Thursday, 10 July 1997
Dáil Éireann Debate
That Dáil Éireann regrets the Government's decision to reverse the proposals of the outgoing Government to empower local authorities to use motor taxation as a devolved funding mechanism designed to enhance local government in this country, and to substitute in its place a highly centralised system of funding.
Mr. Bell: I take this opportunity to congratulate Deputy Dempsey on his appointment as Minister for the Environment. As he is my next door neighbour, I will not have to travel far when seeking money for County Louth or a share of the funding granted to County Meath. I wish him well. I am a dedicated listener to LMFM and I will remind the Minister of everything he said when Opposition spokesman on the Environment. However, I will do so in a constructive way.
I pay tribute to the outgoing Minister, Deputy Howlin, for his work in the Department of the Environment. I have been involved in the work of two local authorities in County Louth for 25 years and I must place on record that his contribution to the Department, and to local government as a whole, has been outstanding. I rate him as the best Minister for the Environment with whom I have had to deal during my time in local government.
 I remind the new Minister for the Environment that on the last occasion Fianna Fáil and the Progressive Democrats were in power County Louth and the entire country fared badly in terms of roads, housing and the infrastructure of local government. For example, during that Government's term of office, 28 houses were built in my home town of Drogheda, the largest borough in the country. The same pattern emerged in Dundalk and the entire mid-Louth area. More houses were built in County Louth last year than were built during the term of office of the previous Fianna Fáil-Progressive Democrats Government. I hope that a repeat does not occur during this Government's term of office, however long it may last. I also hope that the commitment to build in excess of 7,000 houses outlined in this Administration's programme for Government will be honoured.
I was disturbed on reading media reports about dismantling the arrangements for financing local government, something the Dáil has not been told much about to date. It is a pity the previous Government's programme was not considered during the controversial debate over water and service charges. It dealt with more issues than service charges and the transfer of car tax to finance local government. In addition to new powers, many powers were being handed back to local authorities, something for which the General Council of County Councils, the local authority representative bodies, managers and town clerks had called for a long time. It aimed at decentralising power from the Department to local authorities. That document was the brain child of Deputy Howlin and he should receive due credit because of the very positive things it contains in terms of local authority administration.
The major issue is financing. It does not matter what rules or regulations are introduced at local level unless finance is provided. Without finance local authority will return to the bad old days. The proposal to again centralise financing and to reverse the decision to transfer car tax to local authorities, which is administered by them, is a retrograde step. It will be interesting to see what happens when the Dáil resumes, because media reports refer to a percentage of tax in the context of financing. We do not know if this refers to PAYE, VAT, or some other form of tax. This is a retrograde step which the Government will come to regret.
Minister of State at the Department of the Environment (Mr. Molloy): The essence of local government is local empowerment and decision making, but the concept of empowerment means little if anything without resources to back it up. For years we have witnessed cracks and strains developing in our local government system as it  became overburdened with an ever expanding cocktail of functions. I am not against giving more functions to local authorities, but I am against giving them more functions or more so-called powers without providing resources and money to carry out those functions and to exercise those powers.
The record of the House will show my consistency in this over the years. I have long been an ardent proponent of local government. I have long argued for its right to exist hand in hand with central government. I have long believed in its potential to serve communities. I am not and never have been convinced of the benefits of paying lip service to a lame local government system. We could conceivably be better off abolishing local government rather than presiding over its gradual downfall. I am not suggesting the local government system is lame, powerless or without merit. However, I am sounding the alarm bells and giving a clear signal that if something constructive is not done to properly resource local authorities, the future for local democracy, local empowerment and local communities is bleak. It is a measure of the resilience of the local government system that it has survived its difficulties and is still around for revival.
It was in recognising the importance of local government and in realising the threats and difficulties it faces that our programme for Government highlights it as a priority. The principal aim of the Government in respect of local government, as set out in An Action Programme for the Millennium is: “the restoration of real decision-making and power to local authorities and local people”.
The key priorities identified in the programme for government, some of which the Minister mentioned in his speech yesterday evening, are establishing a statutory local government fund which will be a fixed percentage of national taxation; allowing greater discretion to local authorities in spending priorities based on their performance and the value for money they obtain; “capping” increases of commercial rates; financing county road improvements from national motor tax receipts with suitable equalisation and such funding to take into account the findings of the National County Roads Survey; introducing comprehensive value for money audits for all local authorities; improving efficiency throughout the system; enhancing the concept of customer service in local government; removing the “democratic deficit” by restoring real power to the elected members and, finally, facilitating a new partnership with the community and voluntary sector. Although work was started on some of these issues by the previous Administration, the financing plans we propose are innovative and will provide a solid platform on which local government can look forward with confidence to making a continued and improved contribution to the lives of all our citizens.
The first thing to be said about the Government's revised proposals for local funding is that  they do not involve the introduction of any new form of taxation. Our programme for Government clearly states our recognition of the need to reduce the burden of personal taxation to reward effort and to give people an incentive to take up work. To that end we have outlined our commitment to reduce the basic rate of income tax to 20 per cent and the higher rate to 42 per cent over the next five years with an objective of reducing the higher rate to 40 per cent if economic circumstances persist. We have also given a commitment to increase basic allowances at least in line with inflation at each budget.
Our proposals on local government are therefore entirely consistent with our overall taxation proposals. Linking certain local government expenditure with national taxation, through the mechanism of the local government fund will have many advantages for local authorities. It will enable local authorities to prepare and adopt their estimates with a large degree of certainty as to revenues they are likely to receive. The situation that obtained heretofore was unacceptable, where the estimates process and all the important local policy and spending decisions involved in that process, had to be completed in the dark as to potential future revenues. For example, in recent years it was only after the estimate was actually adopted that a local authority was notified of its rate support grant for the following year. The previous Government's funding proposals would have improved the situation somewhat but the reality is that authorities would have continued to be asked to adopt their estimates blindly as they waited to see what sort of an allocation they could expect from year to year from a combination of retained motor tax proceeds and equalisation funds. Providing a specified percentage of national taxation to local government will ensure that local authorities will in the future be in a position to know the level of income they may expect to receive in the following year from the State.
