I move that the Bill be now read a Second Time. The main purpose of this Bill is apparent on its face. At the present moment, the statutory limit of advance which may be made from the Local Loans Fund is £45,000,000 and the Bill proposes to extend this limit to £50,000,000.
Local Loans Fund (Amendment) Bill, 1951—Second and Subsequent Stages.
Will the Minister consider applying the Local Loans Fund to Cork and Dublin?
Perhaps the Deputy would raise that question on the Committee Stage.
Question agreed to.
Agreed, to take the remaining stages to-day.
Question proposed: "That Section 1 stand part of the Bill."
I should like the Minister to tell us why the County Boroughs of Dublin and Cork are unable to secure loans from the Local Loans Fund. They have to pay a much higher rate of interest when they are looking for these loans. That is a hardship on the ratepayers in the areas concerned. I think the Minister should consider including these two boroughs in the list of local authorities who get loans from that fund.
I would like to support Deputy McGrath on this matter. A couple of years ago, Dublin Corporation had great difficulty in finding money for housing purposes. They also have to pay a very high rate of interest and they experience a great deal of trouble in finding suitable loans on the market. I think the Minister should give this matter his serious consideration. If he acceded to the request it would be of great benefit to both Dublin and Cork.
I wish to inform the Minister that the Cork Corporation asked for £500,000 recently and they got less than half of that amount from the investing public. I think that is all the more reason why the Minister should consider the point raised.
I appreciate that the Minister has not had time to look into this matter, but I think there is a very strong case to be made for the inclusion of the Corporation of Dublin under the Local Loans Fund.
I think Deputies are rather inclined to forget what was the original purpose behind the establishment of the Local Loans Fund. Local loans were originally granted in order to enable those local authorities who might be weak financially to finance works of capital development. That applied to practically every local authority outside county boroughs. When I established on a formal legal basis the Local Loans Fund in 1935 I made it quite clear to the House that the purpose of the fund was to enable local authorities which could not raise money on the open market to secure the finances necessary to enable them to carry out works of public importance. Nobody can say that the Corporation of Dublin or the Corporation of Cork is not in a position to go to the open market and raise the necessary finances there.
It is very expensive.
If the Deputy will bear with me. If the public have the money I think they are just as likely to lend it to the Dublin Corporation as they are to the Government, and there was a time when the credit of the Corporation of the County Borough of Cork stood, I think, even higher than that of the Corporation of the County Borough of Dublin. If recently the Cork Corporation and the Dublin Corporation have found it difficult to raise money from the investing public they are not in such a very different position from that in which the Government found itself recently. During the last year, as the House is aware, a loan was floated with disappointing results by our predecessors. What would be the consequences then if the Government assumed the responsibility which at present rests on the shoulders of the larger corporations and municipal authorities to raise their own money for the financing of their own undertakings? What would be the consequences if we had to assume the responsibility, say, that properly attaches to the corporation of the capital city for raising its own finances and if we were to permit that corporation to have recourse to the Local Loans Fund in exactly the same way as that in which county councils, urban district councils and the smaller housing authorities are permitted to utilise it at the moment? That would simply mean that the requirements and demands of the smaller authorities would tend to be neglected, because the demand of the Corporation of Dublin and of the City of Cork would swallow up virtually all the resources that the Government could make available to the Local Loans Fund and instead of having, as we have at present, a rather reasonable distribution of such financial resources as are available among the smaller local authorities, the county councils and the smaller corporations, we should find that the larger corporations would get the lion's share of what was in the Local Loans Fund and the needs of the smaller local authorities would tend to be neglected.
We cannot overlook the fact that the City of Dublin is after all by comparison with any other local authority a very wealthy corporation. It owns a considerable amount of property. Virtually the whole administration of the country is centred in Dublin. A great deal of the taxation which that administration collects throughout the rest of the country is spent in the City of Dublin, and I think it would be unreasonable to expect the taxpayers in the remainder of the country to subsidise, because that is what it would amount to, both the ratepayers and the Corporation of Dublin when they required money for their own particular capital projects.
They already have a municipal debt of £16,000,000.
These are the general considerations which have since the establishment of the Local Loans Fund compelled successive Ministers for Finance to say to the Dublin Corporation: "If you want to carry out capital works and development works then you must go to the open market and raise the money upon your own credit." It has happened on occasions—it happened in connection with the recent loan of the Dublin Corporation—that the State or the Minister for Finance has had to underwrite the issue.
That has also happened in the case of Cork.
