Perhaps the Minister would briefly explain the meaning of the division of the capital into A and B shares.
In Committee on Finance. - Agricultural Credit Bill, 1929—Committee.
I thought that I explained that on Second Reading. The real object of the division is to get rid of the present arrangement whereby the Minister for Finance is paid dividends on the shares held by him, and the money for paying those dividends has to be advanced from the Exchequer. Under this arrangement no dividends will be payable on the B shares, and the position will be, with the special arrangements about the B shares, that, after a year or a year and a half, there will be sufficient earnings to pay dividends on A shares. The B shares will remain without interest until there are profits earned. We will get to the position whereby no dividends will be paid except out of profits. At present dividends are being paid although there are no profits to pay them. It is intended to get rid of the position in which the Exchequer advances moneys which are paid back to it in dividends, and also to get rid of the false position shown on the balance sheet as a result.
In view of what the Minister has just said, there is a possibility that he will hold a number of A shares as, if they are not taken up by the public, they will fall to him. Is there any provision by which they could be converted into B shares?
It is not intended to do that. It would be possible.
It is intended that he will hold A shares?
From sub-section 4, it appears that the Minister must take up the shares which have not been subscribed for by the public. Is there not a possibility that he might require more than £150,000 this year?
No. The total shares will be 500,000. The banks will take up 200,000, so that that leaves only 300,000 and only 10/- a share will be paid up.
But you have to take into account the 250,000 issued some time ago and not taken up?
Those were certificates of charge and not shares.
Does the Minister say that 300,000 will be required?
300,000 shares. 500,000 shares will be issued. The Banks will take up 200,000, leaving 300,000 remaining, and 10/- will be paid per share.
Is not that a roundabout way of doing it, when the money is coming back to the holders again? They will have to pay the extra 10/-, knowing that they will get it back.
They might not get it all. It depends on circumstances.
They are indemnified by the Government.
We might pay.
Perhaps you will not.
In regard to Section 5, on Second Reading the Minister for Agriculture told me that the Government had a majority on the Board. I do not know whether that is correct. I believe under the principal Act, the banks had three directors, the Government three and the shareholders one. If the Government claim that the director who represents the shareholders represents them, then, of course, they have a majority.
Yes. The Minister for Finance has a majority of the shares. As a matter of fact, we could have them all as shareholders and directors, but it was agreed that as the banks were the other principal shareholders, the people they wanted should be elected to the number of three.
There was a clause in the original Act which provided that as the Minister holds 200,000 shares he should have the nomination of Chairman. Does that provision still hold or is it amended by implication to mean 400,000?
It is still the same.
Perhaps the Minister for Finance would be good enough to explain what is the object of the statement in sub-section 1 (d) "Not exceeding in any accounting period one-tenth of the balance of the said net profits."
That is for the purpose of building up the reserve of the Corporation.
Would it not be better to do away with (d) and try to build up a reserve by some other means?
I think if you take the provisions (a) and (d) there is ample provision for a reserve. It is reasonable, I think, that a bonus should be paid at some point to meet the loss the Exchequer has to sustain or the dividend that is foregone.
I would like some explanation of the words in brackets in sub-section 1 (e): "Unless the Minister authorises such series to be issued without any guarantee by him." I take it that that enables the Corporation to issue certificates of charge without a guarantee which they had not power under the principal Act to issue. If I am right in that I think it is a very important provision to be slipped in, in brackets as it were. Perhaps the Minister would explain if it gives him that power.
They could have issued other things, not exactly certificates of charge. They could have issued debentures, though the amount was limited. I do not think that there will be much prospect of issuing certificates not guaranteed by the Minister, because the likelihood would be that they would not be able to dispose of them.
Why take the powers, then?
They desire to have the power. I do not believe it is very likely to be exercised.
Sub-section 2 repeals sub-section 3 of Section 15 of the principal Act. I would like the Minister to explain what is the difference in what is substituted and what is repealed.
The old wording was "in any one year." The new wording is "in any yearly period for which the accounts of the Corporation are made up." Formerly the wording was "in any one year." It might be a calendar year or the financial year. This is simply making it the yearly period for which the accounts are made up.
