Public Business. - Housing (Amendment) Bill, 1941—Committee. – Dáil Éireann (10th Dáil) – Thursday, 3 Jul 1941

Public Business. - Housing (Amendment) Bill, 1941—Committee.

Section 1 and 2 put and agreed to.

SECTION 3.

(1) Any local authority to which this section applies may with the consent of the Minister and subject to such terms and conditions (if any) as he may impose, guarantee, either alone or jointly with any other person or persons, the payment of any sum borrowed by a building society and the interest on such sum.

Mr. Costello

I move amendment No. 1:—

In sub-section (1), line 41, after the word "Minister" to insert the words "and with the consent of the Minister for Industry and Commerce."

The object of the amendment is to ensure that the Minister for Industry and Commerce, who is the Minister that knows all about the finances of building societies, and who has in his Department all relevant materials and returns dealing with those finances, should have a say in the question as to whether, in a particular case, the building society is of sufficient financial standing to embark upon a project contemplated by Section 3 of this Bill and that, consequently, the local authority is safe in giving the guarantee. The Minister knows that these building societies have every year to furnish to the Department of Industry and Commerce very elaborate returns on forms provided for by a statutory regulation to the Department of Industry and Commerce. It would appear, therefore, that the Minister for Industry and Commerce should be in some way responsible for the activities of the building society which is seeking a loan and a guarantee for such a loan.

The main object of the amendment, and the other amendments I have put down, is to see that a building society, under the cloak of Section 3 of this Bill, will not be permitted to indulge in speculative activities at the expense of the ratepayers. The Minister for Industry and Commerce is the authority, under the Building Societies Acts, to look after the activities of building societies. He controls their finances to the extent that they must furnish annual returns to enable him to see what the position is. It is, therefore, proper, in my submission, that the Minister for Industry and Commerce should indeed be the sole authority, but certainly that he should be an authority to act in conjunction with the Minister for Local Government in this matter.

I noticed that in the speech made by the Minister when introducing the Bill he referred to the fact that another Bill was being introduced in addition to this Bill, and I suppose complementary to the provisions contained in this Bill, and that that Bill is being prepared by the Minister for Industry and Commerce to amend the Building Societies Acts. The position, therefore, would appear to be that the Minister for Local Government introduced this Bill and that another Bill complementary to it is being introduced by his colleague to amend the Building Societies Acts. That would appear to be a justification for my amendment to link up the two so that two authorities may be consulted before one of these local authorities gives the guarantee referred to in this section to a building society.

Minister for Local Government and Public Health (Mr. Ruttledge)

I do not think this amendment should be inserted. As Deputy Costello knows, when matters of the sort he has in mind are being investigated the Department of Local Government have the other Departments to assist them. They can get those particulars from the Department of Industry and Commerce if they consider it is necessary and desirable to get them. This amendment and the other amendments of Deputy Costello to my mind are imposing certain restrictions, and I do not think it is desirable to hamper a Bill of this sort, which is experimental, with too many restrictions. We have first, the guaranteeing authority to investigate the bona fides of those building societies, and then the guarantee can only be given with the consent of the Minister. I am sure that every possible investigation will be made so as not to allow a building society which has not adequate assets to proceed with a scheme under this Bill.

I am sure that when the Minister for Industry and Commerce brings in his Bill there will not be any reference to the Minister for Local Government in it. Although these Bills are complementary, they are independent measures. I do not think it is desirable to introduce the Minister for Industry and Commerce into this. In the first place, I do not think it is necessary because the Department of Industry and Commerce is always available to assist other Departments.

Mr. Costello

I have no doubt the Department of Industry and Commerce is available to the Department of Local Government. But what I want to ensure, speaking on behalf of the ratepayers who may be affected by these guarantees, is that every possible step is taken to investigate the bona fides of a building society that wants to get a guarantee for a loan. The best method that the ratepayers and the public can see of ensuring that a guarantee given by a local authority will be given in a proper case is if it is apparent in the Bill, when it becomes an Act, that both the Ministers responsible, that is to say, the Minister for Local Government, who is responsible for local authorities' actions, and the Minister for Industry and Commerce, who is responsible for the finances of building societies, will concur in investigating the bona fides of every building society that is endeavouring to get an advance under the provisions of this section. It is no answer to say that, of course, I know and everybody knows that the services of the Department of Industry and Commerce are available to the Department of Local Government, if the Department of Local Government think it necessary to seek them. I do not want to take anything away from the jurisdiction of the Minister, but I do want to ensure that, before the Minister for Local Government and Public Health sanctions a guarantee under this section, the finances of the building society proposing to get a loan will have been thoroughly investigated; and a thorough investigation, in my submission, can be made only when the Department responsible for building societies is brought into formal and statutory consultation with the Minister for Local Government.