Perhaps the most critical element in any funding system is that it should be capable of producing a sufficient yield to enable the business at hand to be carried out in an effective and efficient way. The KPMG report on local government funding identified lack of buoyancy as one of the greatest drawbacks of the funding system then operating. While there is undoubtedly a degree of buoyancy in motor taxation, the extent to which this tax alone had the capability, apart altogether from doubts about its appropriateness, to fund the ever expanding demands on local government is questionable. Linking local government to national taxation will ensure there is a significant degree of in-built buoyancy in the local government fund.
As I suggested, there are doubts about the propriety of using motor tax to fund all of the services which the local government sector is expected to deliver. It was clear from public reaction while we witnessed the embarrassing difficulties  of the previous Government earlier this year on the issue of group water schemes and private water supplies, that it was not acceptable to use motor tax to fund the abolition of water charges primarily in urban areas.
In addition to the new local government fund, the Government will also re-establish the old road fund concept which existed until 1978 and under which motor tax funded part of the roads programme. The Minister discussed the whole roads issue in detail yesterday and I do not intend to go over that ground again other than to fully endorse the view that it is entirely fitting that motor tax should fund roads and not water supplies. I am sure Deputies will support the Government's commitment to take account of the findings of the national county roads survey in making future allocations to local authorities for their road programme.
Deputy Howlin asked about the Government's commitment to the provision of social housing. An Action Programme for the Millennium provides the framework for the Government with regard to housing. We are committed to providing a suitable standard of accommodation for all. One of our key priorities is to continue the local authority housing programme as the mainstay of the response to meeting social housing needs. It is my intention that local authorities will continue to meet the programme with high quality dwellings provided in a socially sensitive way.
A number of schemes exist to assist local authorities to improve substandard housing and to upgrade the physical environment in certain older local authority housing estates. The Government will continue its support for the remedial works scheme and the estate improvement programme. These will assist local authorities in tackling the environmental and related problems of severely run down urban housing estates and flat complexes. They will help eliminate or modify certain undesirable aspects of the layout and design of estates, carry out improvement works to enhance the living environment for tenants and establish improved estate management arrangements.
With regard to social housing measures, I am concerned that the output on some of these schemes has not reached its full potential to meet social housing needs. I will examine how the uptake of the schemes might be improved and I will impress on local authorities the need for more active promotion by them of the various measures. The voluntary sector has grown rapidly and its continued efforts in providing an alternative to local authority housing will also be supported by the Government.
In keeping with An Action Programme for the Millennium, the Government will make an all out assault on disadvantage. We will seek to establish an inclusive society where all citizens, including the homeless and the travelling community, have the opportunity to participate in social and economic life. We want everyone to share in the benefits of economic growth.
 Another area, linked to the renewal and regeneration of local communities and of particular interest to me, is that of the urban renewal schemes which have operated in various centres since 1986 and which have succeeded in attracting major private investment into run down and derelict areas. This was confirmed in a consultants' study on the schemes published last year. In areas where the urban renewal scheme has achieved its objectives a proactive local authority has been identified as one of the major contributing factors. Many local authorities have put much effort into making the schemes work in their areas. They have actively promoted the schemes among the investment community and they have facilitated developers with pre-planning consultations. In some cases they have used their compulsory purchase powers to regularise difficulties with the title to derelict land, thus freeing it up for development.
The willingness of local authorities to respond positively in this way to the introduction of the urban renewal schemes is heartening. It has also highlighted the case for local authorities to take the lead role in the urban renewal schemes of the future. As Deputies will be aware, there are plans to introduce a new urban renewal scheme in August next year when the current scheme expires. The new scheme will be more integrated and focused than the schemes to date. The physical renewal which the schemes encouraged will no longer be seen as an end in itself. It is now recognised that any future scheme will have to become a means towards securing the overall socio-economic renewal of run down areas. The new scheme was developed in that context. Its successful implementation will require a significant amount of planning and this process has already started. A major element of the planning process will be the identification of priority areas for renewal and the preparation of plans which show how each area's physical development is to be linked to its wider renewal.
In recognition of their pivotal role in the development of their areas, local authorities must take the lead role in preparing these plans. This process will be participative, one in which all the relevant local organisations and communities will have an input. In effect, local authorities will be working in partnership with the other relevant interests. Local authorities recognise the merits of a more planned approach to the new scheme, an approach to which I am confident they will respond enthusiastically.
One of the proposals contained in the Government's action programme relates to the capping of rate increases and the Minister touched on this point briefly yesterday. Behind the proposal is an appreciation of the need to provide for the needs of local authorities while at the same time ensuring that rate increases do not adversely affect the competitive position of the commercial sector. While it is important that certainty exists in local government funding — the Government's proposals will help to achieve this — it is equally  important that the commercial sector will know what it is expected to contribute to local government. This will enable businesses, small businesses in particular, to map out their financial commitments and plan accordingly.
In 1997 total local authority current expenditure will amount to over £1 billion. Of this, about £360 million will be obtained from commercial rates. This income is significant for local authorities and is used to provide important services which benefit all sectors of the community, including commercial ratepayers. The Government's concern relates to rate increases which are far in excess of inflation. Not alone must the commercial sector pay rates but there are other costs for business such as charges for water, refuse and costs involved in pollution licences, fire certification, building control compliance, development contributions, etc. We do not want business to be put at a competitive disadvantage as a result of local authority charges. Therefore, we are examining this whole area to ascertain whether and to what extent central control or capping of commercial rates is needed.