Will that be a twelve-monthly period?
Would the Minister not alter sub-section 2 (b) and let the Corporation expand to whatever extent is necessary. I imagine that if the Corporation goes ahead there will be much more money needed than seven and a half million pounds.
It is really retaining the previous position, except that it enables the Corporation to pay off a certain series of certificates of charge if it is necessary or desirable, by the issue of a new series. It alters the wording so that the second borrowing for the purpose of paying off the first does not count for the purpose of the limit of seven and a half millions.
Are we to understand that the effect of sub-section 3 is that these bills of sale will not be liable for stamp duty?
It is really under the Bills of Sale (Ireland) Act that all bills of sale have to be registered. This means that the certificates of charge have not to be registered.
Will the Minister explain what induced the Government to change the position of the trustees being nominated by the holders of stock to the trustees being nominated by the directors?
It was really a question of machinery and the difficulty of having them nominated by the holders.
In effect, will not the Government nominate all the trustees seeing that the Government have a majority on the Board?
The Corporation acts independently.
Would the Minister explain also the reason of allowing the issue below par?
I think the Deputy could imagine a reason. If it were impossible to issue below par, without going into the history of the matter, the Deputy will realise that we might have a fixed rate of interest and that market conditions vary. You may have occasionally to vary the price of issue to get the stock taken up, no matter what the stock may be.
If you do that, you have to raise the rate of interest and charge those who are getting the money.
It depends. The amount of discount that might be necessary might be very little. It might prove quite possible to issue stock at, say, 99 or 98 where it could not get taken up, owing to market conditions, issued at par. Although that involves an extra charge on the Corporation, as a matter of fact, unless they lent at 6 per cent., I do not think it would be worth while making that issue.
They want to get the money, anyway.
With reference to the money being paid out of the Central Fund, that means that upon the Vote for the Minister for Finance, we can raise questions dealing with the actual payment out of the fund.
That is a question for you, A Chinn Comhairle.
It seems to be a question of order. Would the Deputy develop that point?
The point is whatever little control the House has over the payment of moneys out of the Central Fund would arise, I take it, on the Vote for the Minister for Finance. Therefore, if we wish to raise any question on a payment of that sort, we could raise it on the Vote for the Minister for Finance.
I cannot give the Deputy a decision offhand. If the Minister has to pay certain money, I presume there will be some place where the question of payment can be raised, but if it is a statutory payment, it is not part of the Minister's policy, and you cannot raise on the Minister's salary why he is making certain payments which he is compelled by statute to make.
I submit that all payments are statutory, because if the Minister made a payment which was not statutory, he should be put in jail.
Payments are statutory in that sense that there must eventually be authority under an Act of the Oireachtas, but, for example, the subsidy to the Abbey Theatre is not a statutory payment in the ordinary sense.
I take it that it arises somewhere. What place could one criticise the payment made to the Abbey Theatre? On what Vote would it arise?
On the Vote in which it is included. It is voted on a particular Estimate. It is put into the Appropriation Bill and then becomes a statutory payment in that sense.
There are a number of things like judges' salaries which go on the Central Fund, and it is only on the Office of the Minister for Finance that one can raise questions dealing with them, not with the acts of the judges, but with the general administration, say, if one wanted to consider certain things which ought to have been done and which were not done.
I will have to consider this carefully. I am not going to answer the Deputy's question specifically with regard to this particular question on the Bill except to say that where the Minister, by a particular Act of the Oireachtas as distinct altogether from the Appropriation Act, is compelled to make a certain payment, he cannot be challenged on his Estimate, that he ought to change the policy, because manifestly only the Oireachtas can change policy which is embodied in statutes. That is the general ruling. I am not sure of this particular case.
This particular case does not actually fix the sum; it leaves it too open. Supposing we wanted to say next year that he gave too much, or did not give enough, or that he might have dealt with the thing more rapidly and fixed the period under which he was to give the money more rapidly under that Section, there should be some place where we should be able to raise that point.
