Local Government Bill, 1998: Committee and Remaining Stages.

Thursday, 28 May 1998

Seanad Éireann Debate
Vol. 155 No. 16

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Sections 1 and 2 agreed to.

Question proposed: “That section 3 stand part of the Bill.”

Mr. J. Doyle: Information on Joseph Doyle  Zoom on Joseph Doyle  Section 3 states “The Minister shall manage and control the Fund”. However, no criteria have been established for how the Minister is to do that. One of the weaknesses in the Bill is that the mechanism is still being worked out by the study group in Galway Corporation and Galway County Council, as the Minister explained to us yesterday. It is very hard to pass a Bill when one does not know the mechanism by which the Minister is going to control this fund.

Minister of State at the Department of the Environment and Local Government (Mr. Molloy): Information on Robert Molloy  Zoom on Robert Molloy  It is important to accept there is a need to be careful in drawing up the system under which the allocations will be made. It will be based in only one instance on the pilot scheme which has been undertaken by the Galway local authorities in order to establish the resources and needs of each local authority. This is the practice [957] in other European countries and is not a new principle.

The whole question of equalisation has been accepted here since the Barrington report and was the subject of an earlier Bill proposed by the previous Government. The system of allocation will be based on the principle of equalisation, which will be a core feature of the fund. It is important that any additional funds which become available are distributed equitably.

Despite the research that has been done, I am sure we will still be in a learning process when the initial allocations are made in the early stages. All local authorities will be observing with keen interest the operation of the new system. However, it cannot be brought into operation unless the basic legislation is put in place.

As the Senator may recall, there was great dissatisfaction among local authority members about the way the old rate support grant system operated. It was not fine tuned to respond to a changing society and the changing needs of local authorities. The services being provided may have changed but the level of funding did not. Substantial additional funding will be available from 1 January 1999, therefore, equalisation is even more important.

It is unnecessary to remind the House that when rates on houses were abolished the then Government introduced a statutory requirement under which local authorities received money in lieu of the funds they would otherwise have received from rates on houses. This decision operated satisfactorily in the early years until the system was changed by the then Minister for the Environment, Deputy Spring.

Mr. J. Doyle: Information on Joseph Doyle  Zoom on Joseph Doyle  Many promises were made in 1977 which the country could not afford.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  That decision was made in the Local Government (Financial Provisions) Act, 1983, which was introduced by Senator Doyle's party in conjunction with the then Minister for the Environment who was a Labour Party Deputy. The decision in that Act has been the cause of the gross under-funding of the entire local government system.

Mr. Cregan:  It was gone before that.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  If the original legislation introduced by the Government in 1977 had continued in operation, local authorities would not have found themselves starved of funds at local level while central Government took care of the provision of services at its level.

This Government is redressing that position and I am proud to be a member of a Government which is doing that. I fought against the Bill in 1983 but, unfortunately, we failed because we did not have sufficient numbers to defeat it. It is facile to suggest that the position regarding the funding of local authorities arose because of the removal of rates on houses. It arose as a result of [958] the decision to remove the statutory obligation on central Government to fund local authorities in lieu of the money they would have received from rates on houses. I am glad to have the opportunity to clarify that point.

Mr. Cregan:  I did not intend to deal with events since 1977 but the Minister raised the issue of legislation that was changed in 1983. The fact is that local authorities have suffered since 1977. Anybody who says otherwise is suffering from delusions. The decision to abolish rates without providing matching funds for local authorities in 1977 was a massive mistake. The Minister gave the impression that the problems started after 1983 but that is not the case.

There have been problems in local authorities since 1977, particularly in urban authorities. The Minister knows this is the case in the Galway area. He should not give the impression that the real problem was the legislation implemented in 1983. However, I do not blame one particular Government. Rates were partly abolished between 1975 and 1977 before they were removed totally in 1977. I do not suggest that was correct because all local authorities were undermined from that day forward.

The Minister did not respond to Senator Doyle's query. He said he was delighted to inform the House that the position will be changed. Will he explain precisely how local authorities will be funded and how there will be equal distribution. I have heard promises about equal distribution to local authorities so often that I am confused. For example, the previous Government established a road fund but, on a percentage basis, more funds were given to county authorities than city and urban authorities. If that is an equal distribution of funds, will the Minister explain how some authorities received more than others on a percentage basis? Some authorities received more because county roads needed more work than urban roads. There is significantly more traffic on urban roads but they did not receive funds because the Minister considered a higher percentage should be provided to county authorities.

In Cork, the county authority received a higher allocation than the city authority. The roads in all cities and towns are rapidly deteriorating but no money has been provided for them. The authorities are expected to come up with their own funding. Will the Minister explain how there will be equal distribution to all authorities in a way which will enable me to feel happy about supporting the Bill?

Mr. Dardis: Information on John Dardis  Zoom on John Dardis  Regarding Senator Cregan's point, all roads have deteriorated and this must be addressed. It comes down to prioritisation. Ministers have a difficult job in that respect because they must establish the priorities.