The positive actions set out in An Action Plan for the Millennium, together with the momentum already evident in local government, due in no small measure to local authorities' response to the challenges set out in the last Government's Better Local Government document, will ensure a bright future for local democracy, local communities and local businesses.
Mr. McGuinness: I extend my congratulations to the Leas-Cheann Comhairle on his election. Having known him for many years I am confident of his commitment to public life and I look forward to serving with him in this House. I extend belated congratulations to the Ceann Comhairle on his election. As a fellow Kilkenny man I was proud he was unanimously elected by the House and to have participated in that election as Mayor of Kilkenny. The Ceann Comhairle and his family have a long history in politics in Carlow and Kilkenny. My father served with his father in the local authority in Kilkenny and my father and I served with the Ceann Comhairle. The people of Kilkenny are pleased that he has been elevated to such high office and have no doubt he will carry out his functions in an exemplary way and thus bring further pride to his family and the party he serves. It is pleasing that his mother, who enjoyed her husband's career at local and national level, now enjoys seeing her son assume such an honour in this Dáil.
As a member of a local authority for the past 18 years I am glad steps are being taken to provide proper funding to the local authorities. I disagreed with the proposals of the previous Minister  and I am glad they have been corrected. When the funding structures are put in place they will acknowledge the services being provided in local authority areas and will give flexibility to the local authorities to develop and provide quality services.
Members of this House have a dual function — serving the local needs of their constituents and as legislators. Discussing local government reminds us of the needs and aspirations of the people we represent at local level. I encourage the Minister to focus on the needs of local authorities and their proper development. There is no point devolving powers to local authorities unless they are properly financed.
I hope the new structures will allow us to deal with the recurrent problem of county roads. I am glad it states that there will be proper funding to deal with this problem in an efficient way which will allow local authorities to prioritise various roads and how they should be dealt with.
The issue of planning for designated areas and tax incentives has given rise to various problems. I hope the new financing of local government will take into consideration the interests of medieval cities such as Kilkenny. A huge development was imposed by An Bord Pleanála which served the city's economy well but such developments pose planning problems for local authorities. More people must be employed to deal proactively with planning applications so that conditions laid down by local authorities can be policed. However, more control and local financing is needed in order to do that.
Our architecture and heritage needs to be protected because of these developments. Further money is required to monitor them, particularly in Kilkenny. I refer to the building of ring roads. In Kilkenny city one leg of the ring road was completed in 1984 but the remainder has still not been completed. It is only at design stage and it is time the funding for its completion was made available. The same can be said of Carlow which is being choked by traffic. A bypass of Carlow town is required urgently. These decisions should be made by the local authority with the proper financing in place so that they can prioritise how they approach and develop our cities, towns and counties. Perhaps the article on county government published recently in an English magazine is a way forward. It relates to the proper financing of local authorities.
The extension of services is critical. The structure proposed by the previous Minister would leave Kilkenny, for example, far short of what it needs just to maintain present services. People demand more, cities and town are growing and counties need to be develop. As a result, services need to be extended and proper financing must be put in place. I agree with organisations such as Respond in regard to our social housing programme. In Kilkenny there are almost 750 applicants on the housing list, but this year only 40 houses will be completed. That list will double  next year and there is no end to the requirements that must be met by various corporations and county councils. I wish to see more funding channelled through local authorities so that there can be a proper, active social housing policy, thereby giving hope to the many people on housing lists. It is important to reflect on these issues in terms of the financing of local government.
Finance should be channelled in partnership between various local communities and public representatives who are accountable to the public. They answer queries and are at the cutting edge of local democracy, yet they are often bypassed in terms of funding for various local projects. A greater partnership is needed. That was achieved somewhat through county enterprise boards but there is further scope for development. These boards should work in greater liaison with local authorities, be part of the county development team and contain more risk takers from outside. There are enough safe hands on county enterprise boards to provide goalkeepers for future World Cups.
Most counties look abroad for greater participation in tourism and indigenous industry. Various programmes in tourism and marketing are financed by local authorities. Kilkenny has allocated substantial moneys to this area. Further moneys must be available in the allocation to fund local authorities because by achieving success in tourism and marketing and servicing indigenous industry in a proactive fashion, local government will develop more efficiently along commercial lines and will deliver a service of which public representatives can be proud.
I look forward to this Administration delivering on its promises and was pleased that the Minister of State, Deputy Molloy, outlined a number of cases. A great deal of work must be done but much will be achieved. However, it hinges on the financing of local authorities. If the proper steps are taken to reinvigorate local authority structures, more successful local economies will result.
Mr. Killeen: Is é seo an chéad ocáid liom bheith ag caint tar éis an olltoghcháin. Ba mhaith liom treisiú leat féin agus leis an Aire Stáit. Is ábhar an tábhachtach í seo agus fáiltím roimh an dhíos-póireacht. Tá fadhbanna bunúsacha ag na comhairlí condae i gcúrsaí airgeadais agus tá sé in am tabhairt futhu.
“Dáil Éireann welcomes the Government commitment in An Action Programme for the Millennium to introduce a comprehensive new funding arrangement for local government, which will give maximum local discretion on expenditure to local authorities and which will ensure value for money for the taxpayer.”.
 This is an important debate. The motion as presented by Deputy Allen expresses regret rather than the more usual condemnation of the Government for the proposed changes. All speakers recognise funding for local authorities is a fundamental issue which has posed enormous difficulties. These are well known to everybody since the reason most frequently cited for important works not being carried out is a lack of finance. We also need to recognise that many EU directives as well as legislation emanating from this House have a knock on cost effect for local authorities which is generally not provided for and which almost always undermines the quality of the service which can be delivered.
