Wednesday 23 April 2008

Grand plans for local government need cash

POLITICAL TALK about local government reform in Ireland is as old as the hills. Yet even as the talk continued intermittently over decades, the State became one of the most centralised in Europe, with more and more powers stripped from local authorities, leaving a bare carcass.

Few would disagree with Minister for the Environment John Gormley's ideal that local government should be "democratic, accountable and provide quality local service delivery". What's debatable is whether his Green Paper will turn that ideal into a living, breathing reality.

"No taxation without representation" was the slogan of the American Revolution in 1776, with the obvious corollary that there can be no real representation without taxation. Yet the issue of revenue-raising powers for local government has been long-fingered once again.

Until 1978, when Fianna Fáil made good on its madcap election promise the previous year, local authorities had the power to raise revenue from domestic rates on every household in the State. Since then, they have been dependent - like children - on the Government.

Now largely funded by motor taxation and commercial rates, they have been robbed of the close contact which domestic rates engendered between citizens and their local authority, even as every cent raised by stamp duty - Ireland's only tax on property - goes to the exchequer.

Throughout the property boom, the Government was raking in some €350 million per month from stamp duty on the transfer of property. And though that figure has fallen sharply, the exchequer is still in receipt of a lot more revenue from this quarter than rates ever raised.

Yet no political party in Leinster House has the courage to propose that domestic rates should be reintroduced, even as a substitute for stamp duty. John Gormley has kicked to touch on this issue by referring it to (yet another) Commission on Taxation.

A "stronger local government system", of the type he says he wishes us to have, will not come about unless that system has revenue-raising powers. And the fairest, most obvious way of raising revenue would be to impose local taxes on homes, based on their value.

Two years ago, however, a report by Indecon economic consultants on local government funding warned that local authorities would need an extra €1.5 billion a year between them to meet the cost of "existing and emerging demands" for their services within four years.

But the then minister for the environment, Dick Roche, rejected Indecon's central recommendation that everyone should pay water charges and that local taxes should be imposed on holiday homes. He shirked such tough decisions, claiming that revenues were "bouyant".

One of the main selling points in the Green Paper is a directly-elected mayor for Dublin city and county. He or she is to have "strategic functions", including planning, housing, waste management, sewage treatment and water provision as well as a role in transport.

Supposedly modelled on the successful example of Ken Livingstone's two terms as mayor of London, the Green Paper makes the case that all of our cities and even counties should have directly-elected mayors with a metropolitan or regional focus - as indeed they should.

But if any of these mayors - Dublin's included - is to have real power, it will inevitably involve some transfer of authority from the city and county managers, who have been operating for years as Ireland's equivalents of the prefects who ruled French départments for so long.

Nearly a decade ago, when he was minister for the environment, Noel Dempsey sought to introduce directly-elected mayors here, but his plan was scrapped because of opposition within Fianna Fáil based on fears that it could result in the likes of Senator David Norris being elected.

There was also opposition among Government ministers and senior civil servants to any scenario that would involve creating an alternative power centre in Dublin - much the same fear that motivated Tony Blair in seeking to prevent Ken Livingstone becoming mayor of London.

Livingstone went on to become a highly-successful mayor and, though now facing a tough election battle, one of his principal achievements - the imposition of a congestion charge to reduce traffic in central London - will have long-lasting benefits.

Mr Gormley suggested on RTÉ Radio yesterday that a directly-elected Dublin mayor might have the power to introduce a congestion charge here - though that's doubtful. All he or she is guaranteed is chairmanship of the highly undemocratic Dublin Transport Authority.

Frank McDonald is Environment Editor
The Irish Times

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