My area, County Kildare, has suffered grievously as a result of earlier decisions. However, the historic argument is not productive in my county [959] where the level of population has exploded but the rate support grant has not increased in line with that explosion. It is obvious that the system must be rationalised to allow counties which have suffered population increases to provide the level of services required by the citizens of the area which are inadequate due to the current funding circumstances.

However, a minimum level of funding must be provided to counties where the population levels have fallen and the revenue deriving to the local authorities is small. A basic level of infrastructure must be maintained, irrespective of the size of the population. Given these two aspects, the Bill and specifically this section are a welcome development. They will go a long way towards redressing some of the difficulties which have arisen because of the way the rate support grant system has been administered over many years.

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  It is important to note that the fund as outlined in the Bill is not much different from the position which has pertained since 1983. Senator Cregan referred to events in 1977. I have always articulated the view that local government should be independently funded. The removal of rates from houses and the abolition of water charges were retrograde steps for local government. Nevertheless, it must be noted that all the major political parties have taken that approach.

Since 1983 the Minister of the day has been in control of the amount of funding allocated to local authorities. Under the Bill a special fund with a statutory basis will be established. This is a step forward. In addition, the amount of money that will be available to local authorities will be significantly increased. Section 6 provides for the appointment of a committee to advise on the performance of the fund. I hope councillors and others involved in local government will be members of this body when it is established to ensure an input from that level. The Bill is a step forward. Rather than returning to a position where local authorities must raise finance locally through rates or water charges, the provisions are a move in the right direction.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  Section 3 provides that the Minister shall manage and control the fund. This is an exact replica of a section in the Local Government (Financial Provisions) Act, 1997, under which the Minister has power to manage and control the equalisation fund. The powers in this Bill are therefore the same as those proposed by the previous Government and the proposal for managing the fund is based on the legislation introduced by Deputy Howlin.

The difference is that the decisions made since 1983 have been arbitrary — they were not based on an assessment of the resources available to each local authority, whether county or urban. The Government in this legislation is putting in place a procedure whereby the allocation of [960] money from the fund will relate to an assessment of the financial resources available to each local authority and the needs of that authority. That is a new practice in this country. The pilot study in Galway is only part of the picture and the Department is also carrying out studies into how this could be done.

It is important to move away from the arbitrary position which has obtained up to now, in which a Minister decides how much to give to local authorities irrespective of other matters. Such decisions cannot be made that way in future because the Government is committed to establishing an equalisation formula which will ensure, in the case of each local authority being funded, that there is knowledge of their needs, resources and capacity. If the Senator wants further information about how it is proposed to do this I can send him the terms of reference, scope and guidelines for the resources and needs study, but I do not intend to take up the House's time.

The principle I am expounding is something all sides will welcome and we hope it will work satisfactorily. I do not think it will satisfy everyone at its initiation — experience of how it works may show the need for adjustments — but everyone can observe it and the principle of equity will apply. If people see that decisions are made which do not adhere to an equitable formula, that can be exposed and be the subject of debate.

It is wise to go down this path and I have been advocating it for years. Having examined local government funding procedures in different countries it is clear this is the best system. It is employed by a number of countries and we propose to introduce it here. It will be seen to be the fairest way because smaller and larger local authorities will all be looked after. The possession of a lot of resources will be taken into account, as will a lack of funding from other sources, and it will all be matched against a measurement of needs. It is not an exact science and there will be no perfect solution but it is much more transparent and equitable than what has obtained since 1983.

Mr. Cregan:  I appreciate what the Minister says. His answer was fair and he knows the system was not right. That does not necessarily mean the fund is the correct replacement for the rate relief grant; but the grant was a disaster — it did not help any authority, small or large. I also accept his remarks about the pilot scheme in Galway and the study by Department officials. Senator Walsh mentioned the committee which is to be set up and it is imperative that those on it know all about local authorities. I do not want particular people to be on the committee but there should be a fair distribution of people — there have been enough “jobs for the boys” on committees under all Governments. This is extremely important for the future.

The subject of roads and traffic throughout the country was mentioned on the Order of Business [961]— it is not only a problem in Dublin, it is everywhere. All areas must benefit from the fund so I was happy to hear the Minister say recognition would be given to authorities which are doing work which helps the region generally.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  During the Dáil debate on this Bill the Minister agreed to make certain changes to provide that local authority officials or members shall be on any committee established. The committee may also include members the Minister considers possess the necessary qualifications and experience to contribute to the committee's work. Aside from advising the Minister on allocations from the fund, the committee is now empowered to advise him on quality and value for money issues as well.

Question put and agreed to.

Question proposed: “That section 4 stand part of the Bill.”

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  This is the most important section of the Bill; it deals with the quantum of money which will go into the fund. The Minister should be complimented for this. For many years those involved with local government felt resources were not sufficiently available to undertake duties and at times we were targeted for cost savings because it was easier to take money from us than from other Departments. This section provides a statutory basis for local authority funding. The motor tax allocation to the fund for 1999 is £393 million, including £270 million put into the fund from the Exchequer; that represents a 27 per cent increase on the 1997 figure and must be welcomed. The Bill also removes from a Minister the discretion to reduce the previous year's allocation - it must increase at least as much as the consumer price index. That means local authority funding will increase in line with inflation. Also, it has tended to happen in the past that other functions were allocated to local government without a corresponding availability of funds to undertake those functions. The Bill corrects this by providing that such functions must be costed and resources made available to local government. At a time when we are talking about devolution — which we hope will mean that the principle of subsidiarity will be fully embraced by central Government — it is imperative that finances are made available to local authorities to enable them undertake those functions in an efficient and effective manner. The base being right is essential to the success of a Bill; that is the case here and I compliment the Minister for it.

