Amendment No. 1 is out of order.
Agricultural Credit Bill, 1977: Report Stage.
The reason for my putting down the amendment was to inquire why "Oireachtas" was in the Bill and not "Exchequer". The Minister explained the reason, that in earlier passages he had stated "Exchequer" and the expenses were paid out in this instance.
The amendment is out of order.
Could the Minister explain the reasons for the differentiation?
This is new matter——
It is to inquire, basically.
"Oireachtas" is to signify parliament. It is not relevant to the Report Stage.
It involves new matter of substance which is not effectively before the House.
It is the Finance Vote.
This is just to ask for an explanation rather than going into detail.
It has to be voted by Parliament. That is why the word "Oireachtas" is in.
I move amendment No. 2:
In page 7, between lines 22 and 23, to insert the following:
"(2) In the exercise of these functions the Corporation shall not compete unfairly with existing businesses engaged in similar projects".
This concerns the very wide powers to intervene in processing and setting up new enterprises and, in fact, engaging in almost any economic activity, not as a leader, but on its own account, which the ACC has under section 9. Naturally enough, the ACC is a public body with potential access to unlimited funds from the Exchequer. If it went into an area of agricultural endeavour in which it was competing directly with private companies, it is conceivable that it could use its unlimited access to funds as against the obviously limited access to funds which any private enterprise in the same area would have, and compete unfairly with the private enterprise. But, I must say I welcome—and this is a matter that has been discussed in the budget debate and elsewhere—the idea of State-sponsored bodies getting involved in direct productive activity and in the consequential giving of employment. I believe, and it must be clearly set out in the statute, that in doing so they have a duty to compete only on a fair basis with private firms already in the field. If they were to compete on an unfair basis they would probably find themselves in conflict with EEC rules as well as with rules made in the statute of this House.
I am in favour of the idea of State bodies developing in this area on a productive basis. It is essential to the success of such activity that there should be from the outset an assurance in the minds of all people with whom they might compete that competition would be on a fair basis. If that assurance does not exist and if there is not a statutory safeguard such as I am proposing in this amendment, the danger is that there will be outright political or ideological opposition to such activity and this would be regrettable. It would be justified opposition because there would not be a basis for assurance that competition would not be unfair. The amendment which I propose is a very reasonable one and one which will set this sort of endeavour on a solid foundation.
Section 9 (a), (b), (c), (d) states:
9.—The Corporation may do all or any of the following:
(a) undertake, promote, engage or participate in, manage or supervise any scheme or project which, in the opinion of the Corporation, will, or is likely to, increase, whether directly or indirectly, the productivity of, or be otherwise of benefit to, agriculture, horticulture or fisheries,
(b) appoint and remunerate clerical, technical and managerial staff for schemes and projects referred to in paragraph (a) and assist and advise in relation to the appointment of such staff,
(c) provide the whole or part of the money required for any scheme or project referred to in paragraph (a),
(d) agree with the undertakers or promotors of any scheme or project referred to in paragraph (a) to pay and discharge the whole or part of any losses incurred by them in relation to that scheme or project,
Subsection (d) is particularly relevant. Two firms may be competing, one of them relying on normal credit from a commercial bank. The other firm could be told by the ACC to fire ahead and not to worry about losing money because they are prepared to underwrite all losses. That firm has a competitive advantage as against the first firm. Clearly there is a need for a safeguard, such as I indicate, to the effect that the power to underwrite losses and the other powers mentioned shall not be exercised so as to constitute unfair competition.
Section 9 (g) states:
Assist in and facilitate, in any manner it thinks proper, the formation, promotion, establishment, reconstruction or reorganisation of bodies corporate referred to in paragraph (e).
Under this section it appears that the ACC have the power to do almost anything on their own account that any commercial entity can do and to do it with the full backing of a State guarantee. I am not absolutely sure of this because I have not checked the Companies Act. They have a tremendous power to compete if they so wish. I have no reason to believe that they would wish to do so at present. They have the power to compete unfairly and to put out of business firms competing in the private sector.
I know the argument that will be put forward by the Minister. I must anticipate it since I will not be allowed to speak again on this Stage. The argument will be to the effect that the Minister appoints the directors and the Minister's economic policy at present is one of supporting the private sector and not driving it out of business.
I do not dispute this and that would be my policy were I in the Minister's position. We are not passing laws to be implemented only by the present Government or by a Government formed by any of the parties at present in the Dáil. These laws must stand the test of time in any political situation. I would argue that a safeguard such as suggested in this amendment is necessary and should be implemented to avoid any misunderstanding as to what the ACC can or cannot do. I believe that the acceptance of this amendment would help the ACC to do the sort of things outlined in section 9. The knowledge that such a safeguard exists will ensure that there is a much more co-operative attitude to the ACC in the commercial field if they undertake this sort of endeavour. There will be much less political suspicion and fear of the ACC's involvement in this area because of the existence of the safeguard. In the absence of such a safeguard the ACC will continue as they have done in the past; they will not use these powers because they will be afraid to do so and because they will be afraid that the objection will be made that there is not an adequate safeguard against their abuse of power.
I do not see that there is any necessity for this amendment. I have been dealing with the ACC for 20 or 30 years in getting the co-operative movement under way in the west. It smelled down there. The commercial banks were not inclined to advance money to us and some of the co-operatives would have been closed down but for the ACC. One might say that they were competing with the commercial banks who would not advance the money. We had been asking that money should be provided for a venture with a reasonable chance of success.
The banks are very conservative and so are the ACC. I can see no reason for this amendment because it is my opinion that the ACC are too conservative. If the ACC think that a venture will not be competitive they will not support it. The powers of the ACC should not be curtailed. They have no ambition to go into competition with anybody.
They have the power.
The ACC are very conservative and one would get a bob from the banks just as handily. They are set up to benefit agriculture and they should have the widest possible powers to do what others would not venture to do.
