Dáil Éireann debate -
Friday, 7 Feb 1936

Vol. 60 No. 3

Private Deputies' Business. - Proposed Ground Rent Levy.

Mr. Anthony

I beg to move:—

That the Dáil is of opinion that local authorities in towns and cities should be empowered by legislation to supplement their revenue by levying a rate upon moneys received by ground landlords in respect of ground rents.

In submitting this motion for the consideration of the House, I should like to point out that it was first put down on the Order Paper before the last general election. Shortly after June, 1932, I again added this on the Order Paper when the present Government had taken office. About that time I addressed the following question to the Minister for Finance. To be accurate, it was on the 8th June, 1932. I asked the Minister for Finance:

"If he can state for the latest available financial year the annual amount paid by way of ground rents by property owners in the towns and cities of the Saorstát."

I received the following reply from the Minister:—

"I regret that the information for which the Deputy asks is not available."

It will be observed from the date on which I asked the question here that this motion had not any kind of inspiration from any recent movements established in the country, some of which aim at the complete abolition of ground rents, or what I would rather term the confiscation of ground rents. Neither had it any urge or inspiration from kindred associations which have been established such as the Leaseholders' Association, etc. I want to make that perfectly clear before I develop my argument in support of the motion.

At the Fianna Fáil Ard-Fheis held on Thursday, 4th December, 1935, the Minister for Finance is reported to have said: "For every pound paid in ground rents the State took 5/- or 4/6 if their circumstances permitted." I assume that the 5/- or 4/6 referred to by the Minister must have been paid by way of income tax. It is the only method by which I know he could collect that money. If that is so, I wonder why the Minister was unable to answer my question on 8th June, 1932. I will pass from that because, perhaps at the time he had not the information available. On the same occasion, but at a later stage in the proceedings, the Minister is reported to have stated that "On the question of ground rents generally, a prolonged inquiry was essential." I thoroughly endorse that view. However, it would be very useful for the House and the people generally to know the amount of money that is leaving the country by way of unearned increment, as well as the amount that leaves the country annually and the amount retained annually I mean money accruing from ground rents.

I want to say also that this motion is not designed or calculated to confiscate the property of any ground landlord or even his interest in his ground rents, but it asks that a portion of the revenue derived from ground rents should be returned to the community. Some people may suggest that this is an unfair or unjust proposal to put forward, but I submit that the same argument might be applied to income tax or to the taking over of land under the various Land Purchase Acts. As a matter of fact, the same old arguments were used when land purchase was first mooted in the early days of the land agitation. We then heard the term "confiscation" used. But I do not want to hear the term confiscation used in connection with this debate because this motion, as I have said, is not designed to confiscate the property of any individual ground landlord. Of course it may be that at some future date a movement will spring up in this country, if any considerable volume of opinion is organised, in relation to the whole question of the taxation of land values.

Some people, perhaps, may describe this motion as an emasculated form of the doctrine preached by Henry George. It is nothing of the sort. There is a difference between the two policies or theories. The motion only asks that some portion of the revenue derived from ground rents should be returned to the community through whose efforts this source of wealth was created and built up. It may be that at some future date when a considerable volume of opinion is organised in relation to the taxation of land values and when the relationship between unemployment and the land is better understood, when all parties in the State will have been brought to realise that nowhere except in modern civilised society are unemployed willing workers to be found—then will the opportunity arise for a movement wider in scope, more general in its appeal, and of greater importance, which will have for its object a tax on the value of land, whether used or not, in so far as it has a value for other than agricultural purposes, and all land that is not specially exempted will be valued at its true market value apart from improvements. The reason why I make the reservation: "land other than land for agricultural purposes" is because we all know the tradition of the land war in this country. We all know the great fight that not alone the men of the present generation but of many generations past put up for the land of this country, and he would indeed be a brave if not a foolish man who would suggest for one moment that you should put a land tax on agricultural land in the same way as you would impose a tax on the man deriving a good deal of unearned increment from ground land in the cities and towns.

Various estimates have been made as to the amount paid by way of ground rents in the Saorstát, but as they are only estimates I will only give one or two instances in which exorbitant prices have been paid for land contiguous to the cities. It may be assumed, however, I think, that considerably over £1,000,000 is collected yearly in the Saorstát in the way of ground rents. We all know that most of this money is sent out of the country. In view of that, surely the local and municipal authorities have a moral right to demand that at least a portion of that sum should go in relief of rates. In Mercer Street, Dublin, £1,200 per acre was paid for slum-built real estate, and £212 an acre for land on which the owner had paid agricultural rates only, somewhere beyond Cabra village, and £1,000 an acre in Bray.

Mr. Belton

Developed or undeveloped?

Mr. Anthony

Undeveloped, I presume. In any case, it does not matter even if it were developed; £1,000 an acre must, as Deputy Belton himself should know, represent a considerable amount in rent to be paid by the working-class people who are still clamouring for houses. The Minister must be aware, and most members of the House must also be aware, that valuable land held for speculative purposes escapes rates, while elsewhere ratepayers have to pay heavy rates, particularly ratepayers paying on house property. I hope in this matter I will get a good deal of assistance from Deputy Belton. I must say I do not anticipate much.

Mr. Belton

You may be disappointed.

Mr. Anthony

I think at least we should endeavour to secure for the community a portion of the wealth which the community helped to build up. In large centres of population particularly, the least the community should get from those who are receiving big unearned incomes is some return in the shape of a tax or levy which could be devoted towards social services. Public money, both State money and local rates, is expended on improvements in cities and towns and that enhances very considerably the value of property in those cities and towns. The local authorities should be given power to levy a rate on ground rents and should be free to determine the nature of that rate. They may be trusted, I think, when they know the local conditions not to make that rate exorbitant or beyond the capacity of the person or property to pay. I suggest that rate should be in addition to the ordinary rates struck under the present system.

It is conceded, I think, that land value is created by the community, and therefore something should be given back to the community to meet the cost of social services. It must be remembered that under the present system the ever-increasing value in land is passing into the hands of private individuals at an increasing rate. Most of these people have done nothing whatsoever to create the increased value of the land. In recent years the speculation in land must have broken all previous records—I am only hazarding a guess—having regard to the volume of house-building that has taken place, particularly during the last two or three years. It would be interesting to discover what was the gross amount paid for land by the Dublin and Cork Corporations for the purpose of housing the working classes. At the moment I have not the figures available, but I am certain that a request directed to the city managers in Dublin and Cork would bring forth that information. I could furnish that later.

