IRELAND

Ireland is unitary state and parliamentary republic. Its current constitution was promulgated in 1937. The Irish Parliament (Oireachtas) consists of two houses, the House of Representatives (Dáil Éireann) and the Senate (Seanad Éireann). General elections to the House of Representatives are held at least every five years, and elections to the Senate must be organised within 90 days of the dissolution of the lower house. The head of state is the President of the Republic, elected by direct universal suffrage for seven-year terms, while the government is led by a prime minister (Taoiseach).

Ireland has traditionally been a highly centralised state. Local self-government was formerly recognised in the constitution for the first time in 1999 by way of an amendment (Article 28A), which introduced local elections. Since then a general trend towards more democracy at the local level has gained traction. In 2001, the Local Government Act introduced a range of reforms detailed in the “Better Local Government” White Paper. In 2012, the strategies entitled “Reforming Local Government” and “Putting People First Report” dealt with issues of structures, functions, funding, efficiency and service, and governance and accountability, with the aim of strengthening local authorities' responsibilities, functions, leadership and financing mechanisms.

In 2014, a major reform took place through the Local Government Reform Act, which modified the territorial organisation of Ireland. The reform dissolved 80 city councils and introduced 95 municipal districts, reducing the overall number of local councils from 114 complex two-tier councils to 31 single-tier councils. The reform also introduced a system of sub-county governance, the municipal districts, which are designed to enhance democratic governance, subsidiarity and accountability. The act resulted in both recentralisation and decentralisation processes and reinforced supervision of subnational governments. It strengthened the decision making powers of councillors within the 31 councils and provided them with higher control over local authorities‘ chief executives. A review of the implementation of the 2014 reforms across subnational governments is currently being conducted by the Department of Housing, Local Government and Heritage. The Department is also considering further devolving powers and modernising the local government system.

There is no formal representation of local governments at the national-level and no framework for the consultation of local and regional authorities.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
26 county councils, 3 city councils, 2 city and county councils			31
Average municipal size: 161 097 inh.
31			31

OVERALL DESCRIPTION: Ireland has a single tier of subnational government composed of 31 county and city councils since the 2014 reform.

REGIONAL LEVEL: The 2014 reform replaced the eight former regional authorities with three "regional assemblies": the Connaught-Ulster region, the Southern region, and the Eastern Midland region. They are indirectly elected and enjoy a low degree of autonomy. Their financing is largely dependent upon their constituent local authorities. They are mainly in charge of regional development, including the adoption of Regional Spatial and Economic Strategies, and management of EU funds. Regional policy in Ireland is set out in the National Planning Framework (NPF) and the National Development Plan (NDP), both released in 2018, which form part of the “Project Ireland 2040”, i.e. a planning and investment programme.

MUNICIPAL LEVEL: Local councils are categorised under different types of local authorities of equivalent status: 26 county councils and five city councils, two of which have the status of both city and county councils. County councils represent the historical counties of Ireland, while city councils represent the country’s five main cities: Dublin, Cork, Galway, Limerick and Waterford.

County and city councils have between three and seven councillors who are elected by direct universal suffrage every five years. Every year, each local authority elects, from within its councillors, a chairperson (or mayor) for a term of one year. Each local authority is also managed by a chief executive (formerly known as the city or county manager), appointed generally for a period of seven years, which has to advise and assist the elected council in the exercise of their functions. The 2014 reform also introduced a system of sub-county governance, the municipal districts, which are designed to enhance democratic governance, subsidiarity and accountability. At the exception of the cities of Dublin, Cork and Galway, all local councils are divided into municipal districts.

Overall, Irish municipalities are very large compared to the OECD and EU27 average (respectively 10 250 and 5 960 inhabitants), and the smallest local authority has around 32 000 inhabitants (Leitrim County Council), meaning that all municipalities have more than 20 000 inhabitants, compared to 33% in the OECD on average. More than half of the population lives in cities of more than 50 000 inhabitants. The government established two statutory committees in 2019 to reduce the size of large local electoral areas and to ensure adequate levels of representation for urban areas.

HORIZONTAL COOPERATION: To favour inter-municipal cooperation, Ireland has implemented a shared services programme in several areas, including waste management, payroll functions, building control, treasury management, and procurement through contractual arrangements.

The Local Government Act 2001, as amended by the Local Government Reform Act 2014, provides the legislative basis for the distribution of local authorities’ responsibilities. Overall, local authorities in Ireland have a relatively limited range of responsibilities compared to other OECD countries. The 2014 reform clarified the allocation of responsibilities across levels of government. Some functions were recentralised (e.g. water services transferred the state company “Irish Water”), while others were decentralised (e.g. planning, local and community development).