The Minister has stated that the guaranteeing authority will investigate the bona fides of the building society to whom the guarantee is given. I doubt that. To start with, there is no machinery at the moment in this Bill available to the local authority for that investigation. In an amendment put down by the Minister it is proposed to make this question of guaranteeing a reserved service so far as Dublin and Dun Laoghaire are concerned. Therefore, the Dublin Corporation, the Dublin County Council, and the Dun Laoghaire Corporation, so far as the elected members are concerned, have full authority to give or withhold a guarantee. In other words, it is likely to develop into the question of a vote and, putting it to its logical conclusion, it means that any particular speculative building society, whether started now or hereafter, will go round canvassing the members of the Dublin Corporation, or the Dublin County Council, or the Dun Laoghaire Corporation in order to get a guarantee to finance speculative building.

I do think that is not entirely in the public interest, and it certainly is a complete answer to the Minister's suggestion that the guaranteeing authority is going to investigate the bona fides of the building society applying for the guarantee. There is no machinery available to the local authority to investigate it. The machinery in connection with that investigation is in the Department of Industry and Commerce. The local authority has not got it.

If it were decided to set up here, as I think was the procedure under the Trade Loans Act, an advisory committee, before the ratepayers' money was jeopardised in what can be nothing else but a speculative trade in present circumstances, there would be some investigation of the proposal, of the finances of the proposal and of the financial status of the building society to whom it is proposed to make the loan, and of the particular builder who is going to start operations with the money that is to be advanced under cover of the loan. If such advisory committee were at the disposal of the local authority there would be something to be said for the Minister's suggestion. As the section stands at the moment there is nothing to be said for it. I read the Minister's introductory remarks on the Second Reading of the Bill, and reading them I came to the conclusion that they meant precisely nothing, just as this section means precisely nothing because it is an enabling section. It does not impose on the local authority any obligation to give guarantees or to make an investigation before it gives any such guarantee. It does not impose any obligation on the local authority to guarantee any loan and, of course, there is no reason why the local authority should guarantee a loan unless under the amended machinery proposed by the amendment before the Dáil at the moment to the effect that this is to be a reserved service. In other words, it is to be at the risk of racketeering and canvassing amongst members of Dublin Corporation, the Dublin County Council and Dun Laoghaire Corporation.

I should feel much happier if this were to be the sole responsibility of the City Manager in Dublin or of the Borough Manager in Dun Laoghaire. Of course, we shall have a county manager in a short time in the case of the Dublin County Council. If it were his responsibility then I think the question of a guarantee could be regarded with some equanimity, because it would be felt that with the independent point of view of the manager, with his official outlook on these matters and with his desire to do what was proper in the public interest, the matter would be approached in a businesslike way, but under the proposal contained in this Bill the matter is to be one, particularly with the changed membership of the county council, in which there will be nothing but canvassing on behalf of speculative builders, speculative building societies and other interested parties.

Mr. Hickey

I think the point raised by Deputy Costello is all important. We had a very sad experience in Cork in this matter in the last 12 months. A society was started to build 56 houses. They got a grant of £10,000 in addition to a further sum of £3,000 from the corporation. We found when the houses were half built that it was necessary for the corporation to take them over. Having made inquiries about the financial position of the society, we ascertained that all the capital they had when they started was £7. One could hardly believe that a society would start to build anything up to 56 houses on a capital of £7. Yet they got £13,000 of public money and if the Cork Corporation had not taken over that job it would have meant that the houses would have been thrown on the market, that some speculative builder would come along and would probably buy over the whole lot for £5,000 or £6,000. I think that these building societies are long overdue for a very close review of their financial position. I think it is a shame that some of the public utility societies have been allowed to carry on as they have been.

Mr. Dillon

Hear, hear.

