Seanad Éireann díospóireacht -
Thursday, 8 May 1997

Vol. 151 No. 9

Local Government (Financial Provisions) Bill, 1997: Committee and Final Stages.

Sections 1 to 6, inclusive, agreed to.

SECTION 7.

Question proposed: "That section 7 stand part of the Bill."

Mr. Mullooly

This section provides for the establishment of a body which shall be known as the Local Government Equalisation Council. It does not specify the number of members which shall comprise it; it is at the discretion of the Minister. Can the number be varied depending on the number of party supporters which the Minister might wish to appoint to the council? It also does not specify the duration or length of term of office of council members and this is also at the discretion of the Minister. The section provides that the Minister may by order determine the number of members which shall be on the council. Can the number be varied from time to time?

The section does not specify whether the chairman will be elected or appointed and what the term of office will be. It does not provide any mechanism whereby continuity would be provided for the council. For example, a certain percentage of the members of the council could retire after a specified number of years and the same percentage could retire the following year, and so on. This would be desirable as it would provide continuity.

Section 7(4) states that the Minister "may by order confer on the council one or more of the following functions". It does not oblige the Minister to confer any or all of these functions on it. What guarantee do we have that the Minister will by order confer any or all of them?

Minister for the Environment (Mr. Howlin)

I am committed to the council. I wanted to move the control of the equalisation fund away from Departments or Ministers to the new body. The detail is not fleshed out for a number of reasons.

Since publishing Better Local Government — A Programme for Change, I established a number of working groups involving the General Council of County Councils, the Municipal Authorities Association and the County Managers Association. I asked them to flesh out the proposals in a working atmosphere. I will take their recommendations on board in relation to the structure of this council and draft regulations accordingly. Those regulations will be published and subjected to annulment in the House if they are unsatisfactory. I will happily discuss them with Senators when the regulations are made. However, rather than having me decide on the shape and the chairmanship of this body it would be better to involve the practitioners, management and elected members and I will be guided by their deliberations.

Mr. Mullooly

I thank the Minister and I do not intend to pursue this matter. However, I am always apprehensive of sections of Bills which give too much discretion to Ministers.

Mr. Howlin

I used to be like that myself.

Question put and agreed to.

Section 8 agreed to.

SECTION 9.

Question proposed: "That section 9 stand part of the Bill."

Mr. Fitzgerald

A huge number of people do not pay car tax. I do not know the figure, but I can never understand why there is no local authority system to inform the Garda that such a person has not paid their tax.

Four years ago my car was stolen in Dublin. I only had the car for a short period and I could not remember the registration number, although I knew the colour. I reported the incident in a Garda station and eventually got the number of the car. When the Garda had the registration number he pressed a few buttons on a keyboard and was able to access all the necessary information about the vehicle.

Local authorities use computers. Car tax forms are sent out every year and one fills in the details. This comes back to zero tolerance.

Mr. Hayes

The Senator would know more about that.

Mr. Fitzgerald

Surely every car is on a computer system. Why can local authorities not send out a letter to everyone and if there is no response it is clear they have not paid their tax?

We are told that up to 10 per cent of cars are not taxed. These people get away with not paying water charges. This might not be appropriate to this section of the Bill. Has the Minister any suggestions on how to tackle this problem?

Mr. Howlin

Local authorities will now have a strong, vested interest in maximising their car tax revenue. This was not the case up to now as authorities were only a conduit through which revenue was passed to Dublin. A number of innovative ideas will be generated by local authorities to ensure that all car owners pay their car tax.

The evasion rate is less than 5 per cent. I have contacted the Garda Síochána in relation to this matter because I wish to preserve national revenues. There will now be a more focused campaign by local authorities to collect their own revenues. The national rate for persistent evasion is 2.8 per cent resulting in an estimated loss of £7.5 million last year. I do not know if there is a difference between persistent and ordinary evasion. That figure is low by international standards. The comparative figure in the UK is 4.1 per cent. The 1996 survey results show an improvement when compared with the 1991 results. We are getting better and the local authorities will ensure further improvements.

Mr. Mooney

The Minister has fought this battle and the arguments have been made for and against this measure. Would the Minister agree that our rates of motor taxation are high in European terms and relative to the UK? There was a successful political initiative to abolish car tax in 1977. It was reinstated in 1979. It was foolishly abolished, as were house rates, but that is another argument.