This is a worth-while and reasonable amendment. Section 9 (g) provides that the ACC may:
Assist in and facilitate, in any manner it thinks proper, the formation, promotion, establishment, reconstruction or reorganisation of bodies corporate referred to in paragraph (e).
Basically the position would appear to be such that the corporation can allow themselves to be involved in types of businesses that would compete with existing businesses. To me that would appear to border on a dangerous situation. Suppose the Agricultural Credit Corporation assisted and promoted some organisation which perhaps would compete with an existing meat factory or mart or some type of farming business, even a co-operative society. With the unlimited resources of the ACC behind some group there is a distinct possibility that such a group would be in a position to take risks that a reasonably prudent person might not take.
I accept that, as Deputy Callanan said, the ACC are a conservative body but with vast sums of money at their disposal and being a semi-State body they could enter into competition by promoting a meat factory in a certain area if some people were closely involved and had a particular interest in it— I do not imply any kind of wrong interest. Such competition could either close down or put an existing business into difficulties. This would be unfair competition and would, I think, be unwise and wrong. Some safeguard is necessary in a case like this. It would be unwise if this Bill were to allow a firm promoted and assisted by the ACC to reach a situation whereby an already existing firm in some part of rural Ireland would be forced to compete with it. I believe the Minister would not be happy about such a situation arising and neither would his Department. Most people would be very unhappy about it. Deputy Bruton's amendment is reasonable and should be incorporated in the Bill as a safeguard for the future.
While the ACC are generally regarded as a conservative body, as are most financial institutions that lend money, nevertheless I think it incumbent on us to ensure that, whether they are conservative or not, existing businesses that are progressive and prospering would not find themselves faced with unfair competition that had the unlimited backing of a semi-State body. If the ACC began to promote a firm that was going into competition with an existing firm, the ACC at the outset might not realise this but once they had undertaken the project and after investing a certain amount of money in it they might well say to themselves: "It is not going very well but if we give it a further injection of funds, further borrowing powers or grant a further loan that injection of capital may get this firm on its feet." The other firm that may be suffering from a shortage of capital may be put out of business.
I see no benefit in putting existing businesses engaged in similar projects out of business. The amendment is couched in very moderate language. It seems reasonable and fair and its purpose is to prevent a situation arising in which existing businesses would find themselves in direct competition——
Only unfair competition.
Yes, unfair competition with which they are unable to cope because of the immense backing from ACC. I believe the Minister should accept the amendment.
I cannot accept the amendment because I do not think it is necessary. We discussed this matter at length on the Committee Stage, but it is important to repeat some of the arguments after what has been said. It would appear to me from listening to some of the comments from Deputies opposite that they do not really want the ACC to help firms that might need help.
That is untrue. We said the direct opposite. The Minister is misrepresenting what we said.
That is the impression I got over here. Section 9 of the Bill empowers the ACC to participate in projects operated by other bodies for the benefit of agriculture and horticulture. Fisheries have now been added to that. When Deputy Bruton talks about standing the test of time, this provision was also in the 1961 Act and has been there all along.
It has not been exercised.
But it was there and it has been exercised on a couple of occasions without any detrimental effect on any other business. The object of the section is to enable the corporation to help in cases where private enterprise needs an additional boost or where private enterprise may be unwilling to embark on a particular project, the ACC would step in to provide a much needed impetus or initiative and the question of competing unfairly with existing businesses would not even arise. If the corporation should ever try to use these powers to enter into any business that was adequately catered for by the private sector or to compete unfairly with other such businesses, the Minister for Finance would, as a matter of public policy, intervene and prevent any such abuse of their powers. The Minister is the only shareholder in the ACC and appoints all members of the board of directors.
There is no guarantee as to what any future Minister will do in this matter. A future Minister might want the ACC to put some people out of business, perhaps because they were not abiding by the pay code or something like that as in Britain. Giving this sort of unlimited power to a Minister in cahoots with the ACC is, to my mind, undesirable and there should be a safeguard against unfair competition —nothing else.
Is the amendment withdrawn?
Has Deputy Bruton replied on the amendment?
I have the right to reply?
It is your amendment; you are entitled to reply.
I think he has already done so.
That was the first instalment of my reply.
We should get our procedure right.
The Minister should keep his hair on.
We do not want any of that sort of stuff. The Deputy is entitled to reply on his own amendment. Apparently he was making some sort of reply when I came in. Perhaps he would now finish his reply.
The first point I should like to make is that far from being against the exercise of these powers, as the Minister sought without any justification to suggest, I am in favour of them. These powers on the part of the ACC to become involved in running companies as distinct from merely lending—this is a point that Deputy Callanan did not grasp——
I grasped it all right.
All right, I accept that. I was not saying that the ACC were or were not conservative, or that any safeguard of that nature should be imposed in relation to their power to lend money, nor was I fearing they would lend money in a way that would constitute unfair competition. I said that there was need for a safeguard in relation to unfair competition being created, not by their lending money but by their becoming involved in setting up and running new enterprises. First of all, the safeguard, which I think the Minister agrees should be there in practice though not in law, is against only unfair competition as a result of ACC activity. It does not inhibit them from fair competition in the normal way with other competiting businesses in the same area. Secondly it does not restrict them at all in relation to areas where businesses are not already in operation. For instance, if the ACC want to set up a new business where no existing Irish business is involved this amendment will not affect them in the least because then there is no possibility of their competing unfairly with an existing business.
The Minister has said that the Minister for Finance is the chief share-holder and that he of course would, in the interests of what is nebulously described by the Minister as public policy, prevent the ACC from exercising their powers in an unfair fashion. The assurance that the present Minister might do that is not sufficient in relation to legislation of this sort. We are introducing legislation which must stand the test of time, which must be there and be capable of being implemented with the necessary restraints by any Minister. I will give three examples of the way in which this power could perhaps be abused in the future.