Mr. Hickey

I have very strong views as to the way in which these things are let drift. I should like to know if some of the public authorities are very keen on preserving local interests in the matter. We have had two public utility societies in Cork which built quite a number of houses and which got a big amount of public money. The ground on which the houses were built was purchased at the public expense. What do we now find? That one of these public utility societies has gone into liquidation and the ground purchased with corporation money is now in the possession of a foreigner. I think the Minister and his Department are rather lax about that aspect of the case. I was very keen on something being done about these building societies and after a time, when we found that the land that was bought by the corporation had passed into the hands of a foreigner, I went to the Department to see if anything could be done to prevent such a thing happening. Of course the corporation had no say in the matter. They were not consulted and the matter passed out of their hands. I went to the Department to inquire if it was possible to prevent these lands passing into the hands of a foreigner, and all the satisfaction I got was the statement that our legal adviser should have put some saving clause in the agreement with the builders to prevent any transaction of this kind. The second public utility society also passed into the hands of another group, not foreigners on this occasion. I urge that there should be a little more investigation in these matters as to the financial stability of these public utility societies. In the first case I referred to the society was composed of seven individuals whose sole financial equipment was £7, £1 each. They started to build these 56 houses and collapsed in the middle of the scheme. I am entirely in agreement with the point raised by Deputy Costello on this matter.

Dr. O'Higgins

I think that the whole subject of this Bill, and, in fact, the subject of the amendment, is a matter around which there is no controversy. In fact, I do not know of any subject around which there is more general and more enthusiastic agreement than on the necessity for more houses, better houses, and the soundest possible houses. In our enthusiasm on that particular question in the past, some plans were made which had very bad results. The object of this amendment is to make the whole machinery more watertight, more thorough and more sound from the point of view of (1) the person who has to subscribe the money, and (2) the family that is going to live in the house afterwards. The Minister's reply to the mover of this amendment was, in fact, a very sound case for the amendment, because the Minister said that, in fact, and in practice, the Department of Industry and Commerce would be consulted, and that the advice and machinery of the Department of Industry and Commerce, plus that of the Department of Local Government, would be in operation before any such loan was made. That is all the amendment asks for. It may be that the Minister's contention is quite right, that the amendment is superfluous to the extent that the machinery of both Departments would be in action before a loan is authorised. If that is so, does the Minister see any objection to reassuring the uneasy public mind by putting in black and white in the Bill what he says in the debate on the Bill? There is a general demand from all sides for more houses and better houses, but we want the work of building the better houses undertaken only by financially sound and reliable builders.

We cannot have too many certificates of soundness. The Minister says: "We will get that in the Department of Local Government and Public Health and we will consult the Department of Industry and Commerce." The amendment asks that the certificate of both of them be passed in. I think that it should not be necessary to spend the amount of time that we have spent on this amendment in view of what the amendment asks and in view of the extent to which the Minister met the mover of the amendment. We are merely asking the Minister to incorporate his own policy in the Bill.

Mr. Byrne

I, as a member of the Dublin Corporation, do not want this responsibility. I agree with every word Deputy Costello has said. If the Minister took back the Bill and waited for another six months, I do not think he could give Deputy Costello's words too serious consideration. If, as Deputy Costello has pointed out, the corporation, on a vote, after a terrific canvass, decided to guarantee somebody, who will guarantee the corporation and who will save the ratepayers? The Government, as a result of a very proper campaign for the building of houses, are now, I think, trying to find a way out of the promises they made to speculative builders, and they are deliberately throwing the onus on the corporation and taking the city manager out of any responsibility in the matter.

The Government are posing as doing something to help building and they are saying to us, the elected members of the corporation: "We throw the onus on you of seeing whether such-and-such a building society or individuals are good marks for an advance from the ratepayers' money." Some speculator, as Deputy Costello says, will come along and buy up some ground, if there is any left, probably ground that was formerly utilised as cabbage gardens, and put up a scheme of houses for sale, not for rent. What we need most in this country is the type of house which can be let at a low rent. There is no more room in this city for houses for sale, whether they are offered by public utility societies or speculative builders. We want houses at moderate rents.