It must be acknowledged that there can be no autonomy for local government unless there is control of finances or, at the very minimum, sufficient finance to undertake necessary programmes of work. I spoke a number on months ago on the previous Government's proposal on water tax. One of its faults was that it was an existing form of taxation and was not replacing the charges which had been removed. There is a strong case to be made on the merits and demerits of those charges, but there was merit in local authorities having control on the level of charges and their collection.
I agree with Deputy Bell that many aspects of the document on better local government published by the former Minister, Deputy Howlin, deserved more consideration that those which hit the headlines. That will continue to happen in this debate. I welcome the concept of partnership as outlined by Ministers Molloy and Dempsey, particularly between local government and local development and community organisations. I also welcome the commitment to quality of service.
There has been a substantial improvement by local authorities in this area but it must be recognised that where further improvement is required there are cost implications which will have to be met. Reference has been made to the KPMG consultant's report on the funding of local authorities and the fact that it highlights the increase of 20 per cent in the current expenditure requirement of local authorities between 1995 to 2000. This will bring it close to £1.5 billion which is a very considerable sum.
The format of Estimates as presented, and as required under law to be presented at local authority meetings and to local authority members, does not lend itself to democratic participation. If anything it seems to be designed in such a way that a local authority member would have the maximum level of difficulty in trying to understand exactly what was involved. Some of the eight programme groups are archaic and no longer refer directly to the central fund functions of local authorities. Almost every report commissioned on the funding of local authorities draws attention to the need for a separate system of taxation, preferably in the control of the councils.
 The abolition of domestic charges is now fait accompli as the Minister, Deputy Dempsey, said last night and we have to accept that. We have to accept also there is not likely to be an adequate stand alone system for local authority funding which is directly in the control of local authorities. The motor tax proposal was entirely artificial and a flimsy camouflage for direct funding by the Exchequer, particularly when we take into account the equalisation fund and the fact that the amount that could be removed from councils was variable, not to mention the amounts they might be fortunate enough to receive back.
A number of speakers referred to the undue burden of commercial rates and the Minister of State has indicated it is proposed to have a cap on unreasonable increases. That is welcome. There is a strong case for defending from excessive charges those who pay commercial rates.
Past experience of the rate support grant was that when times became tough for the Exchequer local authority finances suffered most. That will continue to be the case regardless of what system is introduced if funding comes from the Exchequer. There were difficulties also with the bounty in lieu of rates which I have outlined here previously. There were particular difficulties in my county and elsewhere with the principle that if commercial ratepayers and others were obliged to pay rates the Government and its various Departments ought, at a minimum, to pay rates on their property. Presumably that will not arise in the future.
Mr. Gilmore: I congratulate you on your election to your office and extend my congratulations to the Cheann Comhairle on his election. I congratulate also the Minister and Minister of State on their appointments. I wish to share my time with Deputies McCormack and Ring.
Mr. Gilmore: I welcome this motion as it gives us an opportunity to debate local government. Anybody who has been through the recent hustings will know just how important local government services are to the people we represent. It is regrettable that virtually the first act of the new Government is to rip the heart out of reform of local government measures introduced by the last Government. There is no use in saying one is in favour of the measures recommended in the document, Better Local Government, introduced by the former Minister for the Environment, Deputy Brendan Howlin and then ripping the financial heart out of it.
The real problem with local government reform down through the years has been that everybody is in favour of it, everybody talks about it and everybody issues the platitudes but when it comes to funding nothing has happened. The outgoing Government was the first in 30 years who took the question of the financing of local government seriously and made firm  decisions on it, who decided to abolish water charges which had been unacceptable to so many people and to replace them with a designated tax for local government in the form of the road tax — a highly appropriate form of taxation given the use of our roads and on environmental grounds as well. Where are we now? The Government proposes to get rid of the measures introduced by the previous Government for the funding of local government but with what will it be replaced? I have listened to what the Minister, Deputy Dempsey, said yesterday and what the Minister of State, Deputy Molloy, said today and quite frankly I am not clear on what it is being replaced with except some form of centralised control on the funding of local government.
Great emphasis was placed on the discretion local government will have in how it spends its money. It is easy to have discretion about spending money if one does not have the money and that has been the real problem with local government. The degree of discretion which local authorities have had, to some extent, up to now in raising funds, for example, in the area of commercial rates and so on, is to be removed. It is early days in the life of this Government and one has to look at the small print in the speeches by the Minister, Deputy Dempsey, and the Minister of State, Deputy Molloy, to find out what exactly is the Government's intention with regard to local government funding. I am not comforted by what I find in the small print. For example, in his speech yesterday the Minister said:
However, the reality of the situation today is that the principle of seeking a local source of finance was buried and abandoned by the decision of the previous Administration to abolish domestic water and sewerage charges. In practical terms, there is no going back on that decision. We must now build on what we have.
I interpret that to mean the Government will not reintroduce water charges as they were known but the principle of local authorities having a generalised charge on the public remains at the heart of what the Government has in mind. Bearing in mind the Tánaiste's adherence to charging on an economic basis, anybody who took a shower and “the polluter pays” principle, which she articulated so strongly before the election, it seems the Government has in mind a localised charge which will not be called “water charges”. That is the principle that appears to be underlining what the Minister is talking about.
I am talking about a carrot and stick approach to local government. The rewards of local discretion will go to those local authorities who demonstrate their abilities to deliver the  right kind of services, serving their customers to best effect and who show an appetite and desire for responsibility.
Does that mean some local authorities which have a Fianna Fáil majority will get more funds than those who do not, that some local authorities that are more inclined to rezone land, for example, will be rewarded for their efforts, because they are pursuing the right kind of policies? This is the big hand of central Government being used in a way that has never been seen here. Up to now whatever degree of centralised allocation of resources there were to local government applied equally across all local authorities. We will now have not only some kind of centralised funding system for local government but centralised government will decide who are the good local authorities and those which will not be funded.