The Minister for Finance might be a member of a Government who wanted to take over the private sector in some aspect of agriculture and who wanted to have only State factories involved in the production of, say, meat, who could not afford to pay compensation to the meat factories and wished to drive them out of business. The obvious way that this could be done would be by using this section. The Minister could give a directive to the ACC: "You set up your own meat factories and compete unfairly with the existing factories. Spend as much money as you like; you have a State guarantee. Keep spending that money until by unfair competition you have driven the private meat factories out of business and we have only the one State meat factory—or factories—run by the ACC." That is one way in which the ACC could be used by the Minister for Finance, not the present Minister for Finance but one who would be committed to the nationalisation of, say, the meat industry.
The second way in which he could use this power is this. He could decide that, as in Britain at the moment, there be a pay code where firms would be penalised if they paid more to their workers than a norm set by the Government. Again unless safeguards such as I suggest in my amendment are introduced, this section could be used to implement such a policy. A Government who might want to punish a meat factory or another agricultural processing industry who had paid more than the norm to their industry could decide to back a meat factory who had obeyed the norm by giving them unlimited facilities so that they would be able to compete unfairly and do down the meat factory alleged to have broken the norm.
There is a third way, one which I hesitate to suggest, but nonetheless it is real. We all know that the directors of the ACC are political appointees and that certain people in industries may support one party and other people may support others. Apart from merely giving credit, the ACC have the power under this section to become involved in setting up and supporting in a very intimate way, one factory and not supporting another. Is it not possible that these powers could also be used to build up the fortunes of the enterprises of supporters of whoever was in power or whose parties contained representatives on the ACC, to give such firms much greater facilities, equity capital, and guarantees against loss such as are contained in subsection (d) here?
The Deputy is questioning the integrity of the entire board.
I am not questioning the integrity of the entire board of the ACC or of the present Minister. What I am saying is that at a possible future time under a different Government from that presently existing or from any ever represented in this Dáil these unlimited powers could be used by a future ACC. I am not questioning the integrity of the present Government or any of the parties in the Dáil or the present ACC. In passing legislation of this sort we must provide for every eventuality including those in which the three possibilities I have mentioned could be part of an unfair policy being adopted by a Government. I hope that such a situation would never arise and I am fairly confident that it will not, but in passing legislation it is not our job merely to provide for the situation which we hope will not occur. It is our job to provide for the situation which at the worst we fear might occur. It is in order to meet what I believe an unlikely but nonetheless possible eventuality that I am suggesting this protection against unfair competition, and in passing legislation it is our duty to approach it in that manner. For that reason I propose what I regard as a very reasonable amendment which will not in any sense inhibit the ACC. In fact the provision of this safeguard should encourage them to be more active in using their powers. I appeal to the Minister of State again to reconsider his position and to accept this amendment.
Amendments Nos. 3 and 4 have been ruled out of order.
Earlier the Ceann Comhairle allowed me to address some statements on those this morning. I would like——
I do not know how the Chair could allow any statements or any address, as the Deputy calls it, on any amendments that have already been ruled out of order.
I appreciate that, but he did allow me to deal with amendment No. 1 to explain the position on it.
If an amendment has been ruled out of order the Chair cannot allow discussion on it.
The point I want to make is that I was allowed by the Ceann Comhairle to address the House earlier on amendment No. 1.
We could not possibly have a discussion on an amendment which has already been ruled out of order by the Ceann Comhairle. There is absolutely nothing I can do about that. I am sorry Deputy.
This matter is of relevance.
It may be of relevance, but it cannot be relevant in the view of the Chair when it has already been ruled out of order. We must move to amendment No. 5. Amendments Nos. 6 and 7 are consequential on amendment No. 5 and may be taken together. We can have separate decisions if required.
I move amendment No. 5:
In page 9, lines 14 and 15, to delete "expiration of every financial year" and substitute "guarantee has been given".
I agree it is logical to take amendments Nos. 5, 6 and 7 together because they are consequential. The purpose of these amendments is to provide that the Dáil and through the Dáil, the representatives of the public will become aware immediately of any guarantee being given by the Government of a borrowing by the ACC. It is important that there should be an opportunity for public scrutiny of guarantees given by the State, or the taxpayers, of loans undertaken by State bodies. In the event of a State body defaulting on a loan, it would fall to the taxpayer to pay back the loan. It should be possible to know that such a guarantee has been undertaken immediately it is undertaken.
At present, under the section the Minister is obliged to provide a list of all the guarantees he has given in a particular year at the end of that year. In other words, if the Minister gave a guarantee to the ACC to borrow £100 million on 2 January 1979 the House would not be made aware of the existence of that guarantee until the end of 1979, possibly 31 December, or the beginning of 1980 for that matter. A good deal could happen in 12 months. It is possible that a large number of improvident guarantees could be given by an unwise Minister between the time he can commence giving guarantees and the time he must report to the House on the existence of those guarantees. It would be more logical and more sensible if the Minister were obliged to give information about any guarantee he gives as and when he gives it rather than waiting until the end of the year.
This would impose no additional administrative burden on the Minister for Finance. Obviously he has to do a considerable amount of preparatory work and paper work before giving the guarantee. Sending a copy of a notice of the fact that he has given the guarantee, and the basis on which he has given it, to the Dáil Library so that the Dáil would be formally informed of the matter would impose very little, if any, additional administrative burden on him. It would mean the Dáil would be able to keep completely up to date on the position of guarantees given by the Government.
I am not concerned, if you like, about the introduction of an amendment of this sort in this Bill. I believe it should be introduced, but its value would be seen if an amendment of this sort were adopted for all companies in respect of whom guarantees are given by the Minister so that as a general practice the Oireachtas could become cognisant of the total amount of guarantees given at any time during a year. If one went to the Library today and asked for the latest on guarantees given by the State to all State companies one could get the figure and know the total amount guaranteed on 15 February 1978. At present one cannot do that. One has to wait until the end of the year when, perhaps, the financial situation might have changed and the justification for the guarantee might have disappeared, to find out the situation of the Exchequer in relation to guarantees given. Therefore, I would urge that this amendment, which is purely a procedural amendment and contains no issue of policy with which the Minister could disagree, should be accepted.