We do not want to advance moneys to somebody who may accumulate big ground rents and sell out, leaving the baby, as it were, in the arms of the corporation. I think the Government are trying to shove their responsibilities on to somebody else, passing the baby, as it were. I think the Government ought to say to the corporation: "We will guarantee you if you find it desirable, in the interests of building, the giving of work and the provision of homes for the people. If anything goes wrong with your finances as a result of this responsibility which we are casting on you, we will guarantee you."

I mentioned a case here some time ago in which, in some part of Northern Ireland about five years ago, the Local Government Department there guaranteed house builders. Why cannot our Government accept this responsibility instead of throwing it on the corporation? What Deputy Costello has told you will happen. The members will be buttonholed and a very fine picture will be put before them about the development of an area for the purpose of building houses.

I think this Bill is hopelessly conceived and I think the Government should take it back for reconsideration. They should put in some conditions to the effect that houses erected in and around the city or in the Dun Laoghaire Borough should be rented to people. They should not permit house building by speculative builders who will charge £7, £8, or £10 as ground rent and then leave their houses on other people's hands.

The Minister could not bring in this legislation at a worse time. I wonder if he is aware that there are many purchasers of houses, costing up to £800, who bought them within the past five years, who put down £100 or £200 as a deposit and are paying small sums each year off the purchase price and to-day, as a result of unemployment and the curtailment of hours in Dublin industries, these people now find themselves in the position that they cannot pay the instalments due? Solicitors and owners are pressing them in connection with the mortgages on the property. I have here a letter from an individual in Dublin City who put down a deposit of £120 on a house. That unfortunate man tells me his house will be taken from him in the course of a few weeks. That is the position in regard to many houses in which public utility societies, some insurance societies and even the building department of the corporation have an interest. They may find themselves, in the very near future, in the position of having to take houses over from people who, two or five years ago, thought they would be able to buy a home.

I would be inclined to ask members of the House and the Minister to take some steps, by moratorium or otherwise, to protect people placed in the position of this unfortunate man whose letter I have here. Within the last few weeks I received other letters from people who find they are not able to pay their way and whose houses are likely to be taken from them. Perhaps the Dáil could do something to protect them. The responsibility under this Bill is purely a Government matter and the Government should have the courage to deal with it.

Mr. Dillon

It is important to remember what this amendment is about. It is designed to ensure consultation between the Minister for Local Government and Public Health and the Minister for Industry and Commerce before a local authority can guarantee an advance to a building society. I am astonished that the Minister resists that amendment because, as Deputy Costello pointed out, there is no machinery at his disposal to investigate the finances of a building society of this kind, and surely he of all men ought to know the confusion and pandemonium that the public utility societies have involved us in during the last nine years.

We are free to say now, without raising any violent feeling on any side of the House, that the public utility societies were started nine years ago in order to collect members for the Fianna Fáil cumainn down the country. The plan was that every Fianna Fáil cumann was to constitute itself a public utility society and that a member thereof would get a grant of £10 more for his house than anybody who was not in the local cumann. What happened was that the boys all started public utility societies and 90 per cent. of them went "bust." Some of them did not do much damage—they merely went into bankruptcy and dissolution —but others caused great inconvenience and in some cases serious loss. That epoch in our history has passed. The Government have learned a lesson in that regard that they have learned in many other respects.

The position of a building society is somewhat different. A building society does not do the same work that a public utility society does. I think it is true to say that when you examine the position of public utility societies you find a thin veneer of a Fianna Fáil club. A building society is different. A building society purports to collect share capital, and having done so, it purports to borrow money and advance that money on mortgage to persons desirous of building their own houses.

The purpose of this Bill or similar legislation is to permit building societies to reduce the margin of safety which has been hitherto the minimum margin on which they could advance money on mortgage. But there is another point. As Deputy Costello pointed out, unless very considerable vigilance is exercised the well-established and scrupulously administered building societies will carry on along the conservative lines that are essential if the solvency of building societies is to be retained. But some group of warriors who want soft jobs for themselves, or who are perhaps in touch with building suppliers, will constitute themselves the Kathleen Ní hUallacháin Building Society, paint the national flag over the door, invite a couple of prominent politicians to become members of the board, and then declare that their sole ambition in life is to serve the interests of the imperishable Irish race, to rescue the poor from the slums, and to adorn the cities where they operate; and anyone who opposed that is a saboteur, concerned with tearing down the fair fame of Kathleen Ní hUallacháin, and in that atmosphere will approach the local authority for a guarantee of a loan of £50,000. The moment that anybody questions its solvency, propriety, or ultimate purpose, he will be denonunced most vigorously by two or three "chancers" on the local authority to whom the application is made, whom that fraudulent building society had squared.

