Is something wrong? Is the House adjourned?
Land Bond Bill, 1975: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
Normal procedure is being adopted. The Land Bond Bill was interrupted today to take other business.
There is nobody in the House——
There is a Minister in the House now and the Minister for Lands is returning. I am calling on the Minister to conclude.
On a point of order or information, I think Deputy Esmonde was speaking when the debate was adjourned. I wonder if other Deputies are aware of the position and if some members in our party had hoped to speak. I do not know what the position is.
(Cavan): That is not a point of order.
Then I shall call for a quorum.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
Cavan): I explained this morning when introducing this measure that the purpose of the Bill is to give permission for increasing the ceiling for land bond orders from £40 million to £60 million. It is an enabling measure. It is not true to say it is introduced for five years or for any specified period. If and when the Bill becomes law the Minister for Finance will have power to create an issue of land bonds to the extent of £20 million in one issue. He may create £20 million worth in one year or he may never create any land bonds. It is, as I say, purely an enabling measure.
Land bonds were first introduced as far back as 1923 and have since then been by and large the method adopted for paying for land purchased or acquired by the Land Commission. The limit first imposed on land bonds in 1934 was £10 million. In 1953 the limit was increased to £15 million; in 1964 it was increased to £25 million and as recently as 1969 it was increased to £40 million.
Earlier this year the Minister for Finance created a further issue of £1,000,000 bonds and thereby brought the total issue to £40 million. It is because that limit has been reached that this Bill is necessary to enable the Minister for Finance to create further land bonds for the purpose of enabling the Land Commission, in turn, to operate in so far as they are still operating through land bonds.
Dealing briefly now with the history of the Land Commission, from the time the commission first started to acquire land compulsorily until 1950 there was no obligation on the Land Commission to pay market value for land compulsorily acquired. Their only obligation was to pay such price as might be considered fair to the State, the Land Commission and the vendor. Invariably the price was less than the market value because, in arriving at the price, the Land Commission bore in mind the price they would have to charge allottees. That was, of course, manifestly unjust. A man had his land taken compulsorily from him and he was not entitled to the market price of the land. I said earlier—I put it on record again now —that it was an inter-Party Government, through the then Minister for Lands, the late Joe Blowick, who introduced a Bill in 1950 obliging the Land Commission for the first time to pay the market price for land and ever since the Land Commission have paid the market value, even when operating in land bonds.
It would appear from the figures produced by Deputy Lalor today that the Land Commission, when paying in bonds, actually pay more than the market price because Deputy Lalor had figures which showed—indeed, correctly—that the price per acre in land bonds is, percentagewise, quite a bit more than the price per acre in cash. When the appeal tribunal are adjudicating on price they do bear in mind the fact that payment is being made in land bonds and these bonds are at a discount.
The bonds have been criticised on a number of grounds. It was stated that there is no redemption date for land bonds and it is in the nature of a lottery as to whether one ever gets paid at par. That is not so. The Land Bond Act, 1934, provided that the Minister for Finance might redeem bonds on the expiration of 30 years from the date of the passing of the Act, making 23rd March, 1964, the date on which land bonds could be redeemed. In 1957, however, a Fianna Fáil Minister for Finance amended the 1934 Act and extended the period by providing that the optional date for redemption would be 50 years from 1934, thereby providing that land bonds could not be redeemed before 1984.
It is rather extraordinary now to hear Members on the opposite benches so concerned about those who are selling their land to the Land Commission or having their land taken from them when we know that from the time they took office until 1950 they operated a system under which the market value was not paid for the land and, on top of that, in 1957 they introduced a measure which extended the date for optional redemption from 1964 to 1984. During this debate several Deputies demanded that land bonds be phased out. That is exactly what the Government are doing and I hope the happy day will come during my occupancy of this portfolio when they will disappear and will be completely substituted by cash. I want to put on record that I have provided more cash for the payment of lands purchased by the Land Commission in the last two years than Fianna Fáil ever did in their entire term of office. I do not think that is any exaggeration.
Complaints have been made that land bonds are a bad method and an unfair way of paying for land. The same people have complained that there is undue delay in distributing lands purchased by the Land Commission. I find in the budget for 1972-73 that the former Government provided a total of £225,000 for the purchase of land by the Land Commission and of that sum £100,000 was drawn from subhead A for the payment of salaries to Land Commission inspectors and staff in general. A sum of £225,000 is a miserable sum to provide for the purchase of land but it is even worse when we find the former Government sucked £100,000 of that from the account for salaries. The explanation for that is that the previous Administration allowed the staff of the Land Commission to be depleted. They allowed the inspectorate to run down and they did not fill vacancies caused by deaths or resignations. They transferred some of the money provided for salaries to the subhead for the payment of land. Is it any wonder that I found when I came into office that there was quite a backlog of land waiting to be divided? The inspectors were not there to do the work and the work fell into arrears. I am very glad to say that in the first budget we introduced the amount provided for the payment of land by cash was increased for the effective £125,000 provided by our predecessors to £1 million in 1973-74.