Question put and agreed to.

Section 5 agreed to.

Question proposed: “That section 6 stand part of the Bill.”

Mr. Cregan:  I wish to refer to expenses incurred by local authorities. All county councils are tied in with urban authorities. The Minister will know about expenses incurred by authorities in Galway, Cork, Limerick, Dublin and Waterford. What happens when an authority incurs expenses because it services a region rather than an urban area? For instance, Cork Corporation services areas outside the city which are covered by Cork County Council. It costs the corporation more than the county council while people in the city do not benefit to the same degree as those in the council area. I cannot understand why counties do better than cities or big towns percentagewise in terms of contributions. The Minister said equal distribution will solve that problem. Will he give an assurance that the committee to be established will be relevant to proposals made by certain councils and authorities? Cork Corporation has often made arguments for contributions to get joint ventures moving but the county council moves much faster than the city. Why do urban councils always lag behind? I do not mean to be critical of county councils as Cork County Council and others work well but cities and towns are deteriorating. Why is that the case?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  I am not sure if I fully understand Senator Cregan's point. Did he refer to a situation where services were provided by one authority while another benefited from it without contributing to them?

Mr. Cregan:  That is correct.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  Issues such as that will be taken into account by the equalisation study which will seek to iron anomalies out of the system. They will be highlighted in the resources and needs study and the best assurance I can give the Deputy is that for the future there will be a mechanism in place by which these arguments can be made and which can correct the situation if it is possible to do so.

The Deputy did not give a specific example and I can only guess. However, it is an ideal matter to take into consideration in determining the equalisation formula and what allocation might be made.

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  Following discussions when this was announced there was concern that urban authorities might find themselves in a position where moneys would be channelled through the county council and they felt they might not get a fair share of the monies from county councils. How can that be safeguarded to ensure the money is distributed fairly at county level to the urban authorities and they are not disadvantaged?

[963]Mr. Cregan:  The Minister grasped what I am about. The committee to be set up should not be called a “committee” but it should have an authority of its own and answer only to the Minister. It is important the Minister makes sure the committee comprises people with no axe to grind. A county or city councillor cannot be on it because this would lead to a domineering effect since politicians are politicians, irrespective of whether they come from an urban, city, county council or the Seanad, Dáil or Government. An equalisation officer who would look at this fairly is very important, given that one is talking about a 27 per cent increase in funding this year, with a 5 per cent increase next year if it is consumer indexed, and inflation will be running at 4 to 5 per cent. The body to be set up should have people on it who would make sure everybody is treated equally. There will be a deterioration again otherwise. One cannot blame small urban councils where everybody must go through to get to the other side of a town, city or county. For instance, Kinsale and Killarney are busy little towns. How much does Kinsale UDC get in comparison to other areas, yet it must cater for many people? An equalisation officer would handle that and I would appreciate if the Minister would take that on board.

Mr. J. Doyle: Information on Joseph Doyle  Zoom on Joseph Doyle  I support Senator Cregan. Many urban areas, such as the greater Dublin region, are traversed by people who visit, carry on business, use its services and deposit litter. This leads to extra costs for these areas which are not created by people living in them. The equalisation system proposed in the Bill must address such an issue. Senator Cregan developed his argument by saying individuals from those areas should be on the advisory committee.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  I explained how the equalisation formula and principle will work and it will cover the matters raised by the Senators. They are important aspects that will have to be taken into consideration. Senator Walsh raised the question of the allocation of funding. It will be paid directly to all local authorities and urban authorities will not get their moneys through county councils. Each local authority exists in its own right and its needs and resources will be assessed and funded accordingly. Where the towns mentioned are involved in a great deal of extra expense in providing services arising from their use by people who do not reside in the area, such factors will be taken into consideration. That is the point of having an equalisation system in place.

The study in Galway in not just being carried out by Galway County Council. It will take in all the local authorities in County Galway which has a good cross section. It has a county borough in the city, an urban council in Ballinasloe, town commissions in Loughrea and Tuam and the county council is an ideal model for a pilot study. I am pleased by the reaction of Senators to its [964] effectiveness and none of the points raised should cause alarm.

Cork will benefit from areas designated in 1986 under the urban renewal scheme where rate remissions were granted. Some of those have expired and others will expire in future which will result in increased revenue for Cork Corporation and I am sure it will spend it wisely.

Mr. Cregan:  Subsection (6) in my copy of the Bill states: “The Minister may establish a committee (the members of which may include officers or members of local authorities)”. The word “may” is famous in politics.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The Minister changed the wording in the Dáil to reflect his intention.

