Dáil Éireann debate -
Tuesday, 29 Jun 1971

Vol. 255 No. 1

Central Bank Bill, 1969: Report and Final Stages.

Minister for Finance (Mr. Colley)

I move amendment No. 1:

In page 4, between lines 13 and 14, to insert the following definition:

"‘securities' means—

(a) shares in the share capital of any body corporate or stock of any body corporate or debentures, debenture stock or bonds of any body corporate, whether constituting a charge on the assets of the body or not, or rights or interests (described whether as units or otherwise) in any such shares, stock, debentures, debenture stock or bonds,

(b) securities of the Government or the government of any country or territory outside the State, or

(c) rights (whether actual or contingent) in respect of money lent to, or deposited with, any industrial and provident society, friendly society or building society

and includes rights or interests (described whether as units or otherwise) which may be acquired under any unit trust scheme under which all property for the time being subject to any trust or other arrangement created or may in pursuance of the scheme consists of such securities as are mentioned in paragraph (a), (b) or (c) of this definition;".

The purpose of this amendment is to insert a definition of "securities". The term is used in the definitions of investment trust company and unit trust. It is also used in section 13 (7) which empowers the Central Bank to accept securities from certain existing small banks in lieu of cash deposits. It is also used in Part 3 of the Bill where it is given a wider definition as it covers collaterals for bank advances. The definition proposed in the amendment is similar to that in the unit trust Bill. It is comprehensive in scope and covers all the instruments which are generally deemed as securities in business and commerce.

Mr. O'Higgins

Would the Minister indicate why he has been advised the insertion of this definition is necessary?

Mr. Colley

Actually I have been advised that we could do without it but the question was raised by Deputy Collins. There is no very strong argument either way but to make assurance doubly sure we put it in.

Amendment agreed to.

Mr. Colley

I move amendment No. 2:

In page 27, between lines 22 and 23 to insert a new section as follows:

Section 14 of the Decimal Currency Act, 1970, is hereby amended by the substitution of the following subsection for subsection(1):

"(1) Without prejudice to section 2 of this Act, section 10 of the Currency Act, 1927, shall be construed as continuing to permit contracts, sales, payments, bills, notes, instruments, and securities for money, and every transaction dealing, matter, and thing whatever relating to money or involving the payment or the liability to pay any money to be made, executed, entered into, done or had according to the old currency, the new currency or the currency of some state or country other than the State, subject to the proviso that section 13 of this Act shall apply in relation to any amount in the old currency which is not a whole number of pounds and which is or becomes due for payment on or after the appointed day."

I mentioned on the Committee Stage that I proposed to bring in this amendment on Report Stage. It arises out of the formal ending of the period of changeover to decimal currency. As indicated by a document laid before the House today and as will be indicated in a public announcement by the Decimal Currency Board tomorrow the smoothness of the introduction of the decimal currency system has made it possible to end the changeover period on 31st December next. The purpose of the amendment is to remove any doubts about the position after the end of the changeover period in respect of all contracts drawn in £sd terms. Such doubts were raised last year in Seanad Éireann on the passage of the Decimal Currency Act, 1970. While the fears expressed seem unlikely to materialise I decided to introduce this amendment in order to remove any possible uncertainty. I should explain that section 10 of the Currency Act, 1927, is the basic statutory provision requiring contracts and various transactions to be made, executed, entered into, done or had according to Irish currency or foreign currency.

In the drafting of the Decimal Currency Act, 1970 it was considered desirable to include a form of saver for the validity of formal contracts, wills and other documents. This was done in section 14. It was not considered necessary to make any specific provision to ensure the continued validity of other contracts. However, the point was made that the inclusion of the specific saver for formal contracts might raise a doubt about others. In the present amendment section 14 is substantially repealed. In addition, specific provision is made to ensure that the basic currency provisions in section 10 of the 1927 Currency Act will be construed as permitting the continued use of £sd for the purposes specified in that section. I am advised that these steps suffice to ensure continued validity of contracts made in £sd, whether formal or informal and no matter when made.

Mr. O'Higgins

I do not object to the amendment but I am struck by one phrase the Minister used in presenting it to the House, when he referred to the smoothness of the transition from £sd to decimal currency. I do not know whether he was speaking as Minister for Finance or as the father of a family, or as the provider for a woman running a house. I am quite certain that anyone outside this deliberative and legislative assembly who hears the phrase used "the smoothness of the transition to decimal currency" would begin to wonder whether he or we are living in the moon because the transition has been a traumatic experience for most women trying to run a house and for most husbands and fathers trying to provide cash and means of paying bills for their wives. I do not know if we ever had sufficient advice in regard to decimilisation but I am certain that the advent of decimalisation has stepped up prices in most of our shops, retail stores and supermarkets throughout the country. Indeed, it is demonstrated by the fact that in the three months from last February living costs have risen at the rate of 12 per cent. Last year we were battling very well on the European league with a record 10 per cent for the 12 months. In the three months after decimalisation our cost of living is running at the rate of a 12 per cent increase on the 10 per cent. Smoothness of the transfer to decimal currency may be something that may appeal in a fiscal sense to the Minister for Finance but I do not think it has been a good thing for the economy. I do not know whether this amendment is going to dot the i's and cross the t's. The Minister introduces it as being necessary in relation to an event that has already taken place. In that sense it is agreeable to me.