I do not intend to accept the amendment because the provisions of section 14 about laying particulars of ministerial guarantees of borrowings before each House of the Oireachtas are standard provisions and appear in Acts such as the Agricultural Credit Acts which deal with specific State-sponsored bodies and in the State Guarantees Act, 1954, which enables the Minister for Finance to guarantee borrowing by bodies scheduled in that Act or added to the Schedule later by ministerial order. The Acts provide for the return as soon as may be after the end of the financial year of guarantees given during the year, or given before and still in force at the commencement of the year. Such returns which show the Minister's total liabilities at the end of the year, including cumulative liabilities from guarantees given in previous years, are much more valuable to the Oireachtas than separate statements submitted to each House every time a new guarantee is given.
The Minister made two substantial objections to my amendments. First, he argued that the separate statements I am proposing would not be as useful to the Oireachtas as one compiled at the end of the year. I believe they would be more useful because the up-to-date position could be ascertained at any given time. If the Minister accepts my amendment, and provides details of each guarantee as and when it is given, there is nothing to prevent him also giving an annual statement at the end of the year on the total situation against which the subsequent guarantees could be read. It is quite open to the Minister, if he accepts my amendment, to have the best of both worlds.
The other substantial objection he made is not a very worthy one, that is, that it has not been done in other legislation and therefore it should not be done in this. Surely in discussing a Bill of this nature it is our job to improve it as much as possible. Even if we are proposing something for the first time in relation to the ACC, there is no reason why we should not do it, if it is the right thing to do. If we do it in this Bill and it works in practice, it is likely that it will be followed in other legislation. I do not think that objection should be advanced because we are discussing an ACC Bill and not other Bills. If it is right for the ACC it should be done regardless of whether other Legislatures in the past had the wisdom or lack of wisdom to proceed in a particular way. I ask the Minister to reconsider accepting the amendment.
We do not think it is necessary.
Amendment No. 8 has been ruled out of order.
I move amendment No. 9:
In page 12, line 6, after "certificate" to add ": provided that the Corporation has made reasonable efforts to provide notice, in advance of the issue of the certificate, to the specified person of its intention to issue the certificate".
This relates to the issue of the certificate which, once the ACC have issued it, will enable them to distrain against the property of a person to the effect that he owes them a certain amount of money. Once that certificate has been issued the ACC can go straight to the court and have the property of the person distrained even though it may be the case that the person concerned is not aware that the certificate has been issued.
It is undesirable that the ACC should be able to proceed in this manner. I realise it is important that in some cases they should be able to distrain against the property of somebody who refuses to co-operate and who refuses to recognise that a debt exists. They must have some way of going direct to the court and getting something done about it. For that reason my amendment is framed not that the ACC must give notice, because it is possible that in some cases they may not be able to serve notice on the person against whom the certificate is issued, but to the effect that the ACC should have made a reasonable effort to provide notice in advance of the issue of the certificate to the person concerned of their intention in the matter.
I know that at present the ACC in all cases make reasonable efforts to make sure that a person against whom a certificate is being issued knows about this and also of the likelihood of the ACC having recourse to this provision if he does not co-operate. There is no problem for the ACC in complying with the terms of my amendment. They do this at the moment. However, to guard against any unfair use or abuse of this power at some future time by an ACC that might have a less fairminded approach than the present directorate, I believe that an amendment of this kind should be inserted in section 21. It provides a protection and assurance that existing practices will be maintained and that the ACC will not be able to behave in an arbitrary fashion in issuing certificates, in bringing people to court regardless of whether a debt really exists and putting an onus on the person concerned to prove that the debt does not exist. Once the ACC have issued a certificate to the effect that it does the onus falls on the person concerned.
This matter was discussed here when the 1947 Bill came before the House and the arguments advanced then still apply. The fact that there has not been any abuse of the power in the interim—and I accept there has not been—does not invalidate the arguments put forward. The arguments were based on a possible future situation which might occur rather than what has actually transpired in practice. It is merely ensuring that a protection is inserted to ensure that unfair practices do not occur in the future.
I do not think the amendment is necessary. This matter was discussed in detail on Committee Stage. Section 21 provides that in any proceedings for the recovery of money owing to the corporation a sealed certificate of debt shall within one month after the date of the certificate be evidence that the sum specified in the certificate is due to the corporation. The certificate could be presented as evidence in court without requiring any corporation official to attend and testify that the amount was due although in practice if the defaulter is putting in a court appearance a corporation official attends also.
The main use of the certificate is in cases where the defaulter does not contest the proceedings. The certificate is sent to the Circuit Court office who then give a judgement in favour of the corporation. The borrower has ample notice of such proceedings. I am sure the corporation will have been in continuous correspondence for a considerable period seeking payment of the debt due. If the person concerned persists in his refusal to pay, a civil bill is issued requiring him to indicate if he wishes to defend the case. In default, the corporation then submit the certificate of debt to the Circuit Court office seeking a judgment. Clearly the borrower has ample notice of the debt due and of the court proceedings and, therefore, there is no need for the additional notice envisaged in the amendment.
Although all of the things the Minister has stated are true, my point is there is no legal requirement that the ACC should give notice or behave in a reasonable fashion in the exercise of these extensive powers. It is not enough for this House to pass legislation on the basis that all the ACC officials and the Ministers concerned are reasonable men and will behave reasonably. If that was the assumption on which all legislation was passed there would be no need for legislation at all. One could do everything by administrative act and have no safeguard in law against any line of activity by a Minister or a subsidiary body. The need for law in an area such as this is because there is need for protection against arbitrary or unfair action and to say that of course the ACC will behave reasonably is to invalidate the necessity for any legislation in this area beyond giving them the money and letting them do what they like. A protection of this nature is desirable and the amendment should have been accepted by the Minister.