Mr. Cregan:  Is the intention now that he must, may or will?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  He will have the power under the new subsection to appoint local authority members.

Mr. Cregan:  The wording in my copy of the Bill states: “The Minister may establish a committee (the members of which may include officers or members of local authorities)”.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The Minister changed that wording in the Dáil. It now states that he shall.

Mr. Cregan:  Does that include officers and members or just members?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  Is the Senator looking at the Bill as passed by the Dáil or the Bill as published? The Bill now states, following amendment in the Dáil: “Such a committee shall include such and so many officers or members of local authorities as the Minister shall determine..”

Question put and agreed to.

Sections 7 to 10, inclusive, agreed to.

Ms O'Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I move amendment No. 1:

In page 13, before section 11, to insert the following new section:

“11.—Where immediately prior to the passing of this Act a person held a temporary appointment to perform the functions of an office or employment to which section 2(1)(b) of the Local Authorities (Officers and Employees) Act, 1926, would have applied but for the temporary nature of the appointment, the appointment, during the two years commencing on such passing, of that person to the office or employment, being an office or employment up to and including the grade of Executive Engineer and cognate grades, on a permanent basis [965] shall not be deemed to be an appointment to an office to which the Local Authorities (Officers and Employees) Act, 1926, applies.”.

This amendment was tabled by my party in the Dáil and I understand that there was some discussion and teasing out of the matter. I also understand some progress was made on the issue raised by the amendment, that of temporary appointments and the effect of the passing of the legislation on those who hold such positions. I look forward to hearing the Minister's response.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The amendment tabled by Senators Costello, Gallagher and O'Meara is the same as that tabled by Deputy Howlin in the Dáil. The effect of their amendment is limited in that it seeks to create a temporary exclusion for a two year period in respect of the filling of permanent posts up to the level of executive engineer and cognate grades for those in temporary positions at the time of the passing of the Bill.

On Report Stage in the Dáil the Minister tabled his own amendment on this section which was accepted. It enables the Minister to specify by statutory order all the posts which are required to be filled by the Local Appointments Commission. When an order is made by the Minister, it must be laid before both Houses of the Oireachtas and is capable of being annulled if a resolution of either House is passed to that effect. Orders amending or revoking previous articles can be made from time to time, but in every case the order must be laid before both Houses.

The framing of the Minister's amendment to provide a statutory basis for the declaration of posts to be filled by the LAC is believed to be the appropriate approach to take, given that titles of posts may change from time to time or new posts may be created. From the perspective of framing legislation, it is not considered suitable to specify in primary legislation the levels of or reference to specifically named positions above which all posts are to be filled by the LAC. This is the reason powers are included in Acts for the making of orders and regulations to specify particular matters which can vary from time to time.

This is another measure to give greater autonomy to local authorities. It is part of the devolution process of giving the local authorities more control and power over matters affecting the way in which they operate. Under existing requirements, all professional positions have to be filled through competitions organised by the LAC. Under this change, only certain higher professional and administrative positions in local authorities would be required to be filled through the LAC. Other posts can be filled by arrangements entered into by local authorities, while complying with certain conditions laid down for them to ensure that such positions will be filled in a uniform manner throughout the country.

Temporary employees, local authority assistant engineers and others employed from time to time, cannot be made permanent without being [966] appointed by the LAC. Recently there were 600 applicants for two positions of engineer. The delay that will cause can be imagined. A local authority which wishes to fill a vacancy has to wait its turn in the LAC for posts to be filled. It should be recognised that local authorities now have the competency to set up interview boards and make appointments in a fair and just manner.

It is a move towards decentralisation and devolution and giving greater autonomy to local authorities. It presents the opportunity for many people employed in temporary positions for a long number of years of becoming permanent employees. The Opposition amendment proposes that we revert to the status quo after two years. The Bill is trying to change that and to achieve the objectives I have outlined. That is praiseworthy and I ask the House to accept the changes the Minister made in the Dáil as regards statutory orders. They will allow him to specify the posts and those orders will have to be approved by both Houses. If a motion were tabled against any of them within 21 days of their being made, it would have to be put to the House. That safeguards against anything untoward being attempted. Therefore, I regret I cannot accept the Opposition amendment.

Amendment, by leave, withdrawn.

Section 11 agreed to.

Acting Chairman (Mr. Finneran): Information on Michael Finneran  Zoom on Michael Finneran  Amendment No. 2 in the name of Senator Joe Doyle is out of order as it involves a potential charge on the Revenue.

Amendment No. 2 not moved.

Question proposed: “That section 12 stand part of the Bill.”

Mr. Cregan:  This section is important from the point of view of local authority members. Concerns have been expressed about it and the Minister is aware of them. It is unfortunate that the amendment tabled by Senator Doyle, that all members would be recognised, has been ruled out of order as it involves a potential financial charge on the Revenue. It makes the valid point that a person may still feel they have a contribution to make. This Bill more or less states that if a person retires, a gratuity scheme will be established for them. However, schemes can be abolished. Is this initiative a scheme, a gratuity, an allowance, a benefit or a pension? These are questions which must be asked.