That budget was prepared by the previous Government.
(Cavan): The money was provided by this Government and that is what matters. We provided £1 million in that year. In the following year, 1974, we provided £2,250,000 for nine months and for the current year £2,625,000 is provided. The net result of those operations is that my Department have at their disposal this year £2,625,000 for payment for land in cash under the EEC retirement scheme. I want to remind the House that not one penny of that money will be provided by the EEC funds. It is all coming out of the pockets of the taxpayers. For payment of land purchased by the Land Commission in the current year, other than through the EEC retirement scheme, there is available £1,292,750. In other words, taking those two figures together and the sum of £490,070 for life annuities under the scheme, approximately £3,800,000 is available this year to the Department for payment for lands in cash as against a paltry sum of £225,000 when we came into office.
Could I ask a question? When this Government took over what was the figure allocated for the purchase of land? Was it greater or less than the figure the Minister is talking about? Had the Minister's predecessor not provided in the budget for the money the Minister is talking about?
(Cavan): I know this is showing up a certain amount of hypocrisy on the part of the Opposition. I did not interrupt even once this morning and the Deputy should bear with me now.
The Minister did. When this Government took over on 14th March, 1973, the figure for that year was already provided. I understand the figure was greater than the one the Minister is talking about.
(Cavan): The House was dissolved on 5th February of that year and the new Government took office on 14th March. I think the budget was introduced in May of that year. A sum of £1 million was negotiated by me and the money was provided by the Government. It is all right saying that the former Administration had plans for this, that and the other thing. Whatever they had plans for they left office and they did not implement them. We drew up the budget and we provided £1 million in 1973-74. We provided £2,250,000 for the nine months in 1974 and we are providing £2,625,000 in the current year as against the former Government's best in 1972-73 of £225,000. If the Deputy would like to have a discussion on their operations from 1968-69 on it was worse they got instead of better. In 1968-69 the former Administration provided £430,000. In 1969-70 Fianna Fáil provided £600,000; in 1970-71 there was £400,000; in 1971-72 there was £150,000 and in 1972-73 there was £225,000, made up of £125,000 which was provided and £100,000 which Fianna Fáil pinched from salaries. That is not a record of which Fianna Fáil may be proud.
I am glad we have provided so much money for the purchase of land in cash. When we came to power we were saddled with a 9¾ per cent bond left by our predecessors and we replaced it with a 12½ per cent bond. The bond now in operation is a 16 per cent one and there is no doubt that having regard to the trend in interest rates that bond will stand at par for quite a while. Only £1 million has been issued and if the worst should happen—I do not think it will, nor do I think Deputies opposite believe it will happen—when the next bond order is made it can be remedied.
I do not think any good is being done to the farming community by preaching doom and disaster. Some of the speakers on this side of the House mentioned that today. It is better to be optimistic and cheerful. Listening to debates in this House towards the end of last year, I was very depressed with the predictions that were made about the animals that would die. There were statements made that the roads and fields would be filled with cattle that had died of starvation. That kind of wild speculation encouraged farmers to get rid of lands and to give their cattle away although we advised farmers that they should keep their cattle. Cattle prices have never been so good and in every provincial paper there are many advertisements stating that bales of hay are for sale.
The advice given to the farmers by some Deputies in this House was not good and it cost the farmers a considerable amount of money. I am glad to hear that factories such as Burnhouse and Monnery By-Products who process worn-out animals were never so short or raw materials. Long may that situation continue because it shows the cattle herd is in a healthy state.
It is not a useful exercise to tell people that land bonds are worthless. The 16 per cent bond is excellent and I have every reason to believe it will maintain its value for quite a while. The Opposition could only provide £125,000 for the purchase of land at a time when there was not a world recession, when there was no economic blizzard and when, according to them, the economy was booming. When Deputy Lynch, Leader of the Opposition, left office on 14th March, 1973, he referred to the strength of the economy and said the country was in a strong, healthy financial position. In that climate and in those circumstances he could provide only £125,000 for the purchase of land but for last year and this year we are providing approximately £2½ million and we have a fund of £3,800,000. The Opposition will not be regarded as serious; they will be regarded as playing politics with the restructuring of land and with bringing the size of small farms to a viable unit, just as they played politics with the cattle difficulties last winter. They were proved wrong then and they will be proved wrong now.
