Councils still partying like it’s 2007

A reduction in local authority rates emerged as the issue most exercising publicans according to Ask Chili at this year’s VFI Conference.

Rates bills continue to pour in to publicans around the country with unrealistic demands and any pleas to keep step with fiscal and economic reality fall on understandably deaf ears. I say ‘understandably’ because local councils have had the funding cut from under them by a Government that finds itself severely “financially embarrassed” (as an old friend of mine used to put it when he was seeking a temporary beer bar loan from his mates).

Thus cries for reason from hard-pressed businesses such as pubs, hotels and restaurants go unheard. For let’s not forget that local councils are still staffed at 2007 levels – staffed to cope with a very overheated economy. Now, in the absence of the Government safety net, it’s natural for a body to attempt to protect its employment status.

For the facts remain that any reduction in rates will adversely affect local government employment – and local mandarins would not want to see their power base reduced by as much as a single employee.

The rates problem was best defined by economist Jim Power in his report prepared for Irish Employers for Affordable Rates when he stated, “The costs of doing business for this sector increased sharply during the boom and created a very uncompetitive situation. This left the sector in a very uncompetitive and vulnerable situation going into the recession.

“The one segment of the overall cost structure that has not adjusted to the economic challenges are the charges imposed by the local authority system – particularly commercial rates.”

Jim Power went on to point out that between 2000 and 2011, ARVs have increase significantly in all local authority areas, with the increase averaging 57 per cent across the country at a time when the Consumer Price Index increased by 32.8 per cent over the same period.

It’s fairly pointless to have a system not based on the ability to pay – it’s of little use to the council either.
Nor will it be easy to pass much more onto the hard-pressed consumer even if the Government meets with success in effectively re-introducing domestic rates through household and water charges.

Which leaves the inevitable option of cutting back on bloated council costs. As Jim Power points out, if even half of the €511 million in savings suggested by the Local Government Efficiency Review Group were passed back to business, the total commercial rates bill could fall by almost 19 per cent.

What’s not to like?

Sign Up for Drinks Industry Ireland

Get a free weekly update on Drinks Industry trade news, direct to your inbox. Sign up now, it's free