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Dáil Éireann debate -
Wednesday, 22 Feb 1939

Vol. 74 No. 7

Committee on Finance. - Trade Loans (Guarantee) Bill—Money Resolution.

I move:—

That, for the purpose of any Act of the present Session to enable the Minister for Industry and Commerce to grant or guarantee certain classes of loans the application of which is calculated to promote employment, and certain other classes of loans the application of which is calculated to promote a reduction in the retail prices of essential commodities, and to provide for the application of public moneys in or towards the fulfilling of such guarantees and the granting of such loans, and for certain other matters connected with the matters aforesaid, it is expedient to authorise—

(a) the advance out of the Central Fund or the growing produce thereof of such sums as may from time to time be required for fulfilling guarantees given under such Act or for granting loans under such Act;

(b) the advance out of the Central Fund or the growing produce thereof of such sums as may be required, after the passing of such Act, for fulfilling guarantees given under the Trade Loans (Guarantee) Acts, 1924 to 1934;

(c) the payment out of moneys provided by the Oireachtas of such sums as may be required for the repayment, in accordance with the provisions of such Act of the present Session, of advances made from the Central Fund or the growing produce thereof;

(d) the charge upon and payment out of the Central Fund or the growing produce thereof of the principal and interest of any securities issued for the purpose of borrowing under such Act of the present Session.

On the Money Resolution, I understand that the amendments standing in my name are out of order. I cannot understand how, in one of the sections, the Minister takes power to grant money by way of loan for the erection and equipment of dwelling houses, including the acquisition and development of land for that purpose. Perhaps the Minister can tell us if he has some plan and why he proposes to divorce the money; that is, lend on a house, a dwelling house, or land. I would like to know how he proposes to deal with advancing money to a building society. Surely they ought to be under the one Act? All my amendments are along the lines of making it easier for a building society or a friendly or a co-operative society to deal with the Minister as a go-between in the promotion of house building. Perhaps the Minister would let us know what the objections are and how he proposes to deal with a building society that wished to obtain a loan in order to facilitate the building of houses.

I should like the Deputy, and the other Deputies whose amendments I have ruled out, to understand that the Chair has not even yet consulted the Minister as to his view on those amendments. It was purely a ruling of the Chair. I do not say that the Deputy insinuated that.

I did not do so.

I considered that those amendments would involve a contingent liability, that they would increase the number of persons to whom, and the purposes for which, loans might be granted and, if I might even go outside that, that a building society did not come within the terms of the Bill. That is what struck me. The amendments were ruled out on the main principle that there was a contingent liability involving an increased cost on the Exchequer.

I am accepting the ruling of the Chair absolutely, but arising from that, I should like to know from the Minister if he has got some scheme which will show how he proposes to deal with the friendly or the building society?

I think it would be quite in order for the Deputy to take advantage of the Money Resolution to suggest to the Minister that the money might be used more advantageously to promote the purposes of the Bill by inviting the co-operation of building societies.

Deputies seem to have a complete misconception of the Bill. There is nothing in the Bill which has any relation to the financing of building societies. In so far as its general scheme is concerned, the Bill is merely a re-enactment of the Trade Loans Acts. We have had Trade Loans Acts in operation for a long time. They have expired now because they were enacted for a limited period and a decision had to be made whether they were to be allowed to expire or whether we should renew them. We decided to renew them and, in so far as this part of the Bill is concerned, they are being renewed without change. Deputy Dockrell used the term building society as being synonymous with friendly society. It is not. Building societies were established by the Building Societies Act and they get money by way of subscriptions from their members and this is used for the purpose of making advances to members. Public utility societies can engage in the business of bulding houses just as an ordinary contractor would engage, except that the societies will build houses for their members, whereas the ordinary contractor will build houses for sale to the public. There is nothing in the Bill which prevents a public utility society of that kind taking advantage of its terms to the same extent that a private individual or a firm of building contractors might take advantage.