Today, county and city councils carry out a range of functions, which mainly concern economic affairs, environmental issues, housing, cultural and recreational facilities and community development. Municipal districts are involved in community engagement and leadership, representation and ceremonial roles, and have some policy and regulatory functions in areas such as planning, housing, roads, and environmental protection. With respect to the two latter domains, a National Roads Authority (NRA) and an Environemental Protection Agency (EPA) are responsible for managing the national road network and ensuring environmental protection, respectively, while local authorities are responsible for the provision and maintenance of infrastructure. In theory, there is no duplication or overlapping of functions of members between county/city councils and municipal district jurisdictions: matters that are decided at the municipal district level are not dealt with at the county/city level.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level
1. General public services (administration)	Internal administration
2. Public order and safety	Fire services and civil defence
3. Economic affairs / transports	Local economic and community development; Road and bridges; Public lighting; Driving and taxi licensing; Supporting enterprises and job creation at the local level
4. Environment protection	Environmental services; Drainage; Waste management; Pollution control; Animal control
5. Housing and community amenities	Urban and land use planning; Housing and building (enforcement of minimum standards, assistance with housing provision); Planning permissions and development control
6. Health	Veterinary services
7. Culture & Recreation	Local arts, culture and leisure facilities and services; Libraries; Parks and open spaces
8. Education	Nominations to vocational education committee and harbour boards; Higher education grants
9. Social Welfare	Social housing benefits; Social inclusion and poverty

Scope of fiscal data: county councils, city councils, and city and county councils, regional assemblies. From 2017, “Approved Housing Bodies” (AHBs) will be reclassified to the local government sector.

SNA 2008

Availability of fiscal data: High

Quality/reliability of fiscal data: High

GENERAL INTRODUCTION: The basic structures, procedures, and financing arrangements of local authorities in Ireland are defined in the Local Government Act. Ireland is one of the most centralised countries within the OECD regarding fiscal indicators. Local governments in Ireland have very limited spending responsibilities, which have been decreasing for a decade with the transfer of responsibilities to central administration units and to external agencies. subnational governments depend largely on central government grants. The country was severely hit by the 2008 economic crisis, and more recently by the COVID-19 crisis, which provided the opportunity to enact a broad local government reform, which included a fiscal component, in particular through the introduction of a local property tax in 2013 and tighter fiscal budget rules and supervision.

Subnational government expenditure by economic classification
	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	2 322	2.4%	8.9%	100.0%
Inc. current expenditure	1 483	1.6%	6.4%	63.9%
Compensation of employees	514	0.5%	8.2%	22.1%
Intermediate consumption	578	0.6%	15.2%	24.9%
Social expenditure	348	0.4%	3.6%	15.0%
Subsidies and current transfers	19	0.0%	0.7%	0.8%
Financial charges	24	0.0%	2.4%	1.0%
Others	0	0.0%	0.0%	0.0%
Incl. capital expenditure	839	0.9%	31.1%	36.1%
Capital transfers	104	0.1%	23.7%	4.5%
Direct investment (or GFCF)	735	0.8%	32.5%	31.7%

EXPENDITURE: Ireland had one of the lowest ratios of local expenditure to GDP and public spending in 2020 (2.4% and 8.9% respectively) among OECD unitary countries (12.7% and 27.5% respectively), as well as among EU 27 countries (18.3% and 34.3%). The role of Irish subnational governments as public employers is very limited, as local staff spending represents 8.2% of total public staff expenditure (vs. 41.4% on average in OECD unitary countries), although it represents 22.1% of subnational government expenditure. subnational government expenditure experienced a strong decrease between 2007 and 2020 resulting both from recentralisation trends, Better Local Government reforms, and from the aftermath of the 2008 recession. Overall, between 1995 and 20120 the share of subnational government expenditure in GDP and public expenditure decreased respectively by 9.8% and 21.4%, the highest decline among OECD countries.

DIRECT INVESTMENT: The share of subnational governments in public investment is relatively low, accounting for 32.5% versus 50.7% in OECD unitary countries and 51.6% in the EU27, although subnational governments often merely act on behalf of the central government to implement national investment programmes. Subnational public investment amounted to 0.8% of GDP, well below the OECD average for unitary countries (1.9%) and the EU27 average (1.8%). Irish subnational government share in investment has fallen dramatically for the last decades by 56.2%, as a consequence of the economic crisis that hit the country as well as local government reforms. However, subnational government investment as a share of public investment increased by 13.4% between 2014 and 2020, as a result of the 2014 reform and the various investment programmes of the country, notably in regard to social housing for the energy efficiency of their dwellings.