I am alarmed by the subtext of the Government's proposals. No doubt, in time, we will see more of them and have a better opportunity to examine them. In the meantime, local authorities are back where they were 20 years ago when a Fianna Fáil Government first landed them in the fix of not knowing where they stood on funding. It would be useful if the Minister could tell us when we will see firm proposals for advancing the Government's programme.
The question of housing was referred to by the Minister of State, Deputy Molloy. I wish him well in the portfolio that was so ably held by my party colleague, Deputy McManus. I am concerned by what the Government seems to have in mind in relation to housing. Its programme does not mention targets for social housing. The outgoing Government set specific targets for the number of house starts to be implemented in its lifetime; it restored some degree of hope to the tens of thousands of families on housing waiting lists; and, in accordance with agreed targets, it made a start in providing housing and in refurbishing old housing stock. Other than a generalised statement which is wide open to interpretation, there is no mention here of targets, no figures, and no idea of the number of houses to be provided by the present Government.
I am fascinated by Deputy Molloy's assertion that “It is my intention that local authorities will continue to meet the programme with high quality dwellings provided in a socially sensitive way”. I wonder what exactly that means. When the last Fianna Fáil-PD Government was in office it effectively cut the house building programme. It was not announced as a cut but as an effort to achieve a social mix by not allowing housing schemes greater than 25 houses. This, of course, was a ruse to ensure a very small housing programme. This policy of advancing the local authority housing programme in a socially sensitive way raises the question of to whom it will be socially sensitive. If it is to be sensitive to people on the housing lists, that is one thing, and we can expect lots of houses to be built. If it is to be  sensitive to those who, on occasions, resist the construction of local authority housing schemes at local level, it will be quite a different matter. When the Minister of State, Deputy Molloy, gets the opportunity to do so, he should clarify what exactly is meant by the socially sensitive housing policy that the present Government intends to pursue.
On this, the second real sitting day of the new Dáil, we are discussing what is, in effect, the dismantling of the programme for the reform of local government. I am astonished this has happened so quickly and that it is being pursued so enthusiastically by the Minister, Deputy Dempsey. I fail to understand how the Minister and the new Government have so rapidly changed their minds on the question of the importance of local authority funding. The purpose of allowing local authorities to retain the revenue from motor taxation was to give them an independent source of funding from moneys raised in their areas. What could be more democratic than that? What most surprised me was that the Minister, Deputy Dempsey, a product of a local authority, having risen from the status of county councillor to the status of Minister for the Environment, should be the one to promote the idea of removing this method of funding. Why does he, so lately in office, want to claw back to central government this potentially valuable method of funding local government? There was a genuine attempt by the outgoing Government to tackle the question of the reform of local government. Why does the Minister want to take back that independence from local authorities? Why does central government want to continue to control the proper funding of local government and, without proposing any alternative, dismantle this independent method of funding?
In l996 the outgoing Government published a major new programme entitled Better Local Government Programme for Change. This was the first attempt in many decades to look seriously at reform and particularly funding of local government by giving local authorities an independent source of finance. The Government's proposal is the thin end of the wedge in dismantling the package of reform of local government which was being implemented by the last Government. I am disappointed the Government is taking that line of attack on democracy in local government. Apparently central government, the Civil Service, the Progressive Democrats, or whoever is advising the Minister, want to exercise control over the vital aspect of local government that is funding. There is no other logical explanation, even if it is to be replaced by another local charge — from a study of the Minister's speech, I do not think that is intended — or to provide funding from central government. Like Deputy Gilmore, I detect in the small print of the Government's proposals a desire by  central Government to have control of local government.
I listened with interest to my constituency colleague, Deputy Molloy whose appointment as Minister of State with responsibility for the environment I welcome. I welcome also the appointment of my other two constituency colleagues, Deputies Ó Cuív and Fahey — I must be unique in having three Ministers in my constituency. They can be assured of my full co-operation in whatever they can do for West Galway. I hope Deputy Molloy, who is a supporter of the Mutton Island project, will get on with it as soon as possible now that he is in a position to do something about it. Deputy Ó Cuív, who will have responsibility for the islands and the Gaeltacht will have my full co-operation and will be welcome to any advice I can give him. I hope Deputy Fahey, who will have responsibility for health, will fulfil his promise to allocate £75 million for a new hospital and the siting of a cardiac unit in Galway. I hope he will continue the good work done by the outgoing Minister, Deputy Noonan, in terms of the hospital and hospice in Galway. As a backbench Deputy from west Galway I will help the Minister to honour the commitments he made in that regard during the election campaign.
The Minister of State, Deputy Molloy, stated the Government may consider abolishing local authorities. If that is the intention, the Progressive Democrats obviously hold local authorities and councillors in very low esteem. Local councillors are being denied the right to vote in the Seanad elections. This is indicative of the disregard the Progressive Democrats have for county councillors. Rather than nominating candidates to the Seanad — a body they want to abolish — the Progressive Democrats are doing a deal with the Taoiseach to nominate four of them to the Seanad. That is not only undemocratic, it is also illegal. I hope the Progressive Democrats have abandoned the idea of scrutinising the votes of their councillors in the Seanad elections because councillors will not tolerate it. It is also contrary to the constitutional provisions governing Seanad elections. Article 18 states that every election of the elected members of Seanad Éireann shall be held under a system of proportional representation by means of a single transferable vote and by secret ballot. Many PD councillors are concerned about their rights under those provisions. They have a right to vote in their local authorities. While the PD tail is not yet wagging the dog, it is beginning to annoy it. The Minister of State, Deputy Molloy, stated that if we cannot fund local government perhaps it should be abolished. If that is the attitude of the Progressive Democrats, county councillors should not be enticed by a dangling carrot. I have met ten councillors who have been promised a Seanad nomination, six of whom have certainly been misled. They should be careful not to give away their democratic right to Fianna Fáil or any other party, irrespective of what they are promised. They should protect their rights as county councillors  because the Government does not want to give power to local authorities. It wants to take away their financial base and it is trying to deny its councillors the right to vote for their candidates. I will continue to highlight this matter until the Seanad elections take place. Members of local authorities have every right to be concerned that the Government, influenced by the Progressive Democrats, may abolish local authorities or diminish their authority.