If the Minister has a discretion, there is some place where the exercise of that discretion may be raised.
He has a discretion, but it is more a question of the time.
If the Minister has a discretion, there is a place where that question can be raised. There is bound to be a place.
What is the place?
Naturally I require notice of that. If there is a discretion given to the Minister, which I am not clear about, then there is an opportunity of raising it. If the Minister has no discretion, then on his Estimate particularly you cannot raise it.
It is clear that he has a discretion under Section 3, sub-section (4), because there you find the words, "the time limited with the approval of the Minister." The question of time gives him a discretion.
Yes. The way of raising that is evident.
It would seem to an ordinary observer that sub-section (1) is redundant. Any company has the power that is given to the Agricultural Credit Corporation under that Act in the Companies Acts.
The only point about the matter is really the memorandum. The articles of association of a company can be altered fairly easily. The memorandum can only be altered by application to the Court. What is contemplated here is that the alterations supplementary to, or in consequence of, alterations specifically authorised under this Act may be made by the company without resort to the Court.
Section 13, sub-section (2), states: "All such alterations shall be in such form consistent with this Act as shall be approved by the Minister and by the Minister for Agriculture." Who is to decide whether they are consistent or not?
If they are not consistent they are not legal.
I think that is rather faulty. The Minister is to decide. I think the original Act, Section 10, sub-section (2), which is now being amended, had substantially the same sort of provision. The previous approval of the Minister and the Minister for Agriculture was required. Who is to determine whether it is or is not consistent?
What might happen would be: If an alteration in a memorandum was made which was inconsistent with this Act some borrower or a solicitor of some borrower would discover it and probably would refuse to make repayment or take some other action that would lead to the matter being fully decided by a Court.
Would the Minister be liable in that case?
No. It would be invalid.
There is no fear of a conflict between the Minister and the Registrar of Companies, I take it?
The Minister may insist on a form that would be consistent with this Act; the Registrar of Companies might not think it the most suitable form.
I do not think it would arise.
With regard to sub-section (3), is the Minister satisfied with the drafting? I am speaking particularly with regard to the phrase "and that" in line 28. Is it clear to him what the phrase "and that" conveys?
What is wrong with it? It is perfect.
Is the intention not to leave any discretion to the registrar at all? Is it the intention to make it mandatory on the registrar to accept the wording drawn up by the Corporation? "The Corporation shall deliver to the registrar a printed copy of the memorandum as so altered and such registrar shall register the same." I take it that the registrar has discretion in ordinary cases.
The registrar has all the discretion that he exercises at the moment under all the Acts under which he operates. The Minister for Agriculture and the Minister for Lands have an entirely different function. It is for us to say whether within the original Act certain loans may be made, and whether the memorandum should be so extended as to enable those loans to be made. We do not interfere, in any way, with the discretion of the registrar.
The reading of it would seem to indicate that the registrar has no discretion—"such registrar shall register the same."
We cannot come along and do something invalid under the existing law. If we do, we can be made amenable.
I do not know what discretion the registrar has at the moment. I should say that any discretion which the registrar has is very slight. These things are really matters for the Court.
Arising out of Section 14, might I ask the Minister as to whether any provision is made where there is a life interest only and power to hand over the farm to whichever of the children, say, the widow likes to leave it to? Could a loan in that case be a charge?
Yes: on the life interest.
It could not previously.
It could not.
The Agricultural Credit Corporation could take any security they wished. They could take the security of a life interest if they thought it was sufficient. I am sure that in a great many cases they do not think the security is sufficient. Hence they do not make the loans.
It was indicated to me in the Agricultural Credit Corporation that it was not possible to make the loan in such a case.
That is unsound.
I will take the Minister's word.
I was anxious to put in an amendment, but I was not sure how I could do it. I want to ask how I can do it, say, on Report Stage? I think it will be necessary to amend the 1928 Act and raise the £400 to a higher sum. I do not know whether it would be necessary to put in a new section or whether it could be done on this section.
Do you mean on the merits, or how to insert such amendment?
How I could put in the amendment.