I understand the concern of people in public life, be they county council, urban council or borough council members. As a long serving Senator elected by these people I know them well, as do other Senators. The Minister is finally recognising the contribution of local councillors. This recognition [967] seems, however, to be conditional on councillors not standing for re-election. If public representatives are discouraged from standing for election they are more likely to wish to stand. I want to give recognition to county and urban councillors who have given enormous commitment to local government. We can learn such a lot from these people.

This Bill does not go far enough in recognising the contribution of councillors. The vast majority of councillors got no financial reward up to six years ago. They were only paid expenses for travelling to meetings. They nevertheless were totally dedicated. I meet councillors from all parties and all parts of the country and I know this to be the case.

Since 1992 an allowance has been paid to county councillors. The Minister now proposes a scheme to pay a gratuity based on the number of years service. It will be a sad reflection on us if we pass a Bill which sets up a scheme, the details of which are not clear. This would be unfair to the councillors who will be affected by it. I am not prepared to allow this Bill to become law if its terms are not clarified.

The Bill seems to imply that there are many councillors who would be well advised to retire. Such a thing should never be said about anyone. Many councillors have given more than 40 years service. I have seen such experienced councillors listen to a contribution of two hours and then dispense with the speaker's arguments in a speech of four lines. If such people wish to stand in the next local election they should not be discouraged from doing so.

Let us say that of the 900 councillors who stand in the next local election 300 are defeated. It would be preferable to give the gratuity to those defeated councillors — the number of such councillors will be very small — and it would not cost the State any more money.

The Bill seems to say that we wish to see people removed from public service. I will not allow that to be said. I do not say this because councillors elect me and others to this House. I would not demean anyone in that way. Public representatives should be permitted to stand and, if defeated, their contribution over many years should be recognised. Section 6 makes provision for circumstances in which the Minister may make payment from the fund. Would it not be possible to provide that the Minister may make a payment in recognition of the services of councillors who are defeated in an election? Public representatives who have given long service should not be told they may not stand for re-election.

Section 12(1)(a) speaks of the retirement of members. What politician is in a hurry to retire? Politics is not a job, it is a commitment. If a politician's contribution to society is to be recognised that should be done the day after he or she is defeated or he or she decides not to stand. The contributions of Senators, Deputies and Ministers are recognised financially if they are defeated in [968] an election. Why are we not prepared to give the same recognition to the people who have elected us to this House?

Acting Chairman:  I must point out to the Senator that we are on Committee Stage. The Second Stage was discussed yesterday.

Mr. Cregan:  Is the Minister prepared to consider a scheme to recognise a person who wishes to stand for election and is defeated? The number of people concerned is small and the scheme would not be costly. It would be far cheaper than a retirement scheme. About 18 per cent to 20 per cent will be defeated and on that basis it would cost less than this scheme. Will the Minister of State tell us what he is prepared to give? The section does not explain what the people who retire will get.

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  I agree with Senator Cregan with regard to councillors. I have spent 19 years on Wexford County Council and 24 years on New Ross Urban District Council. Having been elected to the Oireachtas recently I see the disparity in the way Members of the Oireachtas and councillors are looked after. The Minister, Deputy Dempsey, the Ministers of State, Deputy Molloy and Deputy Dan Wallace, and the departmental officials are committed to putting right an injustice against those who have given selfless service to their communities over many years.

It is estimated that councillors spend around 35 hours per week carrying out their duties, depending on the councillor and the locality. Many Members of the Oireachtas acknowledge that the majority of work they do at constituency level relates to their local authorities. It is an anomaly that councillors are expected to do similar work without payment, other than the recoupment of some out of pocket expenses. Hopefully, the anomaly will be corrected. The initiative in the Bill is the first step in giving tangible recognition to the contribution of councillors.

Given the longevity of the current councils, it is inevitable that some members will decide to retire. It is appropriate that those who do so will receive a gratuity for their years of service. Members of the Oireachtas and people who work in the public service get a gratuity and a pension on retirement. It has been discriminatory that councillors have not qualified and this measure is a welcome change.

The measure is restricted to those who retire. I would like it to be ongoing and to apply to those who are defeated at election. Having discussed the matter with the Taoiseach and the Minister, I am aware that the provision in the Bill will not be altered. I hope that over the course of time a system similar to that for national politicians will be applied to local politicians. The thrust of local government is towards greater commitment and professionalism from councillors and in that context they should be compensated adequately. The [969] Minister of State has spoken of a payment for councillors and I hope that will be introduced at a level commensurate with the responsibility and workload involved. If such a payment is introduced, gratuities and pensions may flow from it.

It is open to the Minister to decide on the amount that will be paid to people who retire. The LAMA, the General Council of County Councils and the AMAI have made a submission seeking a minimum level of £570 per year of service. I recommend that figure to the Minister as a minimum and anything higher would be welcome. I do not think it should be any less. The Bill does not deal with the tax status of the gratuity. It should be tax free because if it was subject to tax the amounts councillors would get would be very small and would not recognise their years of good service.