We certainly do not intend, and I cannot see how it could be urged that it would be suitable, to utilise the provisions of the Trade Loans Act for the purpose of financing house purchase. It would be completely impracticable to do so. There could be no conceivable method by which the procedure laid down in the Bill could be applied to building societies or the financing of house purchase at all. This measure is designed to enable the Government to guarantee loans for manufacturing undertakings. The definition of "manufacturing undertaking" is expressed to include the erection of houses. As Deputies will remember, originally it did not include the erection of houses. At least, it was doubtful whether the term as defined in the original Act could be interpreted to include the building of houses. A special Act was introduced for the purpose of amending that definition. In introducing that Act, I made it clear that the machinery of the Act could be utilised to assist housing schemes of considerable magnitude. In fact, only one such loan was guaranteed. That was a loan applied for by the company who undertook the development of the Mount Merrion Estate. That loan has been repaid in full. I never conceived it possible to utilise the Trade Loans Act for the purpose of financing house purchase, nor do I think it would be practicable for financing the erection of individual houses or small lots of houses. The question of utilising State credit, or in some other way giving State assistance, for the development of building societies is a separate question altogether which is having separate consideration by the Government.

I understand that we would not have a Trade Loans Guarantee Act at all if there was suitable machinery for financing manufacturing undertakings of every kind that were likely to require assistance. The reason that we have such an Act is that there are difficulties experienced in getting money. The position of the house-building industry was such, I suppose, that the Minister felt at one particular time that he had to make some kind of an arrangement for giving an opening to a manufacturer of houses, as we might call a builder, to take advantage of the trade loans system in the same way as other people. Apparently, in a general way, it has not been successful, but it must be to the knowledge of the Minister that the financing of house building is a very important matter, particularly at the present time in a place like the City of Dublin. Under a Housing Bill that is before the Dáil at present, facilities are being withdrawn from the builders of houses in the City of Dublin, that are going to be enjoyed elsewhere. When we look back over the number of houses built in the City of Dublin under recent house-building schemes, we find that out of 42,782 houses built under the 1924 and 1927 Acts, 21,600, or 50 per cent., have been built in the Dublin and Dun Laoghaire area. So that from the very area that drew very substantially on the facilities for house building, certain facilities have been taken away. The building industry in the City of Dublin has met with a very considerable amount of difficulty during the past six months as a result of the wobbling, shall I say, in the attitude of the Government towards it. Houses will be required in the City of Dublin, but the financing of the building schemes that are necessary in the city is a very difficult matter. I know there are building firms in the city that are being driven to go to the trade loan system for facilities. The Minister must be aware that in Great Britain one of the chief ways in which housing has been financed has been through the tremendous development of the building society there.

I want to suggest to the Deputy that that is an entirely different matter to the one we are dealing with now. The reference to the erection of houses is, in a sense, incidental. It is merely a clarification of the definition. It was never contemplated that the Trade Loans Act would be utilised extensively for the financing of house building nor does it in any way represent the Government policy for assisting the building of houses. The Minister for Local Government and Public Health, who is directly responsible for Government policy in the matter of housing, is giving the question very definite attention and possibly proposals relating to that matter will be brought to the Dáil in the near future. This in no sense represents a deliberate decision to assist house building through the medium of the Trade Loans (Guarantee) Act. The definition, as embodied here, is the same definition as was in the other Act. We felt that if there was an application made for a guarantee, and a good case was made in relation to an individual enterprise, builders should not be precluded from taking advantage of facilities that are open to manufacturers in other spheres. On that account we altered the original definition of "manufacturing undertaking", but, in fact, experience has shown that the procedure of the Trade Loans Act is not altogether suitable for financing house building. The financing of house building falls under two heads—the provision of finances by the local authorities, which is a matter of getting money at reasonable rates from the public, and secondly, the setting up of which will enable individuals to become house purchasers even though they have not sufficient capital of their own to purchase houses. These are matters of housing policy which are not dealt with in this Bill.