I move amendment No. 10:
In page 14, between lines 27 and 28, to insert the following paragraph:
"(b) only banks which have obtained a licence from the Central Bank and which have the approval in writing of the Minister for Finance shall be granted recognition for the purposes of the Act.".
Section 25 deals with recognised banks. The position is that only banks that have obtained a licence from the Central Bank and which have the approval in writing of the Minister for Finance shall be granted recognition for the purposes of this Bill.
On a point of order, could not the House take amendments Nos. 10, 11 and 12 together?
If the House agrees. In fact, we had intended to take amendments Nos. 11 and 12 together and to take amendment No. 10 on its own.
I submit they are separate matters. Amendment No. 10 relates to the granting of recognition and amendments Nos. 11 and 12 relate to withdrawal.
If there is not agreement we must take amendment No. 10 on its own. Deputy Enright to continue.
We are dealing with the situation whereby the ACC have a share capital of £20 million and have powers of borrowing up to a sum of £350 million. These powers are extensive. The ACC borrow money and they invest money. They operate in a normal commercial manner which is reasonable and satisfactory and with which everybody is in full agreement. In the last five years we have experienced two banks getting into serious financial difficulties. Sizeable sums were lost by depositors. In one case the Government are in the process of coming to the rescue of depositors. The Minister for Finance says this is a once-on-once off situation: it is something that will never occur again. A future Minister for Finance may decide otherwise and come to the aid of a bank which gets into difficulties. In this particular case there has been a good deal of controversy. Some are in favour of the Minister coming to the rescue. Others, like Senator Whitaker, are against the Minister coming to the rescue.
Vast sums are invested in the ACC. Vast sums are also invested by the ACC. It is absolutely essential that investors in a semi-State body should have absolute confidence in that body. Their investments should be 100 per cent safe. In the event of the ACC running into financial difficulties the taxpayers will have to pay the bill and meet any deficiencies that may arise. For that reason we must be absolutely certain that the moneys invested in the ACC are safeguarded to the utmost extent. The ACC should not be allowed to invest money in any institution other than one certified by the Central Bank. To do otherwise would be wrong and reckless. We must safeguard the situation. It is desirable, indeed essential, that the Minister for Finance should give his approval in writing to the ACC to invest money in a particular bank.
The ACC borrows extensively. The expansion of the farming industry depends to a large extent on the adoption of a correct policy by the ACC. The policy and plans of the corporation must be seen by investors to be the correct policy and plans. We are dealing here with a major industry on which the livelihoods of thousands depend. The capital needed for the expansion of the agricultural industry is enormous. That is obvious from the advertisements on television. It would be wrong if the ACC were tempted to invest money in some banking institution prepared to pay a higher rate of interest. That would be tantamount to taking a chance. Should losses be suffered people would lose confidence in the ACC and, if people lose confidence, they will no longer invest with that body. Confidence must be maintained. The trust built up over the years must be maintained. The bulk of the investors in the ACC are small. Sums of £100, £200 and £500 make up the bulk of the deposits. It is absolutely incumbent on the Minister for Finance to ensure that every safeguard exists.
I support this amendment designed to ensure that before a bank is recognised for the purpose of this part of the Bill dealing with chattel mortgages it must be certified by the Central Bank whose financial probity and stability have been fully underwritten by that independent body. It is very important this protection should exist. Once a bank is recognised under this Bill it will be given wide powers to enter into transactions with farmers or others who wish to borrow money. To get its money back it will be able to adopt methods which in the normal way a normal money lending institution which is not a recognised bank for the purpose of this section could not exercise. For instance, it will have powers under this section, once it becomes a recognised bank and if it agrees to a chattel mortgage, to seize stock, to prevent farmers selling stock for less than a fair value and in some cases to prevent the sale of stock outright.
The danger is twofold if a bank granting recognition under this section is not a responsible one. Firstly, if it is not responsible it may dupe individual farmers or creditors into giving them a chattel mortgage and giving them a right over the farmer's property which normal commercial wisdom would not suggest that farmer should do if he had been properly advised. An unscrupulous bank might do this. There is a protection in that that bank must be recognised by the Central Bank, as well as being recognised by the Minister, for the purpose of this Bill and the danger of it engaging in that sort of unscrupulous activity is obviously lessened.
Secondly, there is the possibility that if that bank was not financially sound —again the requirement of the agreement of the Central Bank is a guarantee of its financial soundness—it could get into difficulties. Its method of getting out of difficulties might be one of using the powers contained here in relation to chattel mortgages in an extremely severe fashion. It could use them to their absolute utmost to force farmers to pay up immediately instead of, as a normal financially sound bank would do, trying to get the money, only using the extreme powers given under this section where necessary because of the lack of co-operation on the part of the farmer. If such a bank found itself in difficulties it might seek to get out of those difficulties by using the powers contained in this part of the Bill in an unfair and arbitrary fashion. For those reasons it is important to ensure that only a bank which has a licence from the Central Bank and which has the approval in writing of the Minister for Finance—I believe approval in writing is implicit in granting recognition—and is therefore less likely to engage in duping creditors to give them chattel mortgages or using the powers granted by the issue of a chattel mortgage in an unfair fashion, should be given these powers.
In reply to our proposals the Minister is likely to state that the law as interpreted by the Attorney General at the moment is to the effect that only a bank which is recognised by the Central Bank is a bank anyway and that, therefore, at law only such a bank can qualify as a bank to become a recognised bank under this section.
It has to be licensed first and then recognised.
In interpreting the term "bank" in this case the Attorney General expressed the opinion that it was one that had been previously licensed. He felt that to be recognised it had to be a bank; to be a bank it must be licensed and it could only be recognised if it was first licensed. I believe that is the sequence the previous Attorney General is quoted as having put on the powers here in reply to a query by the previous Government in relation to this matter. Without suggesting any disagreement with that interpretation of the law, it is nothing more than the interpretation of a lawyer who was not a judge at the time he made the interpretation and therefore was not creating any binding precedent on other judges by giving that interpretation. It is not precedent and there is no reason to believe that a future Minister or judge would follow that interpretation.
