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Dáil Éireann debate -
Thursday, 23 Jul 1970

Vol. 248 No. 12

Committee on Finance. - Decimal Currency Bill, 1970: Second Stage.

I move: "That the Bill be now read a Second Time."

The explanatory memorandum which was circulated with the Bill outlines the content of the Decimal Currency Act, 1969 and describes in detail the further provisions now contained in this Bill. When the 1969 legislation was before the House it was explained that this second Bill would be needed to deal with various matters of detail in connection with the changeover and that the Decimal Currency Board were studying the matters which would need to be included. The Bill now before the House is based on the board's recommendations.

The board's bulletins and other publications are supplied to Deputies as they are issued and copies are available in the Library. Many Deputies will therefore be already aware of the general background to this legislation and of what is involved in the introduction of decimal currency on 15th February, 1971. It may help, however, if I mention some salient points about the changeover.

Our decimal system will be the £— new penny system. The Irish £ remains unaffected, of course, by the change of currency system and it will be the major unit in the new system as it was in the old. On decimal day, 15th February, 1971 the banks, Government Departments, CIE and a large number of business firms will switch to the use of decimal currency for all their transactions. Decimal day will also see the issue into general circulation of the three bronze decimal coins:

the 2 new pence—value 4.8d.

the 1 new penny—value 2.4d.

the ½ new penny—value1.2d.

The three cupro-nickel decimal coins are already in circulation and are being used as their £sd equivalents in value. These coins are:—

the 50 new pence—value 10/-

the 10 new pence—value 2/-

the 5 new pence—value 1/-

From decimal day these three coins will begin to be used in their decimal denominations.

An overnight switch from £sd to decimal currency working by all shops and businesses in the country is not possible. Up to decimal day all transactions between firms and between individuals must be in pounds, shillings and pence. To enable businesses to change to decimal currency working cash registers and other machines throughout the country must be converted or replaced. This machine task has to be spread over a period since the capacity of machine suppliers is not unlimited.

There must therefore be a changeover period beginning on decimal day. During that period both currency systems will be legal—except that cheques must be written in decimal currency—and the old 1d, 3d and 6d coins will continue to circulate for the purpose of £sd cash transactions. It is not possible at this stage to forecast precisely what length of changeover period will be needed by businesses; but it seems likely that the switch to decimal currency will be completed in all sectors within a year or so following decimal day. In the interest of efficiency it is desirable that the changeover period should be as short as possible.

I now turn to the Bill itself, the purpose of which is to establish the legislative framework for effecting the changeover. It does not attempt to legislate for every decimalisation problem. Statutory arrangements are required only for cases where serious inequity or large-scale administrative difficulties could otherwise arise.

Section 1 deals with the interpretation of the Bill. The effect of section 2 is that cheques must be written in the new currency on and from decimal day. Section 3 is intended to facilitate the banks in the days preceding decimal day, when they will have the massive task of converting all their customers' balances to decimal terms. Section 4 provides for the conversion to decimal terms of £sd amounts written on cheques and similar instruments drawn before decimal day but not paid in until on or after that date. Section 5 prescribes the method of conversion as from decimal day of references to shillings or pence in bank balances.

This conversion will be done on the basis of the Whole New Penny Conversion Table given in the Schedule to the Bill. The banks will account only in whole new pence. This Table therefore gives the amounts in whole new pence which are nearest in value to £sd penny amounts up to 2s. Some individual debtors or creditors may gain or lose marginally through use of the Table. However, the maximum loss or gain will be 1 1/5d and this will usually be negligible in relation to the total due. In the overall the Table will give equitable results because it is designed so that increases and decreases due to rounding, balance out.

I now turn to the question of money transactions in general. During the changeover period it will be possible to make in cash an exact settlement of every £sd debt because the £sd system will still be legal and the old coins will be in circulation. If an amount to be paid includes old pence, however, it will not be possible to write a valid cheque which settles the debt exactly. Section 6 of the Bill therefore provides that £sd amounts paid by cheque during the changeover period will be converted to decimal currency on the basis of the Whole New Penny Table, so that a valid cheque can be written for the resultant amount. Under section 13 of the Bill the Whole New Penny Table is also prescribed as a basis for settling in the new currency —whether in cash or by cheque—any £sd amounts that have to be paid after the changeover period. At that stage the decimal system will be the only legal currency system and the £sd coins will have been withdrawn.