Most subnational government investments are dedicated to transport infrastructure such as local roads, general economic affairs, housing and community amenities and environmental protection. The Ireland National Planning Framework (NPF) is supported by a ten-year public investment strategy (until 2027) for the development of regions, cities, towns and rural areas. Together with the National Deveopment Plan (NDP), the NPF is part of “Project Ireland 2040,“ established in 2018. A delivery board monitors the implementation of the plan to ensure a coordinated and collaborative approach across levels of governance. Under this plan, public investment increased by 24% between 2019 and 2020. Three regional Spatial and Economic Strategies (RSESs) were introduced subsequently by the three regional assemblies for 2020-2031.

Subnational governments can also contract public-private partnerships (PPPs) to finance investment projects. Inter-departmental groups on PPPs (IDGs) have been established between the departments of Finance, Environment, Public Enterprise, Education and Sciences, Local Government, and the National Roads Authority, in order to create a coherent and consistent market for PPPs across all sectors of infrastructure investment and public services. The National Development Finance Agency (NDFA) has been established to advise local authorities on investment projects above EUR 20 million.

Subnational government expenditure by functional classification
	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	2 247	2.5%	-	100.0%
1. General public services	104	0.1%	3.9%	4.6%
2. Defence	0	0.0%	0.0%	0.0%
3. Security and public order	90	0.1%	10.6%	4.0%
4. Economic affairs/transports	413	0.5%	17.6%	18.4%
5. Environmental protection	224	0.3%	59.7%	10.0%
6. Housing and community amenities	329	0.4%	48.2%	14.7%
7. Health	0	0.0%	0.0%	0.0%
8. Recreation, culture and religion	132	0.2%	27.8%	5.9%
9. Education	11	0.0%	0.4%	0.5%
10. Social protection	943	1.1%	11.7%	42.0%

In Ireland, subnational government expenditure shows a different pattern of spending by economic functions than other OECD countries on average. Social protection is their top spending area, including social inclusion, poverty and social housing benefits (42.0% in 2019 vs 14.1% in the OECD on average), followed by economic affairs and transport (18.4%), in particular roads, transportation infrastructure and support to local economic development) and housing and community amenities (14.7%). subnational governments are responsible for 59.7% of total public spending in environmental services and for almost half of total public spending in housing and community amenities.

Subnational government revenue by category
	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	2 262	2.4%	10.6%	100.0%
Tax revenue	187	0.2%	1.2%	8.3%
Grants and subsidies	1 714	1.8%	-	75.8%
Tariffs and fees	264	0.3%	-	11.7%
Income from assets	5	0.0%	-	0.2%
Other revenues	91	0.1%	-	4.0%

OVERALL DESCRIPTION: Reflecting low subnational government expenditure, Irish subnational government revenue is very limited, and has been plummeting in recent years. Representing 10.6% of total public revenue in 2020, i.e. 2.4% of the GDP, it has one of the lowest ratios within the OECD and EU27 (45.5% and 38.3% on average respectively). The main source of subnational government revenue comes from grants and subsidies, which accounted for around three-quarters of their revenue, well above the average of OECD unitary countries (53.3%) and the EU27 average (46.6%). This level sharply increased between 2019 and 2020, due to higher state transfers for Covid-19 related spending, housing regeneration and roads. The second source of revenue is tariffs and fees, which accounted for 11.7% of subnational government revenue, a ratio close to the OECD and EU27 averages (respectively 13.3% and 10.3%). The share of tax revenue is very low by international comparison (8.3% vs. 35.4% of subnational government revenue on average in OECD unitary countries and 40.1% in the EU27).

TAX REVENUE: In addition to accounting for a small share of subnational government revenue, local tax revenue amounted to only 0.2% of GDP and 1.2% of public tax revenues in 2020, well below the average for OECD unitary countries and EU27 countries (respectively 4.5% and 7.2% of GDP and 18.7% and 27.1% of public tax revenue).