Mr. MacEntee

Why does the Deputy not furnish that information now? He told us that this motion has been a very considerable time on the Order Paper.

Mr. Anthony

The Minister has now the chance of a lifetime, because it was only yesterday I prepared most of my data. Anyhow, that does not get us much further. It is a well-known fact that a plot of land on the outskirts of a big city and a plot of a similar size in the centre of the city will show a very big difference in price, ranging from £100 to many thousands per acre. It is evident that the buyer pays for the position of the land, and the value of that position depends on the growth of the city in wealth and population. It is not in any sense due to the activities or otherwise of the owners of the soil. The value of the ground in the places I have mentioned has been considerably improved by municipal effort. Municipal improvements made at the expense of the ratepayers, a new bus or a new railway service—any of those things might easily enhance considerably the value of property in a locality. There are, for instance, such important amenities as lighting and a water supply. These things are a local charge and they go to enhance the value of land in the vicinity.

There is kept in nearly every big city waste land, withheld for a considerable time, the idea being that at some future date a public-spirited corporation or town council might develop the district or might add to its amenities in the way municipal councils do, extending sewerage, lighting, and so on. This land is withheld from sale until the time is ripe for development. Every additional service established at the cost of the ratepayers enhances the value of land in that neighbourhood. There are certain serious economic effects following from the present system which place a burden upon house occupiers and users of business premises. I think that will not be challenged by any Deputy. For instance, it increases the cost of housing and forces many of the working-class people and others to live in inferior houses and unhygienic surroundings. It tends to stop the extension of social services because of the crippling effect of increased rates on local trade and industry. It discourages building and general improvements, because any increase in the rental value increases the rateable value. It encourages the withholding of land from use because no rates are being paid on vacant land.

I do not know and I do not speak for Dublin, but I do know that the citizens of Cork are faced with an increase of 2/- in the £ in the rates this year. Although we were told that, owing to the operation of the Unemployment Assistance Act, home assistance would be very considerably lowered, if not abolished altogether, the fact is that the operation of the Unemployment Assistance Act has not in any way reduced the amount paid by way of home assistance. In fact, home assistance is on the increase. Unemployment assistance, as the Minister must know, is financed by the ratepayers in the cities and towns to the tune of £195,000. The employers and workers contribute between them something like £250,000. Those burdens are becoming too great to be borne by the ratepaying public, the poor and the working-class people being amongst the greatest sufferers under the system of transferring State or national responsibilities to the ratepayers. If the Government are not willing to shoulder their responsibilities in this connection, at least they should open up an avenue to the local bodies through which they would be able to collect at least some revenue as a set-off to the increasing burden which is now thrown upon them. I have endeavoured to show that land values, or ground rents as I prefer to call them, are entirely due to the presence and activities of the community. I have had letters from one or two public bodies in which they call for the abolition of what is designated by one borough council as "the enormous annual tribute paid by way of ground rents."

Mr. MacEntee

The Deputy ought to read the resolution if he is quoting part of it.

Mr. Anthony

It is as follows:—

"I am directed by the county borough council——"

Mr. MacEntee

What borough council?

Mr. Anthony

Wait a minute; you are very impatient. This letter is dated "Cork, 21st May, 1932." It is as follows:—

"I am directed by the county borough council to send you the following resolution submitted by the Letterkenny Urban District Council."

The Minister's patience is rewarded.

Mr. Belton

What is the population of Letterkenny?

Mr. Anthony

I do not know. I suppose 10,000 or 15,000.

Mr. MacEntee

What!

Mr. Anthony

I am just judging by the letter; they have an urban district council. The resolution is as follows:—

"That we believe the enormous annual tribute paid by way of ground rents by property owners in our towns and cities is grossly unfair and inequitable; a huge drain on the resources of our impoverished people. It is one of the remaining examples of the injustices of landlordism, and should be removed. The moneys comprising the ground rent tribute go only into the coffers of gentlemen who perform no services whatever to the well-being of our towns or people in return for this unearned income."

Mr. MacEntee

And it is that resolution that moved the Deputy to put down his motion on the Order Paper?

Mr. Anthony

No.

Mr. O'Leary

Some of your own friends on that side are on the job too.

Mr. Anthony

I could produce voluminous correspondence from various parts of the country, all in the same strain. I would go further and suggest that the Minister should consult some members of his own Party, for instance, Deputy Seán Moylan, and ask him what is the position in his own part of the country where they challenge the right of certain ground landlords to collect ground rent.

Mr. O'Leary

And where they went to jail for it.

Mr. Anthony

The Minister must be blissfully ignorant of all those things. Perhaps it would be well also for the Minister to inquire what percentage of his Party is pledged to the abolition of ground rents.

Mr. MacEntee

I am more interested in discovering what percentage of Deputy Morrissey's Party is pledged to the abolition of ground rents.

Mr. Morrissey

The Minister has trouble enough of his own.

Mr. Anthony

I could mention members of his own Party who have subscribed, by their attendance at meetings and by making speeches at meetings, to the policy of withholding all ground rents, if not their absolute abolition. I shall be very much interested to see how those people will vote when this motion is being decided. I do hope, Sir, that we will have an expression of opinion from many members of the House, whether they favour the motion or are against it, but I will certainly be very much interested—that is if they will make themselves vocal at all—to hear some of the Minister's own back benchers, who to my own knowledge attended meetings all over the country and pledged themselves to a very much wider resolution or motion than the one I have put on the Order Paper. Now, Sir, I stress the fact that it did not aim at confiscation.

Mr. MacEntee

Was it demanded by the resolution which the Deputy read out?

Mr. Anthony

It was; but I do not go so far as that. I am not so responsive to wild resolutions of this character as the Minister and his Party are to the wild resolutions coming from the Fianna Fáil clubs. I do not propose to say any more on this motion except to express the hope that in view of the publicity which a number of associations have got-associations asking for the total abolition of ground rents, some of them asking for purchase rights such as are permitted in the case of land purchase; others who, under such names as the Leaseholders' Association, have passed resolutions of a similar character to the one which came from Letterkenny — we shall hear opinions of the members of the Minister's own Party on this. I have very grave doubts that many of them will speak at all, and I think when a division comes they will be looking for pairs.