Although it was quoted in this House—this is more important—it was a private opinion given by the Attorney General to a previous Minister. It is not on the public record anywhere, apart from the record of this House which was referred to by the Minister of State. Therefore, I submit that Deputy Enright's amendment should be accepted because it merely underwrites in law what the Minister has said is the opinion of the Attorney General anyway. By putting it in law one is giving a much greater safeguard than one would do merely by relying on the informal opinion of the Attorney General given in private to a previous Minister. For that reason Deputy Enright's amendment should be accepted and these wide powers in relation to chattel mortgages should only be given to banks which are clearly financially sound and have been agreed to be such by the Central Bank.
Some points made by Deputy Enright in moving the amendment seem to be different to the provisions of the Bill. Recognition means only recognition for the purpose of this section and has nothing whatever to do with deposits, small or large, with ACC or others in such recognised banks. It is only recognition for the purposes of this section. Section 7 of the Central Bank Act provides that nobody can operate as a bank unless he holds a licence from the Central Bank. That has been the law since 1971. Only such banks as are licensed by the Central Bank are recognised by the Minister. Because of that law no other bank could exist so that in practice we see no necessity at all for accepting the amendment.
The Minister's reply has disappointed me. I wish to avoid entering into any controversy over the Irish Trust Bank.
It would not be in order to do so but it could be mentioned in passing.
I will not enter into any controversy over it. A bank may obtain a licence from the Central Bank; it may be able to force its way through the courts and obtain that licence after a court hearing and other difficulties. In spite of efforts on the part of the directors of the Central Bank to stop such a licence being issued a bank may be able to obtain this certificate from the Central Bank even though the Central Bank may not be entirely happy over the granting or issuing of such a licence.
That is the first point I wish to make. A bank obtains such a licence and the Minister may be aware that the Central Bank have not absolute confidence in that bank. He might not, therefore, be happy about giving a statement in writing of his satisfaction to the Agricultural Credit Corporation.
My reason for putting down this amendment is that not alone must there be a licence issued by the Central Bank but a letter must also be given by the Minister to the Agricultural Credit Corporation pointing out that he is happy with the licence that has been issued. The Minister appears to be happy that a recognised bank is the only one which obtains a licence under the Central Bank Act and that the situation is such since 1971. If he is happy about this he should have it inserted into the Act to ensure that confidence continues to be maintained in the Agricultural Credit Corporation. The Minister should add in the extra proviso, that I propose, of having this in writing also.
It has nothing to do with confidence in the ACC. I do not know why the Deputy keeps mentioning that.
We are dealing with recognised banks in this Bill. Sub-section (4) of this section states:
A bank which is for the time being recognised under this section is in this part referred to as a recognised bank.
By the courts.
The Bill before the House is the Agricultural Credit Bill, 1977.
Recognition of banks has nothing to do with confidence in the ACC.
Only banks which have obtained licences from the Central Bank and have obtained permission from the Minister are entitled to be recognised under this section. The situation in regard to banks is entirely different from some other institutions. I asked the Minister for Finance recently if an indemnity scheme would be drawn up by the banking institutions, that is banks which have obtained licences from the Central Bank. I wanted to ensure that in the event of a bank running into difficulty——
That is surely moving a bit from the amendment.
I accept that what I am saying is moving a little bit from the amendment but I am dealing with recognised banks. If you permit me I will keep my remarks brief. I wish to ensure in the case of all the banks which have obtained licences from the Central Bank that there will be a system where all the banks will have a fund.
Surely that is a matter for another Minister. It would not come under this Minister.
I want to elaborate my reasons for moving this amendment so that the Minister will accept my point. I would like to ensure that the banking institutions in the country have a fund so that if a bank runs into financial difficulties this fund will be used to pay off depositors.
That certainly is a very important point but this Minister has nothing at all to do with it. It is a matter for the Minister for Finance or somebody else to bring in that type of legislation. It would not come under this Bill and certainly not under this amendment.
I accept that. The rules of the House prevent me from elaborating on this point but I believe it is something which some Minister for Finance will have to tackle in the future. I want to ensure that a licence obtained from the Central Bank, which has the approval in writing of the Minister of Finance, shall have recognition. This is a reasonable safeguard and I am surprised there is any opposition to it. It is to ensure that all dealings have 100 per cent security. As far as I can see under the Central Bank Act a bank can obtain a licence and can still get into financial difficulties. I want to ensure that if such a bank obtains a licence and the Minister is unhappy about it he will not give his consent in writing to the ACC to have any financial dealings with them. The Minister should be obliged to furnish a letter bearing his signature that he is satisfied with this particular bank. This is a reasonable request.
Amendment Nos. 11 and 12 are related so we will discuss both amendments together.
I move amendment No. 11:
In page 14, to delete lines 28 to 30, and substitute the following:
"(3) The Minister may by notice in writing withdraw, giving the reason or reasons therefor, the recognition of a bank as a recognised bank and shall thereupon give to the Minister for Justice notice of the withdrawal."
In practice the Minister recognises only those banks which hold licences from the Central Bank under section 7 of the Central Bank Act 1971. It has already been said that the Attorney General advised in 1975 that the Minister may not do otherwise. Equally, it is likely that withdrawal of recognition will arise in cases where the Central Bank, in exercise of their powers under section 11 of the 1971 Act, revoke a bank's licence, although the Minister is not confined to this. The Central Bank may revoke a licence only with the consent of the Minister for Finance. Section 11 sets out the circumstances in which the revocation may take place. If in most cases the Minister will be withdrawing recognition following an earlier decision to revoke a banking licence there will be no need for a further hearing in Dáil Éireann as implied in Deputy Bruton's amendment.
I wish to formally move amendment No. 12.
Sorry, Deputy, there is only one amendment before the House. We will discuss the two together but there is only one before the House at any particular time. Therefore we can discuss the two and, if the Deputy wants a decision on No. 12 afterwards, he can then move it.