Local tax revenue is mainly composed of two property taxes, one levied on commercial properties (commercial rates) and, since 2013, a local property tax on residential properties (LPT). Each individual local authority is responsible for the levying and collection of these taxes. The Annual Rate on Valuation (ARV) applies to the 2021 market valuation of each property since January 2022 until 2025 (against 2013 market value until 2022) and as determined by the Valuation Office. It is set by the elected members of each local council as part of their annual budget. Commercial rates are compulsory for local governments and generally levied on the occupiers of property. LPT is collected by the state Revenue Commissionners who transfer the revenue directly to the Local Government Fund, which is managed by the department of Housing, Local Government and Heritage. The department then allocates LPT proceeds to individual authorities according to a complex formula. 80% of revenue is retained locally for the funding of basic public services, housing and roads, while the remaining 20% are allocated to an equalisation fund. Where the 80% allocation is lower than the base funding requirement, the local authority receives additional equalisation funds. In 2015, new powers were conferred to local authorities to vary the LPT annual rate on valuation by up to 15%, with the aim of increasing their financial autonomy and funding sustainability. In 2020, four local authorities decreased their LPT rates, while 19 raised it above the basic rate. LPT represented overall 5.5% of subnational government local revenue in 2020. Both taxes combined totalled 8.3% of subnational government revenue and 0.2% of GDP in 2020, which is significantly low compared to the OECD average (property tax revenue accounts for an average of 1.0% of GDP in OECD countries).

GRANTS AND SUBSIDIES: Transfers from the central government include specific (earmarked) grants and a general grant, as well as the Local Government Fund (LGF) established in 1999, which is the most important. The LGF is financed by receipts from the Exchequer (68.7% in 2020) and from the LPT (31.3%). In 2020, the LGF total budget accounted for 20.3% of total grants and 15.4% of total subnational government revenue. The share decreased in 2020 as the central government sharply increased its transfer to local authorities (+46% compared to 2019) to finance COVID-19 related costs, as well as roads, housing and regeneration. Prior to 2015, the LGF was used to provide funding to local authorities for their ‘day-to-day’ activities through “General Purpose Grants”. Since 2015, they have been replaced by “Local Property Tax allocations”. These allocations amount to 20% of local property tax receipts collected nationally, which are then redistributed for equalisation purposes through the LGF, taking into account expenditure and revenue of each local government (needs and resources model). The LGF is also used for payments to the Department of Transport for non-national roads and public infrastructure, payment to the Exchequer, subsidies to Irish Water and, in 2020, for COVID-19 supports. Local governments also receive grants from the Environment Fund (less than 1% of total grants in 2020), financed by the plastic bag levy and the landfill levy to support environmental initiatives, as well as from various government departments for particular services, such as housing, employment and road maintenance.

Most of the grants allocated by the central government must be used for specific services provided by local authorities. In 2020, current grants represented 63.0% of total grants, while capital grants accounted for 37.0%. Around 85% of the grants provided to local authorities were dedicated to three main sectors in 2020: housing and urban renewal (58.9%), transport (16.2%) and enterprises (10.6%). The remaining was allocated to other services, such as sports and cultural activities, heritage services, veterinary services and fire and emergency services. On housing and regeneration, the central government provides around 97% of local authorities‘ funding, used for the provision of social housing dwellings (managed by local authorities), for housing benefits (e.g. housing assistance payment HAP, rental accomodation scheme RAS and accomodation for homeless persons) and for the improvement of existing housing units.

OTHER REVENUE: Irish local governments also receive revenue from other sources, in particular tariffs and fees (11.7% of subnational government revenue in 2020) and property income (0.2%). In 2020, Irish local councils raised substantial revenue from user charges and fees, including commercial housing rents, water charges, rental income, waste charges, parking charges, planning application fees, and revenues from Irish Water for goods and services (whereas previously this income was incorporated within the general-purpose grant).

Subnational government fiscal rules and debt
	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt	2 022	2.1%	3.0%	100.0%	-
Financial debt*	1 582	1.7%	2.6%	78.2%	100.0%
Currency and deposits	0	-	-	0.0%	0.0%
Bonds / debt securities	0	-	-	0.0%	0.0%
Loans	1 582	-	-	78.2%	100.0%
Insurance pensions	0	-	-	0.0%	-
Other accounts payable	440	-	-	21.8%	-

* Currency and deposits, loans and bonds

FISCAL RULES: Budget balance rules for local governments were introduced in 2004, after Ireland recorded a general government deficit in 2002. Local governments are required to prepare Annual Financial Statements (AFS) by the end of March, which are submitted to an independent audit by the Local Government Audit Service. The Medium-Term Budgetary Framework, published in July 2014, provides a compendium of how local government budgets should be managed in general government accounting. The Irish Fiscal Advisory Council (IFAC), established in 2011, is responsible for assessing compliance with fiscal rules and assessing the fiscal stance adopted by the government. subnational government performance is monitored through the National Oversight and Audit Commission for Local Government (NOAC), which was established in July 2014 to oversee local governments.

