A total of €18.4 million in cuts to councils in Dublin and Waterford are on the way due to the Government and Irish Water. This is because the Minister for Public Expenditure and Reform will no longer fund the commercial rate compensation scheme. Because of this, Dublin City Council will take a hit of €8.7 million while Waterford City and County Council will see a 13.5% drop in rates - €3.3 million - and is proportionately the worst hit council. South Dublin County Council will lose €4.1 million while Fingal County Council will lose €2.3 million. Let us be very clear. These are Government cuts plain and simple. They are not cuts by the councils themselves. Let us be equally clear that these cuts are unsustainable. They place a burden on those local authorities that cannot be met. We are hearing that from the CEOs of those councils but also from councillors across the political divide.

The compensation from the Department that was in place is now abolished, leaving those councils, which are badly affected, high and dry. On Monday night, Dublin city councillors refused to pass a budget because of these cuts. How could they pass a budget which proposed, for example, increasing council rents, commercial rates on small businesses and toll charges? All of this would have a serious effect and negative impact on householders, older people in their homes and small businesses already struggling, as well as commuters forced to drive because of a failing public transport system. The chief executive of Dublin City Council said these cuts had to be made because the council was not being compensated by the Government, despite promises made. I have spoken to the chief executive officer of Waterford City and County Council and he has the same view. This is a Government cut. Promises were made to compensate these local authorities but they have been left high and dry.

In Waterford City and County Council, the proposed budget may include cuts in funding for housing maintenance, roads, festivals for local communities and an increase in commercial rates of up to 10%. That is unsustainable. People were told when they paid their property tax that the moneys would be used to fund proper services, yet people in Waterford and Dublin will see services cut through no fault of their own.

My simple question is this. We need obviously to have a debate on how we fund local government. In this particular instance, given that these local authorities have been so badly hit and given the impact this will have on people in Dublin, Waterford and other areas, will the Government commit to restoring the compensation given to local authorities to ensure they do not have to take the axe to services, which is what they are being asked to do? Sinn Féin councillors will not do that nor will they clean up the mess created by the Tánaiste’s party. I implore him to do the right thing and restore funding to these local authorities.

I thank the Deputy for raising this issue. The background to this is that, between 2014 and 2019, compensation of the order of €47 million was paid annually to local authorities in lieu of commercial rates from Irish Water. Irish Water is liable for commercial rates from 2020 and the need for compensation in lieu of commercial rates ceases. The apportionment of the valuation of Irish Water among local authorities from 2020 will be based on population, similar to that for other utility companies with national networks. It is expected the local government sector will collect a broadly similar amount in commercial rates, as was previously paid as Exchequer-funded water rates compensation.

Most local authorities are better off under the revised distribution effect of the income from Irish Water commercial rates as compared to the compensation amount. However, seven local authorities will receive less in commercial rates than they received in compensation. Waterford City and County Council is particularly impacted, losing 70% of the income previously received through Irish Water rates related compensation. It is far less equipped to deal with such a reduction in income compared to the other impacted authorities, namely, the four Dublin local authorities as well as the Wicklow and Kildare local authorities. The loss creates a gap for Waterford to deal with of up to €3 million for its 2020 budget.

Support for local government in 2020 has been realigned, largely as a result of the valuation of Irish Water as a global utility liable for commercial rates. The Department of Housing, Planning and Local Government is monitoring the impact of this transition on local authorities and will, of course, take it into account. It is important local authorities have sufficient long-term sustainable funding to deliver critical services to local communities, rural and urban.

We are seeing a change in the way in which commercial rates will be allocated linked to Irish Water assets to ensure an appropriate distribution of those rates across local authorities. Most counties are gaining. Some counties, however, are losing as a result of that. Waterford is one of those. It is the job of the Department of Housing, Planning and Local Government to make sure it works through those challenging arrangements with the Waterford local authority to ensure it is appropriately funded through the transition.

I know the history of this issue. It is a legacy issue from Irish Water which is a complete mess and fiasco. It is not the fault of those local authorities in Dublin or Waterford that there was a global re-evaluation which has seen a massive cut in their funding. The Tánaiste said the local authorities in question have been asked to engage with the Department. They have done so for a long period and have been told that they may get funding for one year but that is it. After that, they are on their own and have to make the cuts. If the Tánaiste was watching this, Dublin City Council has proposed an increase in toll charges and rents for social housing tenants, for those who can least afford it, as well as cutting services and increasing rates. The same is being proposed in Waterford.

Solutions are not being provided other than the Tánaiste telling local councillors to take the axe to cut services because of a mistake made by the Government. That is not good enough. All the promises made as a consequence of the property tax have been thrown back in councillors’ faces. Not only are they not getting additional services in those local authorities, they are now getting fewer services. It is not good enough. Compensation needs to be given fully to those local authorities to ensure householders and older people are not the ones who will have to pay the price for the Government’s incompetence and mess.

I am sure the Deputy knows that the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, has met Waterford Oireachtas Members on this issue in recent weeks. Exchequer funding for local authorities has increased in recent years, including the allocation for next year for Waterford City and County Council of just over €3 million. This is an increase of just under €700,000 in terms of this year's allocation moving into next year.

There is an issue, however, for Waterford City and County Council in the context of the reorganisation of the rates which would have been paid in the past from Irish Water assets. According to my note, the Department has an ongoing dialogue with management in Waterford City and County Council with a view of working through these issues. I am sure the Deputy is raising it in the Dáil today to make sure the focus stays on trying to resolve these issues in a way which is sustainable for Waterford City and County Council.