That is a question I could not decide offhand without consultation with the draughtsman. If the Deputy wishes to insert such an amendment I think he would want a new section. Of course it would be a very simple section, but I suggest that £400, in view of the extraordinary powers taken, is ample.
When this thing was being argued last year I noticed in the Official Report that Deputy Moore made a very strong case for this provision here with regard to the unvested tenants, but the case did not meet with very much sympathy. I would like to know what caused the Minister to change his mind and to have this section put in this year
Is the matter Deputy Ryan wishes to raise dealt with in any section of the Bill?
The 1928 Act is referred to, but it is governed by the £400 limit. I want to change that.
Is it a fundamental thing in the 1928 Act?
And it is not dealt with at all in this Bill?
The 1928 Act is referred to. Many sections of this Act are governed by the £400 limit.
I would like to get an opportunity of considering the question. This is an Amending Bill to the 1928 Act.
The 1927 Act.
The 1927 and the 1928 Acts. If there is a particular matter which is not dealt with at all in this Bill, and which was fundamental to the 1927 and 1928 Acts, it is likely that it would not be in order to raise it at all on this Bill after it gets a Second Reading. I am not able to judge that at the moment. There is some governing clause in the 1928 Act which is not dealt with in this Bill at all. I do not see, at first glance, how it can be brought into this Bill.
In the original Act, £200 was changed after the Second Reading to £400.
If the matter is relevant, I will allow the Deputy to raise it on Report.
I wonder would the Minister explain with regard to sub-section (c) why is the time limited to within one month?
You have to fix some time.
A month is surely a short time.
What time does the Deputy suggest?
At least three months.
The shorter the time the better, as the person's status and conditions may change between this and the date of making the loan. It is reasonable to ask the borrower to get a certificate from the Land Commission, within a month of charging the place, as the certificate can be got within a month from the date of the loan.
Very often personal circumstances will not permit of a thing like that being done within a month. A man may be ill.
Then he can get another certificate. It is merely a certificate that he is in occupation of the land and paying rent.
On this section, I wonder would the Minister consider whether the registration of these cautions should not be made without cost.
Why should it? The Local Registration of Title Act, 1891, has simplified proceedings in respect of the title to land, and the cost of registering a caution is very small indeed. The greater part of it is solicitor's costs, and I see no particular reason why a slight cost of this sort should not be paid. People could make as good a case in connection with other matters, and if you did it in this case you would have to do it in a hundred others, and upset the whole machinery.
My idea was that as this is a semi-Government office, and will be altogether a Government office, any work done for it by other offices should not be charged for.
Surely the State should get some fees also, as appropriations-in-aid to pay the Registrar's salary, and so on?
It is not worth while that the State should be getting fees into one pocket and paying them out of another.
They are not in this case.
With regard to the Corporation generally, for the moment it is a public expense.
We are hoping for the time when it will be paying its way. In this case, a man wishes to lodge a caution; in the usual way he gets a solicitor to lodge it, and the fees are extremely small. Why should he be let off his fees any more than any other man who has to lodge a caution? The Deputy is raising a huge question in this, as the consideration put up in this case would apply to many others.
I should like the Minister to defend sub-section 1. There was very considerable discussion on this last year.
What is the particular point the Deputy wants defended?
Last year the Minister pointed out the inequity and injustice of allowing people who had gone to America, or gone into the Civic Guards, or become national teachers and so on, coming back after ten or fifteen years and making a claim against the person who stayed at home to work the place. There was a similar amendment to this proposal by Deputy Fahy last year, but the Minister convinced the House so much that it was withdrawn.
No. Surely this principle was in the previous Act? There are two parties to it—the man who is in occupation of the land and the other person in America. It is very hard to adopt general principles that will settle the equities between these two. In some cases, the person who remains at home is no good and does not deserve the place, but he gets it. His father dies intestate, and he remains on and works the place and gets the easiest living. In the other case, the boot is on the other foot, and the best man goes away.
The Minister gave the other instance last year.
I think I stated that explicitly on the last occasion. This is not a simple matter at all. I remember distinctly putting both sides of the case on the last occasion.