Mr. Ring: I congratulate you, a Leas-Cheann Comhairle, on your appointment. I also wish the Minister of State, Deputy Wallace, well on his appointment. On my first occasion to speak since the general election, it would be remiss of me not to state that this is the first time since the foundation of the State that we do not have a Minister in Connacht, not to mention in County Mayo which has always had one. I congratulate the Minister of State, Deputy Moffatt, who was given responsibility for food safety and older people. There will be large numbers of older people in the west if this Government has its way because, without a Minister from the west at the Cabinet table, we will not get much of the national cake.
Matt Durkan, a publican in Balla who is well versed on the political scene, told me last week that he knew Fianna Fáil and the Progressive Democrats would be elected and he is convinced that water charges will be reintroduced. People on social welfare should not have to pay for water. The authorities see fit to take a poor person receiving £70 or £80 per week to court for failing to pay water charges while others can receive £1.3 million. We fail to send those who murder or place bombs under cars to jail, but we have no difficulty jailing those who fail to pay the local authority a few pounds for water.
When I was elected to the Dáil in 1994 the main issue concerning most councillors was county roads. The Minister, Deputy Dempsey, and his super sub, the Minister of State, Deputy Molloy, should honour the commitment of the previous Government in a ten-year plan to give a major injection of funding to county roads. In the past two budgets large sums of money were allocated to county roads. County Cavan, a Leas-Cheann Comhairle, received massive funding for county roads. Large sums of money should not be allocated to counties Wicklow and Kerry because of deals done with Independents. That is not the way to run a Government. I hope substantial funding will be provided for county roads in the next budget. County councillors from all sides want the previous Government's commitment honoured. Mayo County Council devised a five year plan for county roads and deals done with Deputies Fox, Healy-Rae or others should not prevent the completion of that plan.
The previous Government also provided funding for the building of a record number of houses in the past few years. Housing is a major problem for all county councils. In the past when a family  were housed, they were housed for life but because of separations and people entering second relationships, that is no longer the case. When the previous Government introduced the urban-rural pilot scheme, we did not realise the effects it would have on the young people who want to continue to live in their local towns. Most people who were born and reared in Westport want to continue living there, but that is not possible because of the large number of people from Dublin who now own property in the town. The tax breaks given under that pilot scheme have resulted in a shortage of housing for the people of Westport. More people are leaving Westport to live in Castlebar, Newport and surrounding towns. That trend will have an impact on the school population, the post office, other services and the general population of Westport. In future when planning permission is sought by a contractor for the provision of, say, l00 houses under a pilot scheme 50 per cent of those houses should be cost effective. Unlike what is happening now, the price of 50 per cent of those houses should be controlled and they should be made available at a reasonable price to people living and working in town.
In Westport big business people from London, Dublin and elsewhere own more property than the local people who live in the town. I hope the Government will consider this matter. The Minister of State, Deputy Molloy, has responsibility for housing and urban renewal. I would like a future scheme to cover towns which need an injection of funding like Ballinrobe, Newport, Erris and others in north Mayo. I would prefer if derelict areas were developed and local people rather than big business people from London, Dublin and elsewhere were encouraged to invest in such towns.
I also wish to raise the issue of rates. I cannot understand why The Chambers of Commerce of Ireland have not brought a case to the High Court to challenge the constitutionality of the imposition of rates only on business people. House owners pay direct tax, but so do business people. It is time the Government devised a way to abolish unjust rates which penalise business people. I am in business and I know of other business people who pay rates, water charges and taxes. It is time the Chambers of Commerce brought a case to the High Court to test if it is constitutional to require business people to pay rates when no one else has to pay them.
The Minister talked about reforming local authorities. In recent years my local authority stopped employing workers, including bin men, and people who cleaned the drains and the graveyards. The response from the county manager is to involve the community in cleaning up graveyards and the roads. I will ask my county manager at the estimates meeting this year what is the function of the county council. Its function appears to be to have more senior executive engineers than ordinary workers. There are too many chiefs and no Indians to do the work. I will  observe the actions of the Government in this regard.
I compliment the former Minister, Deputy Howlin, who was a very good Minister and did an excellent job. It has taken the present Minister and two junior Ministers to replace him and they will have a major job in doing so.
An Leas-Cheann Comhairle: This Private Members' Business was introduced by Fine Gael and it is a matter for the Opposition or the Government to give time to Independents, but there is no provision for that in today's order.
Minister of State at the Department of the Environment (Mr. D. Wallace): I welcome the fact that one of the first major debates of the new Dáil should concern local government. Right up to the beginning of the decade the road to the reform of local government was paved with reports, studies, commissions and so on. In fairness, those worthy studies were accompanied with good intentions. Successive Governments were often genuinely concerned that something should be done. Unfortunately, something else generally arose to crowd local government off the political agenda.
The 1990's saw the beginning of the process of reform. First, there was the Barrington Report on Local Government Reorganisation and Reform. That was quickly followed by the Local Government Act, 1991 which ushered in some substantial reforms. Among the most notable of those was the introduction of broad powers of general competence for local government to act in the interests of the local community. This reform removed the negative and restrictive ultra vires doctrine which had stifled local government thinking. In many ways the Barrington report and the subsequent legislation acted as a stimulus to the major programme of reform on which we are about to embark.