Will the amount to be paid be the same for urban councillors as for county councillors? Subsection (2)(a) indicates that a gratuity shall be granted by the local authority specified in a scheme. Will urban authorities qualify under that provision? I note the provision in the Bill for a clawback, so to speak, for those who qualify but who are re-elected or co-opted subsequently. Many councillors with long service died during the life of the current councils. What provision is to be made for them, particularly in cases where their seats were taken over by their spouses? Will the qualifying period include that of the deceased spouse? That should be recognised for the sake of equity. I welcome this as a good initiative. It should be extended in the future.

Mr. O'Brien: Information on Francis O'Brien  Zoom on Francis O'Brien  I welcome this provision which concerns many Members of the House who have served local authorities well over many years. We must welcome the Minister's decision to recognise such service with a gratuity. I do not refer to it as a retirement lump sum because many councillors feel that if they go for election in 1999 and are defeated they should be entitled to a lump sum as if they had retired before going for election. It is the Minister's intention not to change the provision, but perhaps he might consider alternative ways to facilitate defeated councillors in the future. As Senator Cregan pointed out, they would be small in number, especially in view of the numbers who may retire.

There is a matter to which the Minister referred yesterday which I do not see in the Bill. The Minister said yesterday — and I hope the Minister of State, Deputy Molloy, will bring this matter to his attention — that people will have to give notice between June and September of their intention to avail of the retirement scheme. It is a little unfair to put an onus on people to make up their minds between June and September 1998. I cannot locate the reference to this in the Bill but the Minister made reference to it yesterday in his reply.

Mr. Cregan:  What happens if he dies?

[970]Mr. O'Brien: Information on Francis O'Brien  Zoom on Francis O'Brien  I ask that the Minister take a look at this to ensure people have at least to March 1999 to make up their minds whether or not to stand in the next election.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  I understand the views expressed in relation to certain aspects of the Bill. It is important to bear in mind that this is the first time any Government has put forward a proposal recognising the contributions made by people who have been members of local authorities for a number of years. They will receive that recognition by opting to retire and not contesting the subsequent election. No other Government has proposed such a measure. It is a very generous offer and will be a small reward for those who have served on local authorities for years. Many people have retired after years of dedicated service who on reflection would rightly have harboured the view that officialdom gave very little recognition to their role, contribution, time and effort in serving their local communities. This Government is proposing to change that. We are introducing this system whereby generous amounts, perhaps based on the length of service, will be made available for people retiring from local government.

We are at a crossroads in the local government system. We have reached the tenth anniversary of the foundation of this Act. Reform of local government and introducing new funding methods through acceleration in the reform process is heralding a new era for local government, one in which the work of councillors will in future be recognised by way of remuneration. That is what is intended, though the formula has not yet been worked out. It will perhaps take further legislation to implement it. I hope and expect that there will be a salary system for councillors. Many comments have been made which remind me of the man who places a decent bet on a horse and the horse comes in at generous odds: when you win, you never have enough on it. When the Government is doing something generous there will always be someone who will say we are not doing enough. Nothing has been done up to now. I know that councillors who are considering retirement are pleased they will receive some recognition for their services from this Government. They expected whole-hearted support for this measure when it came before the Houses of the Oireachtas. It is being seen as an option not available to them before. I cannot subscribe to the intent of the proposed amendment which has been ruled out of order. I recommend that Senators accept the Bill as is.

Senators raised specific questions. It is intended that the amounts paid will be tax-free. That will not be covered by this legislation, but following consultations with Revenue it may be contained in a future Finance Bill. The figures on the scheme have not yet been decided. I think it was wise not to decide on that until views from Members of the Dáil and Seanad had been heard. Such views will be taken into account by the [971] Minister in determining at what level the scheme is to be pitched.

Anybody who has been elected to Government office through the local government system — town commissioners, urban councils, county councils, corporations, borough corporations etc. - will qualify for payment under the scheme. Procedures, excluding the figures, for the scheme are laid down in the Bill but they will be published soon and laid before the Houses of the Oireachtas. It is the Minister's intention to publish the scheme about two or three weeks after the Bill is passed. Councillors will have adequate time to examine the proposals before deciding to opt for the scheme. Such decisions are personal and will be made by each individual having consulted his family and local organisation. Popular councillors find it difficult to withdraw from local government because of pressures from their local organisations to remain because of their certainty in winning seats. Many councillors remain in office because of pressure from other people to do so, but I think they should have the right to make a decision themselves.

This proposal provides them with an option they did not have before. It is expected that there will be remuneration in the new system so it is not a question of take the money now or you will get nothing later. The decision to retire will be a voluntary one. It is hoped to introduce salaries as part of the new system. It is not the Government's intention that this be seen to sweep out people who have given loyal service for years. It is in recognition of that service that we are introducing this measure. I would prefer it to be read in that way.

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  What about the figures for the scheme?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  That has not yet been decided. The Minister will take Senators' views into account before deciding that and will publish them in a few weeks time. I cannot supply Senators with any information in relation to figures to be included in the scheme because no decisions have been made in that regard other than that they will be generous. It is expected that the introduction of this measure will cost £1 million. If a person has died since election in 1991 and who had he been alive would have qualified under the scheme, it is intended that the amount will be paid over to his estate.