The instance the Minister gave last year was that of the best man staying at home and the other going away. This year the instance he gives is of the best man going away.
If I said that the Deputy should have pointed out how foolish it was.
Has the Minister considered whether, in addition to the two classes of people mentioned, that is, persons under 21, and persons of unsound mind, persons resident abroad temporarily should not be included?
It would be rather hard to do that. When you are dealing with a lunatic you are dealing with his estate—you have a definite body to deal with. When you are dealing with a minor you liquidate matters when he comes to 21, or within five years afterwards. It would be very hard to bring in a person resident abroad. The matter might be considered before the Report Stage, but it is rather difficult. It would be very hard to draft an amendment dealing with the equities of that sort of person.
Does this Section cover the point raised by Deputy Kennedy?
This section deals with that point. I should be very much surprised if I am wrong in stating that the Agricultural Credit Corporation have not the right to lend on the security of a tenancy for life.
I move Amendment 1:
To add to the end of the Section the following words—"or for any other purpose or purposes including personal and family maintenance where in the opinion of the directors the making or incurring of the loan or liability was calculated to facilitate the farmer in effecting economies or avoiding losses."
During the Second Reading debate I raised this point about the power the Corporation have of lending money. It was pointed out that there are certain purposes for which the Corporation feel they have not power to lend money—for instance, for household expenses. If a person, for instance, runs up a bill for groceries, provisions or other household expenses he is not entitled to get a loan from the Agricultural Credit Corporation to pay those bills. Or if a person incurs a bill for the education of his children, or the apprenticeship of his children to a trade, he is not entitled to get a loan from the Agricultural Corporation to pay off that debt. On the other hand, if he has a well-stocked farm he is entitled to take out two or three cattle and to sell them and pay these bills, and then to approach the Agricultural Credit Corporation for a loan of money to buy cattle instead of those he has sold. It is to cover that position that I suggested this amendment, because I believe that if a farmer wants to effect economics and wishes to avoid loss he cannot possibly sell the stock which he has to sell to pay his debts, and then, again, go to the next fair and buy stock for the money he gets from the Corporation. This particular stock that he has to sell may not be marketable, at best market value, or it may not be the best time to sell. The farmer may have incurred a loss by selling that stock at that particular time. Where it is so easy to evade the principal Act, where it tries to tie the farmer down to the use of money for farm purposes only—where it is easy to evade that in reference to the particular case I mentioned, I think it would be very much easier for the Corporation to work if it had a discretion. And this amendment gives power where, in the opinion of the directors the making or incurring of the loan is advisable. It sometimes happens that a person can go for a loan to the Corporation to pay a certain debt, which may include a debt that is mixed, some of which was incurred for provisions, clothes, and so on, for household purposes, and part of which was incurred for feeding stuffs, or some agricultural purpose. The Corporation have to go to the trouble of getting the original invoices and dividing them up. Then, if a certain amount is paid off the bill they have to go into a sum in proportion to see what remains of the debt incurred for farm purposes and for household purposes. Having gone into that matter they are at liberty to make a loan to pay off that part of the debt that was incurred for farm purposes. I think this amendment, if accepted, would enable the Corporation to give loans much more quickly and without such a great amount of inquiry. It is not a question, as I mentioned before, of interfering in any way with the security, because the same security will be there in any case. The Corporation will be just as secure in making a loan if this amendment is inserted in the Bill as they would be if it were not inserted. It is not a question of security at all, but is a question of giving the Corporation wider power.
I think if the Deputy would not press his amendment at this stage, we would have an opportunity of considering it between this and Report Stage, and could then see what could be done.
Then I shall ask leave to withdraw the amendment.
I move Amendment 1 (a) :—
To add at the end of the section a new sub-section as follows—
"(2) Notwithstanding anything contained in the Principal Act or in the memorandum of association or the articles of association of the Corporation, the Corporation shall be deemed always to have been before the passing of this Act empowered to lend or advance money to any person (other than a co-operative society) for the purpose of paying off a loan or other liability which was originally made or incurred whether before or after the passing of the Principal Act to or by such person or any other person wholly or mainly for a purpose for which a loan could be made by the Corporation under Section 12 of the Principal Act, and no loan or advance of moneys so made by the Corporation before the passing of this Act shall be held or deemed to be or ever to have been invalid or irrecoverable on the ground that the making thereof was in excess of the powers of the Corporation."
