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Dáil hears that 'local government is the starved dog of Irish public administration'

The public is facing worse services and higher rates as seven local authorities are set to lose €18.4 million in their funding, The Dáil has heard.

Because of a decision to not to continue a compensation process from Irish Water to local authorities, local authorities are now facing having to increase commercial rates and reducing services.

The matter was raised both at the Public Accounts Committee (PAC) and in the Dáil during Leaders' Questions on Thursday.

"Local Government is the starved dog of Irish public administration," said PAC member and Fianna Fail TD Shane Cassells.

Sinn Fein's David Cullinane said the cuts to funding are because the Minister for Public Expenditure and Reform will no longer fund the commercial rate compensation scheme.

“Because of this, Dublin City Council will take a hit of €8.7 million while Waterford City and County Council will see a 13.5% drop in rates - €3.3 million - and is proportionately the worst hit council. South Dublin County Council will lose €4.1 million while Fingal County Council will lose €2.3 million,” he said.

Mr Cullinane said these are not cuts by the councils themselves and that these cuts are unsustainable.

“They place a burden on those local authorities that cannot be met. We are hearing that from the CEOs of those councils but also from councillors across the political divide. The compensation from the Department that was in place is now abolished, leaving those councils, which are badly affected, high and dry,” he said.

Mr Cullinane said on Monday night, Dublin city councillors refused to pass a budget because of these cuts.

The chief executive of Dublin City Council, Owen Keengan, said these cuts had to be made because the council was not being compensated by the Government, despite promises made, he said.

“I have spoken to the chief executive officer of Waterford City and County Council and he has the same view. This is a Government cut. Promises were made to compensate these local authorities but they have been left high and dry,” he added.

In Waterford City and County Council, the proposed budget may include cuts in funding for housing maintenance, roads, festivals for local communities and an increase in commercial rates of up to 10%, the Dáil heard.

“That is unsustainable. People were told when they paid their property tax that the moneys would be used to fund proper services, yet people in Waterford and Dublin will see services cut through no fault of their own,” Mr Cullinane said.

Tanaiste Simon Coveney said in response that between 2014 and 2019, compensation of the order of €47 million was paid annually to local authorities in lieu of commercial rates from Irish Water. Irish Water is liable for commercial rates from 2020 and the need for compensation in lieu of commercial rates ceases, he said.

“The apportionment of the valuation of Irish Water among local authorities from 2020 will be based on population, similar to that for other utility companies with national networks,” he said.

Mr Coveney did accept that Waterford City and County Council is particularly impacted, losing 70% of the income previously received through Irish Water rates related compensation.

“It is far less equipped to deal with such a reduction in income compared to the other impacted authorities, namely the four Dublin local authorities, as well as Wicklow and Kildare local authorities. The loss creates a gap for Waterford to deal with of up to €3 million for its 2020 budget,” he said.

The Department of Housing is monitoring the impact of this transition on local authorities and will, of course, take it into account. It is important local authorities have sufficient long-term sustainable funding to deliver critical services to local communities, rural and urban, Mr Coveney said.

The Tanaiste said Exchequer funding for local authorities has increased in recent years, including the allocation for next year for Waterford City and County Council of just over €3 million. This is an increase of just under €700,000 in terms of this year's allocation moving into next year.

“There is an issue, however, for Waterford City and County Council in the context of the reorganisation of the rates which would have been paid in the past from Irish Water assets. According to my note, my understanding is that the Department has an ongoing dialogue with management in Waterford City and County Council with a view of working through these issues,” he said.