The current system of local authority financing places an unfair and unsustainable burden on Irish business, according to a statement issued yesterday by employers lobby group Ibec.

The group called for local charges and rates on business, like those imposed for waste disposal, to be capped at the rate of inflation, and for reforms to make local government more efficient.

Speaking in Dublin yesterday, Ibec director general, Turlough O'Sullivan, said that the inequity of local authority financing was a key issue that needed to be addressed if Ireland was to remain competitive.

"While accounting for a mere 8 per cent of properties and 15 per cent of water connections, business alone pays rates, water charges and development levies.

"Average water bills have risen by 75 per cent since 2000 and some councils have seen development levy income rise 400 per cent since last year," said Mr O'Sullivan.

According to data cited by Ibec, non-pay costs for Irish business rose by 19 per cent between 2000 and 2004, due to rising rates and waste and water charges. In 2004, businesses contributed €40 of every €100 received by the State's local authorities, while households contributed €6.

According to Ibec, the pressure faced by the business sector to reduce costs in a competitive environment contrasts with the freedom of local authorities to increase charges on them without any control or accountability in regard to spending.

"Local authorities must take practical steps now to improve their performance; it is unacceptable for business to pay inexorably rising charges to fund inefficiencies," said Mr. O'Sullivan.

As well as calling for alternative sources of local authority funding, Ibec also demanded that the government implement a series of measures to improve the efficiency of local authorities.

Amongst these proposals are that town councils and boroughs be merged, that more services be tendered on a national, rather than local, basis and that local authorities adopt performance indicators.

But the Ibec initiative prompted a strong reaction from Dublin City Manager, Mr John Fitzgerald, who defended local authorities' records.

"If Ibec's argument is for broadening the base for local authority financing then I wouldn't disagree with that, but it is unfortunate that it should be made in the form of an unfair attack on local government.

"We published performance indicators for all local authorities within the last two months and, as far as I'm aware, we are the first segment of the public service to do so", said Mr. Fitzgerald.