"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."
October 3, 2013
Mr. Robert Watt, Secretary General, Department of Public Expenditure and Reform, called and examined.
"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.
Selected contributions, 2013 meetings of PAC
As the public spending watchdog, the Public Accounts Committee is one of the most powerful Oireachtas Committees. It has a key role to play in ensuring that there is accountability and transparency in the way Government agencies allocate, spend and manage their finances and in guaranteeing that the taxpayer receives value for money for every euro spent.