Mr. Morrissey

I beg to formally second the motion.

Mr. MacDermot

Is anybody going to put up a case for it?

Mr. MacEntee

Surely we are entitled to hear the opinion of the Party to which Deputy Morrissey had the honour to belong.

Mr. Morrissey

We will be glad to hear the Minister.

Mr. MacEntee

I see one of his leaders on the Front Bench. He might let us know whether or not Deputy Morrissey has put it down on behalf of his Party.

Mr. Morrissey

Where now are the Fianna Fáil Party who were calling for this down the country? They are represented by two members— the Minister, and Deputy Mrs. Concannon.

Mr. Belton

I should like to ask where are the 153 Deputies of Dáil Eireann now?

Notice taken that 20 Deputies were not present; House counted and 20 Deputies being present.

Mr. Belton

I was very anxious to hear this debate. I only rose when I saw a reluctance on the part of members of the various Parties to get up and say anything on this matter. I must candidly confess that I was disappointed by the case made by the proposer of the motion. I hope he will not take it ill of me when I give it as my opinion that he has not made a case. He used a lot of generalities. I do compliment him on the fact that he dispelled the notion that might be created in the public minds by a motion of this kind when he emphatically assured the House that there was nothing by way of confiscation prompting this motion. That was a useful assurance. The Deputy read resolutions that were based on wide, wild and uninformed generalities. He read a resolution from Letterkenny which talked about millions that were collected by way of ground rents, unearned increment collected for nothing and exported out of the country.

Mr. Anthony

I did not say that.

Mr. Belton

I know Deputy Anthony did not say that but that was the gist of the resolution from Letterkenny. Now, it is well to know at the outset that the largest ground landlord in Ireland is the Dublin Corporation and if the Dublin Corporation give £200 or £300 an acre for virgin soil for building houses, they get £9,000 or more an acre for land let to private individuals. I am Chairman of the Estates Committee of the Dublin Corporation and I know what I am talking about. Leases have lapsed in the corporation. They are lapsing every day. It is only this morning I posted a few orders that had been sent to me as Chairman of the Estates Committee. We actually increase the rents when the leases lapse. We will not relet them even subject to an increase without a guarantee of expenditure on capital outlay towards rebuilding, renovating or reconditioning. We have authority in the powers given to the corporation to do that on our own. Sometimes certain technicalities come into it and when those operate we have to get the sanction of the Local Government Department. When we suggest an increase in the rents the Local Government Department does not disagree with us in imposing the increase. They have held that we have not increased the rents enough. I say that without fear of contradiction, and I say it without finding fault with the Local Government Department. I am merely stating a fact.

Deputy Anthony's motion states that special taxation over and above all other taxation should be levied on moneys received by ground landlords in respect of ground rents. I intervene in this matter because I know its importance. I have no special ability for knowing of its importance, but I have been thrown in the way of having its importance brought directly home to me. For instance, a loan was recently floated by the Dublin Corporation. I am sorry I was not aware that this motion was coming on to-day or I would have got some substantial figures which would convey to Deputies the size and importance of the matter I refer to. It is a very considerable amount running into many thousands, perhaps hundreds of thousands. That is the revenue derived from the Dublin Corporation from ground rents. The Corporation, roughly speaking, have a public debt of £7,000,000 or £8,000,000 which they have borrowed. These ground rents are an asset. Are you going to undermine that asset?

When the Dublin Corporation wanted over £1,000,000 last year for the housing of the working classes a deputation waited on the Minister for Finance. It was a composite deputation of people of various brands of politics and of no politics. I think the Minister will concede that we met him in a businesslike way and I must say that he met us in a businesslike way. Our one concern was to get money and we forgot politics for the time. The Minister outlined a programme for us to carry out and told us that if we did not get the money we were to come back to him, and we all genuinely thanked the Minister. That committee proceeded to get some money in other ways. We got £250,000 from a certain source for the housing of the working classes.

We had our 1935-36 housing programe ready. The contract was ready for signature and everything was ready to go on with the work, but we could not move until we had the money. That was before Christmas. As a matter of fact, we had our schemes ready a year ago, but we had not the money to go on with them. We started off then. Then we wanted another £750,000 for the erection of working-class houses in Crumlin and some schemes of flats in the city and £250,000 for loans to people to purchase their dwellings under the Small Dwellings (Acquisition) Act. Then the deputation switched on to the Banks' Standing Committee. We interviewed them and communications passed between us, until finally we made a deal with them which produced this loan which was so successfully floated the other day.

I was one of the few members of the corporation who were in all these negotiations and it is in that way, if I had any doubt about it, that the fatal danger of dealing with this matter in any flippant manner was brought home to me. I should say that we had already advanced nearly £1,000,000 under the Small Dwellings (Acquisition) Act. The question of the security and the percentage of default in the repayment of that money was very sternly put up to us and very carefully considered by the Banks' Standing Committee before they agreed to underwrite the loan. The question of our ground rents is another matter, as it is a very important asset. If you interfere with the ground rents of any individual you must interfere with the Dublin Corporation and such bodies who also have ground rents. If the Dublin Corporation ground rents were in any way damaged, considering the difficulty we had in getting the Banks' Standing Committee to underwrite our loan and take the risk of having to put up any portion that was not subscribed, I would not like to be a member of the corporation which would attempt to negotiate a loan next year. Neither would I care to see it done considering that it is only on the credit of the corporation and their capacity to borrow money that the housing of the working classes can proceed.

That is by way of showing the facts and the absurdity of these uninformed resolutions which are being passed and people saying, perhaps, that some man may be living in London and drawing £100 a year in ground rents out of property in Letterkenny. They see that man drawing these ground rents, but they do not consider the cases of other people in the country who have ground rents. In the case of that man the ground rents may have been created 100 years ago and he may have inherited them. I have heard of a case in a place not 1,000 miles from here where old leases lapsed and without doing anything in the way of improving the property, the owners of the ground rents trebled them. I do not think that is fair and it should not be allowed if it can be prevented without introducing a principle which would in the long run do more harm than good. Speaking generally, I do not think that that should be allowed but the question of how to stop it would have to be considered very carefully. Only last night I was told by a gentleman in the estate business of the case of a street or a road near the city; for all practical purposes you might say it is in the city. In that case the ground rents of the houses are about £7 or £7 10s. per year and the people have been notified that the ground rents will be increased to £24 per year. That is a substantial case, and if it is of any interest to the Minister, I shall get the full particulars and give them to him.

