county engineer in County Kilkenny recently, as a result of the amount of finance we received.

The Minister appears to have no policy at all in relation to housing. Since March 1987 the Minister has eliminated home improvement grants, savaged new house grants, reduced mortgage interest relief, abolished the £5,000 surrender grant and abandoned practically any new start in local authority housing in 1988. The measures will ultimately lead to longer housing lists for local authorities in 1988 and it will take another Government to reduce the housing lists. We had to do this during the term of the last Government.

The Minister reduced the capital allocation for water and sewerage schemes by 16 per cent, which means that he has given a vote of no confidence in regard to the future planning of any new housing and industrial developments by local authorities. At a time of unprecedented pollution of our water systems and waterways the Minister has decided that the solution is to cut the finance available to the staff of local authorities to deal with this problem and to abolish An Foras Forbartha. Adding insult to injury, the Minister's own Government have virtually wound up the farm improvements scheme, which would have given some grant-in-aid to people who are in a position to improve their effluent storage.

Mr. Flynn

Caused by the local authorities themselves.

An Leas-Chathaoirleach

Order, please.

Mr. Ferris

Because the Minister would not grant money for their sewage schemes.

Mr. Hogan

That is just another example of the Minister's ill-planned and ill-thought out decision making.

Arising from these cuts in finance, which signal the deathknell of local government, I look forward to the Minister's proposals in relation to reform of local government. We have been listening to these platitudes about local government reform being at an advanced stage of development in the Minister's Department. Is that an advanced stage with successive Governments?

Mr. Flynn

That is right.

Mr. Hogan

I hope the Minister will come clean on the issue within the time indicated here. The Minister has given county and city managers an impossible task in striking a reasonable rate for 1988. Redundancies will be inevitable and services will have to be abolished or curtailed. Charges for services will have to be increased dramatically and the commercial rate will increase to an extent where businesses will not be in a position to pay those rates. We have the appalling spectacle of Fianna Fáil public representatives scrambling for the introduction of new sources of local revenue. This is indeed hypocrisy when one considers that Fianna Fáil councillors told people not to pay water charges, and they were backed up by the Fianna Fáil Front Bench of the day. It was part of the general election manifesto of 1987 for the Minister's party. They told people not to pay land tax because it would be abolished, and the Minister's party did that, thus depriving local authorities of another source of revenue.

Fianna Fáil promised that when they were returned to Government all service charges would be abolished and that local authorities would be put on a proper financial footing. The Government have reneged on that promise. The irresponsibility that was boldly displayed by the Minister's public representatives at local elections is a main contributing factor to the present situation, where we have huge amounts of finance outstanding to every local authority from these service charges. All this has contributed to the malaise that prevails in the public mind. They now do not wish to contribute anything for any local service. It must be embarrassing for many Fianna Fáil public representatives to have to perform U-turn after U-turn on these service charges and bow to the Minister's wishes — a monetarist wish because the Minister is getting good at balancing the books in his own Department. I ask the Minister to tell us here this evening if he is in favour of service charges, if he is in favour of property tax, and to divulge his proposals for local Government reform as soon as possible.

Mr. Flynn

Yes.

Mr. Hogan

Failure to clear the air in this matter will only be prolonging the agony for many local authorities. Councils will not be able to fund existing services and employment on the allocations they have been given for 1988. The Minister is prepared to put local authority employees on the dole so that they can balance his books and at the same time take power away from local government and take it on himself——

Mr. Flynn

That is not fair, Senator.

Mr. Hogan

The Minister has taken power away from the local authorities because he is wielding the big stick in cutting the rates support grant, in cutting the block grant and cutting the amount of capital allocations for major, primary and secondary roadworks. The Minister has given no scope to local authority members to get new projects underway, and I do not subscribe to that policy.

In addition, the Minister's Government have decided, as the guardians and bastions of local government, to abolish county committees of agriculture and abolish health committees. I do not subscribe to taking power from the local government system of which the Minister was a member and giving more power to the central authority. I ask members to support the motion.

An Leas-Chathaoirleach

The question is that the amendment be made.

Senators

Votáil.

Amendment put.

The Seanad divided: Tá, 28; Níl, 21.

Tá

• Bohan, Edward Joseph.
• Byrne, Sean.
• Cassidy, Donie.
• Cullimore, Seamus.
• Doherty, Michael.
• Eogan, George.
• Fallon, Sean.
• Farrell, Willie.
• Fitzgerald, Tom.
• Fitzsimons, Jack.
• Haughey, Seán F.
• Hillery, Brian.
• Hussey, Thomas.
• Kiely, Dan.
• Kiely, Rory.
• Lanigan, Mick.
• Lydon, Donal.
• McEllistrim, Tom.
• McGowan, Patrick.
• McKenna, Tony.
• Mullooly, Brian.
• Mulroy, Jimmy.
• O'Callaghan, Vivian.
• O'Connell, John.
• O'Toole, Martin J.
• Ross, Shane P.N.
• Ryan, William.
• Wallace, Mary.

Níl

• Bradford, Paul.
• Bulbulia, Katharine.
• Connor, John.
• Cregan, Denis.
• Daly, Jack.
• Doyle, Joe.
• Fennell, Nuala.
• Ferris, Michael.
• Harte, John.
• Hogan, Philip.
• Kelleher, Peter.
• Kennedy, Patrick.
• McCormack, Padraic.
• McDonald, Charlie.
• McMahon, Larry.
• Manning, Maurice.
• Norris, David.
• O'Shea, Brian.
• O'Toole, Joe.
• Reynolds, Gerry.
• Ryan, Brendan.

Tellers: Tá, Senators W. Ryan and S. Haughey; Níl, Senators J. Daly and Cregan.

Amendment declared carried.

An Cathaoirleach

Is the motion, as amended, agreed to?

Senators

No.

Question put: "That the motion, as amended, be agreed to."

The Seanad divided: Tá, 28; Níl, 21.

Tá

• Bohan, Edward Joseph.
• Byrne, Sean.
• Cassidy, Donie.
• Cullimore, Seamus.
• Fitzgerald, Tom.
• Fitzsimons, Jack.
• Haughey, Seán F.
• Hillery, Brian.
• Hussey, Thomas.
• Kiely, Dan.
• Kiely, Rory.
• Lanigan, Mick.
• Lydon, Donal.
• McEllistrim, Tom.
• Doherty, Michael.
• Eogan, George.
• Fallon, Sean.
• Farrell, Willie.
• McGowan, Patrick.
• McKenna, Tony.
• Mullooly, Brian.
• Mulroy, Jimmy.
• O'Callaghan, Vivian.
• O'Connell, John.
• O'Toole, Martin J.
• Ross, Shane P.N.
• Ryan, William.
• Wallace, Mary.

Níl

• Bradford, Paul.
• Bulbulia, Katharine.
• Connor, John.
• Cregan, Denis.
• Daly, Jack.
• Doyle, Joe.
• Fennell, Nuala.
• Ferris, Michael.
• Harte, John.
• Hogan, Philip.
• Kelleher, Peter.
• Kennedy, Patrick.
• McCormack, Padraic.
• McDonald, Charlie.
• McMahon, Larry.
• Manning, Maurice.
• Norris, David.
• O'Shea, Brian.
• O'Toole, Joe.
• Reynolds, Gerry.
• Ryan, Brendan.

Tellers: Tá, Senators W. Ryan and S. Haughey; Níl, Senators J. Daly and Cregan.

Question declared carried.