The position of regular weekly or monthly payments such as mortgage repayments, ordinary life assurance premiums and hire purchase instalments is dealt with by section 7 of the Bill. As in the case of any other £sd debt, a person making such a payment will retain the right to pay the existing £sd amount in cash during the changeover period. If he prefers to pay in decimal currency during the changeover period he will be free to convert the shillings and pence on the basis of the Whole New Penny Conversion Table and to pay that amount. After the end of the changeover period the payment must be made according to the whole New Penny Table.

A special arrangement is however necessary in regard to premiums payable under industrial life assurance policies or friendly society contracts. A large number of such contracts involve very small weekly cash payments and many of these do not convert exactly into decimal currency terms. Application of a conversion table individually to such small payments would in some cases cause a relatively appreciable change in the amount of the payment. Section 8 of the Bill will enable the Minister for Industry and Commerce to make regulations prescribing an equitable solution to come into effect as from decimal day. It is intended that these regulations will prescribe that the total £sd amount payable over a period of four weeks will be converted into the nearest equivalent in decimal coins that is, to the nearest nearest half new penny. For example, a premium of 1d a week—that is 4d for a four weekly period—will become 1½ new pence payable over four weeks, that is to say nothing in the first week and a new halfpenny in each of the following three weeks. In this example the policy holder would be paying slightly less than before but in another case he might have to pay a fraction more. Benefits payable under policies will not change.

Sections 9 and 10 contain an important group of provisions concerned with conversion of statutory references to amounts of money which include shillings or pence. The bulk of statutory references to £sd will not give rise to any difficulty as they will convert exactly to decimal currency terms. In some cases, however, it may be necessary to make some slight adjustment if the amount does not convert exactly. Section 10 of the Bill gives the necessary powers to enable this to be done. The powers in this section will not be used to make any changes that are not required for decimalisation.

The provisions of section 14 of the Bill will ensure that the changeover to decimal currency does not invalidate any contracts or other formal documents which contain references to amounts of money in £sd. For example, if after the changeover a person makes a will which mentions an amount in £sd. For example, if after the changeover a person makes a will which mentions an amount in £sd, it will not be invalid. However, all payments under £sd contracts and other legal documents will fall to be made in decimal currency under section 13 of the Bill after the changeover period. The Bill does not say how all £sd references mentioned in contracts or other legal documents are to be converted to decimal terms. There is no need for it to do so. References to £sd in these documents need be altered only at the instance and with the agreement of the parties concerned. Different methods of conversion may be appropriate depending on the type of reference involved. Many £sd references in contracts and agreements are not payable sums but merely items in a calculation—perhaps, a unit price in a contract for the purchase of thousands of units. Where it is decided to convert these references exact conversion rather than application of a conversion table will be appropriate in order to minimise the differences between final amounts for payment.

It is sometimes suggested that the changeover to decimal currency will give rise to an overall increase in price levels. There is no foundation for this. Many prices will not be affected at all by the changeover to decimal currency. There will be no reason to alter the prices of articles costing £1, £2, £3 and so on because the £ will not change. Similarly, the prices of articles costing 6d or any multiple of 6d will be exactly convertible because sixpence is worth exactly 2½ new pence. For other prices the use of a new halfpenny conversion table is being promoted. This table gives to the nearest half new penny the decimal currency amounts corresponding to £sd amounts involving odd pence and is so constructed that over the whole range of prices up to one shilling increases and decreases cancel out. The use of the new halfpenny table, the good sense of traders, the force of competition and the public alertness which will result from the activities of the Decimal Currency Board, will all combine to ensure that decimalisation as such will not result in an overall increase in the level of prices. Furthermore, any apparently unjustified price increases coming to notice will be investigated by the Department of Industry and Commerce.

During the changeover period those who sell goods or services will offer them at a decimal price or at an £sd price. Once a shop has gone decimal, their prices will be decimal prices only and it will not normally be open to the customer to decide that he prefers to pay an £sd price. There will not be two prices. This does not mean that people will have to make a point of carrying both currencies.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Since sixpence in the old currency is exactly equivalent to 2½ new pence, exact change can always be given if customers tender in sixpenny multiples. The Decimal Currency Board will impress this point on retailers and the public.

Up to the present a great deal of the Decimal Currency Board's activities have been directed towards getting businesses—large and small—to identify everything that needs to be done and to set about preparations in good time. From the board's contacts with business firms and organisations throughout the country they are satisfied that the business community generally is responding well to the call for efficient preparation. No intractable problems have been encountered but there is still a proportion of traders who have been dilatory in setting about the task of preparations. These should take action without further delay.