Minister for Finance (Mr. MacEntee)

I should like if the Deputy would.

Mr. Belton

I am against an increase of that kind. But take the modern ground rents. Take a plot with a frontage of 20 or 30 feet and a depth of from 150 to 200 feet. Various ground rents are put on that, say from £8 to £12. Let us say the land as virgin soil is worth £250 or £300 per acre. People will say, "That is the value of that land for agricultural purposes; why should a man get £8 or £10 or £12 for a little plot of that land?" What the public do not realise is that a man taking virgin soil to build upon may have a small frontage to it on which he can put a few houses, but if he goes into the hinterland he has to make roads and footpaths and put in sewerage and surface drainage. He has to enter into an agreement with the E.S.B. that he will put so many houses there or guarantee that there will be a certain consumption of electricity by a certain time, and he will either have to give a bond or put down money as a guarantee that that will be done by a certain time. If that is not done by then it may be confiscated. Further, when all that is done, the Dublin Corporation requires that not only must the roads, footpaths and everything in that line be laid to their specification, but the builder must put up the public lamps and pay for them, and then the corporation will take them over. A man walks into a grass field. He does all that and leaves them standing. He has to pay for all these. Is his money which he has put into that land to be confiscated? If it is you can say good-bye to all further building operations. Where are you going to get ground developed, and built upon, if the money put into the land is confiscated or if the recipients are to be branded as public parasites getting something for nothing? The Minister for Finance has gone a long way, perhaps many think too far, in the direction of getting more of that money. These ground rents have to pay income tax. The proposer of this motion asked why should these people get away with anything more than the income tax they pay, but they pay income tax upon these ground rents.

If a man creates a ground rent, in the way I have mentioned, the Minister for Finance, although he claims that the provision was there before he put it into the last Finance Act, decided that if a £10 ground rent is paid, that ground rent is to pay income tax although the recipients of it are liable for income tax in the ordinary way. But over and above ordinary income tax the Minister taxes that £10 ground rent if it was created between April 1935 and April 1936. He says that that £10 created this year, and received this year, is not the income on that ground rent for the initial year, but that the real income is from the capital that created that. In other words, 12½ or 15 years' purchase or whatever number of years the Revenue Commissioner takes, is the capital. Once the principle is conceded the Revenue Commissioners are not really ravenous; they do not want to take the breeches off a man altogether. It is not the principle I find fault with. I only want to say that the people who created these ground rents are pretty well skinned already and ought not to be skinned any further. If that £10 ground rent is capitalised in the year it is created, it becomes not £10 but £130 or £150. The recipient has to pay that tax so that he may have to pay 150 times 4/6 in that year, and the following year he has to pay ten times 4/6. If the Revenue wants more the best thing to do would be to make it illegal to have ground rents at all and say that the system should not be tolerated.

On what principle do the Revenue Commissioners work in this matter? What principle has the Minister adopted in making a case for the capitalising of ground rents? Take a particular plot of land. A house is built upon it and sold for £1,000. There is a ground rent out of that —a profit ground rent would be the easiest way to explain it to the House. In many cases a builder rents building sites at, say, £5 per site. He builds a house, sells it for £1,000 and puts on a profit rent of £5 and a ground rent of £10. What the Revenue has been maintaining, and what the Minister in the last Finance Act wanted to put beyond doubt, as there was a decision in the Circuit Court against what the Minister or his Department had determined, was that the £5 profit rent created by some means or other an extra building profit. So if a man sold the house for £1,000 and returned for income tax purposes £100 profit, the Revenue Commissioners say no; it should be £100 building profit plus £5 capitalised. So that where ground rent cannot be shown to represent outlay, it is capitalised to its full value and has to pay 4/6 in the £ income tax or whatever the standard rate is.

I do not think that Deputy Anthony has made a case for any more over and above that. I hope the Deputy will not think I am speaking as an interested party. I have a little interest in it but I can say more money was spent in Dublin in developing land for builders than otherwise would have been spent on the land. People interested in virgin soil down the country have trouble perhaps, but it is only a bagatelle compared with the development costs here. Sums of £200 or £300 are nothing as capital value compared to development costs. It is not the municipality that develops land. The municipality of Dublin and the County Council—and I am intimately associated with the administration of both—give the same facilities in their area. All that is done in the way of new development is on public roads where that is a practical proposition. Where ribbon development would mean going half a mile with a sewer or with pipes that would accommodate only one house that is not a practical proposition and it will not be done. It will be done if the man at the end pays for it. He could not expect it any other way.

Mr. Davin

Hear, hear!

Mr. Belton

I am glad Deputy Davin applauds that. Where the development is continuous, either in the city or in the county, public services will be put in and public roads. That is not so when it comes to the development of the hinterland. I have developed a good deal of hinterland, and all the facilities I got from the Corporation, of which I am a member, was what anyone else would get. I took good care to get what everyone else got. I wanted no more and no less. All I got was the water mains, but I had to pay £75 to get a sewer, before a pick was put into the ground. It is not all a bed of roses. You do not get ground rents for nothing. I am sorry that other Deputies have not spoken, because many points might be introduced that I might know a little about, and that I might be able to support or to oppose. In discussing this motion generally I hope that it will be approached in an unbiassed way, and with due regard to the credit of the country and the credit of municipalities. I have seen letters in the Press about this question. I should have replied to them only that someone might say I did so because I had a little 2½d. interest in ground rents, and that it was selfish motives prompted me. There is talk about the advantage it would be to industrial development and to local rates if ground rents were taxed or reduced. Ground rents, when considered in the whole national welfare and wealth of the country, are a very small item. They are there by contract. If you set out to attack contracts you are going to put a price on the money that you want for national and local services, as well as increasing the cost of industrial development, business development and social services, particularly in reference to the housing of the working classes. The Dublin Corporation got a loan of £1,000,000 at 4 per cent. or a little over that figure. If the Corporation could have got that money at 2½ per cent. Deputies can realise what it would mean to the municipality, and what it would mean in the housing of the working classes. Think what it would mean if the Corporation had to pay 5 per cent. or 5½ per cent. for that money. If we start to attack something established by contract we are seriously damaging the credit of the country. I except from that private individuals who use their position in the case of lapsed leases to extract rack rents.