Could a future Government unravel and disassemble everything the Minister has painstakingly put together? What contingency plans does the Minister have if even he finds himself in Government in another Department where he is being pressed for funds and he starts looking at this attractive mountain of money?

Mr. Howlin

I am anxious to have this Bill enacted as I am aware of that temptation. The Bill ring-fences a new source of funding for local government. That funding is untouchable without an amending Act, so any future Government seeking an alteration will have to come back to the Oireachtas. This is not being done by ministerial order but by an Act of the Oireachtas, which states that motor tax is owned by local authorities.

In preparation for this Bill and with the authority of the Government, I instructed the Exchequer to begin to create this pool once the £100 million rate support grant already paid out is repaid in motor tax income. That £100 million has already been repaid to the Exchequer. The pool for local authorities is growing and waiting for the enactment of this Bill to be released.

If any future Minister for the Environment receives the approval of the Oireachtas to unravel this plan then that is democracy and I have no control over it. However, from speaking to other parties, there is a growing awareness that this is a prudent, practical and achievable mechanism for funding local government. The other options have been examined by KPMG. We might share views on the mistakes of the past but I do not see any future Government rushing in to do some of the things people are proposing.

This mechanism will be a boon to local authorities as it is a buoyant source of income. Car ownership rates in Ireland are at the lower end of the European average. They are much lower than any other country in the EU and more akin to Central European countries. As we become more affluent more people will own cars. The buoyancy exists without touching the base rates.

The ESRI report stated that we should increase car tax, carbon taxes and charges on fuels and a variety of services and goods which pollute. That is a debate for the future. Green taxation is out there, so no future Government will abolish car tax. There will be a view that carbon or polluting taxes must exist on any mechanism, service or utility which causes environmental harm.

Mr. Mooney

The debate on carbon tax is a real one and the Minister's argument is well made. Surely this will prove an attractive option for a future Government. Will it prove part of central Exchequer funding or will local authorities be given the right to raise revenue in this area?

Mr. Howlin

I genuinely believe in local government and if I have my way we will reshape it. When Minister for Health, I believed the Department should be the policy department, arguing for national resources and shaping policy, but the "doers" should be the health boards, subsections of the health services and the deliverers of care. Every decision should not be made centrally. By and large, that is how that system has evolved.

Local government is eager to do much more, but so much is decided centrally that need not be decided there. If we give real powers of implementation to local authorities they should also get the necessary resources. There is now a strong view in Governments of all political hues that the day of passing Bills to tell local authorities what to do, without giving them the financial wherewithal to do so, is gone. The new tax bases being discussed for local government will be available, and it is a good direction to go and will bring us into line with European administrations. That will also be good for central Government as we will have more time for policy than being absorbed in the minutiae of delivery. I also hope it changes the culture in the media and among the public, who are very demanding in this regard. They want Ministers to do what is needed with national policy, walk the European stage and represent Ireland in the European Union, but they also demand involvement by Ministers in the minutiae of detailed delivery of services by our Departments which is a burden that falls on no other country's Ministers. This debate needs to be in a broad context if we are to achieve the objectives shared by all sides of the House on the fundamental shift in the way the country is governed.

Question put and agreed to.

Sections 10 and 11 agreed to.

SECTION 12.

Government amendment No. 1:

In page 15, line 48, after "by" to insert "the".

Mr. Howlin

This is a typographical error.

Amendment agreed to.

Question proposed: "That section 12, as amended, stand part of the Bill."

Mr. Mooney

Section 12 refers to the removal of the power of the local authorities to make charges on supply and is presumably the core of the Bill.

The Minister will be aware of my declared interest as a nominee of the Library Association of Ireland. It has made submissions and buttonholed the Minister more than once since he announced the abolition of water charges last Christmas. The association has asked him to abolish library book charges which are levied by local authorities in their annual estimates. These have been a source of major irritation to librarians and have proven counterproductive. These charges have inhibited the orderly, natural and important development of a wider book readership, particularly among those who need it most. The administrative costs involved and the revenue generated do not justify the continuation of these charges; although they are introduced and maintained by a wide variety of local authorities, due to resentment of them they have rarely been increased appreciably. Those charges have not kept pace with inflation or rises in other revenue-generating activities of local authorities.