It happened in the case of the last loan issued by the County Borough of Cork. I think that when the Minister for Finance underwrites a loan of, say, £5,000,000 for the Dublin Corporation and takes the responsibility upon himself of finding the money for that corporation, that is of very great assistance to the corporation and goes as far perhaps as we can reasonably ask the rest of the country to go in assisting the capital city to carry out the works which it requires for its own particular purposes.
For these reasons I think there should not in future be any departure from the policy which has been adopted in the past of reserving the Local Loans Fund for the benefit of the smaller local authorities.
Will the Minister agree that the recent loan guaranteed by the Government in Cork referred to housing only? Will we get the same guarantee if we carry out the main sewerage scheme? Will that loan be underwritten in the same way as the loan for housing?
Is it not a natural assumption?
Will the Minister agree that the Cork County Council, which is a larger body than the Cork Corporation, is able to draw loans from the Local Loans Fund?
The Minister will be just as helpless in this as any other Minister for Finance if we continue to carry on in the same way. The Cork Corporation is in the position that it asked for a loan of £500,000 a couple of months ago and it got less than half that amount. It issued 3½ per cent. at 97, practically 4 per cent.
It got £200,000.
Less than half of what it asked. There is a municipal debt of over £1,750,000, and every man, woman and child in Cork carries a debt of £21 2s. 3d. The Dublin Corporation carries a municipal debt of £16,000,000, equivalent to £35 6s. 0d. on every man, woman and child in this city. I can well understand the helplessness of the Minister in the situation in which he finds himself. Unless we make a change we will not be able to carry on. I think the members of this House should consider the question of finance more seriously and fundamentally rather than try to continue in operation a system which is wrong, unjust and immoral.
The Minister for Finance in reply to points which were raised in the debate referred to the last Government's difficulty in raising money by means of loans. He referred to the particular difficulty which was experienced last year. If the Minister cares to study the situation in relation to Government loans over the past three years he will realise that last year's loan was an outstanding success in the circumstances in which that loan was floated.
It was the third loan—that is, we had one running each consecutive year —and it was launched unfortunately at the time of the outbreak of the Korean War. We need not have gone on the market at that time looking for the money because other funds could have been switched to provide the money necessary but it was felt that probably money would be cheaper in 1950 than in 1951 or 1952 and that we should try to syphon out of public savings each year's loan and get other funds for public investment and that perhaps it would be undesirable to go on the public market at a later stage because of the high price which would have to be paid for money. When you consider that last year's loan was the third loan in three years, and that it coincided with the outbreak of the Korean War, with a war neurosis all over the world, and when you remember, in addition, that State funds which could have been switched into that loan were in fact withheld from the loan, I think it will be admitted that the loan in the circumstances was a particularly successful one.
Deputies have raised questions affecting the financing of housing schemes in Dublin and Cork. I think these issues raise matters of serious moment, so far as housing is concerned. I remember that the Dublin Corporation two years ago found it difficult to get money on the open market and they were enabled to get money subsequently only as a result of direct Government intervention with the banks. If the Government on that occasion had not intervened strongly with the banks, and told the banks that they were expected to come to the aid of the Dublin Corporation and assist it in carrying out its worth-while activities in the matter of building houses, the Dublin Corporation would not have been able to get the money at that time. It was only the positive action of the Government which succeeded in getting any money for house building for the corporation. On that occasion I was one of the members of the Government who saw a deputation from the corporation. We suggested to them what was a sensible line of policy, namely, that they should go on the open market having regard to their assets and stability, and try to get whatever public savings were available and that the Government would buttress their invitations to the public by giving a kind of collateral Government guarantee so as to encourage public subscription. We said to the corporation: "If that fails, an entirely new situation is opened up and we will have to face up as a Government to the responsibility of finding money to finance your house building activities because house building is not going to be allowed to stop for want of money." A positive assurance on these lines was given to the Dublin Corporation.
It has not been necessary, happily, to implement that policy because the corporation has been able to raise the money on the open market but this House should remember and realise that if there is that danger to the Dublin Corporation, the Cork Corporation or any other body, because of failure to get the necessary money by appealing for public subscriptions, then the State as the central body responsible for the direction of house building activities, must be prepared to find the money to enable the local authority to continue its house building activities. I think it a reasonable enough approach to the problem to tell the body concerned that it can raise the money and that it should go on the public market and there endeavour to attract subscriptions to its loan. I think that is more easily done in Dublin than in Cork. So far there has been no big problem so far as Dublin is concerned, but there may be a problem and, if it arises, it should be met.