Can I move No. 12?
Not at this stage. We have only one amendment at present before the House.
Can we discuss No. 12 separately?
No, we are discussing the two together; we have agreed on that.
I welcome the Minister's amendment. It is worth saying, which he did not say, that it arises from the discussion here on Committee Stage, from points made on this side of the House. I am glad to note that, although the Minister did not accept any of the other points we made, certainly he came a considerable distance towards meeting the points we were making on this matter against the arbitrary and unexplained withdrawal of recognition from a bank. It is just, as the Minister suggests in his amendment, that a statement of the reasons for the withdrawal of recognition from a bank—something which could obviously affect its commercial operations considerably—should be furnished to that bank at the time the withdrawal is taking place.
My reason for proposing another amendment somewhat different from that of the Minister's—it goes in the same direction only further and is to the effect that a statement of the reasons as well as being furnished to the bank should also be furnished to the Dáil—is to allow more public accountability on the part of the Minister for a decision he takes to with-draw recognition from a bank. My amendment provides, not that the statement of reasons need necessarily be discussed, but that it should be laid before the House and if at any time in the succeeding 21 sitting days the House decides that the Minister has acted wrongly in withdrawing recognition from a bank, it could—if it so decided and if a Member raised the matter—countermand the Minister's decision.
That is a stronger safeguard against unfair withdrawal or recognition. It is then open to any Member of the House to raise the matter in a substantive way by proposing a resolution which could countermand the Minister's decision. Of course, under the Minister's present amendment a Member has the right at any time to raise the matter by means of parliamentary question. But if the Minister does not give a satisfactory answer that is the end of it, whereas under my proposed amendment if it is the view of a Member of the House that a Minister has acted in an arbitrary or unfair fashion in withdrawing recognition the Member would have the power to raise the matter by means of a motion to annul that decision. That is a stronger protection against arbitrary action.
There is a further point I should like to make relating to both amendments. If a withdrawal is to take place, apart from the case the Minister mentioned of withdrawal of recognition under this Bill in consequence of the licence being withdrawn by the Central Bank under its legislation—that is concerned with slightly different matters from those in this Bill here—it is possible, apart from the Central Bank's initiative, that a particular bank could abuse its powers under Part III of this Bill in relation to chattel mortgages. A bank could be perfectly sound from the point of view of the Central Bank and all the safeguards required by the Central Bank Act being complied with, but there could be abuse in regard to some of the powers contained here in Part III concerning chattel mortgages.
Perhaps the Minister would elaborate on who is responsible for ensuring that the provisions of Part III of this Bill are complied with? Is it the Minister for Finance? I presume it is. If so, what means has he of finding out? Has he any inspectorate or system of checking on banks to ensure that they are not abusing the powers contained in Part III of this Bill? I do not see any provision anywhere in this Bill for setting up an inspecting agency to ensure that the powers in Part III are not abused, that the Minister will be getting the information necessary to know when to withdraw recognition from a bank at the right time.
Although I am notau fait with the provisions of the Central Bank Act, I do not think it is sufficient to rely on the Central Bank. The Central Bank has its Act to enforce; it is not concerned directly with the powers contained in Part III, which are given to recognised banks. There must be somebody else concerned with abuses of these powers. I should like to know who that person is and what means are open to him, whoever he may be, to ensure that he has full information on a continuing basis about the way in which recognised banks exercise their powers under this Bill so that he can make a decision to withdraw if necessary.
I am interested to note that in regard to the granting of a licence the Minister is not very anxious to do so in writing but that he will give it in writing when he is withdrawing a licence. That is an interesting differentiation. I am pleased with the Minister's amendment, which is a good one. However the amendment proposed by Deputy Bruton goes a stage further and, of the two, is perhaps the more appropriate to be written into this Bill. The Minister's amendment will be welcomed by most people going through this Bill, be it any type of investor, solicitor, accountant, stockbroker who may have occasion to go through such Acts of Parliament in a fairly detailed manner from time to time. It is important that the Minister has such powers in regard to the withdrawing of recognition of a bank as a recognised bank. It is a good thing the Minister has decided to give notice in writing of the reasons for withdrawal of recognition to the bank. It is of the utmost importance to the bank concerned and affords it the opportunity of going through the reasons for withdrawal with the people involved to show that perhaps, in some instances they are not correct. Having furnished his reasons the Minister should then go into this matter in detail with some banks, affording them an opportunity of proving that their bank is one that is sound and worthy of trust. It is equally important that it be seen that the Minister is retaining this power. This amendment gives a recognised bank considerable standing among other financial institutions. The section deals with recognised banks and is of the utmost importance. It involves the question of notice in writing which I regard as being essential.
Some very good points have been made by Deputies. This amendment has resulted from points raised on Committee Stage. An important point was made by Deputy Bruton on supervision but there is no specific provision here for supervision. The ultimate situation would be that the Minister would withdraw recognition. Of course the Central Bank supervises the activities of all banks. If there were abuses the individuals concerned could take it up in the courts. Such matters would be brought to the notice of the Minister by solicitors, by Deputies or by aggrieved individuals and the Minister would take appropriate steps.
Could we not get around the difficulty by extending the supervisory powers of the Central Bank to include supervision of the implementation of the powers in this Bill?
That would be a matter for another Minister.
I do not think that would be necessary. In any case it would be a matter for further legislation.
I move amendment No. 13:
In page 15, line 28, after "requisition" to add ": provided that person has given his consent".
This is concerned to ensure that when a recognised bank wishes to inspect the register of chattel mortgages in relation to a person seeking a loan the bank must get the consent of the potential borrower. The register of chattel mortgages contains all information in regard to all properties which may have been given in mortgage by any individual. Clearly it would be necessary for a bank wishing to lend money to find out whether the person had granted a large number of mortgages on an existing chattel. He might have granted mortgages to other banks and therfore would not be as creditworthy as he appeared to be from the list of what he owned.
