Government policy on funding local councils is directly contributing to the phenomenon of long-distance commuting and "ribbons of commercial development" on the outskirts of cities and towns, according to the Chambers of Commerce of Ireland (CCI).
Publishing its latest research on local government financing, CCI chief executive John Dunne said local government charges cost business over €2 billion a year, of which over €1 billion comes from commercial rates to make up for inadequate funding by the Exchequer.
As a result, local authorities were promoting the development of rateable properties over a healthy mix of residential and commercial developments.
This was driving up property prices in urban areas and pushing residential development farther from centres to poorly serviced and remote locations.
"Schools in areas such as Kilbarrack in Dublin are closing and constituencies such as Dublin North Central are losing TDs due to ageing populations, while places such as Leixlip, Lucan and Gorey are underserviced, in terms of schools, infrastructure and amenities and have grim commuting patterns," he said.
Speaking at the launch of CCI's detailed report, Local Government Financing - Business Pays, which is the centrepiece of its campaign for reform, Mr Dunne said the present system of financing was also giving rise to "unacceptable anomalies" that were putting private-sector jobs at risk.
"Firstly, in the Border region, companies from the North are winning local authority contracts for which their southern counterparts simply cannot compete due to the range of charges they are being forced to carry that do not apply in Northern Ireland.
"Secondly, under the conditions imposed by benchmarking and additional pay awards, employers in the private sector are funding wage increases for public-sector employees through significant increases in local authority charges.
"These charges are levied without regard to ability to pay - so, in effect, private-sector companies that are unable to pay wage increases to their own workers, are obliged to fund wage increases for their public-sector counterparts."
The CCI report suggests that cost savings of 20 per cent could be achieved by rationalising local government structures.
"While it is important to take account of local geographic and socio-economic conditions, the current number of local authorities does not appear to reflect these factors", it says.
The report also calls on the Government to look at alternative sources of financing for local government - for example, by giving local authorities the power to "expand their base of paying customers within a clear framework based on the polluter-pays principle", with corresponding reductions in commercial rates.
Mr Dunne strongly criticised the delay in publishing a report on local government financing by Indecon consultants. "More than one year ago, the Government announced that they were undertaking a serious review", he said.
Noting that this was the 14th report on this subject, he said none had been implemented.
"We were assured it would be different on this occasion, but now, as the second set of local authority budgets since then are being agreed, local authorities are being left once again to lean on the business community to make up their cost deficits."