They are asking us to provide another £3 million to £5 million to finance the complete and utter purchase of land by cash in one year. They are doing that at a time when they criticise the budget for having too high a deficit, for imposing too much taxation and for borrowing too much from abroad. Where will the money come from? Do they think we should introduce this innovation this year in the difficult economic climate now prevailing, when they could not introduce it in their 16 years in office? During that time they did nothing, good, bad or indifferent to improve the position of the vendor of land to the Land Commission. Nothing had been done since 1950 when Deputy Blowick was working in this area. I would ask the Opposition to come down to reality because they will not be taken seriously by the people.
They are asking for a complete departure from the traditional system of purchasing land at an expense of approximately £5 million. They are doing it at a time when money was never so scarce, when the priorities of the Government are to divert all moneys that are available towards keeping unemployment to a minimum and towards putting money into productive investments so that the poorer sections may be cushioned against the unavoidable increase in the cost of living.
Deputy Callanan made what appeared on the surface to be a reasonable proposition, namely, that bonds should be created for a short period and that they should be redeemable at the option of the holder after five or seven years. On the face of it it looked a reasonable proposition but when it was investigated and considered it was found that the sinking fund to operate it would have to increase by an extra 5 per cent, giving a total annuity of about 21 per cent. Assuming that land was costing about £500 per acre, the cost to the allottee would be about £100 per acre. I can imagine the howling in this House if a suggestion were made that the annuity on land would not be less than £100 an acre, and in many cases it might be considerably more. Every rural Deputy would be up in arms, saying it was an intolerable situation.
The State should provide the sinking fund.
(Cavan): Fianna Fáil are saying the State should provide the fund and, at the same time, they are saying the budget deficit is too high, that there is too much taxation and that we are borrowing too much. Where will we get the money in the present situation?
The Government could borrow more. They are borrowing good-o.
If things are that bad they should pack up.
(Cavan): Deputy Esmonde spoke about hardship cases. Of course there are cases of hardship. We are doing our best to phase out land bonds and any reasonable Deputy will agree that an increase from £225,000 to £2½ million per year is not a bad start? I believe it is necessary to continue what we call the traditional operation of the Land Commission to acquire land through their compulsory powers in order to prevent speculation and to ensure that vast tracts of land do not get into the hands of people who are not farmers.
People who acquire land in that way do not deserve to have tears shed for them. I propose to give the House a classical example of that type of speculation. I know of 329 acres of land purchased in 1972 for £77,000 by a man who was not a farmer and who did not live within miles of that farm. Deputies cannot blame me for not having prevented him from buying in 1972 because I was not Minister for Lands then. Recently that man accepted a price awarded by the Appeals Tribunal of £164,000 in 16 per cent land bonds. He is getting too much.
I could not agree more.
(Cavan): I will not shed any tears for that man. That is only one part of the country. It is happening in every county where there is good land. I could find instances of it in southern and eastern counties where the good land is. When the money was flush the speculators got in and bought the land. There is a case in Deputy Lalor's constituency which is equally bad.
There will not be many buying land with that kind of money these days.
(Cavan): Deputy Lalor and I are talking in the same language but about different farms. A few years after Deputy Lalor came into the House there was an instance in his constituency which is a replica of the case I cited. We should not be too concerned about land bonds because the 16 per cent bond is a very good one. That type of investment is availed of by institutions and companies to set up pension funds—people who do not want early redemption. It is the best gilt-edged security on the market today.
Many Deputies dealt with points which would have been more relevant on the Estimate. I should have started my reply by saying that copies of my speech were not available when I introduced the Bill. It was a mishap. I am glad to see Deputy Tunney in the position of spokesman for Lands. I hope we will get on for a long time, both of us in the same position.
The Bill was attacked on the basis that I should be phasing out land bonds. I hope I have convinced the House that I am making a genuine effort in very difficult circumstances. It is not true to say there is not a market for land bonds. The Government stockbroker is obliged to purchase all the bonds that come on the market. I should point out that fixed interest securities also have fallen on the market. Governments during the years have issued long term loans at five, seven and eight per cent and they are not redeemable until the 90s. People put their money into these securities on the advice of the Government of the day and usually of the Opposition of the day. National loans of five, seven, eight and nine per cent are now standing at very low rates if people have to sell. Their guarantee is that the Government stockbroker will buy them. I do not think any Deputy can genuinely distinguish between them and land bonds. People bought these securities so that they could provide money for themselves in later years. They have found that national loans have fallen dramatically over the years. Land bonds are no worse.
When they bought those loans they knew exactly when they would be redeemable.
