Dáil Éireann debate -
Wednesday, 23 Oct 1963

Vol. 205 No. 1

National Loan, 1963. - Statement by Minister for Finance.

Minister for Finance (Dr. Ryan)

I wish to inform the House that a new National Loan will open for subscription on Monday next, 28th October. The loan will be for £25 million but £5.1 million of the stock is being allotted to certain life assurance offices so that the amount available for public subscription will be £19.9 million which will be underwritten jointly by the banks and the Government.An application for £5 million of the stock is being made on behalf of funds under my control.

The rate of interest will be 5¾ per cent per annum and the price £100 per cent. The stock will be redeemed at par not later than 1989 and may be redeemed at any time from November, 1984.

The usual provision is made in the prospectus whereby only ten 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 December. Those subscribers who wish to pay the full amount on application next week, or to complete their subscription on 20th November, 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, 1963, 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 be ready continually to buy and sell reasonable amounts of the stock, and this will help to maintain an active market in it.

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 you are aware, we are mainly dependent on domestic savings to finance the capital investment necessary for national development. The Second Programme envisages an increase in capital formation in the period to 1970. The resources necessary for this increased investment must come in the main from increased current saving. The national loan provides an excellent opportunity for putting the savings of the community to good use. Subscribers to the loan, while providing the State with the resources necessary to develop the national economy, will at the same time be making a safe investment on which they will earn an attractive annual return.

The prospectus of the issue will be published in tomorrow morning's newspapers. Copies of the prospectus, with an application form for subscriptions attached, will also be available as from tomorrow from any bank, stockbroker or post office. The lists will close not later than Friday, 1st November.

I am sure that every Deputy will give the issue his full support.

Mr. Sweetman

The issue of a National Loan is a national matter, not a political matter and, accordingly, on behalf of the Fine Gael Party in this House and on behalf of all the supporters of Fine Gael throughout the country I rise to support the appeal made by the Minister for Finance. We all understand and appreciate that without adequate growth, there cannot be any rise in the standard of living or any hope of ending the drain of emigration.Equally, though we may differ as to the manner in which it should be done, every Party in this House is united in its anxiety to ensure that economic growth. We in this Party have always been clear that the best way to deal with that matter is by a scheme of productive capital investment.This is an essay in productive capital investment and therefore we support this National Loan. We hope that the funds raised by it will be utilised for the further development of agriculture, for the further drainage of our lands, to ensure that industrial development will be expanded and extended, with a consequent increase in employment, and that in addition, the social investment such as housing so urgently required will be expanded and made available.

It is not only on national, patriotic grounds that this loan recommends itself. The terms of issue are generous when one considers that it will be at the rate of 5¾ per cent. As far as I can see looking at the newspapers this morning, the nearest comparable British security is the 5½ per cent stock redeemable in 1982 to 1984 which though it is a quarter per cent less stands at four and a half points. The interest that is being offered here is therefore some ten shillings higher than is being offered on the other side. There it works out at £5 5s. per cent. Here the Minister is offering £5 15s. per cent. To that extent therefore it is clear that the offer he is making is a generous one to investors.

People who invest in this loan will not merely be helping progress in the nation. They will also be doing themselves quite a good turn in relation to the moneys they are investing. For that reason, we in Fine Gael support the loan and trust that it will be a success.

Mr. Norton

On behalf of the Labour Party, I want to support the terms of the loan which have been commended to the House and to the country by the Minister. While it might at first sight appear that the issue of a national loan will affect only those with money to invest, that, however, is rather a short-sighted view because a national loan affects all our citizens. It affects the man who has some money to invest and who is sufficiently patriotic to believe that he should give preference to investment in Irish stock because it will be used for the benefit of the whole nation. But a national loan affects the man who is unemployed or the man of very slender resources, because unless the national estate is developed and unless public enterprise is pushed to the fullest, there will be very little regular employment for him, so that he must to a very large extent rely on the fullest development of the national estate not merely to be ensured regular employment at reasonable rates of wages but to get those benefits which accrue to himself and his family and other citizens from State investment in such projects as housing, schools, the provision of water supplies, afforestation, electricity, peat development and all those activities which yield on the one hand, a financial dividend or on the other, an equally important social dividend.

The alternative to the issue of a national loan is either to abandon national development or, worse still perhaps, to borrow from another country sums of money to which strings may be attached. These sums of money, if they were so borrowed, could be used with disconcerting embarrassment at any time when the borrowing country found itself in internal or financial difficulties. Therefore, the progressive countries of the world have found that the best way in which to borrow money is from their own people, relying on their financial investment and their creative ability to produce dividends on the money so invested.

So far as we are concerned here, we have found in the past that not only are our national loans fully supported but the sum total of Irish investment in national loans is probably one of the highest in the world, taking the national populations in relation to national loans of the various countries.

This, as has been said, is a very attractive offer. Five and three-quarter per cent for an investment over 25 years ought to be particularly attractive to insurance companies, whether Irish or British. It is intended that some of the insurance companies will take up a sum of £5.1 million in this loan. That is a wise decision on their part. I hope that the same kind of wisdom will be shown by the public at large in recognising that it will be difficult to find a better investment than a loan bearing 5¾ per cent interest over 25 years. I hope the loan will be an outstanding success and I feel certain that our own people as in the past can be relied on to make it so.