PAC | Nov 7, 2013

[Extract]
Deputy John Deasy: While we are speaking about the Minister for Public Expenditure and Reform and Mr. [Robert] Watt [Secretary General in the Department], I remind the committee that Deputy Robert Dowds and I have been working on the issue of commercial rates. We have raised the issue at this committee on three or four occasions in the past year. It is another important element when it comes to local government. 

Taking up what Deputy Simon Harris said about what the Minister, Deputy Brendan Howlin, had offered with regard to the committee investigating this area, there is an acceptance of the arguments we have been making on commercial rates. The Ministers and Secretaries General to whom I spoke in the past couple of days appeared to accept the amendments we would be tabling to the Local Government Bill 2013. We need to take an holistic view of commercial rates when it comes to the two Departments mentioned. The Departments of Finance and Jobs, Enterprise and Innovation could also play a role. 

There has been a lack of joined-up thinking between Departments on commercial rates and their potential effect on businesses in putting them to the wall. Based on what we have done at this committee, the Departments have reached the point where they recognise that these sentiments deserve attention. If one is going to organise something with the Departments of the Environment, Community and Local Government and Public Expenditure and Reform, Mr. Watt has been very helpful. Deputy Robert Dowds and I have met him on a couple of occasions and he has been very constructive on the commercial rates issue. When it comes to any kind of initiative regarding the funding of local government and where the funding goes, the issue of rates will be part and parcel of it.

Chairman (John McGuinness): We will write to them first, following which we will see if we need to ask the two Secretaries General to come before us for a discussion. We will include it all in the same correspondence.

Deputy John Deasy: To give members an idea of the difficulties that arise, the Department of Finance used to be the umbrella Department for the Valuation Office, but now it is the Department of Public Expenditure and Reform. However, as the latter views - correctly I think - the office as an independent agency, it has a difficulty getting involved with it. The Department of the Environment, Community and Local Government is the only Department with a vehicle going through the Oireachtas dealing with commercial rates. For that reason, everything is in segments and there is no overlap or connection between the Departments. The jurisdictions are separate, but the issue deserves an initiative between the Departments, perhaps led by this committee, to deal with it holistically.

Chairman: We will copy the Departments of Finance and Jobs, Enterprise and Innovation in our correspondence because they also have a role to play in the issue. We will receive the correspondence first and, if necessary, then speak to the Secretaries General.

Deputy Sean Fleming: I understand there is a valuation Bill on the Dáil Order Paper.

Deputy John Deasy:  A Valuation (Amendment) Bill was introduced in the Seanad several months ago to provide for self-assessment. This would be an entirely different system from that which obtains. New valuations are being prepared, but when that Bill is enacted, there will be an entirely different assessment regime for businesses. Nobody has thought about how we deal with one set of people whose businesses were being valued using a new method being brought in. We were told that the people whose businesses were valued using the old method would not be allowed to self-assess under the new method. These are the issues that need to be addressed.

PAC Meeting:
October 3, 2013

Mr. Robert Watt, Secretary General, Department of Public Expenditure and Reform, called and examined.

[Extract]
"I welcome Mr. Watt and his officials and wish to raise with them the issue of commercial rates. The committee has already discussed this issue with officials from the Departments of Finance and the Environment, Community and Local Government and the Valuation Office. It is one that has been raised in committee approximately eight or nine times at this stage. 

"I inform the committee that I have spoken to and met Mr. Watt on a number of occasions on this issue in the past few months. I do not wish to patronise him, but he is probably the only civil servant who has an appreciation of the impact of the increased commercial rate bills on businesses around the country. I left this meeting approximately half an hour ago to attend another committee meeting at which the Simon Community was making its pre-budget submission. When I informed the group that I did not have much time to engage with it because I had to return to this committee to discuss commercial rate values, I was told commercial rates for the Simon Community had increased from €4,500 to €6,000 and that while it had a waiver of 50% of its rates, its income was approximately €20,000 per annum. No one is safe from the Valuation Office and what is going on. When a group such as the Simon Community is expressing that view, it tells its own story.

"Where are we in this process? For me, it all comes back to one thing. From talking to local authority officials I believe they are out of kilter with officials of the Department of the Environment, Community and Local Government. The local authority officials with whom I deal are extremely concerned about a diminishing rates base. They believe hiking rates will result in more businesses going to the wall. They are adamant about this. When I make this argument to officials of the Department of the Environment, Community and Local Government, they do not seem to get it, which is a real difficulty. That is exactly what will happen. The question now is what are the potential solutions to ease this spike in commercial rates that is coming down the line."

