2012 Estimates provide for gross expenditure of €1.328 billion

On publication of the spending estimates for 2012, Minister Phil Hogan T.D., Minister for the Environment, Community and Local Government, today (5 December 2011) said:

‘The primary aim of Government fiscal policy is to return the public finances to a sound position and thereby create a critical pre-condition for sustainable economic and employment growth.

Budget 2012 contains significant measures to consolidate our public finances. As part of this, every Department has been affected by spending cuts.  That’s unavoidable. The cuts to my Department, like those in other Departments, are necessary to get the public finances back to a sound footing, regain our economic independence and restore confidence. That’s a price well worth paying, very difficult though it might be in the short term.”

The Estimates provide €467m for current spending by the Department in 2012, down €185m on 2011.
The main area affected is the Local Government Fund. The Exchequer contribution to the Fund (€164m in 2011) will end in 2012 and be replaced by revenue from the new household charge. (Motor tax will continue as the primary source of income for the Fund).

The EU/IMF Programme of Financial Support for Ireland commits the Government to the introduction of a property tax. The Programme reflects the need, in the context of the State’s overall financial position, to put the funding of locally delivered services on a sound financial footing, improve accountability and better align the cost of providing services with the demand for such services.

In light of the complex issues involved, a property tax, requiring a comprehensive property valuation system, would take time to introduce and, accordingly, to meet the requirements in the Programme the Government has decided to introduce a household charge in 2012. The charge is an interim measure and proposals for a property tax will be considered by the Government in due course. The charge has the potential to raise €160 million annually: the revenue will be paid into the Local Government Fund for distribution to local authorities and will replace Exchequer financing previously provided by the Department.  

Other savings measures in the current estimate include meeting non-pay costs of the Environmental Protection Agency and the Radiological Protection Institute of Ireland, and payments under international agreements, from the Environment Fund (€9m); a reduced provision for the Local and Community Development Programme (€8m); savings in provisions for leasing of local authority housing in the context of the value for money available in the market and by efficiencies gained in reconfiguration of delivery of housing services (€7m); and finally, reducing staff numbers in the Department will lead to pay savings and there will also be a reduction in non-pay administration costs associated with increased efficiencies (€4m).

The Department is also undertaking a significant agency rationalisation programme, which will effectively halve the number of agencies under the Department’s aegis.   In addition, a key focus for DECLG will be on exploring the opportunities for shared services options amongst the agencies under its remit and providing a leadership role in that context.

On local authorities, the Local Government Efficiency Review Group has already reviewed the cost base, expenditure and numbers of staff employed in the sector, including a review of the effectiveness of programmes and proposals to enhance efficiencies. A range of work is underway or in planning arising from the Report related to shared services, procurement, ICT, audit, etc.   An Implementation Group, with an independent chairman, has been established to drive forward relevant recommendations of the Report.  The Group has been asked to focus on the key recommendations that will remove costs and yield earliest financial savings for the benefit of the sector and the economy generally. 

Capital spending;

“The estimates follow through on the Government’s investment plan published last month and deliver some €861 million to be invested in my Department’s capital programmes in 2012 (details below). In addition, a further €34m from this year’s funding will be carried forward to 2012 and be used to accelerate progress on the LEADER Rural Development Programme. A total of €3.3 billion will be invested in my Department’s capital programmes over the period to 2016. The focus will be on getting the most from these very significant capital resources through refocused priorities, greater efficiency and more competitive tendering.

While there is a significant reduction in capital funding in overall terms, the main effect will be to extend the timescale for full implementation of programmes, while also taking account of refocused priorities in the current economic context. The continuing competitive tendering environment provides a positive climate for capital investment compared to a few years ago when we were at peak construction prices. This allows us to deliver much more for less.

  2011   2012 
   Estimate   
  Programme  € million  € million
 ICT: Met Éireann and DECLG  2  2
 Housing  519

 390

  Water  435  371
  Environment  5  3.9
 Waste  1  1.3
 Local Govt  18  11
 Community  66  66.8
 Other  12  15
 Total  1,058   861
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