Mr. Hickey

Not all of them.

Mr. Dillon

Let us be quite blunt and plain. Honest men who demur to the proposal will be denounced by three or four "chancers" on that public body who permitted themselves to be squared by this fraudulent body. Most Deputies who have been members of public bodies know what goes on. The average member who is a member of a public body is a busy man, and has not the time necessary to make actuarial and accounting investigations into the financial standing of building societies, the financing of which is fairly complicated. I want that man to be in the position to turn to the permanent officials of a local authority to whom an application is made, to ask if the Minister for Local Government and the Minister for Industry and Commerce had certified that it was a solvent body, and that a guarantee could be given without undue risk of financial loss to the local authority. Unless Ministers with the machinery at their disposal are prepared to give that certificate I am not going to consider this application, Kathleen Ní hUallacháin or no Kathleen Ní hUallacháin. It is time enough to deal with Kathleen Ní hUallacháin when there is a certificate from the Minister. The Minister for Local Government will say that he can give the necessary certificate.

The only difference between us is whether the Minister alone will give it or give it after consultation with the Minister for Industry and Commerce. My answer is that he has not the machinery to conduct the necessary inquiries into the finances of public utility societies or public building societies. If he chooses to take over from the Department of Industry and Commerce that division that deals with building, friendly and incorporated societies, I am sure Deputy Costello will be content. The important thing is that if another Department which deals with friendly societies has the machinery to carry out inquiries, that Minister ought to be brought into this business in order to ensure that fraudulent proposals will not be put over on local authorities. The only objection the Minister raised so far is that this is an experimental Bill and that we ought not to make its processes difficult. Surely it is not raising an unnecessary difficulty to ask that it will be made certain, before a local authority is allowed to guarantee a building society loan, that that building society is not a fraudulent conspiracy to rob the ratepayers. That is what the amendment asks, a certificate from the Government that at least the men are honest, and that with reasonably good management such a building society should do all right. It is for members of county councils and corporations to determine if these men will do their best honestly to discharge their duties as officials of a building society ought to discharge them. The Minister is an astute and a reasonable man and I intervened to urge him to accept the amendment. It cannot possibly embarrass him, while it provides a valuable and an essential safeguard if serious abuses are to be prevented.

Mr. Ruttledge

I am afraid we are confusing public utility societies with the societies contemplated in the Bill. The societies contemplated to operate the Bill are building societies that are well known in this country. There are not many of them. There is the Civil Service Building Society and other well-known building societies, some of whom have not been very long in operation in the city, like the Educational Building Society. They can only accept deposits and loans to the extent of two-thirds of their mortgages. The other Bill that I referred to was a Bill that the Minister for Industry and Commerce was to introduce, to enable building societies to accept deposits and loans up to three-fourths of the mortgages, as against two-thirds. If we had the other Bill I do not think Deputy Costello would worry about the amendment. When dealing with societies of that sort people are pretty well sure where they are. In addition, you have it in Section 3 that the Minister for Local Government can impose what conditions he likes.

If he wishes he can put in a condition that the Department of Local Government must be satisfied—or something like that. I do not imagine anything of the kind will be done, but he can impose what conditions he likes. The increased facilities are not very much—the building people have asked for much more—but I am satisfied that, with these increased facilities, perhaps, other societies may spring up composed of people who are interested in the building business. In that way you may give some little impetus to house purchase and you may be able to provide other houses. A point was made, which I think is very unfair to make, that you are handing it over to the members of the corporation, not to the city manager. The only reason I have brought that in is that it is keeping in line with the Managerial Act. Under the Managerial Act the borrowing powers are reserved to the corporation as reserved functions, and where there is guaranteeing of borrowing it did not seem to be in line with the scheme of the Managerial Act. That is the only reason that the corporation are getting this as a reserved function. You may have delays; you may have differences, if you are going to bring in the Minister for Industry and Commerce. The Minister may see things in a different way. I do not think it is right that you should ask a Minister to bind himself that he is going to consult or, at least, get the consent of another Minister. It is the Minister who is charged with Local Government and who has the responsibility to encourage building, it is he and he alone who should take the responsibility and be responsible for that. If he does not take the necessary precautions and ensure that everything is right it is he and he alone who should be responsible.