(Cavan): They did Land bonds issued under the 1934 Act could have been redeemed in 1964 but another Government decided they would postpone that until 1984. It is not true to say that at the moment there is no worthwhile redemption of land bonds. In 1974 £1,130,682 was provided and paid to redeem land bonds.
That is lottery.
(Cavan): It may be lottery but the money was paid out. I do not think anybody can say that that sum is a mere bagatelle. As the years go on, the amount of land which will become available under the EEC scheme will make it less necessary for the Land Commission to resort to compulsory powers.
I know the Deputy is interested in figures. Under the retirement scheme 74 cases were processed and provided a pool of land of 2,807 acres. That was a small number of cases but a fair amount of land. As this scheme is understood and gets going properly, it will provide a worthwhile amount of land and so relieve the Land Commission from the necessity of having to acquire land compulsorily. At the same time, I would not like to see the compulsory powers of the Land Commission abolished.
In his speech today Deputy O'Malley appeared to out-Mansholt Mansholt. He gave the impression that what mattered was the amount of return to be got out of a farm. That could be pursued to its logical conclusion. If you had a 300 or 400 acre highly mechanised farm, it would produce more than six 50-acre farms. I would not agree to that proposition. I believe that we should continue to bring the small farm up to a viable size. That is what the Land Commission propose to do. There are two ways of doing that. Firstly, this could be done through the retirement scheme. That is a painless and voluntary method under which people who retire from farming make their farm available to the Land Commission or to a local farmer direct.
As I said, the Land Commission should have power to ensure that land is not controlled by a few people or that speculators do not rush in to buy as they did in anticipation of our entry into Europe. The Land Commission should retain their compulsory powers. I am very glad other Deputies agree with me. Deputy Callanan, Deputy Lalor and others who have the figures will agree that we should not have any sympathy for these get-rich-quick merchants who bought land in areas where there already was congestion. In 1971 and 1972 they bought land for £77,000 and the market price for that land is now fixed at £164,000. In my view it would be very bad to give them cash. My only regret is that they are getting a bond which is as good as——
They are getting too much.
(Cavan): It is very easy to come into this House as some people did this morning, simply denounce land bonds and say that I should wave a magic wand and in one operation we would cease to have land bonds.
I did not say that.
(Cavan): No, Deputy Callanan has never said that. Even when asking questions he conceded that it was not possible to abolish land bonds in one year. Unfortunately, the cure he suggests is to have them redeemable compulsorily after five or seven years. That cure would be worse than the disease. Unless we were to go to the taxpayers and ask them to produce the difference we would have to charge the farmers at current land prices, about £100 an acre——
Borrow the money.
(Cavan): The Deputy denounces us for borrowing money. We cannot win.
You borrow for everything else.
(Cavan): When it suits, Deputies say we are borrowing too much but when the budget is over and they want something else they say we should borrow more money. We must be fair.
This is for a good purpose.
(Cavan): I agree. I was about to develop the point. Deputies must look at this matter realistically. They will then come to the conclusion that I am doing what I was asked to do. I am acceding to the request made to me this morning to phase out land bonds. I am phasing them out in the best way possible. They are gone completely as far as the scheme is concerned. People can avail of the scheme and be paid in cash.
Almost £1 million is available for the purchase of land outside the scheme. My hope would be that the Land Commission would avail of that money when dealing with hard luck cases. I can see that it is very difficult to decide which of the hard luck cases is inflicting the greatest hardship. With the money provided under this scheme and the very considerable amount provided outside the scheme, I believe we have gone a long way towards this, much further than Deputy Tunney's predecessors in this office did over the last number of years. If Deputy Tunney had been Minister for Lands since 1965, he might now have reached the stage where we would not be paying for cash-in land bonds. If I had been Minister for Lands from 1965, and travelling nearly as fast as I have been since 1973, there would be no land bonds now and plenty of cash.
We are in a very different economic climate, a time of high interest and scarcity of money, not alone here but all over the world. That is conceded. This is the time that I am asked to jump in at the deep end. I have not pleased some members of the House when I went half way—I even went more than half way—to meet their requests. In 1975 I provided £3 million in round figures available under the scheme—I think Deputy Callanan was shocked to hear that—and over £1 million carry forward from last year.
I certainly was not shocked.
(Cavan): I think the Deputy was.
My goodness, what would it buy this year?
(Cavan): If the Deputy helps me to sell the scheme in the west and get me all of the people who would like to avail of it, on the general terms offered, I will buy the land, will pay for it and get it.
The people who want to get out cannot avail of it.
(Cavan): Why cannot they avail of it?
Because they do come within the scheme.
(Cavan): I know the difficulty the Deputy experiences is that of people who have been letting their lands for some time.
That is an EEC directive.
(Cavan): That is a difficulty we are trying to overcome.
Debate adjourned.