Mr. Tully

I am afraid I would have to re-echo what Deputy O'Higgins has just said. I was amazed when I heard the other day the Minister using the same phraseology—the smoothness of the transfer—and again tonight he talks about the smoothness of the transfer to decimal currency. I do not know whether the Minister is aware of this or not but there are numerous persons in this country at the present time who are finding it extremely difficult to know when they go into a shop what prices actually are in so far as that even some of the supermarkets until recently were using the old currency, which only confused matters more. Not alone are old persons and children finding it difficult to handle the new money but, in fact, I fear that many shopkeepers have been deliberately using the unfamiliarity of the people with the currency to jack up prices. In fact, when something costs an extra ha'penny, what we said would happen when the Decimal Currency Bill was before the House has happened, and that is, that the new half-penny is being deliberately confused with the old ha'penny and the new half-penny is of too high a value. The result is that when increases occur which under the old system would be relatively small, under the new system they are very substantial.

I suppose there is no point in blaming the Minister for this now. The House passed the Decimal Currency Bill; it became law, and that was that. But I feel that the Government, deliberately or otherwise, failed to inform the public of what was happening and the result is we have this situation where smoothness is not the word I would use. I grant that there was a lot of smooth talk by people who wanted to create this situation but we have the unfortunate position of Ministers, the Minister for Finance being among the chief of them, preaching to workers about the necessity not to step over the line and of the wonderful thing it was to have at the last minute a type of wage freeze which could be held until the end of the year and saying that prices must be kept down but suddenly everybody realises that because of something which was deliberately caused by this House, if not by the Government—and I would blame the Government as being the chief cause of it—prices are rocketing again.

If the Minister is serious in his exhortations about trying to hold a fixed wage at what it is now, then he must realise that a smooth transfer is not the description which most people are giving to this. We cannot object to the amendment if the amendment does something to ensure there will not be a bigger mix-up when the period ends. Anything that can be done in order to ensure that people will not be able to say that contracts which were entered into in £sd are no longer valid must be done. We must agree. If the Minister thinks it necessary to include a section like this to ensure that they are continued as valid, the House must pass it. But, would the Minister get used to the fact that the situation has got out of hand and this sort of thing is not doing anything to bring it under control again?

Mr. Colley

I have explained the purpose of the amendment and I gather it is acceptable to the House but, to comment briefly on what was said by Deputy O'Higgins and Deputy Tully, let me say, first, that when I used the phrase "the smoothness of the introduction of the decimal currency" I was, as Deputy O'Higgins surmised, referring to this in a broad fiscal sense. It should be realised that numerous checks, both official and unofficial, of prices since the introduction of decimal currency have shown that there is no substantial evidence whatever of excessive charges because of decimal currency as such. What should be realised is that a number of price increases which were sanctioned by the Minister for Industry and Commerce and which would have come into operation perhaps somewhat before 15th February, which was Decimal Day, were in fact held, because they had to be applied in decimal currency, from Decimal Day and therefore people may well feel that some of these increase were simply due to the changeover in the currency system but many of these increases certainly were not due to that.

Mr. Tully

Then it was the Government's ineptitude?

Mr. O'Higgins

It was Government policy then?

Mr. Colley

I think Deputy Tully and Deputy O'Higgins are more intelligent than that. If it is stated that increase which are justified to the Department of Industry and Commerce and sanctioned by the Minister are increases because of Government policy, I think that is stretching the English language rather a bit.

Mr. Tully

It has been stretched over the last 12 months.

Mr. Colley

I also want to say regarding what Deputy Tully said—he was I think, referring to the national wage agreement in what he said—I think it is unfortunate that he should refer to it as a type of freeze because that is not what it is. It is a regulated increase to incomes which it is hoped will lead to an even greater increase in real income in the future.

Mr. Tully

It is £2 a week and no more.

Mr. Colley

I said at the time, I have said it since and may I say it once more, that the carry-over because of increase in wages and other costs in the past—the spill-over into this year —meant that the effect on prices would not be very obvious in this year but by adhering to the national wage agreement we will certainly reap considerable benefit in prices next year. I have said this before and am saying it again. I do not think there should be any misunderstanding.

Mr. Tully

The Minister should appreciate that I am in favour of the national wage agreement but I do not think the Minister should allow incomes to be eroded in this way. That is the difference.

Amendment agreed to.

Question—"That the Bill, as amended, be received for final consideration"—put and agreed to.

Question—"That the Bill do now pass"—put and agreed to.

The Dáil adjourned at 10.20 p.m. until 11 a.m. on Wednesday, 30th June, 1971.