Mr. Davin

Do you include ground rents?

Mr. Belton

I do. I hope this question will be approached on all sides on its merits, and not from a Party angle, because a great deal of harm can easily be done if it is attacked from the Party angle. I am sorry Deputy Anthony did not go fully into this problem. He disassociated himself from all the wild resolutions that have been published. At the same time, as proposer of the motion, he should have indicated exactly what results he wanted.

Mr. MacDermot

Supposing a man had two houses and that in both cases the leases had lapsed, and that in one case he was not able to let the house again, except at a reduced ground rent, would it seem to the Deputy to be immoral if he decided to increase the ground rent on the other House?

Mr. Belton

If a person had a freehold of the site it is open to him to do what he likes with it. Take the case of a house that cost £1,000, with a ground rent of £10. If a buyer comes along and says that he does not like the ground rent, but would give £1,100 or £1,200 for the freehold, that is purely a business transaction.

Mr. Davin

£1,500!

Mr. Belton

Deputy Davin knows that that is absolutely wild talk. If the Deputy had a house for sale worth £1,000, and if he was offered £1,500 would he refuse on moral grounds?

Mr. Davin

That is not the answer.

Mr. Belton

That is the answer. I wonder if I have answered Deputy MacDermot's question?

Mr. MacDermot

I understood the Deputy to say that he would be against a private individual being allowed to increase the ground rent on the lapse of the old contract. If that is so, supposing a man had two houses, and that in the case of one, as the value of the locality had gone down, he could not hope to get the same ground rent, would there be anything immoral in his taking advantage of the opportunity to increase the ground rent on the other house?

Mr. Belton

That is a matter to be considered. I am not going to answer that question. It is one for the House. When you go back to the old leases which have lapsed it will be found that there was very little money invested in the development of these sites in bygone days.

Mr. Morrissey

We are getting to realities now.

Mr. Belton

Houses then were built on virgin soil, and I doubt if there were any sanitary arrangements necessary.

Mr. Anthony

Hence the necessity for the inquiry that I am suggesting.

Mr. Belton

It is not an inquiry. You are going for them bald-headed and want to make them pay local rates right away.

Mr. Anthony

On a point of order, I think the Minister will remember that at the beginning of my remarks I endorsed the attitude taken up by him at the Ard-Fheis, when he said that prolonged and close inquiry was necessary.

Mr. Davin

What do you mean by prolonged?

An Leas-Cheann Comhairle

That is not a point of order.

Mr. Belton

These old ground rents particularly have gone into the market and been bought and sold. Many poor people have invested savings in them to enable them to live. That is true, just the same as if they had invested in the railways, which were not able to produce a profit and in which their savings were confiscated.

Mr. Davin

What about the credit the Deputy spoke of?

Mr. Belton

Deputy Davin will get plenty of time to speak, and I shall be a good listener. It will be very interesting to see how the Labour Party will be able to work out of this. They will be on a tight rope in regard to this.

Mr. Norton

If we want any advice on walking it, we will talk to you about it.

Mr. Belton

I regret the Labour Party was not present when I had to get up to speak to keep the debate going. There was only one occupant on the Labour Benches at the time. To be fair to the Deputies who are present now, I presume they were taking a much-needed bit of luncheon.

Mr. Norton

I was seeing a constituent of yours.

Mr. Belton

My constituents would be better served if they came to their representative than to the representative of the Short Grass.

Mr. Norton

They did not think that.

Mr. Belton

This important business, in which the Deputy seems interested, nearly fell through, and it was because of the danger of its falling through, by reason of the small House, that I intervened.

Mr. Davin

We had to make the House.

Mr. Belton

It was made before the Deputy came in. We waited a long time and he did not turn up. I quite agree with what Deputy Anthony has said, and I think it is the general feeling all round that anything done in this matter needs very careful inquiry and consideration, and, without anticipating the result of that inquiry, it is absolutely necessary that it should be held, particularly when there has been so much opposition voiced against ground rents. It does not follow that anything terrible is going to happen, but it would be important to settle the public mind on the question by having an exhaustive inquiry into the matter. Whatever the report is, people can examine and criticise it, and I am sure it will bring to light a lot of information which is not at the moment before the public, including those who sent that resolution to Deputy Anthony, and they might be wiser, if sadder, men when they got the information. If there is an inquiry, and I hope there will be, everybody interested can put up his case. Meanwhile, I hope that the wishes of the proposer of this motion will form the keynote of the debate here, and that we will request the Minister to take steps to have an inquiry into this matter, rather than that we should anticipate the results of that inquiry by dogmatising on any particular line on the matter here. Let us get the inquiry, and let the people who hold that inquiry go into the details of the case and put them before the House, and we can then have another day at it.

Mr. Norton

I must congratulate the Minister for Finance on having brought about the conversion of Deputy Belton to his point of view in respect of ground rents. Even Deputy Anthony has now progressed so far towards accepting the Minister's point of view that he agrees with the Minister's speech at the Fianna Fáil Ard-Fheis. I suggest to the Minister that he should try to have an Ard-Fheis every month.

Mr. MacEntee

When did Deputy Morrissey signify his conversion?

Mr. Anthony

Deputy Norton, I think, was not here when I spoke. I quoted the Minister's exact words, that a prolonged and careful inquiry was essential.

Mr. MacEntee

Why upset the peace of nations that way?

Mr. Norton

Everybody knows the views of the Minister for Finance on this matter and what he means by "a prolonged inquiry." Whatever else you may say about the Minister, he is perfectly clear in his own mind as to what his own words mean, and when the Minister talks about "a careful and prolonged inquiry," the Minister really means the kind of inquiry that will do nothing in the matter.

Mr. MacEntee

Except to make the truth known.

Mr. Norton

The Minister for Finance is always perfectly clear as to what he wants, and when he says he wants a prolonged and careful inquiry, what he really wants is some kind of vehicle that will take him away from the necessity of having to do anything in the matter at the moment, and probably may take him to a point at which a set of circumstances will exist which will probably not necessitate his having to do anything at all. As a Minister, he may have changed his responsibility so that he would be prevented from having to deal with a financial matter, and another set of circumstances might give him complete freedom from responsibility for legislating on a matter of this kind. Let us be perfectly clear, however, that this new community of interest between Deputy Anthony and the Minister looks to me, at any rate, like a conspiracy to enter into a prolonged and careful inquiry, the ultimate object of which is to do nothing in respect of ground rents. I am surprised that a radical like Deputy Anthony should now have moved so close to the Minister for Finance as even to agree with the Minister's Ard-Fheis speech, that a prolonged and careful inquiry into ground rents is essential.