We are in the happy position that there is broad consensus among all the main political parties that local government's time has come. This has to be good news for all of us who have seen so many false dawns for local government. I know debates such as these can tend to be somewhat confrontational. That is the nature of the system. However, I am heartened on this occasion because there is so much on which both sides of the House agree and progress can be made.
There is general agreement that the role of the councillors should be strengthened so that they are more meaningfully involved in policy development and review, as well generally monitoring local authority operations. There is broad consensus that local democracy has to be widened to include relevant sectoral interests. Of particular importance is the proposed integration of local government and local development, as proposed  by the Devolution Commission, among others.
On the delivery of services by local authorities, I doubt if any of us would disagree that the emphasis has to be on local authorities providing a first class service for their customers. Similarly, there is a broad political welcome for reform measures such as the application of strategic management throughout local government and the comprehensive modernising of the local authority accounting system.
In his contribution to this debate yesterday evening the Minister touched on the concept of value for money in local authorities. Deputy Allen also spoke about this. Unfortunately, the Minister was beaten by the clock yesterday and did not get a chance to expand on his views. I will take up where the Minister left off and put on record the views of the Minister and the Government on value for money.
As the Minister indicated last night, if local authorities want to be awarded greater discretion on how they spend their money, they must make and be seen to make the best possible use of the resources allocated to them. We will put in place arrangements to ensure that greater value for money and improved performance are essential prerequisites for increased discretionary spending. I am confident all authorities will be anxious to improve the manner in which they do business.
Society is becoming more and more consumerdriven. This point is not lost on local authority management and staff who in many ways already demonstrate that they appreciate the importance of improving and developing their operational methods to meet the needs of this changing society. The public expect and demand high standards of efficiency and effectiveness for local government. It is one of this Government's primary objectives to ensure these standards can and will be met.
Strong emphasis was placed on value for money in “Better Local Government”. In addition, the Local Government (Financial Provisions) Act, 1997 put the value for money unit in my Department on a statutory basis and established a legal basis for value for money audits of local authorities. We are committed to building on those initiatives. The value for money approach shifts the emphasis away from the traditional audit on to a broader view of the organisation as a whole and how it achieves its objectives. This is very much a progressive, outsidein approach which takes an overall view of the organisation as well as looking at each specific area of work. No area will be exempt as the value for money concept must permeate and become part of each individual cog in the overall local government wheel. By adopting this approach local authorities will become more focused on achieving results, on satisfying their customers, and less focused on pure administration.
The Government intends to strengthen the core requirement of value for money in all local government operations. Arrangements are being  made to introduce comprehensive value for money audits in all local authorities. The role of the VFM unit is being extended to carry more indepth analyses of a wider range of local authority activities. Value for money must become part and parcel of everyday activity.
The achievement of efficiency in local government has to be an integral part of any reform programme. It is a crucial aspect of the customer service approach about which the Minister spoke earlier. Performance indicators and service standards will become the yardstick of efficiency for customer service. Local authorities have had performance indicators in planning for more than 30 years. The legal requirement to respond to a planning application within two months is certainly a spur to customer service.
Efficiency will not just be confined to the delivery of services, important and all as this is. The drive for efficiency will also extend to the whole finance function in local authorities. The aim will be to make the local government financial reporting system more transparent, more understandable and more accessible to the public. The reporting system will be underpinned by a range of financial performance indicators which will tie in with the focus on customer care.
All of the initiatives on funding and value for money which the Minister, the Minister of State, Deputy Molloy, and myself have spoken about will place local government back where it should belong — as a vibrant leader in local communities. It will have the financial resources to provide optimum services to all its customers. It will be ready to face the challenges of the 21st century from a solid footing.
There is no intention, as has been suggested in Opposition contributions, to reintroduce water charges. The Minister for the Environment, Deputy Dempsey stated this clearly in his speech yesterday evening. There should not be any misinterpretation of the direction the Minister intends to take on local government.
Mr. Hayes: I congratulate you, Sir, on your elevation to the position of Leas-Cheann Comhairle. You are a distinguished Member of this House and a former Government Minister. I wish you well in your distinguished position in the years ahead. I also congratulate the Ministers of State at the Department of the Environment, Deputy Wallace and Deputy Molloy, and the Minister for the Environment, Deputy Dempsey, on their recent appointments. I wish them well in the years ahead.
Mr. Hayes: We will have to wait and see. I listened intently to the depressing speech by the Minister of State, Deputy Molloy, this morning. It is readily accepted by most county councillors and officials of local government that the radical reforms implemented by the former Minister for the Environment, Deputy Howlin, and the former Minister of State, Deputy Allen, over a short period of time could now amount to nought as a result of the Government's proposal. That is why Fine Gael has placed this timely motion before the House.
It is wrong to propose that motor taxation revenue should not contribute to local government funding. The empowerment that Deputy Dempsey spoke about was based on the fundamental idea that for the first time a dedicated source of finance from national moneys would go to local government. This idea has been disregarded by the Government. It is a depressing time for local government and councillors who are at the coalface, delivering a service in local authorities. The reforms we introduced in the past two years will amount to nothing.
The Government amendment states that comprehensive new funding arrangements for local government will be put in place. However, we have not seen any fleshing out of these ideas, at last week's press conference or in the House. There has been no elaboration of what the Government wants to do about funding arrangements. It is ironic that it is only 20 years since Fianna Fáil abolished the source of funding which provided decent local authority services. We are still paying for that disastrous decision.