Mr. O'Brien: Information on Francis O'Brien  Zoom on Francis O'Brien  What is the period for notifying the local authority?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The Minister has indicated he may decide to give the period from June to September. He has not made a final decision in that regard. It must be accepted that if a councillor is to opt for retirement under the scheme and not be a candidate in the following election, then it is proper that decision be made earlier rather than [972] later in the interests of the organisation who will need to find someone to replace him. That is reasonable to enable new candidates to get their profile before the public. As political animals, we know how important it is to have such an opportunity. That is the thinking behind the Minister's announcement. He will grant a three month period from June to September. He may vary that but I would not expect him to extend it by much more than he has already indicated.

Mr. D. Kiely: Information on Daniel Kiely  Zoom on Daniel Kiely  I welcome the explanation given by the Minister. This is the first time a Government has made any gesture towards the work done by councillors. We have been looking for this for a long time through the General Council of County Councils. I proposed this some years ago at a meeting of that body and it has progressed from there. I compliment the Government for making the first move to recognise people who have done outstanding work on behalf of the public. As one Senator stated today, sometimes up to 40 hours a week is taken up by this work and these people receive nothing in return. It interferes with their families and life-styles and those who enjoy public life should be complimented. Our predecessors did not even get a gold watch for 40 years outstanding service. Now councillors are being recognised for the first time.

An avenue should be left open in the legislation. Political parties might put a certain amount of pressure on people who should retire to run again. If those people with long service are defeated there should be a system of awards introduced for them. This part of the Bill should be examined again.

I compliment the Government for bringing this piece of legislation forward.

Mr. Cregan:  I thank the Minister for his reply and appreciate what he says. This is the first time any consideration was given to members of local authorities. The first step — legislation — is always welcome but the next step takes a long time. The impression in this section is that there is a demand on people. I do not want to give that impression. The Minister is right not to do so and I apologise if I am giving that impression.

There is no recognition for people who will be defeated. That is unfair. The Minister should not ask people to make decisions before the end of September. He should give people some time. People could be greedy. A person who is prepared to serve another term but is defeated is not recognised. That is unfair. To how many people will this happen? It could be less than 50, and, at an average gratuity of £10,000, that will cost £500,000 or less. The Minister is undermining this section by not recognising these people.

I appreciate the recognition given at long last to county councillors; they are not necessarily getting enough. No politician does this work for £570 per year for 20 years — and that is what this £10,000 is worth. Big deal. It will be tax free; that [973] is marvellous. Compare that to the amount now being paid out. At least the Minister is recognising the loss of a person within the period 1991-9. The estate of any person who died in that time receives the benefit and that is appreciated. Does a person who lost his or her seat as a junior Minister receive the benefit? I would appreciate it if some recognition could be given to people who stand. What happens to a person who is elected and is in an accident three days after the election? They receive no recognition.

Acting Chairman:  May I remind Senators that we are on Committee Stage, section 12. Second Stage was taken yesterday.

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  I thank the Minister for his responses. The fact that the payment will be tax free, will apply to all councillors, county councillors, corporation members and urban district councillors, and that it will apply to the estates of those who die during the currency of this council, is welcome.

The only other outstanding issue is the quantum. When is it expected that the scheme will be laid before the Seanad?

Mr. Mooney: Information on Paschal Canice Mooney  Zoom on Paschal Canice Mooney  It is important that the over-whelming and enthusiastic welcome there has been for the concept of this gratuity should be put on record, irrespective of the difficulties which may have arisen in the teasing out of the detail. The devil is in the detail and that will unfold in the months to come.

Subsections (3)(c) and (10) give the Minister latitude in the context of how the scheme will be set up and to whom it will apply. Has the Minister or his Department given any thought to spouses of members who were elected in 1991, died in office and the spouse was subsequently nominated to fill that vacancy? Will the gratuity apply to the spouses? In most cases the spouses are women without income. On humanitarian if not legal grounds there is a strong case for the gratuity concept to be extended to members in that situation.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  If a councillor had more than five years' service, was elected in 1991 or 1994 and then died, his entitlement if he were alive would be paid to his estate, in other words, to his spouse or to whoever was entitled to his estate.

Mr. Mooney: Information on Paschal Canice Mooney  Zoom on Paschal Canice Mooney  From the date of election in 1991?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  He would have to have been a candidate in the 1991 election.

Mr. Mooney: Information on Paschal Canice Mooney  Zoom on Paschal Canice Mooney  As a point of clarification, does this apply from the date of election of the member?

Acting Chairman:  Let the Minister reply.

[974]Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The 1991 elections were for county councils and county boroughs while the 1994 elections were for the other authorities. When we refer to 1991, we mean 1991-4. If a councillor had been a member of a local authority for more than five years, was a candidate in the last election in 1991 or 1994 and subsequently died but would have had an entitlement under this gratuity scheme if they were alive, the gratuity to which they would have been entitled up to the time of their death will be paid to their estate. Everybody, except Senator Mooney, understands this. This is a very generous measure.