An important part of the board's future work will be to prepare the general public for the use of decimal currency so that they will understand it thoroughly. A special publicity campaign will be conducted for this purpose. Timing is, of course, important here. If the familiarisation of the public were done too soon the effects would have disappeared somewhat by the time the public came to use it. In the six weeks before decimal day the board will switch the weight of publicity over to the general public. A special explanatory leaflet will be sent to each household in the country, and I feel confident that the public will come up to 15th February, 1971, with the knowledge of decimal currency fresh in their minds.

I have always known that Deputy Clinton had the nature of a poltergeist but I did not think he was capable of producing half of the Fianna Fáil Party from their inner recesses where I am sure they have been debating the most interesting things.

Is it anything personal against the Deputy that none of his party came in?

I would not think so. I am very popular in my party. The Deputy's father used to be. This is a Bill on which there can be no disagreement. We have studied this measure. There are certain things you could say might have been done. It is the right of the Government to do what they think should be done as long as they are the Government. There is one question as to whether or not the florin or the two shilling piece would have been a better unit. The flaw in that is that we might be different from Britain. From our tourist point of view that might be an asset. We have not done this. We have the pounds and the pence. The pounds and the pence will produce a difficult situation as far as the changeover is concerned.

It might well be that the florin would have been a better unit except that there is the point that we would have been different. If being different is wrong then we would have been wrong but if being different is right, as far as we are concerned, selfishly, then we would have been right. It is just a point to think that we could have had ten florins to the £ rather than 100p. It is something on which a decision was made by the Department of Finance with the previous Minister in on the discussions. There is the point, however, that many people have said that the florin or two shilling piece might have been a distinctive unit for us. With ten of them to a £ we could have done very well and then one-tenth of that would have been about 2.4p. This would have been exactly in line with what is here on the pence, which is the 1p. This is just a point. The Government took the other decision. Maybe they were right or maybe they were wrong, I am not saying which. Personally I would have preferred the florin and I should like to hear the Minister saying whether he considers that there would have been any merit in having the florin as a unit.

The statement by the Minister that the Irish £ will be unaffected is incorrect. Our experience in regard to turnover tax was that when the 2½ per cent went on there was difficulty, particularly in regard to the smaller units of purchase, as there was no convenient coin to produce 2½ per cent. Half-pennies have been more or less out in the last few years and what happened was that when the 2½ per cent was added the increase to the consumer was more of the order of 4 per cent. I am not arguing now about whether or not the Government should have put on the 2½ per cent. I can visualise a situation whereby a 2½ per cent increase in turnover tax if applicable would be necessary—I am not making a political point of this but merely saying that when you put 2½ per cent turnover tax on you end up with a figure of around 4 per cent real increase. Here you have the situation whereby you just shake up all the currency and at the lower levels you have the 1.2d which is the new ½p and the 2.4d. which is the 1p and 2 new pence is equal to 4.8d. Imagine the prices on such articles as the box of matches or the bar of soap, articles at the lower levels. I cannot visualise any unit of production, or any supply service agreeing that there must be a reduction in the cost of the article. The statement by the Minister that the £ would be unaffected is quite incorrect.

I do not follow the Deputy's point. What I meant was the parity of the £1 unit. Is this what the Deputy means?

No. So we are not in disagreement. I am saying that when this change occurs in the lower levels for things like the bar of soap, the box of matches or the razor blade, all of those things which are used every day, the prices will be corrected and they will be corrected upwards. The Minister of course has dealt with the situation which arises when you get up into the pounds and somebody might lose 1.2 pence paying a bill after decimal day. This on one pound is quite small, on £1,000 it is of no consequence. so we do not have to worry about that. However, I do want to make the point that this will further increase the cost of living. That is not to be taken as a criticism of the Government. I do not make it as such, it is merely stating a fact. If there has to be a decimalisation day then this will occur. I hope the Minister will not accept this as a criticism but just as a fact.

The question of cheques is one to which we must address ourselves. After decimal day cheques must be written in decimal money. I hope that what will happen, if the cheque is written in old money, is that the local manager will correct the cheque and honour the cheques. In Ireland if a cheque is refused for any reason it is tantamount to having stolen money. Rumours spread around and so you must not have a cheque refused. In regard to cheques being refused the local bank manager may pass it or he may not. I hope that arrangements will be made so that a cheque written after decimal day in old money terms will be corrected by the bank manager, and then having—it is quite impossible to make a speech here with the Labour Party having a chat. I have chats with the Labour Party all the time but it is quite impossible to make a speech with that party having a chat when into your ear comes this thing which you half hear and half do not.

The Deputy is too sensitive.

No, I have just good hearing.

I am listening attentively to the Deputy.

I am trying to get across to the Minister but it is quite difficult.

