I move that the Bill be now read a second time. The Bill contains a number of rather technical provisions, but the purpose and the main principle of it are fairly simple. The purpose is to avoid a danger, which is very serious, of railway valuations on revision being reduced to nil if the law remains as at present. It is a very long time since some of the railways were revalued. I think it is 50 years since the section which constituted the Midland Great Western Railway was revalued. Although some lines have been revalued in more recent times, no difficulty arose with the present system until a great decline in the prosperity of railway undertakings commenced in comparatively recent times. In 1925 the railways applied for revision of their valuation, and we were immediately faced with very considerable difficulty. It became apparent at that time that the present formula could not remain. The Valuation Office made a rather rough revaluation of the railways, and they allowed certain percentage reductions. The Minister for Local Government did not consent to any rating authority contesting the ratings or appealing against any new valuation, because at that time it was apparent that there was not any satisfactory material for a thorough revaluation on the present basis. It was also apparent that there were large sections of lines on which the valuation would probably be wiped out altogether. The railways at the time, in consideration of the attitude taken up, agreed to cooperate with us in elaborating a new basis for valuation. It was very difficult to get ahead. Meantime, as a matter of fact, a similar problem confronted the authorities in Great Britain, and finally last year an Act was passed which represented that cooperation and, in a large measure, agreement between the railway companies and the various other interested parties.
This Bill follows to a large extent the Act passed in Great Britain, except that we have introduced the principle of minimum valuation which was not incorporated in the British Act. That minimum valuation is necessary because if it were not in the Bill you might have it that although the railway system as a whole was not by any means reduced to nil there could be sections of lines in respect of which the valuation would be nil. The valuation is determined on the basis defined in Section XI of the Valuation Act, 1852: "an estimate of the net annual value thereof; that is to say, the rent for which, one year with another, the same might in its actual state be reasonably expected to let from year to year, the probable average annual cost of repairs, insurance, and other expenses (if any) necessary to maintain the hereditament in its actual state, and all rates, taxes and public charges, if any, (except Tithe Rent charge) being paid by the tenant." That is, the basis of all valuation is the rent at which the hereditament might be let. The Act, of course, applied to railway undertakings as to all other hereditaments. An estimate had to be made on the basis of a landlord owning and running the line and the railway buildings and letting them to a hypothetical tenant. The basis adopted was to take the net annual receipts and to deduct from the net annual receipts an allowance in respect of renewals and a further allowance in respect of the tenant's capital which went towards the creation of those receipts. For a very long time—fifty or sixty years—that practice has been established and very generous allowances have been given in respect of tenant's capital. Of course, the allowance on the tenant's capital extends to rolling stock of all descriptions, workmen's tools, to the chairs in the offices, to everything except the actual fixtures and fixed plant, which was allowed for in another way. In respect of tenant's capital the allowance in no case was less than 10 per cent., and it was very often as much as 17½ per cent.; the average was something like 15 per cent.
The railways have reached the position at present that if a revision were carried out in the ordinary way, if the net receipts for the year were taken, and if a fair deduction was made from them in respect of renewals of permanent way and all fixed plant, and if a further deduction was made from the net annual receipts in respect of tenants' capital at the rate of 15 per cent., which is the average, the valuation in some districts would be not only nil, but there would be a position where, if everything were carried out logically, there ought to be a minus valuation. It is quite clear that if revisions were carried out generally now there would be in respect of some systems in some districts a nil valuation. If the total valuation came to be distributed over the railway lines there would be in respect of many sections a nil valuation. It is perfectly clear, therefore, that a change is necessary.
I might say that it is regarded as certain that it would not be possible in the courts to get a change made in the percentage allowances for tenants' capital because the matter is so well and so long settled that the courts would not make a change. This Bill proposes to make quite a number of changes. For instance, it provides for a quinquennial valuation so that we cannot have the position that existed in regard to the Midland Great Western section, where for over 50 years there was no general revision. In the past a general revision could only take place if it were asked for by the railway company or asked for by the rating authorities through whose areas the line passed. Take the case of the Great Northern line. The Dublin County Council could not have got a general re-valuation of the Great Northern line. It could only have contested the division of the valuation. It might have contended that it should have got more than the County Meath or other counties got, but it could not have obtained a general revision of valuation of the undertaking. The railway companies naturally did not ask for a general revision except at a time when they thought they were likely to get a reduction. We provide that in future every five years the railway undertaking as a whole shall be re-valued and that will prevent the position where it is being under-valued seriously or over-valued seriously.
We provide that the Commissioner of Valuation and any courts to whom an appeal may in future be made "shall not be bound to give effect to any custom or practice affecting the valuation of railway hereditaments which obtained prior to the passing of this Act in regard to the deduction or allowance to be made in respect of the capital of a tenant, but shall have regard to all relevant circumstances." That is, we are removing the obligation on the Commissioner of Valuation and the courts to have regard to the practice of fixing an allowance for tenant's capital at an average, as it has been, of 15 per cent. We also provide—and it is not in the British Act— that there shall be a minimum valuation, so that even if the condition of the railway undertakings were to become worse than it is, we could not have the position where there would be nil valuations generally, even on the new basis. The minimum valuation will be, so far as the running line is concerned, the agricultural land value. On station buildings and other non-running line hereditaments the minimum valuation will be one-third of the 1914 valuation; so that in no circumstances, no matter what happens to railway profits, can any county council receive with respect to the running line through that county less than the agricultural land valuation, and no district in which there are stations and similar buildings situate can have rates based on any valuation less than one-third of the 1914 valuation. That provision is put in because as long as the railway line is operating it must be assumed, whether there are profits or not, that the railway company is in beneficial occupation of the various hereditaments, and consequently should make a contribution to the rates. It seems to us that that meets the situation fairly. If there are small profits, or if there are no profits, it allows the railway undertaking a substantial reduction of valuation, and allows the total value of its property to be relatively low. On the other hand, it assures the local authorities that they will always have what, in effect, will be a substantial contribution to the rates from the various railway companies.
Some Deputies may ask why, in respect of buildings, we are taking one-third of the 1914 valuation rather than the whole of the 1914 valuation. It is true that a factory owner or a shopkeeper will have to pay on his whole valuation whether he makes any profits or not. The position of the railway company is different. If a shopkeeper has two shops, or a shop and a store, or if a man has two factories situate in different places, if profits were small or non-existent, or if business were bad he might close one of them, and in many cases might escape a proportion of the rates. He might dispose of the premises in various ways if there were no profits, and he could not actually close them. The railway company is carrying out a public service, and is not really free, to a considerable extent to close without serious inconvenience to the public. It is felt that this provision of minimum valuation, taking everything into account, is an entirely reasonable proposal. It really has this effect, that it is imposing on the railways a liability which at present does not exist. If a railway company is now making no profits on the existing basis, and re-valuation goes through, that railway company can obtain a nil valuation. We are taking away the possibility of that nil valuation.
I do not think I need refer to the considerable number of points of detail in the Bill. There is only one other thing I will say, that the railway companies have only been dissuaded from proceeding with an application for re-valuation in the present year, because they were informed that this Bill would be introduced. I think this Bill will probably give them some reduction in their total valuation in each case. It is not absolutely certain that it will do that, but, I think it is most probable that it will give some reduction. I would not say that the reduction will be very striking. They were given a certain reduction in 1925, and I am not sure that the further reduction will be very appreciable. However, we have to have regard to the principle, and the principle is that of basing the new valuation on the net receipts, calculated as prescribed in the Bill. The Commissioner of Valuation and the courts shall be no longer bound to give enormous allowances in respect of tenant's capital, which has been the practice heretofore.