Mr. Morrissey

He will be soon as bad as the Deputy—having fortnightly conferences with him.

Mr. Norton

He would probably do a lot of listening, judging by his speech to-day. We have Deputy Belton coming along, in case Deputy Anthony would be too radical, even after his protestations of agreement with the Minister, to advise Deputy Anthony to be very careful in this matter and not to go too quickly lest he might damage the interest he intends to serve in this motion. I am not at all in agreement with the way in which this motion is phrased. Deputy Anthony wants prolonged and careful inquiry—the same kind as the Minister wants—but his motion does not ask for an inquiry at all. It asks for legislation, as if all the facts on the matter were already well known and Deputy Anthony had a recipe for solving all the evils and ills that flow from ground rents. After proposing a motion which demands legislation, he now does not want legislation at all. What he wants is one of the Minister's inquiries, with this addition, that the inquiries are to be prolonged and careful. We will probably get the result of an inquiry of that kind ten years hence, if indeed it ever sees the light of day.

Deputy Belton has pointed out certain weaknesses in a resolution of the kind proposed here. I agree that there is need for a thorough examination of the ground rent problem, but there are some very obvious facts which scarcely require any further examination, and the hardships and injustices which flow from some of the methods of exacting ground rents are so clear as not to require that prolonged consideration of the problem which some people now advocate. The fact of the matter is that we in this country have always been confronted with the problem of adequately housing our people, and to-day, when efforts are being made to repair the shortage of houses, and when the State is making such heroic efforts to provide the citizens with decent habitations, we find a section of the community which owns land—the manner in which the land was got is immaterial for the purpose of this argument—demanding of the community that it must pay for the land the high prices which the present landowner is demanding.

Mr. Belton

What is that? Put a figure on it.

Mr. Norton

The Deputy was half an hour on his feet and while there were a lot of figures used, they were not very helpful. When we come to examine this question of the demands made for land for the purpose of house-building, we find that there is no machinery in existence to ascertain what is a fair price for any land sold for house-building purposes. A local authority may wish to acquire a particular site because it is the most convenient one within its area of jurisdiction for house-building purposes. A local authority may consider that the development of a particular site is advantageous for house-building purposes because of the ease with which it can be connected with sewerage, water, light, and various other municipal services; or a private builder, following his normal avocation, might say that he also desired to acquire a particular site for the purpose of providing houses which he could sell at a profit to himself—and I do not regard that as in any way a reprehensible occupation, since he provides the community with its needs, and a builder is entitled, like everybody else in the community, to a reasonable return for his labour.

Mr. Belton

Follow that out now, till we see where you are going. Develop the case of the private builder.

Mr. Norton

Just wait a moment.

Mr. Belton

Go on. Follow out that point.

Mr. Norton

Sir, I shall sit down if Deputy Belton will make my speech for me.

Mr. Belton

I shall not. I have no desire to make the Deputy's speech.

Mr. MacEntee

If what Deputy Norton is saying indicates his mind, Deputy Anthony is apt to have him as an opponent.

Mr. Norton

As I was saying, a local authority may desire to acquire land for house-building purposes, and, as I said, there is no machinery for fixing the price of that land.

Mr. Belton

Oh, yes, there is.

Mr. Norton

There is no machinery except by means of an arbitrator appointed under the Acts, but the arbitrator appointed under the Acts in such cases is influenced inevitably by the high prices which can be got for land of that kind, owing to the shortage of housing accommodation, and he is not concerned with what is a reasonable and a just price for the land but with what is the present commercial value of a site of that kind.

Mr. Belton

What is the value?

Mr. Norton

In many cases, local authorities are required to pay exorbitant rents for sites which are not value, having regard to any just standard, for the land they obtain; and public utility societies, as well as private builders, are likewise required to pay fancy prices for sites which are not value for the prices paid.

Mr. MacEntee

Could the Deputy differentiate between the commercial price and a just price?

Mr. Norton

Well, I shall make this differentiation: That a commercial price that can be got for any kind of commodity in a period of shortage is obviously an inflated price, and, when the burden of paying that price is to be passed on to the community, I think there is need for interference as between what is a commercial price and a just price.

Mr. MacEntee

Will the Deputy differentiate?

Mr. Belton

The same applies to other commodities used in house-building, such as bricks, slates, and so on.

Mr. MacEntee

And to labour costs.

Mr. Belton

Yes, and to labour.

Mr. Smith

How does the Deputy make out that there is a shortage?

Mr. Norton

I shall answer all these questions in due course.

An Ceann Comhairle

The Deputy is not obliged to answer any of them.

Mr. Norton

As I said, because of the famine in houses, a local authority may be required, if it wants a particular site, to pay an extortionate sum for that land. In considering the value of the land, the owner naturally says, firstly, that there is a shortage of houses and a scarcity of suitable land, and that factor enters largely into the sale of his commodity. In addition, however, that land may have been bought by the owner, in the first instance, when it was not situated in a developed portion of a town or city. It may have been bought originally as land simply for agricultural purposes, or, by the efforts of the community, it may have been developed by the construction of roads, by lighting, or by sanitation close to it—by the provision of transport, electric light and water supply convenient to it. All these assets, in the form of transport, water, public health, lighting and road construction, which have been created by the community, are all community-created assets which, in relation to land, have inevitably the effect of increasing the value of that land, and the person who thus sells land for the purpose of house-building is selling it in many cases at a very enhanced price due, in the first instance, to the fact that there is a scarcity of land, and, in the second instance, to the fact that there has been added to that inflated commercial value a new value made possible by the efforts of the community in providing additional services.

A local authority or a private builder is, therefore, often compelled to pay for ground rents, as rents for land, a sum of money which represents to the purchaser an income for property which was considerably increased in price by efforts other than those of the property owner. An artificial scarcity of the commodity which is sought will increase the value of the land, and the addition to that land of community-created assets inevitably will have the effect of forcing up the price of that land with the result, particularly in recent years, that persons who have had land for sale for house-building purposes have been able to dispose of that land not merely at inflated prices but often at a still greater inflation of the price because of the community-created assets which have been added to the land.