DEBT: The Local Government Act (Art.106) states that a local authority may borrow money in any manner it considers suitable for the effective performance of its functions, for capital expenditure exclusively (“Golden Rule”). However, local governments need prior approval of the central government and are constrained by a debt ceiling of EUR200 million for new annual borrowing. As a result, local government debt, at 2.1% of GDP and 3.0% of public debt, is significantly below the OECD average for unitary countries (respectively 14.5% of GDP and 10.5% of public debt in 2020). 78.2% of total outstanding debt is made up of financial debt (“Maastricht debt”), the remaining part comprising other accounts payable (commercial debt, arrears). Financial debt is composed exclusively of loans, most of which were borrowed from the central government. subnational governments do not issue bonds.

TERRITORIAL MANAGEMENT OF THE CRISIS: The COVID-19 crisis was mainly managed centrally in Ireland. Local authorities followed national guidance provided by the central government to ensure they provided appropriate support to vulnerable households (e.g. older persons, poor families). They established community support heplines and forums in order to coordinate the COVID-19 support within their territories, which is referred as the “Community Call” initiative. Through these structures, subnational governments ensured collaboration between a wide range of stakeholders. Each forum was chaired by the Chief Executive of the subnational government and comprised relevant local authority staff, representatives of local and regional organisations and state agencies (e.g. the Health Service Executive HSE, Community Welfare Service). Forums ensured (i) the cooperation with the HSE, local community groups and the local Community Welfare Office to identify vulnerable groups in each subnational government, (ii) the delivery of social care support to the weakest population, (iii) the resilience of existing community services, and (iv) the collection of information on services and groups to identify potential gaps in service.

To implement these community supports, most local authorities had to improve or adapt their information and communication technology (ICT) infrastructure (e.g. Geographical Information System – GIS), which were crucial in the local response to the pandemic. A national dashboard then collected statistics from all the local authorities on the services delivered.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: Local authorities deferred commercial property rate payments from the most affected companies to support them in 2020 and 2021, especially in non-essential retail services, hospitality, leisure, personal services (e.g. hairdressers) and childcare sectors. In addition, local authorities provided a EUR 633 million restart grant scheme to SMEs hit by the crisis and a EUR 53 million trading online and business continuity voucher scheme and client stimulus fund. The client stimulus fund aimed to provide cash to sustain clients of local companies in manufacturing and internationally traded services sectors to help support operational costs (up to EUR 20 000 per eligible business).

On the other hand, local authorities received strong financial support from the central government, mostly through grants. The central government provided EUR 1.42 billion of extraordinary funding to local authorities to cover COVID-19 expenditure in 2020, which included EUR 730 million related to the waiver of local commercial rates, EUR 687 million for SMEs administered by local authorities. Additional funding of EUR 131 million in respect of COVID-19 impact in 2020 was paid from the Local Government Fund to subnational governments in March 2021. All supports are assumed to have been withdrawn in 2022.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Subnational government finances were largely impacted by the pandemic. Their tax revenue declined by almost half of their 2019 level in 2020 (-49.2%) and, to a lesser extent, tariffs and fees also decreased (-2.5%) due to the drop in parking fines and charges, trading licenses and leisure and tourism activities. This was compensated by strong support from the central government. Grants and subsidies received by local authorities increased by 33.7% between 2019 and 2020, with the aim to cover COVID-19 impact but also to increase social housing accommodation. Local revenue from assets also grew in 2020 (+22.2%).

On the expenditure side, subnational government spending increased by 9.1% in 2020 compared to 2019 as a result of the local support provided during the crisis to vulnerable companies and households. The growth of local spending was also driven by redeployment costs, the cost of implementing remote working, the cost of purchasing staff protection equipment and cleaning. As a result, subnational government debt increased by 14.1% in 2020, fully financed by loans.

ECONOMIC AND SOCIAL STIMULUS PLANS: Ireland is set to EUR 900 million in grants as part of the EU Recovery and Resilience Facility (RRF) to mitigate the economic consequences of the pandemic and of Brexit. The Department of Public Expenditure and Reform developed national Recovery and Resilience Plans to access this funding (“Resilience and recovery 2020-2021: Plan for living with Covid-19" in 2020 and “ Covid-19 Resilience and Recovery 2021: The Path ahead“ in 2021). The plans include structural reforms and investment projects at different levels of governance and supported by the RRF. They mainly focus on green transition (37% of projects) and digital transformation (20%).In case of adverse economic shocks, the government established a „Rainy Day Fund“, with approximately EUR 500 million transferred from the Exchequer until 2023, to be used to maintain a planned level of capital expenditure at all levels of governments, such as projects included in the National Development Plan (NDP).