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New Councillors Can't Ignore Businesses

May 25, 2014

Following Friday’s elections, people around Ireland will be waking up to a new set of local Councillors. For some, following the abolition of Town and Borough Councils, they’ll find themselves in a whole new jurisdiction.

As in most democracies, our Councillors are directly elected by the people. In return, they ought to represent the interests of the people. This link between local people and local representatives is one of the strengths of our democracy. People have direct access to those that make decisions on their behalf.

There is also an important link between Local Government and the business community.  Businesses do not get to cast votes; rightly so. However, in representing the interests of people, local Councillors must be mindful of the needs of business. This is especially true given the recent reforms introduced in Local Authorities.

This Government was keen to increase the power, responsibility and accountability of Local Government, particularly with regard to economic development. Therefore, it is essential that Councillors step up to the challenge and do everything they can to represent business in their communities. Equally, it is important that businesses play an active role in securing a ‘business dividend’ from the reforms.

There are a few key questions to be considered with regard to the relationship between business and Local Authorities. Why should Local Authorities represent business interests? How should Local Authorities represent business? And how can business hold Local Authorities to account?

We believe Local Authorities should represent the interests of business for two main reasons. Firstly, business is vital to improvements in the quality of life in local areas. It is business that creates jobs, invests in the environment and gives vibrancy to town centres. Secondly, businesses should be represented, as well as nurtured and encouraged, as they are responsible for significant levels of funding for Local Government. Water charges and the Local Property Tax may be new burdens on households and families but business has been contributing to Local Authorities through rates, water charges and other taxes and levies for years.

Local Authorities ought to focus on a small number of big issues. This is a time when businesses should be developing strategies to make the transition from surviving the recession to capitalising on the recovery. However, there are many remaining challenges. Of these, we believe there are five facing Councils.

Firstly, it is vital that all Councils support their local economy. The support units within Councils must work with and for the business community. The newly established Local Enterprise Offices must support start-ups with fewer than 10 staff. It is also essential that Councils work with Chambers and other groups to make sure they don’t miss out on the considerable tourism opportunity in Ireland. Amenities and attractions, including town centres, must be developed to become attractive destinations. Town centres must also be given the opportunity to compete with ‘out of town’ centres by not making car parking charges excessively high.

Secondly, Councils must support procurement policies that support local businesses. All Councillors should encourage contracting authorities to introduce procurement policies that do not simply focus on lowest price. Despite commitments from the Office of Government Procurement to assist SMEs, we are hearing of tenders with pre-qualification criteria which almost guarantee that the contracts are awarded to large companies located outside the State. This does little to support domestic businesses and actually threatens jobs. Furthermore, this has the unintended consequence of lower tax receipts and increased social welfare payments – a large financial and social penalty to the State for a slightly cheaper price. Strategic procurement policies, which stimulate the economy, incentivise innovation, support local business and facilitate job creation, should be promoted.

Thirdly, Local Government reform should result in benefits for business. Now that the Local Property Tax has been implemented, it is essential it is retained by Local Authorities to be spent on local services and economic development. This will also increase the legitimacy of the tax.

Balancing the budget will always be a challenge for Councils but any reduction in the cost of Local Government should result in a reduction in rates paid by businesses. Of course, this should also convert to lower prices for consumers.

In areas where Town Councils are to be integrated into County Council areas, there is a real fear among affected businesses that they will be required to pay significantly higher rates. If such an increase is unavoidable, Councils should introduce the maximum period of adjustment allowed by the legislation.

Fourthly, Councils must work to make sure the rollout of Irish Water does not lead to increased charges for business. It is vital that Local Authorities work with Irish Water to produce a reliable, sustainable and efficient water supply for all residential and business customers, with a clear strategy for securing future investment, involving central Government if necessary.

Now that central Government has ‘hobbled’ the CER when it comes to independently regulating Irish Water and the charges it can levy, business cannot be expected to make up for any shortfall in funding arising. While Councils will no longer have responsibility over water charges, they must use their influence to protect the interests of businesses in their area.

Finally, Councils must make infrastructure and planning contribute to growth. It’s not just businesses that benefit from improvements in infrastructure, whether it’s upgrades in roads, public transport or the utilities we all use every day. For too long planning processes have hampered the improvements required to support progress. It is vital that planning decisions support business development. This will be of benefit to everyone in our communities. Construction 2020 helps set the scene for the future and it is now essential that Local Authorities work with national Government to create the type of planning and development regimes that will really boost local economies.

Ultimately a building decision has to rest on firm financial foundations. If these foundations are weak due to unrealistically high development contribution requirements, levies such as the 80% Capital Gains Tax on profit arising from the sale of rezoned land, or a VAT regime that makes residential construction 30% more expensive than office construction, then development will not happen. Our new Local Government leadership can play its part in delivering necessary reforms.

Chambers recognise that businesses cannot be passive in this process. Just as a vibrant democracy requires engaged citizens, successful Local Government needs business to interact with Councils: to support them; work with them; and to hold them to account. These are the roles played by every Chamber in the country and they are the roles we encourage all businesses to get involved in. The business community must be active participants in local decision making, not just for their own benefit but for the benefit of local communities and the many people who are employed by them and depend on their services.

So, as we call on all new Councillors to engage with business, we also call on all businesses to engage with and drive Local Government policy. Reflecting on the oft heard expression “you’d think they’d have fixed that by now”, it’s important to consider who “they” are. The reality is “they” are “you” – so get engaged!

This opinion piece by Chambers Ireland Chief Executive Ian Talbot appeared in the Sunday Business Post on Sunday 25th May 2014.

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