Mr. Costello

I think the Minister is not quite correct in his analogy between what is proposed to be done here and the policy of the Managerial Acts of permitting the borrowing powers of the corporation to be a reserved service. I think this is not a borrowing power, strictly speaking. It is rather a spending power and spending power and spending authority, as I understand it, are really vested in the manager. The borrowing, of course, may be vested in the city council. But this is not borrowing. It is really a contingent liability— spending.

It is somebody else that is borrowing and the corporation is guaranteeing the person who lends that money to somebody else against loss. That is not borrowing by the corporation. It is the incurring of a contingent liability. It is more analogous to spending than to borrowing, in my submission. Therefore I do not think that the Minister's analogy that he is carrying on the policy of the Managerial Acts in making this a reserved service is quite accurate. But at all events, whether it is within the policy or not, I say that that is a particular power that, having regard to the manner in which it is going to be exercised, should be taken out of that particular policy. I think it is a bad system where you have a new experimental phase in housing being tried out—because that is what is going to be done; that is what this is. The Minister calls it experimental. I call it a try-on or a passing of the buck, because I know that the building societies have been pressing the Minister and the Government for something far different from what this is. What the building societies wanted was to be guaranteed by the Government against loss and the Government, I am sure, much to the joy of the Department of Finance, passed on the responsibility to the local authority. There is always joy in the financial hearts of the officials of the Department of Finance when they are able to take some liability from the Central Fund and put it on the local authorities. From my acquaintance with the Department of Finance for a number of years I believe that they always consider that they have achieved a notable victory if they call something which in essence is a taxation, a rate instead of a tax. That is what they have done here. They have passed on the responsibility to the Dublin County Council and the Dún Laoghaire Corporation. If they have done that, and if they have got rid of their own responsibility, to their financial delight, at least, the Dublin ratepayers are entitled to be protected. I do not think there is any protection where the granting of a guarantee depends upon intrigue. That is what is going to happen here. Deputy Byrne has agreed with what I have said. There is going to be some speculative builder who wants a building society to finance some scheme of his in order that he can make money. Perhaps what I am about to say will be more relevant on the next amendment I have down. I will not press it very much at the moment.

There is some speculative builder going to have a little try at making some profit for himself. He is not out in the public interest. He is out for his own profit and he gets the financiers to try their experiment on through the building society who further pass the responsibility on to the ratepayers with a very serious possibility of the ratepayers incurring a loss unless the building society is in a very sound financial position. I think every possible safeguard that could be devised to safeguard the ratepayers should be adopted in this experimental section which, as far as I can gather, nobody wants. Certainly if I am right in what I said that the building societies were looking for a guarantee from the Government, I can assume the building societies did not want this section. I believe—and perhaps the Minister will correct me if I am wrong—that neither the Corporation of Dublin nor the Dun Laoghaire Corporation nor the Dublin County Council were consulted as to whether they would like this section or not. Who wants the section? That is what I would like to know, and the people of Dublin, probably, would like to know.

Mr. Byrne

We were not consulted in the corporation.

Mr. Cosgrave

Perhaps between this and Report Stage the Minister would consider imposing some regulation on the corporation before they give this guarantee. As it stands there now, I should say a member of the corporation can put down a motion pledging the guarantee of the corporation to a building society for £X, and if that passes the council, so far as the corporation is concerned, that work is done. The same thing would apply to the county council or to the borough council of Dun Laoghaire. In the normal course, when there is a housing scheme in the corporation, they get a report from their responsible officer. Various estimates of the scheme are put before the council. In the first instance it goes before a committee. Officials of the corporation having any responsibility in the matter give the benefit of their advice to the committee and then it goes before the council on report. There is no provision for that in this section. The only information we get here is that "any local authority to which the section applies may, with the consent of the Minister and subject to such terms and conditions as he may impose ..." It may be that the Minister intends to make regulations, but if the council first passes a resolution to give a guarantee and the Minister then imposes conditions under which the guarantee can be exercised, it is an unusual innovation in connection with the business and does not provide for close examination of the proposals before a recommendation is set before the council. I do not know what the agenda of the corporation is now, but many years ago it was, in the first place, a series of reports from committees. The second part of the agenda was resolutions, and the third was communications of one kind or another.