I would suggest to the Minister if definite proposals are not coming before the House for the fostering of building societies, that he would make better use of this money by using it to foster the development of building societies.

It could not be done under this Act.

There is no reason why it could not be done just as people are assisted in other manufacturing undertakings.

Is the Deputy referring to a house building society?

A house building society is defined as a society which gets money on deposit or by subscription from its members, and advances it to them to buy houses. A trade loan could not be given to such a society, because in order to give a guarantee for that loan we would have to get a charge on its assets. The mere fact that we would do that would shut up the society at once. Its depositors could no longer withdraw their money, as we would have a charge upon it. The whole business of a building society debars it from availing of the facilities of the Trade Loans (Guarantee) Act.

I wonder is the Minister serious in including in the definition of "manufacturing undertaking" the purpose: "or the erection and equipment in Ireland of dwelling houses, including the acquisition and development of land for that purpose"? Does he really mean to advance money for that purpose?

We guaranteed an advance by a bank on one occasion for the Mount Merrion housing scheme.

What building is going on there now?

We got our money back, anyhow.

If the purpose of this Bill is to promote employment—I am sure that is what is behind it; otherwise, it would serve no purpose—and if you consider that the investment of money in house-building is one way of promoting employment, I should like to know from the Minister how the lending of money to needy builders to carry on their business or develop virgin land for building purposes is going to help in existing circumstances. No man in Dublin who is fit to be a builder wants money to build.

Why offer money to a business that does not want it?

We are not offering money.

You are placing facilities at his disposal.

What, then, is the meaning of this resolution?

I agree that, in my experience, the provision of capital for builders in Dublin has never been a problem, that persons engaging in building have been able to get the capital required for that purpose without difficulty.

That is so.

I think that that is the answer to Deputy Mulcahy's contention.

It is the answer to your resolution.

Is there any reason why we should preclude ourselves from guaranteeing a loan in such cases if it is clear that the public interest is going to be served by it? During the whole period that the original Acts were in operation only one such loan was guaranteed. That may never happen again, but, unless there is good reason, why should we deprive ourselves of the power to guarantee such a loan if it is in the public interest that it should be done?

The Minister is pretending in this Bill to do something that he knows will not be done. Why not put some substance into the proposal, as suggested by Deputy Mulcahy and Deputy Dockrell? I have an amendment down and, but for the fact that I had fears as to how the Ceann Comhairle would regard the matter, I should have put down substantially similar amendments to those put down by the Deputies to whom I have referred.

The Deputy's fears were well founded.

There is no use in being here if you do not learn. I seriously suggest to the Minister that, if he wants to help employment in the building trade, there is only one way of doing it—that is, to help the thousands who are looking for accommodation to make up 70 per cent. or 80 per cent. of the purchase money. They have the rest. There is not a builder in Dublin who has not houses on his hands, and, if he is working at all, he is working with only a skeleton staff. The way to electrify that business is not to give the builder money with which he might foolishly develop more land and leave the money buried there, so that the Minister for Finance would have great difficulty in getting payment of interest and sinking fund. That is a dangerous proceeding, and I do not think the Minister should engage in it. My experience—and I have a little—is that if sales are good, no builder wants accommodation. Any man fit to build a house must have a banking account, and the banks meet the honest man who keeps his word and who is seeking accommodation. The banks will never turn down such a man, and I repudiate any suggestion to the contrary.

Neither will the builders' providers of Dublin refuse accommodation to a man who makes a fair show. The key to the whole thing is not the production of the houses but the selling of the houses at a fair price. The market is gone and if the Minister wants to put life in that business, it is for him or his colleague of another Department to take the appropriate steps. If the Ceann Comhairle allows me to move my amendment, I shall say that you should withdraw that provision and I am a builder and would like accommodation as much as any other man, though I might abuse it.

The Deputy's amendment is in order.

Question put and agreed to.