asked the Minister for Finance if in view of his reported statement that the provision of office accommodation should be slowed down for the present he proposes to take any effective measures to ensure that action in this regard is taken by insurance companies and developers.
Ceisteanna—Questions. Oral Answers. - Office Accommodation.
40.
In the course of my remarks to which the Deputy refers, I expressed the Government's belief that office building should be slowed down for the present and that developers, including insurance companies engaging in such work, should examine whether schemes for the provision of houses, flats or hostels could be substituted for new office projects they may have on hands. I expect that in response developers will consider carefully the extent to which it will be possible for them to meet the Government's view.
It is proposed that consultations regarding their investment policies should take place from time to time with investing agencies, including insurance companies.
The insurance companies are one of the most important investing agencies. As I indicated in my statement, they are under an obligation to ensure a good return to their policy holders. They must keep a balance between this objective and the making of a reasonable contribution to the solution of our fundamental social needs. I would point out that their annual allocation of funds to house purchase loans has been increasing and now amounts to £6 million a year. Their contributions to national and public authority loans have also shown a substantial increase.
Will the Minister agree, arising from his speech, that it is a peculiar situation to find an insurance company like the Irish Life Assurance Company, in which the Minister has a 95 per cent controlling interest, refusing mortgage facilities to any new applicants over the past six months while the same company is up to its neck in property development? Is it not a crazy position for a nationally owned insurance company to be in?
I tried to bring out in my speech recently that we must keep a sense of proportion about these things. A life insurance company is the custodian of the life savings of a very large number of people and these people look to the company to make sure that they get a good return on their policies. An insurance company, therefore, has to seek remunerative outlets for the funds it has at its disposal. I suggest that the right thing to do— and I think all insurance companies agree with this—is that they should aim at a balance, they should take on a number of socially oriented projects, and at the same time balance those out by more remunerative projects like property investment. Between the two they try to ensure that their funds are invested in such a way that a contribution is made to meeting our fundamental social needs and at the same time they discharge their moral obligations to their policy holders.
Does the Minister agree that there is a serious lack of balance in the policy of a nationally-owned company like the Irish Life which refuses applications from people merely wishing to purchase houses and welcomes people who wish to get involved in property development?
I do not think that is a fair criticism.
It is true that over the past six months they have refused all new applicants while in the same period they have not been reluctant to invest their money in property development.
The Deputy must look at the performance of this company as a whole. It plays a very important part in our national life generally. It is a very large subscriber to the national loans and a very high proportion of national loans goes to housing and public services of one kind or another. The company plays an important part in the commercial life of the country and supports any worthwhile developments. I am quite certain that, if the Deputy looks at the record of the company as a whole and does not single out any one particular aspect of its operations, he will find that this company is doing a very good job for the community.
Would the Minister say that the situation has yet been reached in which he should hold further talks with Irish Life and with the New Ireland and other insurance companies, not alone with the Irish ones but also with foreign companies operating here, to ensure that the position in which ordinary people cannot get facilities for purchase by mortgage repayments and so on is remedied? Does he agree that these companies should go out of their way to meet the requests of such would-be home purchasers?
I am satisfied that all the companies are doing their very best to make a contribution to help people to provide themselves with houses. As I mentioned in that speech, both the home-based and foreign-based societies are making a substantial contribution.
Does the Minister not think that at a time like this, when people who are trying to purchase their houses are going through such hardship, these companies should strain a point to meet this situation?
They are doing so.
I do not think they are doing anything that they had not been doing when there was no such crisis. This is the time when they should do something extra.
It is very easy to talk about a crisis——
If it is not a crisis when there could not be one loan sanctioned in Dublin County Council from 1st September——
That is not true.
Of course it is true and that is a crisis.
It is not true. At present there are more houses being built both by public authorities and private builders than ever before in our history.
No loan application is being processed at the present time in Dublin County Council, nor has one been processed for the past two months.
There is a crisis in housebuilding at present.
(Interruptions.)
It is no use to try to pillory the insurance companies. That will not get anyone anywhere.
We are not trying to pillory them.
I do not think it will even get the Deputy votes. The point is that the contribution from all the insurance companies to housing in one form or another, directly or indirectly, has been substantially increasing in recent years.
Not in proportion. Is the Minister aware that the insurance companies at present are backing certain property dealers and that a limited number of the dealers between them are controlling the market in property and are able to bid with insurance money and are putting up property on people who cannot get money from the insurance companies? They are backing only a certain number.
I would not be prepared to accept that from Deputy Belton.
Thank you very much. I know it is true.
Would the Minister agree that it is an unbalanced and crazy situation where a nationally-owned insurance company refuses new applicants for house purchase loans but is quite ready to meet applications for property development?
The Deputy has made that statement twice or three times already in this discussion. I am not accepting it. I maintain that the record of the Irish Life Assurance Company in regard to house purchase of all sorts is as good as that of any insurance company in these islands.
