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Dáil Éireann debate -
Wednesday, 14 Nov 1962

Vol. 197 No. 7

National Loan, 1962. - Statement by Minister for Finance.

I wish to inform the House that a new National Loan will open for subscription on Monday next, 19th November. The Loan will be for £20 million but £4.8 million of the stock is being allotted to certain life assurance offices so that the amount available for public subscription will be £15.2 million which will be underwritten jointly by the Banks and the Government.

The rate of interest will be 5¾ per cent. per annum and the price £99 for each £100 of stock purchased so that the annual return on each £100 of cash invested in the stock will be £5 16s. 2d. The stock will be redeemed at par not later than 1987 and may be redeemed at any time from October, 1982. As the issue is being made at a discount, there will be a capital gain of £1 per cent. on redemption and this will be tax-free to the ordinary investor.

The usual provision is made in the Prospectus whereby only 10 per cent. of the purchase price need be paid on application, the remainder being paid in three further instalments spread over the period to the middle of January. This should facilitate investors in taking up stock. On the other hand, those who wish to pay the full amount on application next week, or to complete their subscription on 12th December, will be entitled to discount equivalent to an interest rate of 5¾ per cent. per annum on the advance payments.

The tax privileges attached to recent National Loans are again included. Interest will be paid without deduction of income tax at source, but, of course, holders will, if ordinarily resident in the State, be liable for whatever tax on the interest is appropriate to their respective incomes. Stock of the issue will be accepted at its nominal value as the equivalent of cash in satisfaction of death duties on properties of which it formed a part. The stock and the interest on it will be exempt from all Irish taxation, present and future, if owned by a person neither domiciled nor ordinarily resident in the State.

The issue is being made under the authority of the Appropriation Act, 1962, and other statutes. Both principal and interest will be a charge on the Central Fund. The attractive interest rate it carries, its status as a trustee security, the concession whereby it will be accepted in payment of death duties and the substantial sinking fund allocations should ensure that the stock will always have a high market value. The Government stockbroker will at all times be prepared to buy and sell reasonable amounts of the stock, and this will help to maintain an active market in it.

An additional £5 million of the stock will be issued to Departmental Funds in conversion of Ways and Means Advances to the Exchequer.

The Loan is required to assist in the financing of State capital outlay on agriculture and industry; on housing, sanitary services and schools; on afforestation and fuel resources; on transport and on other development schemes in pursuance of the Programme for Economic Expansion.

As Deputies are well aware, it is primarily to our own people we must look to provide the funds needed for national development. It is only by applying the maximum amount of resources to productive purposes at home that we can increase employment and raise living standards. I should like, therefore, to stress once again the continuing need for a high level of savings. The new loan gives an excellent opportunity for the investment of savings, and subscribers to it will be doing their part to promote the development of the national economy while at the same time securing for themselves a safe investment and an attractive annual return on their capital.

The prospectus of the issue will be published in to-morrow morning's newspapers. Copies of the prospectus with the application form for subscriptions attached will also be available as from to-morrow from any bank, stockbroker or post office. The lists will close not later than Friday, 23rd November.

I confidently ask for the full and active support of every Deputy in the House for the issue.

Ordinarily, Deputy Sweetman would speak on behalf of this Party in regard to a matter of this kind. Having lost his voice, he has asked me to deputise for him on this occasion.

On the occasion of this loan, on behalf of the principal Opposition Party in this House, I desire to say that we commend it to the investors of this country as as good a security as money can buy. We have always believed that any security issued on the credit of the Irish nation was a good security. We believe it now as we believed it in the past. In the fullest possible confidence, we recommend it as such to our people or to any other people who may be interested in its purchase.

So far as the issue price is concerned, bearing in mind the current information, it would seem that the interest rate is generous and, with the prospect envisaged by Mr. Jacobsson in his reports on the necessity for cheaper money and an expansion of the monetary policy throughout the free world, it is highly likely that an issue price of £99 for each £100 of stock, with 5¾ per cent. interest, will be difficult to match in the early future.

Therefore, on the basis of the security, with its long-term aspect, on the basis of the value of the interest rate and on the basis of the issue price, we have no hesitation in recommending to our people and others, at home and abroad, generous investment in what may be the most advantageous Irish loan to which they will have access for a considerable time.

On behalf of the Labour Party, I want to commend this loan and to recommend it warmly to the people who are looking for a very safe investment at a pretty generous rate of interest. I am glad the Minister has been able to announce on this occasion, even before the issue of the loan, that the insurance companies have agreed to take up a substantial portion of the loan. I hope that indicates that the non-Irish companies recognise an understandable obligation to invest in Irish loans a substantial portion of the premium incomes they collect in this country. This is a commendable development. The companies are to be praised for doing it. I hope the only problem for the future in this respect will be that they will decide to invest an increasing sum of money in the sound securities which are issued by Irish Governments, not for warlike purposes but for sound, constructive schemes of national development.

In the days of our political infancy in this House, it was fashionable at the time for some Deputies to say that a loan issued by a particular Government was that Government's loan. Others took malicious delight in saying that this was the Government's loan and in trying to detract from the success of it. With the effluxion of time and the coming of political maturity, that mentality has evaporated.

Hear, hear.

We now recognise that a loan is a loan issued by the Government by and on behalf of the Irish people. Here in this House we are all expected to defend it, and rightly so, because such loans are used for the benefit of the Irish people. We have learned through time that there is no suitable alternative to using our own money, our own savings and the savings of our people, for schemes of national development. Every other country in the world which has reached political maturity has had to develop its resources by relying on the savings of its people. There is no short cut to that and the printing presses have never proved an effective answer to the problem of providing money for national development.

These schemes are vital for the development of the nation and they are necessary in order to provide opportunities of employment for our people and at the same time, to provide social standards and conditions of living that will induce our people to remain in their own country and give it the benefit of their brains and energy in order that we may be able to keep abreast with the nations of the world.