Mr. Robert Watt: As has been noted, we have spoken about this and the Valuation Office is aware of the position. This arises from the fact that we have not had a revaluation for so long - it has not happened since 1988 - and much has changed since. Relative values have altered and, in the likes of Waterford and Dungarvan, there has been significant change. Some sectors are benefitting but some will face a very significant increase in rates based on current policy and what is happening with the Valuation Office. These are policy questions so I must be careful about what I can say. As Deputies know, the Valuation Office is independent and we do not interfere with it. There is the question of how, once the Valuation Office does its job and we see an impact, the policy options are laid out to deal with consequences. We have spoken about this before and it is a matter for the Minister for the Environment, Community and Local Government, Deputy Hogan.

In the retail sector there will be significant change in demand. We have spoken about different options and these issues must be taken up by the relevant Minister. Whatever option is taken will have difficulties. For example, those who would benefit from a change in rates will not be happy if changes are phased in over time, although those who face the increase would be happy. There is a policy question that must consider where we are and whether there is any room to phase in the process over time or ameliorate some effects. There is also a wider policy question about the time it has taken to do this and how to ensure, in future, that we have regular revaluation. The Valuation (Amendment) Bill is working its way through the House and it stipulates that it should be done every five years, with self-assessment to speed up the process. It is very important that in future we do not have such a long gap in revaluation and sudden changes. The policy options are not great but there is a need to consider the impact on particular sectors to see if the system can formulate an option that could, over time, phase in changes.

John Deasy: The lack of foresight in policymakers concerns me. That is not within the Department but rather within local authorities and the so-called harmonisation of rates. There is not much harmony in the case of Government and business people, so it is probably a bad word. Is it not the case that when the legislation was being drafted to harmonise the rate for Dungarvan, for example, with a county rate, somebody would have had the foresight to look to spread this over ten years? However, with the Valuation Office and the spike that people may have to suffer, no foresight was given with regard to spreading it over a period. Is that a massive inconsistency in policy?

Robert Watt: When there is a merging of rates, there is a ten year phasing-in period as set out in the legislation, and no such provision is available for phasing in the consequences of a revaluation. In the UK, they have a phasing in as a result of revaluation, with the period extending to two or three years. On the face of it, the Deputy is correct. I do not want to get into what could be a policy question but there is a different approach taken when rates must be merged, as will happen in Waterford, where there is ten years to do so, as opposed to a revaluation, as no such provision exists. There are different approaches and whoever constructed the legislation showed great foresight in including the ten year provision. That anticipated a problem that is live in some places.

John Deasy: The Chairman and committee have been substantially involved in this over recent months. I have asked for a meeting with the Secretary General of the Department of the Environment, Community and Local Government to discuss these matters and I hope she will revert on that. I appreciate Mr. Watt's efforts and his giving the matter time and thought. We have spoken about officials working on this a little more in the days ahead and we will keep making those contacts in the relevant Departments to get some kind of a policy solution to what will be in some cases a catastrophic impact on businesses.

PAC Hearing | 26 September 2013 
Annual Report and Financial Statements 2012: Discussion with National Asset Management Agency (Continued)

[Extract]
Deputy John Deasy: I have another "how many" question... it goes back to those individuals who have worked in NAMA and who went on to work for a company that does business with NAMA. Since NAMA's formation how many people have left the agency and gone to work with companies that do business or have done business with NAMA? 
 
Mr. Brendan McDonagh [NAMA chief executive]: The figure we have quoted is that between last year and this year to date, we have lost 50 people. Some of these people obviously have joined companies which have nothing to do with NAMA. However, to be realistic with the Deputy, a number of other people have joined companies that may have some dealings with NAMA. As I indicated earlier, our best defence against that is to make sure that assets are openly marketed and that, in effect, by having the same information as everyone else, no one can steal a march on anyone else.

John Deasy: Mr. McDonagh knows what I am asking. 

Brendan McDonagh: Yes. 
 
John Deasy: I am trying to get the rate here. I worked in the United States and the big debate 20 years ago pertained to the revolving door in respect of United States Senators and Congressmen. Eventually, they dealt with the issue but it took years. They have a vastly more developed lobbying system over there and eventually they were obliged to do something about it. While that has been talked about in Ireland, given the sums of money involved and the importance of NAMA to the taxpayer, can Mr. McDonagh give me an idea of how many of the aforementioned 50 people have gone to companies that have done or do business with NAMA? ... I have been informed that Mr. McDonagh referred to a three month or six month cooling-off period. I am trying to figure out how many people have actually gone to such companies. 