Is it not true that 9½ per cent, which is the present mortgage rate for insurance companies, is a fair return on capital and would it not ensure investors in those insurance companies a good return?
The insurance company must balance its portfolio and the return any insurance company seeks must keep it competitive with other insurance companies. If one insurance company is getting a return on mortgage of 9½ per cent all the others are getting it also.
Can the Minister think of any other——
I am calling Question No. 41. I have already allowed eight supplementaries on Question No. 40.
41.
asked the Minister for Finance if his attention has been drawn to a report regarding the proposed purchase of office accommodation in Kildare Street, Dublin, through a sophisticated form of hire purchase; if he will give details of any agreement made in this regard; and if it is proposed to make use of this form of purchase to provide office accommodation in future.
This building to which the Deputy refers will be erected on the site of the former Church of Ireland Training College in Kildare Place. As a result of negotiations which have been proceeding for a number of years the fee simple interest in the site is to be conveyed to the Commissioners of Public Works who will then lease it back to the developers for the purpose of the erection of the building. The State is to make a capital contribution of £½m, to be paid in two equal instalments, one in the current financial year and one in 1970-71, towards the cost of site acquisition and the erection of the building which will contain approximately 165,000 square feet of office space. The State will also pay an annual rent over a period of years and the building will eventually become the absolute property of the State. While it would be contrary to standard practice to disclose the amount of the annual rent I can say that it compares very favourably with rents being charged at present for modern office accommodation.
It is intended to centralise in the new building at least all the headquarters staff of the Department of Agriculture numbering about 1,100 who are now dispersed over several buildings a number of which are, by modern standards, unsuitable.
There are no proposals at present for the acquisition of other premises on a similar basis.
Is an agreement being entered into immediately to purchase the property outright?
Negotiations on this agreement have just been concluded. The decision to negotiate this purchase originated in 1964 and I believe the present Minister's predecessor had very good and ample reasons for it.
Which was the company selling the property?
Is the Parliamentary Secretary satisfied that this accommodation is required in view of the fact that it is proposed to transfer the Departments of Education and Lands out of Dublin?
Yes. My Department are preparing the plans for the transfer of the Departments of Education and Lands.
Where to?
To Athlone and Castlebar. That is a separate question.
(Cavan): Surely, if it is intended to transfer the Departments of Education and Lands to the country within the foreseeable future, that should relieve congestion in office buildings in Dublin and make available sufficient space for the Department of Agriculture if it is not also intended to transfer that Department to the country?
The position is that I intend to deal with this matter at some length on my Estimate which will be taken in a week or two. If the Deputy wishes we can discuss the matter more fully at that stage.
(Cavan): Will the Parliamentary Secretary then be good enough to deal with the supplementary question that I have raised?
Yes. This decision was taken in 1964; it is not a recent one. It was taken in order to conserve capital and make more capital available for housing and sanitary work.
(Cavan): I am sure the Parliamentary Secretary will agree that if it was not a wise decision or if the space was not necessary it would not be difficult to get rid of it?
42.
asked the Minister for Finance the present annual cost of office accommodation rented by Government Departments in Dublin city compiled to the latest convenient period; and if he will give comparable figures for the previous two years.
The amounts of rents and rates paid by the State in respect of rented office accommodation in Dublin city for the year ended 31st March, 1969, were as follows:—
Rent: £347,506.!Rates: £127,338.
The corresponding figures for the years ended 31st March, 1967, and 31st March, 1968, were:—
Rent: £254,194.!Rates: £60,813.
Rent: £343,260.!Rates: £101,811.
In relation to what has been done in regard to the property in Kildare Street, does the Parliamentary Secretary consider that they should in future, instead of renting office accommodation, attempt the outright purchase of it? Is this a policy decision?
The Deputy must realise that the building proposed in Kildare Place is quite a separate matter from that of any other type of office accommodation on account of its location. It will be overlooking the whole complex of Government buildings between Kildare Street and Merrion Square and there are very important reasons why the Government should retain control of it.
I agree, but what I am concerned about is that the Government, unwittingly, because of the amount of rented accommodation which they have in Dublin, are in fact responsible with the insurance companies for the present inflated figures of property and rents in Dublin. This goes back to what Deputy Belton said. The insurance companies are involved up to their necks in this development and the Government also because of the large extent of their rented accommodation in Dublin. Very much of that rented accommodation is already guaranteed to these companies before a block is put on a particular site. Does the Parliamentary Secretary therefore think it is time the Government withdrew from this form of investment which is having such an adverse effect?
This is a separate question. Surely the Deputy can see that special consideration must be given to this site for security reasons alone.
Can the Parliamentary Secretary say do these figures relate to semi-State bodies or are they purely Government?
Purely Government.