Mr. Belton

Give instances.

Mr. Norton

The Deputy asks me to give instances. Is the Deputy the chairman of the estates committee of the corporation without being aware of the fact that land is being sold to-day for house-building purposes at a price which could not have been got five or six years ago?

Mr. Belton

I paid as high a price for land for agricultural purposes ten years ago as the corporation is paying for land in Crumlin or Cabra, and I used that land for agricultural purposes.

Mr. Norton

Surely the Deputy knows that advantage has been taken of the boom in house-building?

Mr. MacEntee

The whole of Deputy Norton's argument depends on what facts he can produce to substantiate his argument.

Mr. Norton

If the Minister goes out to his own constituency in the south county and looks at the estates there——

Mr. MacEntee

The Deputy should give facts. He should prove his case here.

Mr. Norton

Well, I have not that facility for disclosing private affairs that other people have. I have not the same facility that others have for disclosing confidential information or making public all kinds of private documents. The Minister can make inquiries in his own constituency in the south county and he can there ascertain the extent to which sites are being sold and the prices which are being charged, compared with the prices of similar land, almost side by side, which was sold ten years ago. Let the Minister ask the town clerk of Dun Laoghaire or the borough commissioner and he will be supplied with the information. Anybody, who has not his head in the clouds, must know that advantage is being taken of the housing boom, and if the Housing Acts were repealed to-morrow, land could be purchased for very much less than the amount it can be purchased for to-day.

Mr. MacEntee

I gather from what he says that the knowledge the Deputy has of these things is public property, and, if that is so, there cannot be any charge against him of giving away private or confidential information if he gives the facts here.

Mr. Norton

Is that the only case against the Motion?

Mr. MacEntee

No.

Mr. Norton

I have asked the Minister to inquire from the town clerk in Dun Laoghaire.

Mr. MacEntee

I am anxious to hear the case for the Motion.

Mr. Norton

That is a mischievous kind of inquiry not based on any desire to help.

Mr. MacEntee

I want the full facts. If the facts cannot be controverted, then the Motion will be carried. If the Deputy does not put the full facts before the House, then I think the Motion will be defeated.

Mr. Norton

I am sure all the Deputies who are not listening to this debate will not help in any way to determine the merits of it by their absence. It may be defeated by the Party whips, and the Minister, of course, has already indicated, by keeping his Party out of the House when attention was called to the fact that there was not a quorum, that he is opposed to the Motion no matter what arguments are made in favour of it.

Mr. MacEntee

No, we did not keep our Party out of the House. The Opposition whip was here, and why did he not get his Party to keep a House.

Mr. Morrissey

The Minister had to tie up Deputy Corry and send him out of the House.

Mr. MacEntee

No. Deputy Corry is not like Deputy Morrissey. He cannot be tied up. He is not as tame as the Deputy.

Professor O'Sullivan

The Minister is speaking from experience.

Mr. Norton

I was making the point that because of the shortage of houses land has been sold at prices which are inflated. There has entered into the sale of the land, to the benefit of the property owner, an additional value which has been secured to him, in many instances, by the fact of community created assets. I think it is within the knowledge of Deputies that, in a period when there is an extensive scheme of public works being carried out and when there is a shortage of houses, a person with suitable land to sell for house building purposes is often able, purely by reference to these two factors, to secure for his land a price which is altogether extortionate and which must ultimately be borne by the community in respect of its desire to find decent accommodation for its people. To-day, although land is being sold at this inflated price, there is really no effective taxation on the income so derived in the form of ground rents except the charge which is imposed under the income tax code, and it, in my opinion, simply assesses income tax on an income of that kind without any reference whatever to the specially enhanced prices which are being secured for land in existing circumstances.

Mr. Belton

It does.

Mr. Norton

It does not. Ground rents of that kind may pay income tax of 4/6 in the £ in the higher scale, but that is not a new development. That is an application of the principle of paying the higher tax on the ground rent. You may say that if there are more ground rents there are a greater number of four and sixpences to be paid. In my opinion, the income which is being got out of ground rents is inflated to such an extent as to neutralise completely the imposition of a tax of 4/6 in the £ on income derived from ground rents.

Mr. Belton

It is capitalised.

Mr. Norton

It may be capitalised, but the desire of people to acquire land and create new ground rents out of it shows that the capitalisation of ground rent income does not in any way deter them from doing so. Even the Deputy in his speech admitted that the Revenue Commissioners, under the formula they adopt, do not impose any intolerable burden on the ground landlord.

Mr. Belton

May I point out to the Deputy that coming from the ground alone, apart from the expenditure incurred on development, ground rents do not amount to £1 a house. If you take the figure of £250 an acre and divide it up you will see that it does not amount to more than £1 per house per annum. Ground rents of £10 are due to development and to the money sunk in the ground and to that only.

Mr. Norton

We can deal with the development side of it later, but I regard the imposition of a tax of 4/6 in the £ on incomes derived from ground rents as utterly inadequate. It is utterly inadequate in recent years because of the facilities provided by the State for house-building purposes. Advantage is being taken of the scarcity of houses and the scarcity of suitable land convenient to towns.

Mr. Belton

There is no scarcity of suitable land.

Mr. Norton

There is a scarcity of suitable land convenient to towns, and if there was not be compelled to go out tion would not be compelled to go out long distances to acquire land.

Mr. Belton

They have 200 acres at the Thatch and they cannot let it.

Mr. Norton

Because the district of the Thatch is inconvenient to live in, having regard to the high transport charges to and from that district. Deputy Belton, in the course of his speech, talked of the builder who bought land, went in on a site and put in roads, sewerage, footpaths, light, and built a house, and, having thus transformed the character of the countryside, disposes of the house and walks out. He may, of course, retain an interest in the ground rent. The Deputy seems to think that such a builder was a kind of public benefactor who built roads, sewers, footpaths, and erected lights—generally improved the amenities of the place—and then sold his house, which he had erected on the land, without any relation to the cost of these services to him. Deputy Belton is too astute a financier not to have adverted to it in his own case, that when a builder goes in to build houses on a site one of the elements in his cost, and one of the elements in the sale price of the house, is the fact that he has had to construct footpaths and roads to the satisfaction of the Corporation, to lay down sewers and to erect lamps. Is it not a fact that the value of all these services is aggregated and added to the cost of the house?