There were some huge hints of democratic centralism in Deputy Molloy's speech. All power is to be given to the Minister and central Government. We gave control and power back to local authorities. The new Government, in only two weeks of power, has taken that control away. There were some gems in Deputy Molloy's speech, including the proposed capping of commercial rates. I am a member of a local authority which covers two of the country's five worst areas in terms of deprivation and poverty. It does not have a huge pool of commercial rates as a resource. By capping commercial rates in our local authority, an opportunity to give more resources to the people it serves will be removed.
Another whopper in Deputy Molloy's speech was the reference to facilitating a new partnership with the community and voluntary sector. Will we return to the year zero or work from the model which has been in place for the past ten or 15 years — partnerships, county enterprise boards and the regional authorities? The programme for change tried to make sense of all of these interesting and exciting levels of government when the strategic committees were established. Does this Government want to abolish that new structure? Does it want to weed out the consensus which has been reached in those bodies at local level? It is a dangerous time for all local  authority members because of this Government decision.
I favoured motor taxation as a dedicated source of moneys. For the first time, irrespective of how the economy was performing, local government would have known what it was receiving. Motor taxation is a buoyant source of revenue. Ireland has one of the lowest rates of car ownership in the EU. As the economic boom continues, the affluence it will bring will result in more cars on the road. As a result of this Government decision, local authorities will no longer receive this source of revenue. This is bad for local government and local democracy.
Sections 6 and 7 of the Local Government (Financial Provisions) Bill, 1997, ensured for the first time that local authority members would be consulted about the equalisation fund and the allocation of central Government funds. Is there any commitment to the representation of local councillors or their representative bodies in the proposed funding process? Will the democratic centralist position of Deputy Molloy mean their views will be ignored? If we go down that road, it will be a bad day for local government and councillors who are democratically elected to serve.
The Minister for the Environment was right when he said there will be ongoing financial difficulties for local authorities. He said £1.3 billion is allocated to local authorities at the moment and this may increase to £1.6 million by 1999. Much of this is due to the fact that there are huge maintenance costs coming on stream as a result of EU Structural Funds. Those new moneys will have to come from a new source of Government revenue. This Government does not appear to have given any great consideration to the new funding proposals. It was a grave day when, within two weeks of taking office, the Government decided to give more power to the Minister at the centre and less power to local government.
Ms O. Mitchell: I congratulate the Minister of State, Deputy Dan Wallace, on his appointment. I wish him well in the job. Yesterday evening I listened with great interest to the Minister's speech. Before finding fault with it, I should say that I fully accept his good intentions with regard to the reform of local government funding. It is needed because, despite all the lip service paid to the notion of local authority autonomy by successive Governments, inexplicably no party has succeeded in granting autonomy to local authorities.
The result is that we have the most centralised system of local government in Europe. When a system to allow autonomy to local authorities through a dedicated system of finance from motor taxation seemed to be within our grasp it was snatched away and that perplexes me. Nobody seems to know why the Minister considered it so important to withdraw that power from local authorities in what was almost his first act in office. The Minister can correct me if I am  wrong but I see the dead hand of the Department of Finance in this.
The proposed system of financing local authorities from motor taxation, although not a perfect one, offered many advantages. It had the advantage of being publicly acceptable as an existing tax, which could be collected and spent locally. It had the benefit of certainty from year to year and did not isolate local government from economic changes, which is the way it should be. No more so than central Government, local government should not have to cut back when economic restraint is required. The proposed system also allowed local discretion which is the key to local government.
The Minister spoke of the need for local authorities to have enough money, which is important. However, the Minister knows, as does anyone involved in local government, that the real determinant of autonomous local government which can deliver an effective service is the funding mechanism, not the level of funding, important though that is. Real local government can only happen if each local authority can set its own objectives and priorities to deliver services in a way best suited to local needs. Such needs can only be ascertained locally.
Local government can only have that kind of autonomy if it is funded by a dedicated, ringfenced and independent method. It must have its own source of finance by right, not by the whim of this or future Ministers for the Environment or Finance. Such independent financing can be achieved in various ways. Motor taxation is one and a percentage of the national tax take is another. Even though the latter is a centralised way of funding local government, it can and does work in other countries. However, the difference there is that it is a fixed percentage guaranteed by legislation over a number of years. That is the only way to guarantee the autonomy of local authorities.
I welcome the Minister, Deputy Dempsey, and wish him well. I listened carefully to the language he used during the week when he spoke about the new local government fund. It started off as a fixed percentage, although the time span was not mentioned. It is now a specified percentage, but what exactly does that mean? The awful realisation is dawning on all of us that it simply means local government will be funded by the Exchequer and that this local government fund does not have any basis in reality. It is just a notional concept that can be changed at the whim of this Minister or his successors at the first hint of economic change. If that is true it is the most retrograde step in the long and sad history of local government's emasculation.
I wish to make a number of points concerning value for money auditing of which the Minister has made much. Nobody is against value for money auditing, which has already been incorporated by most local authorities as part of their strategic management initiatives involving performance indicators. While no one objects to the  notion of value for money, local government decisions are a matter of judgment which local councillors are elected to make. That is the essence of local government.
If national standards are set which remove discretion from local authorities to provide the wide variety of services needed in different areas — given their different economic, social and physical conditions — one takes away all notion  of local accountability. One is either accountable to the centre or to the local population. One cannot have two masters. That has been the eternal problem of local government.
Acting Chairman Mr. Browne: (Carlow-Kilkenny): I am sorry, the Deputy is accountable to the Chair and her time is up. I congratulate the Deputy on her maiden speech and I hope she will make many more speeches in the House.
Browne, John (Wexford).
de Valera, Síle.
Ó Cuív, Éamon.
Browne, John (Carlow-Kilkenny).
Cosgrave, Michael Joe.
Coveney, Hugh.  Higgins, Jim.
De Rossa, Proinsias.
Hayes, Brian.  Noonan, Michael.
Ó Caoláin, Caoimhghín.
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