This gratuity is a once-off scheme and was introduced into this local government funding Bill which became a mechanism for this gratuity. To qualify for the scheme or the gratuity, a councillor must have served a period subsequent to the last local elections — June 1991 for county and city councils and June 1994 for town, borough and urban district councils and town commissioners — and must also satisfy minimum service requirements and must have served five years, as specified in the scheme. The scheme will specify a period for making applications to the local authority for a gratuity. The Minister mentioned June to September 1998 as the possible period, but that is not finalised.

The local authority will issue written notification to a person that they qualify for the gratuity and inform them of the amount. The scheme will specify that if a person stands for election to any local authority in 1999 the decision to grant the gratuity will stand revoked. The scheme will provide that the gratuity is payable following the June 1999 local elections. The Act provides that where a person has been paid a gratuity and subsequently becomes a member of any local authority, he should pay over the amount of the gratuity. If they fail to do so, the local authority will cease expenses and other payments until the amount of the gratuity is recovered.

The effect on dual members — town and county members — is as follows. The gratuity will be calculated and paid by the county which will aggregate service with the urbans for concurrent service and the more favourable result will apply. If the person does not stand for any local authority in June 1999, then the gratuity becomes payable. If the person stands for any local authority, the decision to grant stands revoked.

Persons who are currently Ministers or Ministers of State will not be eligible for a gratuity. However, service by previous Ministers or Ministers of State, who were elected to a local authority in 1991 or 1994, will qualify them for the payment of the gratuity. I see a smile on Senator Avril Doyle's face.

Mrs. A. Doyle: Information on Avril Doyle  Zoom on Avril Doyle  I thank the Minister.

Mr. Mooney: Information on Paschal Canice Mooney  Zoom on Paschal Canice Mooney  I apologise for the Minister interrupting. My enthusiasm got the better of me. While he has clarified the matter, perhaps he will make one further clarification to satisfy me. I [975] understand what he said in relation to the elected member. However, I need to contextualise this matter. The person I have in mind was a member of my local authority and died three months after the 1991 local elections. His wife was subsequently nominated to fill the vacancy. The Minister has clarified that the estate of the member, who died and who had been a long standing member with well in excess of five years' service, will receive the gratuity from the date of the commencement of his tenure to the time he died. All I wished to have confirmed was whether his wife, who is a member of the council since September 1991 and who will more than likely retire, would in turn be entitled to a gratuity in her own right. I am sorry for being specific but it was necessary in order to clarify the matter. This has happened in many other local authorities. We are ad idem on this matter but I wanted to put it on the record.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  I said on more than one occasion that to qualify for the scheme, an essential requirement is that one must have five years service.

Question put and agreed to.

Sections 13 to 15, inclusive, agreed to.

Title agreed to.

Bill reported without amendment and received for final consideration.

Question proposed: “That the Bill do now pass.”

Mr. Cregan:  I thank the Minister for his contribution. It is always encouraging to have him in the House because he explains his proposals in detail and in a polite and honest way. He is committed to this Bill and to local government because he is one of the first to be involved in the reorganisation of local government. I thank him for allowing Galway to be involved in this novel scheme.

Mr. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  I join Senator Cregan in thanking the Minister. We are fortunate to have him and the Minister, Deputy Dempsey, in the Department because their experience, knowledge and commitment to local government are evident in this Bill. For the first time in 15 years, the finances of local government are being put on a sound footing and tangible recognition is being given to the long service of many local authority members. They are welcome developments which I applaud. I hope we will see more of that type of thinking in future Bill.

Mrs. A. Doyle: Information on Avril Doyle  Zoom on Avril Doyle  On behalf of former Ministers of State, who were elected in 1991 and in previous years, I thank the Minister for including us in the package.

[976]Minister of State at the Department of the Environment and Local Government (Mr. Molloy): Information on Robert Molloy  Zoom on Robert Molloy  This is a significant Bill, although this is only part of the process. I was interested to hear Senator Cregan refer to my involvement for many years and it is true that I produced the first document for the reform of local government in 1971. It is remarkable to notice the warm reception among councillors, in particular, and the public for the idea of modernising and improving the local government system and devolving more functions to local authorities giving them a solid funding base and making some changes in the structure within which they operate.

There was deep suspicion in 1971 when I went on similar grounds to those the Minister has gone. I visited the nine regions to explain the proposals and there was a suspicion that we were proposing something which might undermine the situation which obtained. At the time there was general acceptance of what was required and that what was proposed were improvements. Looking back, it is sad it has taken so long, from the early 1970s to the late 1990s, to achieve the levels of reform about which we are talking. It has been a long and slow process.

Europe has moved ahead in reforming its local government system which is stronger than ours and has a greater constitutional role in the governance of many European Union countries. The proposals made 20 or 25 years ago are now becoming a reality; this makes me very happy.

I am glad to have had the opportunity to stand in for the Minister to deal with this important Bill. I hope it will lay down a solid foundation for the future funding of local government and give local authorities greater discretion in terms of spending and the projects they wish to undertake within their areas. That has been a great difficulty since prior to 1983.

Mr. Cregan:  Since 1977.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  And before that again.

Question put and agreed to.

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