As matters stand there I find nothing to prevent a member putting down a motion. There is a difficulty in a case of that sort presented to members of the local authority. It might be said, here is an opportunity for spending money, giving employment, providing houses, and so on. The second part of this section indicates that the local authority may borrow. Obviously the Minister has in mind there the default of the society, and if we take what the Minister says regarding the building societies here in Dublin as being correct, they are all fairly sound. The responsibility in this case, from the beginning to the end, ought to be that of the local authority. Unless the Minister is going to share it and bear some of the responsibility, it ought to be the local authority that should make the regulations as to the conditions on which they would give the guarantee. But if the Minister makes the regulations, and the corporation, or the county council, or the borough of Dun Laoghaire shoulders the responsibility, it appears that the Minister does the ordering and they do the paying. I think the Minister might well recast this before the next stage.

General Mulcahy

In my opinion, the amendment standing in Deputy Costello's name is an almost necessary corollary to amendment No. 4 standing in the Minister's name, whereby this function is made a reserved service of the corporation. I can understand people having a difficulty as to whether it should be a reserved service or not. I do not think there is any escape from making it a reserved service since the particular function that is being given to the corporation under this Bill makes it a very difficult one to deal with.

The difficulties that will arise for the members of the corporation in dealing with proposals have been amply touched on here. I think it will be apparent to anybody that the difficulties being what they are, some kind of veto ought to be vested in the city manager when any of these proposals are passed by the corporation, in the same way that the corporation should have a veto if this were being made a function of the city manager. The passing of proposals of this kind, guaranteeing a loan to a building society will, as Deputy Costello has said, mean the building up of contingent liabilities for the corporation which may fall on it and ultimately on the ratepayers. That ought not to be allowed any more than the raising of the rates or of loans.

Mr. Costello

I move amendment No. 2:—

Before sub-section (2), to insert a new sub-section as follows:—

A local authority shall not give any such guarantee as aforesaid unless such local authority and the Minister and the Minister for Industry and Commerce are satisfied (a) that any such sum borrowed by a building society will be applied for purposes conducive to the public interest, and (b) that such building society is financially sound, and (c) that such guarantee can be given without undue risk of financial loss to the local authority.

Much of the discussion which has already taken place on the first amendment would be appropriate to this, and, consequently, I do not intend to travel over the same ground again. I just wish to make one or two additional points. The Minister, in his remarks on the last amendment, referred to the fact that under Section 3 (1) he has indefinite powers as to the kind of terms and conditions he may impose in reference to the guarantee. I suggest that in itself is a further infirmity in this measure, and that the terms and conditions ought to be set out in the Bill. This amendment is an endeavour to give a headline as to the kinds of terms and conditions that ought to be imposed. One of the requirements that I would suggest, before a guarantee is given, is that the loan is for a purpose conducive to the public interest. I do not want a loan to be guaranteed by the local authority for the purpose of enabling a speculative builder to make some money, or for the purpose of enabling a building society to be in a position to use its surplus assets. While that may be right and proper, yet where the ratepayers' money is going to be involved, there should be some corresponding public interest concerned. If a building society which, after all, is a private profit-making concern, or speculative builders who are pre-eminently a profit-making concern, are going to be helped by means of public money then, at least, the public ought to be guaranteed that they are going to get something out of it.

The only thing that I could find from the Minister's speech on the Second Reading was that the ratepayers of the City and County of Dublin and the Borough of Dun Laoghaire are going to get out of this the somewhat grim satisfaction expressed in the last three lines of his speech where he said:

"It is expected that the proposal will do much to encourage the development of house purchase through building societies."

Well, we used to hear of the art of saying nothing in a lot of words. We have in that extract the art of saying nothing in a few words, because what was said means nothing at all—that this proposal is going to do much to develop house purchase through building societies. What public interest is involved in building societies being facilitated in their activities in connection with house purchase? Where is the public interest? I am not at all sure that the public interest would not, in present circumstances, be better served by a stoppage of the kind of house purchase that will be financed under this section. Everyone is in favour, as I think Deputy O'Higgins said, of facilities being given as rapidly as possible for the housing of the working classes. The particular kind of scheme adumbrated in this Bill is not one for the housing of the working classes, but one to enable people to purchase their houses.