I do not think you can put Cork in the same category as Dublin. Stock of the Dublin Corporation has been a common feature on the stock exchange for many years, a commodity for which there has been, over a long period of years, a constant demand and recognition. I do not think that Cork Corporation stock—I do not wish to cast any reflection in making this statement on its stability—has the same attraction on the market as Dublin Corporation stock. I think you have got to recognise the disparity between the two boroughs—one with a population of almost 600,000 and the other with a population of 80,000. If the investor goes for the stock offered by the bigger body, he is only following the normal pattern. There may be fears on the part of those who have money to invest that the Cork Corporation might be loaded up with liabilities which it may at some time find it difficult to meet or, at all events, that the financing of its activities by this method might cause a drop in the day to day value of the stock. I think the situation revealed by Deputy Hickey, that on the flotation of a loan of over £500,000 the Cork Corporation only got £200,000, is very serious. It is redlighting the dangers into which the Cork Corporation will be driven if it is unable to get money on the open market. I think the Minister ought to give an assurance that if that situation continues, at all events the Cork Corporation will get a guarantee that, if it cannot get money on the open market, the State will step in and either, by providing more positive collateral security or by raising the money itself, will ensure that house building and other essential activities will not be stopped owing to want of money because there is an abundance of money in the hands of the public available for investment.
It is, of course, generally known that the investment of capital in various directions by a municipality provides assets. Therefore the debts to which Deputies have referred are not debts in the usual sense of the word because there is a certain income from these investments. As well as that, there is provision made by the municipality by the expenditure of these moneys for the health of the people which is also a very considerable national or local asset which cannot be measured in the terms of the money spent. It has unfortunately been the experience of the Borough of Cork that it is difficult to get money on the open market if the rates which generally apply to money transactions in the local markets at the particular period at which the loan is sought are not offered. On the security and credit of a city where a penny in the £ produces only approximately £1,100, you cannot expect to get money on as favourable terms as would apply to the City of Dublin, or even, as Deputy McGrath said, on as favourable terms as the County Cork, which covers a much larger area, and a penny in the £ there will produce £4,500 or more. The position, however, is that up to the present, even though these difficulties have prevailed, it is not want of money which has held up building in the City of Cork. The difficulty is there undoubtedly and ought to be guarded against in future and provision made for it, and money at reasonable rates should be made available so as not to be adding to the rents of the houses. In a municipality of the size of Cork we should have money available from the Local Loans Fund.
At the moment, the Dublin Corporation is raising £5,000,000. As the Minister says, we have a guarantee from the Government that that loan will be underwritten by the Government, so that we are certain to get the £5,000,000 anyway. From my own experience in the Dublin Corporation I know there is a general desire that money required for constructive purposes—and I take it this applies to the Cork Corporation— should be provided from some fund such as the Local Loans Fund, because that fund will be an easier form of machinery for raising the money required than the troublesome method of raising money in the open market. The general feeling is that, if all the money required for constructive purposes by local authorities of all sizes were raised in a central way, money could be made available cheaper to the local authorities and in that way the rents of houses could be reduced. I know that Deputy Hickey, like myself, would like to indulge in a discussion on higher finance here.
It is not higher finance at all.
However, I do not think the Chair would give us the opportunity on this Bill anyway. Opportunities, however, will arise in the future to deal with it. I should like to impress on the Minister that it is the opinion of all the members of the Dublin Corporation, as far as I can ascertain, that the funds required for building should be made available to the corporation through machinery such as the Local Loans Fund.
The Minister will realise that it is difficult to get money at 3½ per cent. at an issue price of £97 while industrial concerns are guaranteeing 6 per cent. and, some of them, 8 per cent., and when you find that a company quite recently asked for £200,000 and in less than 15 minutes were offered £7,000,000 in this country. I refer to the Athlone Woollen Mills. How then can we expect to get money for municipal authorities at 3½ or 4 per cent.? These are the facts which the Government will have to face sooner or later, and the sooner the better.
I welcome the Minister's attitude towards this matter. I believe that the City of Dublin and the City of Cork, if they had a good body of men with business acumen representing them on the corporations, would undoubtedly get the money they are looking for. But nobody in the world will give such an incompetent body of nincompoops, as some of these bodies are, any money.
That does not arise on this measure.
For once in my life, I am supporting the Minister for Finance. We object to their coming into the Local Loans Fund because they would dissipate that fund very quickly just as they dissipated money which they had before. If these people want to get a loan, by their fruits they will be known to the people who are prepared to put up money. They will want to show that they will do something with the money, not like the Cork Corporation who, over a number of years, have only built 400 houses. I approve of the Minister's attitude in this matter. I hope he will be adamant and make these people row their own boats.