Perhaps we could have a quorum for "the honourable gentleman".

Notice taken that 20 Members were not present; House counted, and 20 Members being present,

I understand that the Minister has undertaken in the last paragraph of his speech that such cheques will be met. Is this correct?

Yes, this is true. They will be entitled to convert in accordance with the tables set out.

There is an important point here and that is if a man was rogue enough to write a cheque after decimal day in old money terms for £100 1s 11d knowing that such cheque would not be met he would really have committed a criminal offence. It is very important that this should be publicised, that if the cheque is written in old money it will be met, and for what period.

I think in agreeing with the Deputy I may have been misleading him. This point is important. The position would be that cheques which are written before decimal day in £sd and are presented for payment after decimal day will be converted in accordance with the whole new penny conversion table and will be met, but cheques which are written after decimal day in the £sd system will, strictly speaking, according to law be invalid. I would expect, however, that banks would deal with these as they deal with those written at the start of the New Year when people by mistake inscribe the year that has just passed. This happens regularly; the banks deal with these cheques and I expect the banks will equally use their discretion in this case.

It is very important that this should be publicised in the newspapers: if a man is careless enough or so uninformed as to write a cheque in £sd after decimal day, if he is honest and his bank manager knows him the cheque will be met. At the same time, we should be warned against persons who deliberately and of fell purpose make this mistake because they do not want cheques to be met.

I agree with the Deputy.

I am a business man. The Minister practised as a solicitor. We both know there are people who will take advantage of a situation and I think it would be a very very good idea if the Press were to publicise this. It would be simultaneously a warning and a possible deterrent. Those who accept cheques as payment for goods could suffer. I do not want to delay the House unnecessarily, but this is important.

I suggest that the florin might have been the unit of currency. Possibly the difficulties internationally were such that this could not be done. It is a pity. I should like to hear what the Minister has to say about this.

I think most people wish this Bill had been introduced 30 or 40 years ago. It would have made life for a section of the community much easier down through the years. Presumably it is being introduced now because of our imminent entry into the EEC. It is one of the tangible effects of entry. I doubt if people have taken a great deal of notice of the symbols on the coins. The 2s piece still looks the same. The fact that it is ten new pence has not made any great impact because the value of the coin has remained more or less stable.

Decimal day is just six months away. The promotional campaign initiated by the Decimal Coinage Board has not really got across to the public generally. There have been promotional campaigns in all the major towns and business people are beginning to realise that this change is coming more quickly, perhaps, than they anticipated. They are beginning to wake up to the need to adjust their prices, in some cases in both the new and the current coinage.

The Minister referred to the promotion that will take place between now and decimal day to educate people generally in regard to this new coinage. It is the experience of doing business in the new coinage which will ultimately educate the public. People will —unfortunately for themselves, perhaps—learn by their mistakes. That is the way in which a great many of them will really be educated. The hard school of experience will be more effective than all the lectures and campaigns.

I disagree with the previous speaker when he says the 2s piece would have been a better unit for us to start with. I believe the 10s piece would be a far better unit for many reasons. The British, who initiated this system—we seem to have copied them somewhat slavishly—made the mistake of deliberately holding on to their £ sterling more, I think, for old time's sake than for any practical reason. The 10s piece can be converted into 100 new pence and would more readily identify itself with the old system of currency. It would have been a much better unit. There would, too, have been some relationship between the 10s piece and the American dollar.

I should like to make a plea to the Minister for the retention of the 6d piece. I tabled questions some months back about this. I believe there will be a great deal of confusion if this coin is dropped. It would be a much more useful coin than the new 5d. The sixpence is used in a variety of transactions. The normal postage rate is 6d. A great many slot machines operate on sixpences. The sixpenny bit had, unfortunately, been dropped when the parking meters were installed and I believe that was the factor which prompted the authorities concerned to make parking 1s. It would have been far better to retain the sixpenny piece. That has been done elsewhere.

Again, toilet meters will be affected by this change. Presumably the old penny meter would in due course have been revised upwards. A heavy coin was needed to operate it. I wonder has the Minister any ideas as to how these meters will operate with the new currency. Food dispensing machines require coins to operate them, though these may not be affected because most require a 2s piece and the ten new pence will fill the bill here.

I think the Minister is over-optimistic when he says prices will not increase as a result of decimalisation. I hope he is right, but I do not see that being the course of events. A number of commodities will be affected by the change, particularly small items in the sweet and confectionery trade. Papers and periodicals will likewise be affected.

Debate adjourned.
The Dáil adjourned at 10.30 p.m. until 2 p.m. on Tuesday, 28th July, 1970.
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