Deputy Byrne has pointed out the very great hardships accruing in very wide areas in the City of Dublin and elsewhere at present through the operation of these house purchase schemes, where economic considerations intervene and prevent the tenants from being able to continue the payments of the instalments of the purchase money. Their whole life-savings are gone, in 99 per cent. of the cases, I should think, through no fault of the purchasing tenant. I am not at all sure that there is any public interest at all in this, and I believe that the only object at the back of all this is to enable the building societies to utilise their funds and to enable builders to make some profit. Where the public interest comes in I do not know, but at all events the object of the amendment is to ensure that there shall be some public interest before the ratepayers' money is jeopardised.

The second part of the amendment is really the part that was spoken of on the previous amendment, that no guarantee should be given until all authorities—the local authority, the Minister for Local Government and the Minister for Industry and Commerce— are satisfied that the building society to whom the loan is being advanced is in a financially sound position. If it is the intention of the Minister to see that such a building society is in a financially sound condition, before he approves of the guarantee by the local authority, why not say so specifically in the Bill? I do not wish to repeat what has been said already, although I regard the matter as of some considerable importance. I want to ask the Minister if it is a fact, as I am informed it is, that all this matter of the relationship between the building societies, the guaranteeing of loans, or the guaranteeing against loss is, and has been for some time, under consideration by the Housing Commission. I am informed that that is so. That commission, the members of which are being paid very high salaries for doing nothing, so far as we can see, has been considering the matter for some time and has not reported on it. Why could not this proposal in Section 3 be deleted and await the report of the commission, which, as I say, is being paid at a very high rate and apparently has not dealt with this subject?

I want also to direct the attention of the Minister to the fact that the words "building society" are not defined in the Bill. Presumably, they must be building societies within the meaning of the Building Societies Acts, but you can have building societies which are not building societies within the meaning of those Acts. The mere mention of it in a Housing Act will not attract—I am open to correction on this, but it may not be held to attract—the various provisions of the Building Societies Acts.

Mr. Ruttledge

My objection to this amendment is the same objection as I had to the previous amendment, that I do not want to impose too many restrictions or to make the scheme in any way more difficult of operation. The Bill which the Minister for Industry and Commerce will introduce will define these building societies so far as is necessary. It will be on lines that I have already indicated, namely, that ordinary deposits and loans may be accepted up to three-fourths of the amount advanced on mortgages. When dealing with societies of that kind, we can be quite sure that we are dealing with societies which are reasonably sound financially. If the matter of the definition of a building society requires to be cleared up in this Bill, I shall look into it between now and Report Stage, and, if necessary, have it more fully defined, although I am not certain at the moment that it is necessary.

My objection to the amendment, as I say, is that it means imposing too many restrictions. The Housing Commission has not made any recommendation on which this Bill is based and I have not had the report yet. Various organisations have from time to time put forward many varied schemes for the financing of house purchase. A number of them have been interested in the scheme of federal housing which was operated in America since 1933, but we are not able to adopt a scheme on the same basis as that on which that scheme was adopted in America at that time. This Bill does not go as far as most people want it to go. That is the only complaint I have had since its provisions were indicated to the people interested.

Mr. Costello

Who are the "most people" the Minister refers to?

Mr. Ruttledge

I refer to some of these building societies and other people who hold that more encouragement should be given so that more houses would be built.

Mr. Costello

Who are the "other people"?

Mr. Ruttledge

Some of them are people who are well-known building contractors in the city and others are building societies.

Amendment, by leave, withdrawn.

Mr. Costello

I move amendment No. 3:—

Before sub-section (2), to insert a new sub-section as follows:—

No payment shall be required from or be made by a local authority who has given any such guarantee as aforesaid unless and until the Minister is satisfied that the person from whom any such sum has been borrowed has taken all reasonable steps to enforce and recover payment of the amount of such sum and interest thereon from the building society.

Will the Minister accept even this one?

Mr. Ruttledge

I will see if I can do anything to help in that way.

Question put and agreed to.

Bill reported with amendments.

Report Stage ordered for Wednesday next, 9th July, 1941.

Dáil Éireann debate - Thursday, 3 Jul 1941