The purpose of this amendment is really to save the Corporation in case the doubt which exists should prove to be well founded from being met with a refusal to repay money borrowed. Section 23 makes it clear that the Corporation is entitled to lend money for the purposes of paying off a loan or other liability which was originally incurred for the purposes for which the loan might be made under any of these Acts. Certain doubts have arisen. The Corporation made certain loans, and were advised that they were entitled to make these loans. Later on they were advised that there was a possibility that the courts might hold they were not entitled to make the loans. Section 23 was inserted for the purpose of absolutely making it clear that in future they are entitled to make the loans. This amendment is for the purpose of preventing anybody who may read in the newspapers about the insertion of this section claiming that the loan he had got was made outside the power of the Corporation, and therefore was not bound to repay it, and it is to make sure that the Corporation will be able to recover loans made, even if by any chance it should be proved that they were made outside the terms of the memorandum.
I move in line 49 to delete from the word "which" to the word "Act" line 51, both inclusive.
The purpose of this amendment is to save the Corporation from possible loss. It is easy to see that there will be cases where if the land cannot be sold with any debt belonging to the Corporation upon it, other than debts in respect of permanent improvements, the realisation may mean that there will not be money enough to pay the Corporation what is owing to it. There does not seem to be any strong reason why a farm should not be sold with a debt in respect of non-permanent improvement charges. If there be no strong reason against this amendment, I think it would facilitate the Corporation in getting recovery of sums due. At all events, the real purpose of putting down the amendment is to find out why the Minister is making this distinction as between the two things. One can at once see that a person who purchases a farm which has been charged with a permanent improvement has got full value for his money, so to speak. On the other hand, if he has got a farm with a charge in respect of improvements that were not permanent, it will naturally lower the price that will be given for the farm, and at the same time it might enable the Corporation to get in money that would be due to it. I do not intend to press the amendment if there is strong opposition to it, but I would like to have the Minister's view upon the matter.
It is somewhat difficult to justify the section itself even as it stands. There is this, of course, to be said in its favour: it is simply placing the loan made by the Agricultural Corporation in the same position as a loan formerly made by the Board of Works.
Then when it comes to the question of a sale it is justifiable because there is value there for it. If it were possible under Deputy Moore's amendment for a farmer to borrow £500 for any purpose and he lost the money and that £500 was charged on the land, the real effect of it would be that it would be impossible to sell the land; it would be very difficult for the Land Commission to sell—I think it would be utterly impossible —if some money for which there was no value remaining on the land was to be charged against it. It is for that reason, and also for the other reason of not going beyond merely putting the Agricultural Credit Corporation in the position of the Board of Works, that the section is as it stands.
What is the objection to putting the Agricultural Credit Corporation in the position of the Board of Works?
What is done in the section is putting it in the position of the Board of Works.
The Minister understands that the Corporation will give only half the value of a farm on loan, or less than half. If there is sale for the farm it ought to sell with the debt attached to it. The Land Commission is paid and the Agricultural Credit Corporation is paid, and after all they have a better right to get money out of it than the man selling it. Selling under present circumstances, if Deputy Moore's amendment is not accepted, the original owner of the farm may get a certain amount out of it as soon as the Land Commission is paid.
No, surely not. If there is more money available than what is required to pay the debt to the Land Commission, it goes to the first mortgagor.
I am willing to withdraw the amendment.
Would it be in order to ask the Minister a question about Section 3? I was not here when that section was discussed.
The Deputy may ask the question.
It is with regard to sub-section (4) and I would like to ask whether the power taken by the Minister will enable him to invest moneys, such as moneys belonging to the Teachers' Pension Fund or similar funds, in the Corporation as distinct from a contribution out of ordinary revenue?
It would be possible for the Minister to invest the money in that way.