I should like to inform Deputy Hickey, in connection with the difficulties experienced by the Cork Corporation and the Dublin Corporation in procuring money for housing, that similar difficulties are experienced by every local authority.
I know they are.
I fail to see why this cannot be considered as a serious problem, not alone for the Corporations of Dublin and Cork, but for every local authority which has the responsibility of providing houses for the people. This whole matter will have to be gone into more deeply and more seriously by the Minister for Finance. There is a growing demand in Dublin and in Cork for houses, and I have always believed that shortage of money should not prevent houses being provided for the people. For that reason, I think the Minister is endeavouring to work a system, and his predecessors have endeavoured to work the same system, which has proved to be a failure and that until such time as the whole system of finance is changed we cannot hope to have any remedy for the grievances voiced to-day by Dublin and Cork Deputies.
I do not think I have anything to add to what I have already said, except to say that I will consider the arguments advanced on behalf of the Corporation of Dublin and of the Corporation of Cork in relation to borrowings from this fund. Let me say, however, that I doubt very much whether, if we were to relieve the Corporation of Dublin of the need to finance its own operations, the credit of the city would be enhanced, because it would be an admission, both on the part of the Dublin Corporation and on our part, that the city, with all its considerable properties, was not as credit-worthy as the Government. There was a time not so many years ago when it was possible for the City of Dublin to raise money at cheaper rates than it was possible for the Government to do it. It is possible that, in the course of time, when the demands become perhaps a little lighter than they are, that position may recur. I do not guarantee that it will; I do not foresee that it will; but it is a possibility. It is not certain, therefore, that it would be entirely advantageous to the City of Dublin if we were to throw open the Local Loans Fund to it. After all, there is some virtue in expecting people to do things for themselves which are going to be for their own benefit and I think that, as the expenditure on housing and on other public works considerably enhances the property of the city and makes it much more attractive from a social and business point of view, we might expect that the returns would justify the trouble imposed on the corporation when we ask them to provide for their own finance.
I do not want to go into the question of the City of Cork. There are many aspects of that problem to be considered. For instance, there is the big problem of the city boundary. I do not know whether the fact that 1d. in the £ in the rate of the second city in Ireland can produce only £1,100 is at all creditable to the management of the city. It would seem to me that there are two aspects of that problem: first of all the revaluation of the city and, secondly, the extension of the city boundaries.
Would the Minister mind saying this slowly so that Deputy McGrath can absorb enough?
I am absorbing it.
It will be cheerful news in Cork next week.
Deputy Corry has asked for that.
The fact that these problems have not been faced up to may have adverse reactions on the success of the corporation's borrowing operations and I would suggest that the people in Cork, who, of course, are very good business people——
How much of the county do they want?
——should give at least as much credit to the rest of the community for having the same business acumen as they have and direct their attention to trying to make their loans more attractive to borrowers by offering much greater security than they are able to offer at the present moment.
Does the Minister not agree that if the corporation or any such authority go to the public for money they are unlikely to get it owing to the terms which are available to people in the open market at that particular time? That has been the experience. Does the Minister not also agree that if you offer these terms which apply to industrial concerns which look for money at the same time, it would be inflating the rents of the houses for the people? We are up against that problem.
You are.
Irrespective of the size or anything else of the municipality, first and foremost, the Department will not allow the corporation to apply for money in the open market at the terms generally applicable there. The Department will not allow it and have stopped the corporation from doing so. That is point No. 1. The second point is whether the security of the city is sufficient to get money owing to the rate applying in the open market. Experience has shown, in Deputy Hickey's time and in all our time, that that is not the case.
That is so because the banks were boycotting us, and would not give us one shilling.
Could the Minister say if it is his intention to ask the officers of his Department to carry out a revaluation of Cork City?
No.
It is not ministerial responsibility.
The Minister is not going to do it?
No.
The Minister remembers that some years ago he introduced a Valuation Bill and then ran away from it subsequently. Will that not be revived now for Deputy MacCarthy's benefit?
It is a very great pity—and the country is suffering considerably—that that Valuation Bill was not passed.
It will not be a bit popular in Cork.
It shows that the thought is in the Minister's head.
Question put and agreed to.
Section 2 and the Title agreed to.
Bill reported without amendment, received for final consideration, and passed.
This is a Money Bill within the meaning of Article 22 of the Constitution and will be certified accordingly by the Ceann Comhairle.