Sunday 28 December 2014

€5bn debt threatens plan to cut property tax

Published 20/07/2014 | 02:30

PAC’s John McGuinness criticised the ‘poor ability of the councils to collect money’
PAC’s John McGuinness criticised the ‘poor ability of the councils to collect money’

Local authorities now owe a staggering €5bn to the banks.

New figures obtained by the Sunday Independent also reveal that €676m remains outstanding to councils across the country by way of unpaid rates, water arrears and housing loan arrears.

The high level of accumulated debts at the councils - who receive annual state funding of more than €5bn - was branded "indefensible" and a "disgrace" by members of the Public Accounts Committee (PAC) this weekend.

Documents from new Environment Minister Alan Kelly's department reveal the scale of indebtedness, both in terms of loans and overdraft facilities in councils throughout Ireland.

The massive debt mountain has raised serious questions about the ability of some councils to reduce the rate of the property tax by 15pc, as promised by most parties in the run-up to the May local elections.

Much of the debt was accumulated during the boom, when councils bought up large tracts of land to develop for housing, much of which has since remained idle.

The newly collated figures are contained in documents sent by John McCarthy, Secretary General of the Department of the Environment, to the PAC, which is demanding oversight responsibilities for local government.

In addition to the €5bn in loans that remain outstanding, the documents also reveal that the councils have €40m in overdraft facilities available to them. According to the documents, this is to allow them to overcome short-term funding issues to meet their current and capital commitments.

The figures show that at the end of 2012, Dublin City Council owed almost €876,746,153 in loans payable to banks, the highest of any local authority by far. The council, which found itself at the centre of a political storm over the cancellation of 
the Garth Brooks concerts, has €115m in cash in the bank.

The local authority with the next highest debt is Cork City Council at €502m, followed by Fingal County Council at €447m.

The documents also reveal that €430m is owed in commercial rates arrears. A further €145m is owed in commercial water arrears, a further €62m in rent arrears and €37m more in housing loan arrears.

There has been a marked increase in rates arrears reported by councils, from €323m in 2011 to €430m in 2012.

At the end of 2012, Dublin City was owed €76.2m in commercial rates alone. It is also owed €15.9m in water arrears, €20m in rent arrears and €10m in housing loan arrears.

South Dublin County Council, which is owed €40m in commercial rates arrears, had the next highest level of arrears.

PAC Chairman John McGuinness described the figures as "shocking". He told the Sunday Independent: "It is truly a disgrace. It shows the urgent need to bring the local government sector under the proper auditing remit of the Comptroller and Auditor General and ourselves. It also highlights the alarmingly poor ability of the councils to collect money."

Independent TD and PAC member Shane Ross said 
the councils' debts are "indefensible" and called for a review of loan-approval procedures.

Sunday Independent

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