Mr. Belton

No.

Mr. Norton

The builder who did not do that would soon be either in an asylum or in the workhouse. Is not what I have stated a fact?

Mr. Belton

It is not.

Mr. Norton

Does the builder provide these services without charging the purchaser of the house anything?

Mr. Belton

He charges them on the ground rent.

Mr. Moore

He has got to sell in competition.

Mr. Norton

If Deputy Moore was in the Sahara with a gallon of water for sale the enhanced price that he would get for it would not be affected by the fact that he was selling in competition with somebody else who had another gallon of water for sale.

Mr. MacEntee

We are not discussing the Sahara here. Anyway I think that is a very barren argument.

Mr. Norton

Deputy Moore says that he has got to sell in competition. The fact is that the builder is selling an article that is in considerable demand. That is better than selling in a glutted market. Deputy Moore seems to think that there is some virtue in selling a commodity in a famine in competition. Everybody knows well that prices are being got for houses to-day which could not be got only there is a famine for houses.

Mr. Belton

What pays for the development?

Mr. Moore

If Deputy Belton develops the 200 acres and provides all these facilities, he has to sell in competition with houses in Rathmines, built in places where these facilities have already been provided and paid for.

Mr. Norton

What does the Deputy mean by already provided and paid for?

Mr. Moore

Such things as roads— amenities that are already paid for, the capital cost already paid off.

Mr. Norton

I cannot see the implication of the Deputy's argument in relation to the point we are discussing.

Mr. Belton

Let the Deputy not go back to the Sahara.

Mr. Norton

No, we will go back now to Belton Park. The fact of the matter is that when a builder proceeds to erect houses he naturally calculates in the selling price of the houses the cost to him of providing roads, sewerage, sanitation, lights and other matters. All these elements go into the cost of the houses.

Mr. Belton

No, they go into the cost of development.

Mr. Norton

I do not know what method Deputy Belton has of regulating his house building affairs, but I do know that builders, particularly those who are not very well equipped with money, find it necessary to charge the seller a proportion of the cost of providing those other services which are necessary if the houses are to be sold. There is no serious challenge to the contention that in the sale of the house it is not merely the sale of the houses itself but of the ancillary services provided with the house, such as roads, sewerage, water, light, etc.

Mr. Belton

Subject to a ground rent and it is the ground rent that pays for these services, the capital cost of putting them in.

Mr. Norton

I have shown, in any case, that the normal method of ascertaining the cost of a house is not merely concerned with the house itself, but with the cost of providing the other services. The cost of these other services is added proportionately to the price of the house and the purchaser pays both for the house and the services.

Mr. Belton

That is not so.

Mr. Norton

Deputy Belton speaks of a builder as a philanthropic man who provides the community with all these services, but he really does not mean it, because the house-builder ultimately exacts his cost from the purchaser and even exacts a profit on the services he provides in the same way as he exacts a profit on the house he provides. The Deputy talked about house-builders providing services of that kind. I doubt if he imagines that anyone believes that builders are such philanthropic individuals that they can afford to do that. I do not see any reason why they should do it.

Mr. Belton

Very well; there is no objection to ground rents, then.

Mr. Norton

The Deputy proceeds to masquerade as a public benefactor. providing services of that kind, so to speak, for nothing. The services which the Deputy is supposed to provide free of cost are not provided free of cost. The cost is borne by the purchaser.

Mr. Belton

Through the ground rent.

Mr. Norton

The Deputy may do it through the ground rent or by an addition to the price of the house, but no matter what way he does it, the Deputy will not lose on the transaction.

Mr. Belton

Certainly not.

Mr. Norton

Therefore the provision of these services does not impose any burden on the builder. If he adds to the ground rent the cost of these services he is making an addition to the ground rent over and above what he would charge.

Mr. Belton

Prove that point and you will make your case.

Mr. Davin

It is clear to anybody outside Grangegorman.

Mr. Belton

The Deputy never bulit a house. It is easy for those on the ditch to talk.

Mr. Norton

The Deputy is building them and I will give him credit for being able to organise the finances of a scheme and I am sure the Deputy sees bankruptey a long way off.

Mr. Belton

I would be glad to be so optimistic as the Deputy.

Mr. Norton

That is a striking admission from Deputy Belton. In any case, he knows very well that, particularly in boom periods, those who have land to sell or those who provide houses have not been prominent in the bankruptey courts.

Mr. Belton

Neither are those who have labour to sell in the boom periods.

Mr. Norton

Few of them ever have enough money to be able to get to the bankruptey courts; the workhouse often provides a convenient via media. I am afraid the Deputy is not making a success of his housing scheme, if that is his admission. This method of his, which is contrary to the normal method, may be an explanation of it. I agree with Deputy Belton on one point, and that is that the motion is defective to the extent that it would appear to impose on local authorities an obligation to levy a rate on themselves as ground landlords. It seems to me to be a childish piece of legislation to enable a local authority to impose a levy on its own ground rents. There is no purpose served in imposing a levy on Corporation ground rents, because such surplus as is made on the Corporation ground rents is used for the benefit of the whole community.

One must distinguish between the ground rent used for the benefit of private individuals and ground rent used for the purpose of the municipality, for the benefit of the municipality. If, as Deputy Belton says, the corporation buys land at £200 an acre and arranges a ground rent of £400 an acre, what is the position? The land is bought from someone within the area of the corporation and sold to people within the same area, and such surplus as is realised from the ground rent is used for the benefit of all the people within the area of the corporation. Surpluses which may be raised in that manner find their way back into the pockets of the community in one way or another, in the form of better municipal services or a remission of rates which would otherwise be necessary if there were no ground rents of that kind accruing to the corporation. I think Deputy Anthony has made a mistake in not differentiating between the private ground landlord and the municipality which may be a landlord.

Mr. Morrissey

That can be done in the Bill.

Mr. Norton

I agree, but it is necessary. Deputy Anthony may have made it clear that his desire is to impose additional taxation on ground rents which are secured by the sale of an article which is in extensive demand and the value of which has been enormously improved by the addition of community-created assets. I move the adjournment of the debate.

Debate adjourned.

The Dáil rose at 2 p.m. until Wednesday, 12th February, at 3 p.m.