Brendan McDonagh: It is a notice period, and during that time, we can put people on gardening leave if we think it necessary to so do. In respect of the property and private equity buyers, probably about five of the 50 staff have gone to those. The rest of the 50 staff have joined other banks or----- 

John Deasy: In other words, 10% of the staff went to such organisations. 

Brendan McDonagh: Yes. 
 
John Deasy: Is it the case that NAMA is not overly concerned about this? 

Brendan McDonagh: The reality is that people have the right to move job. However, they are under contractual obligations and statutory obligations in respect of the Official Secrets Act as well as confidentiality clauses in the NAMA Act. There are provisions to enable one to deal with someone who breaches such obligations. I reiterate that the biggest defence is for an asset, which is put up for sale by NAMA or by the debtor in a case to which NAMA must give its consent, to be openly marketed in order that anyone who can buy that asset has an opportunity to bid for that asset and has the same information as anyone else. It is a difficult issue and I accept what the Deputy is trying to say. The reality is that people will come to work in NAMA, where they will work for a number of years, after which they will try to get a job somewhere else. This is what is happening. People are being given opportunities elsewhere because we cannot compensate them, to be frank with the Deputy, in the context of trying to hold on to them.

Committee of Public Accounts | Thursday, 27 June 2013

[Outset]
Deputy John Deasy: I raised an issue last week about the Valuation Office. The Chairman offered to consider inviting the office to appear before the committee. Can we make that request as soon as possible?

Chairman (Deputy John McGuinness): Yes, we are doing that. When did the Deputy have in mind for this meeting? I would like to know what kind of pressure we are under.

Deputy John Deasy: There is a major issue among businesses in my constituency with regard to valuations being made by the Valuation Office. It is clear that many will go out of business. This is relevant to the work of this committee and the taxpayer because of the massive amounts of commercial rates being written off and the massive arrears in local authorities, which are going up. There is an association between what the Valuation Office is doing and how much money is effectively not being collected. Issues arise from the general administration of the Valuation Office and how it goes about its business. There is a loss to the taxpayer. We need to examine this because economic times have changed and some say it is not going to get better any time soon. We need to consider the effect the valuations being put on businesses and the ratings involved are having on business. Can we invite the representatives of the Valuation Office on that basis as soon as possible?

Deputy Robert Dowds (Lab): I support that request and would be interested to see the difference in impact in counties in which the new system has come in compared to the old system. I know that will not give a full picture because they were different economic times, but it is important to have a decent system of commercial rates and it is important that businesses can survive.

Chairman: We will ask the Valuation Office to come in at the earliest possible date. Some of those matters might be taken up in a general way today with the Department of the Environment, Community and Local Government.

Deputy John Deasy: Deputy Dowds has raised the other big issue in this respect, which is the introduction of the Valuation (Amendment) (No. 2) Bill 2012. This completely changes the way in which businesses are assessed. We are moving towards a system of self-assessment and the Valuation Office will have views on that and when and whether it should be expedited through the Government. What will it mean to have two separate systems of assessment once that Bill is enacted and how will their administration work, in some cases in two different parts of the country? All of those issues need to be teased out with the Valuation Office.

Chairman: We will set an early date for that meeting.

PAC Meeting | Jan31, 2013
RE: Enterprise Ireland

Deputy John Deasy (extract): 
[Regarding] the proposal to amalgamate county and city enterprise boards within local authorities through the establishment of local enterprise offices. I voiced my concern about this on the floor of the Dáil and I am surprised others have not raised it. My experience of local authorities and their association with the commercial world is not good... enterprise boards should not be put anywhere near them... How will Enterprise Ireland guard against the very anti-commercial culture that exists in some of the local authorities seeping into these incredibly valuable organisations to affect the creation of start-ups?

My two cents is that local authorities are dysfunctional when it comes to the commercial world... Local authorities are political organisations and are in many respects inefficient. They are driven by a wholly different mindset to that of the business and commercial world. I see trouble coming down the line if that kind of influence is exerted on organisations which have worked very well. Waterford County Enterprise Board in my constituency is a good organisation. The integration of enterprise bodies into local authorities will take some minding and watching.

>> Read John's contributions and questions in full here: (pages 7-9)