Agricultural Credit Bill, 1973: Committee and Final Stages.

Section 1 agreed to.
Question proposed: "That section 2 stand part of the Bill."

This is the section which increases the amount the ACC can borrow. I hope I am in order on this section in expressing my grave concern at the situation which the Minister touched on a few moments ago in response to my question on the Second Stage. It is a matter of serious concern if the deposits from the general public in the ACC are going down rather than going up. To the best of my knowledge up to March of this year there was a very substantial buoyancy and rate of increase in the deposits in the ACC.

It appears now from what the Minister has said, although he did not have precise figures, that that position is reversed and that the rate of deposits in the ACC since March is going down. This is an extremely serious position particularly in agriculture. On the Second Stage we dwelt on the vital importance of agriculture in our economy especially in these times and if there is any suggestion of a lack of confidence in the future of agriculture it could have very serious consequences.

The Minister did say on the Second Stage in a somewhat different context, that there were many — I do not think he used the word gimmicky — different forms of investment available offering apparently very attractive rates which are not, in the long run, as reliable as an investment in the ACC. The Minister did suggest that this range of attractive, or apparently attractive, alternatives was operating to take from the ACC and similar institutions deposits which they might otherwise receive.

But while I would not like that position I think, if that is the position, things are not as bad as they might be. I doubt if that is the explanation. The Minister will recall that any such alternative attractions as are available now were available in the past, certainly in the last few years when the pattern of deposits with the ACC from the general public was increasing all the time. The Minister would be very unwise to accept that the reasons for the falling off in the deposits in the ACC were solely these alternative attractions which have been available in the past.

I know of the problems to be faced with rising interest rates but I would point out to the Minister that the problem of rising interest rates is not a new one and that it did not start last March. While people may think that the present interest rates are appallingly high it is conceivable, in certain circumstances, that they could go higher. In that event present interest rates would be relatively the same as last year's interest rates are to the present interest rates.

The Minister should look very closely at the reasons for the falling off of deposits in the ACC. As the Minister knows, not only in regard to the ACC but in regard to other bodies also for which he is responsible, the matter seems to be a serious one, and one which is becoming more serious. In this context in relation to agriculture it is ominous. The Minister should examine the position much more deeply than is indicated by the rather superficial explanation which he gave of attractive alternatives being available. It is incumbent on the Minister to make a more detailed examination of the problem. The Minister knows, as I do, that unless the deposits from the public are maintained at least at a reasonable level in a position where demand for credit is expanding at a greater rate than ever, it simply will not be possible for the Exchequer to bridge the gap if the gap becomes very large.

It is right that an effort should be made to bridge the gap. As the Minister has indicated, this is being done. The Minister knows, as I do, that there is a limit to the amount of money which the Exchequer can make available for this or any other purpose. Consequently, I urge the Minister to give extremely serious consideration to the underlying causes of the fall-off in deposits in the ACC. Perhaps he could do so in conjunction with the board of the ACC or with the other advisers available to him. The Minister should see whether there is any course open to him which would reverse this very ominous trend.

I stick to my basic premise. It is not one with which Deputy Colley or anyone else can disagree. The world is full of "hot money" at the moment. Much of this money is very unsound and people are very foolish to be chasing it, but they are doing so. As a result of this, long-established, solid institutions and some of the principal banks in the world are now in a position where they have to offer, for a variety of reasons including the availability of this "hot money", interest rates to attract depositors which are 5 per cent higher than those obtaining in September, 1972. That is a massive jump — 5 per cent higher than in September, 1972. In some cases this is an increase of nearly 130 per cent in interest rates.

This is what is knocking the bottom out of organisations which traditionally have attracted money from small depositors who were seeking security and a steady interest flow. The consequence of this is reflected here in the ACC intake and in the intake of many other institutions which collect money from a large number of small savers. The ACC and other organisations in days of cooler and more sensible money behaviour attracted very large deposits from a variety of institutions who today prefer to put their money into some of the international markets where the overnight rate of interest can vary by anything between 5 per cent and 20 per cent. This money is being sloshed around the world by the multi-millionaires and is something, as Deputy Colley knows, even the World Bank notices. The situation is not being made any easier by the experiences of the biggest moneymakers in the world — those of the Arab countries — who now find they can make more money by selling only a small fraction of what they used to sell, and they can build up bigger deposits. It is a crazy world. I am not saying that on that account we must give in to it. It would be idle, if we are to have a debate on credit, to overlook these factors and the very substantial forces which are at work throughout the world.

It would be wrong, as Deputy Colley has suggested, that anybody should interpret the position of the ACC as indicating lack of confidence in Irish agriculture. Nobody but a lunatic today would be miserable about the prospects for Irish agriculture. This year alone the income from agriculture in Ireland has increased by 40 per cent. It is not a question of agriculture having either a poor present or a gloomy future. It is quite the reverse. It is obviously a very sensible form of investment.

We face the problems which face any Minister for Finance today. Money rates are such that it is extremely difficult to attract sufficient money to meet the requirements of legitimate investment. We hope that this situation will last only for a short time, but we are not even certain of that. The Finance Ministers of the EEC will be meeting next Monday and Tuesday to try to find a solution to this problem. A solution would be a nice Christmas present to bring home if it could be found. If we do not do so, that will not have happened because of lack of effort.

As we sit here today there are likely to be some very cold draughts blowing on the London market. No matter what steps we take it is improbable that we will avoid having to face some of the unpleasant consequences. These unpleasant realities must be faced. If deposits cannot be maintained and money attracted through normal sources there is an obvious limit to the capacity of the Exchequer to make good the shortfall. That would be particularly so at a time when revenue is not likely to be as buoyant as it has been in the past, and if international economic forces develop in the way some people fear at the present time.

This section of the Bill is doing no more than authorising the ACC to increase their borrowing capacity from £70 million to £120 million. As was said, this is the least we can do but probably more will be required. It is a sound investment and we could not borrow for a better purpose. The ACC and the Government will borrow the money at the very best possible rates.

Question put and agreed to.
Sections 3 to 5, inclusive, agreed to.
Question proposed: "That section 6 stand part of the Bill."

I mentioned a point earlier which I think the Minister overlooked in replying to the Second Stage of the debate. It refers to the legal position of the ACC in regard to borrowing abroad and their having no problems in that respect.

The 1972 Act, which Deputy Colley when Minister introduced, gave them the power to borrow abroad.

I am obliged to the Minister for confirming that.

Question put and agreed to.
Section 7 agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.