I appreciate that we are talking about water charges, but this is my opportunity to raise this issue and to make the Minister consider this question. What is his view on this matter?

Mr. Howlin

The media have been absorbed by demands for charges, so it is very difficult to argue for any service to be provided free. There is some merit in the Senator's argument, although it is not pertinent to this legislation. In the event of an electoral contest occurring soon, I hope there will be a vested interest in my discussions with the Library Association of Ireland and that I return to the position I hold. From the dialogue I have had, I feel I would be good for the Library Association of Ireland and the development of libraries.

On the specific question of whether I would bring in legislation to forbid charging for such services, I am not minded to do so now, but I will keep an open mind on it.

Mr. Mooney

I thank the Minister. This has elicited the Minister's thinking on this matter for the record. As these are the dying days of this Administration——

An Cathaoirleach

This is not relevent to the legislation.

Mr. Mooney

——I wish to record my sincere acknowledgement and those of the Library Association of the Minister's sincere interest in and accessibility to that Association while Minister for the Environment.

Question put and agreed to.

Sections 13 to 18, inclusive, agreed to.

SECTION 19.

Question proposed: "That section 19 stand part of the Bill."

Mr. Mooney

Every piece of legislation that involves the shifting of finance from one area to another involves a certain expense. What additional expense does the Minister envisage being incurred under this section?

Mr. Howlin

I do not envisage any particular expense but I have a legal authority to spend money to implement this legislation if necessary. That is a standard provision in every Act.

Mr. Mooney

Perhaps the Minister covered this elsewhere. Will the administration of the transfer of this money increase administrative charges at local authority level in a way that would detract from local authorities' net income?

Mr. Howlin

No. As Senators have already pointed out, this is a unique tax in that it is collected already in the local government system. Local authorities would simply be instructed to keep 80 per cent of the money. The only situation in which additional administrative costs would arise would be in the case of those authorities which do not currently collect motor tax and who then decide to do so, such as the Dublin authorities. Dublin Corporation currently collects for the entire area and I envisage the other authorities wishing to become their own motor taxation collectors. That would have some obvious administrative costs and would reduce the volume of funding available to them. Other costs, such as computer modification costs, might occur, but no other tax lends itself so perfectly to being transferred to local authorities because it is already in their remit and would have the least financial impact in its administration.

Mr. Mooney

I wish to raise two points. First, the Minister mentioned local authorities which do not currently collect tax. In Dublin there are three local authorities which will now, presumably, seek the power to collect revenue. There must be down-sizing implications for Dublin Corporation and staff implications for the three local authorities because of expansion of their duties.

The second point is related. I gather the varying increase of 3 per cent, which the Minister will allow, is at the discretion of local authorities. Dublin local authorities have huge revenue earning facilities unlike my county of Leitrim which must squeeze every last penny. Taking those two extremes, will there be staffing implications throughout the country because of the variable nature of what the Minister has outlined? That is not necessarily bad.

Mr. Howlin

The staffing implications would be minimal in that they would not apply to counties other than those which might for the first time become motor tax collecting authorities. Part of the thrust of the programme for local government reform is to focus services on the customer. I envisage a process of decentralisation. If a person wants to pay motor tax in my county of Wexford, he or she must go to the County Hall. Wexford is a large county and technology should be in place to allow people to pay their motor tax in Enniscorthy, Gorey or New Ross. Such technology should be available throughout the country.

There will be implications if we provide such a service. However, we will not only provide a new motor tax office but hopefully a one stop shop where the range of service available from the local authority and other services will be available. There should be a single house for community development. People have easy access to services, which should be as efficient and open as possible. The two day seminar held last year — I am not sure if the Senator attended it — was good in that regard.

County Donegal is an example of decentralisation. That county is regionalising its services to provide a one stop shop on the doorstep of as many people as possible. I would see that process happening in parallel and it will have staffing and cost implications. It is, however, meaningful reform in the best sense of this document.

Question put and agreed to.

Section 20 agreed to.

Title agreed to.

Bill reported with amendment, received for final consideration and passed.