IBEC is concerned by lack of consistency in their application, writes Cliff Taylor, Economics Editor.
The focus of debate on new local authority development levies has been on their impact on house prices. However the levies will also have major implications for the business sector, affecting all areas of industrial development and construction.
IBEC, the business lobby group, has launched a campaign to try to limit the additional burden for business. In a letter to the Taoiseach, Mr Ahern, IBEC's director general Mr Turlough O'Sullivan says his members have "strong reservations" about the proposals. IBEC is calling for greater consistency in the way the levies are applied by local authorities, as well as a change in the appeals mechanism.
Local authorities already impose a development levy which is attached to planning permission for projects and helps pay for local infrastructure. The 2000 Planning and Development Act has introduced a new system of levies to help pay for public infrastructure and facilities. This allows local authorities to to draft a development contributions scheme of charges, which are due to come into force next year. IBEC's concern has been sparked by the drawing up of these draft plans, which indicate a significant increase in the development levies, with no appeal on the terms of the scheme allowed to An Bord Pleanála.
Infrastructure provision is currently funded primarily by central Government funding and from development levy contributions. The contributions have increased sharply in recent years, reaching €122 million in 2001, but most of the increase was due to a higher level of activity rather than increasing charges. However, the draft schemes published so far indicate that the levy is likely to increase sharply when the new regime comes into force.
An analysis of the figures from IBEC illustrates the scale of the increase. They estimate that the estimate contribution for Fingal County Council would increase from €15 million in 2001 to €52 million , while in Cork County Council the estimated increase is from €10 million to €23 million over the same period. The money will form a substantial part of local authority income, accounting for an estimated 20 per cent of receipts in Fingal, for example.
While all the local authority proposals are not yet published, the indications are that the total take will be "multiples" of the previous €112 million and, on current indications, could approach €500 million, according to Mr Brendan Butler, IBEC's enterprise director.
Draft plans published so far show a substantial difference in the proposed developer contribution in different local authority areas. For example, Fingal proposes a new dwelling revenue of €140 per square meter, while the same rate in Kilkenny is €45. Other authorities are proposing to charge by unit, ranging from a €4,800 charge in Cork County Council to €12,200 in South Tipperary. In practice this means Fingal could put a levy of up to €14,000 on a new house, while the maximum levy in Cork would be €4,800.
Proposed levies for industrial and manufacturing facilities also vary widely (see table). A 10,000 square meter industrial facility would attract a €1 million charge in Fingal, €750,000 in South Tipperary and €155,1250 in Sligo.
IBEC argues that "this demonstrates major inconsistencies in the pricing structures and demonstrates the need for national guidelines". From a business point of view, they say that account needs to be taken of the fact that industrial development will already produce a regular future revenue stream from rates and water charges.
With Government finances under pressure, it appears that the levies may be used to reduce Exchequer financing of local capital spending.
The likely implications for home buyers have already been highlighted. The Irish Home Builders Association has estimated that the charges could add some 5 per cent to the average cost of a new home in Dublin. Meanwhile, Clare councillors blocked the proposed development levies for their country earlier this week because of their likely impact on house prices.
IBEC argues that the additional cost will also be passed on to customers of industries and services forced to pay the levy for their development projects. "Following increases in energy costs, local authority rates, regulatory compliance costs and insurance, this represents a further cost burden to industry," Mr Butler argues, further damaging competitiveness and hitting the drive to attract foreign direct investment here.
IBEC is calling on the Minister for the Environment, Mr Cullen, to use his powers under the legislation to ensure that calculated costs are realistic and that there is an appropriate level of consistency between schemes. They also believe that application of all or part of the charges envisaged under the scheme should be at the discretion of the local authorities, to allow them to apply waivers and exemptions in certain community related initiatives. IBEC also wants the ability to appeal the development schemes to An Bord Pleanála. The new legislation allows the application of the schemes by the local authorities to be appealed, but not the schemes themselves.