I accept that if a person approached a bank with a view of getting a loan on the basis of a chattel mortgage, it would be appropriate that the bank should inspect the register of chattel mortgages. The amendment does not prevent that. The bank would say to the potential borrower that it could not consider his application unless there is written consent to inspect the register, and if that man wanted money he would give the consent straightaway. The amendment, however, is intended to prevent other banks which may have no dealings with the potential borrower from trying to find out the creditworthiness of all the people in a county, perhaps. It does not prevent abona fide bank from getting the information, with the consent of the potential borrower.
The kind of operation I am trying to provide against is all the easier nowadays with the advent of the computer. The information could be got from the register of chattel mortgages and it could be digested by a bank who would then have a complete picture of all chattel mortgages in all parts of the country. The Bill at the moment provides that a recognised lender may at any time by requisition under the hand of the solicitor or law agent of such recognised lender require the county registrar to inspect the register and to provide the recognised lender with certified copies of any entries therein relating to the stock of any person named in the requisition;
If banks wished to get information about every single person in the State all they would have to do would be to take the register of electors and append a requisition to the county registrar to give all the information in relation to chattel mortgages "in the appended list", namely, everybody in the county, and the county registrar would have no option but to supply that information under the Bill as it stands.
If the county registrar were asked for all the names on the register of electors he would not regard that as reasonable.
The point I have been making probably carries it to extremes. What I am concerned with is the possibility of banks, or officials in banks, making inquiries about groups of people with whom they have no dealings. My amendment provides that such information can be sought only with the consent of the potential borrower.
The purpose of registering chattel mortgages is to ensure that there is an official record of mortgages available. This protects the interests of the lender who is taking the charge and it enables a prospective lender to check whether any goods being offered as security are already mortgaged. That is a very important check. Subsection (6) provides that a recognised lender, in effect, any licensed bank or the ACC, may require any registrar to supply certified copies of any entries in the register relating to the stock of a person named in the requisition. The concession is available to bona fide lenders only. It would defeat one of the purposes of registration if such lenders could not obtain information about charges unless they had the prior consent of the mortgagee. Many countries have open registers and the EEC in a draft directive on securities are advocating open registers for all member countries, open to inspection by all and sundry. There is quite an amount of protection here. Nobody need have any fear of somebody walking up with a draft register of electors looking for the list of everybody on that who might have some mortgage registered against him. I do not see any necessity for the amendment.
Are the Government in favour of the EEC proposals for open registers? This proposal would run counter to traditional practice here where people's financial affairs are a matter between their God and their bank but not a matter for third parties who are just curious to find out the credit standing of the person. The introduction of the EEC proposal in justification of the Minister's stand is somewhat ominous. It implies that the Minister agrees with the EEC proposal, and that implication hangs over the whole debate.
That is a lot of nonsense. I was pointing out what exists within the EEC as against what exists in this legislation.
What exists in the EEC will apply to this country if it is accepted.
It is a draft directive, surely the Deputy knows what that means?
I do, perhaps better than the Minister.
Then perhaps the Deputy can answer his own question.
I am not getting many answers from the Minister, so I will have to. The situation is that a draft directive if accepted becomes not just the law of the EEC but part of our law. The fact that the Minister has cited an EEC proposal in support of his stand on this amendment implies that he agrees with the EEC proposal. If the Minister agrees with that it will become the law of the land and people who have their chattel mortgages regisstered in this register will have every reason to fear that every Tom, Dick or Harry who wishes to find whether or not an individual has a chattel mortgage registered against him will be able to see the register. If the Minister accepts that proposal the consequences will be far more sweeping than the powers contained in this Bill even as it stands. The protection to be provided by the amendment will not interefere with the normal commercial operations of recognised banks. It is designed to prevent recognised banks who have no dealings with a person from getting information about that person's creditworthiness. It is not designed to prevent recognised banks who have dealings with a person from getting information. My amendment should be accepted.
Is the amendment withdrawn?
I would have withdrawn the amendment only for what the Minister said about the EEC proposals.
Amendments Nos. 14, 15 and 16 have been ruled out of order.
I wish to challenge——
I am sorry Deputy, we cannot discuss amendments that have been ruled out of order.
Amendment No. 14 has been widely dealt with under amendment No. 9.
Sorry, Deputy, we cannot continue on this line. They have been ruled out of order by the Ceann Comhairle. The Deputy often refers to me as the Ceann Comhairle. Sometimes I wish I were the Ceann Comhairle from the financial point of view, if nothing else, but I have not received that promotion and those three amendments have been ruled out of order, so there is nothing I can do about it.
I am not satisfied with the ruling.
The Deputy is putting it on record that he is not satisfied with the rulings of the Ceann Comhairle.
Can I just explain my reason?
No. We can have no discussion on them. I presume the Ceann Comhairle has informed the Deputy.
Yes, he has.
That is fair enough.
I will not have an opportunity to reply to the Ceann Comhairle.
The Deputy can reply, there is nothing to stop him replying.
But it will be history at that stage.
We cannot discuss amendments that have been ruled out of order.
I wish to put it to the Leas-Cheann Comhairle that amendment No. 9 deals with the question of mortgages. What I was trying to do under this section was to provide that before a county registrar would have permission to enter on a farmer's land he would have to obtain a court order.
I am sorry Deputy, that finishes that. Amendments Nos. 14, 15 and 16 have been ruled out of order. Will Deputy Enright please move amendment No. 17?
This Bill should be amended in such a way as to allow that a court order must be obtained.
Will the Deputy please move amendment No. 17?
I move amendment No. 17:
In page 25, between lines 36 and 37, to insert the following:
"(4) The Corporation shall not demand a charge prior to or in preference to an existing charge or burden on the folio, where the said burden or charge creates rights relating to rights of residence, maintenance and support in favour of the father or mother of the borrower.".
I dealt with this matter extensively on Committee Stage of the Bill. I outlined my reasons for having this amendment inserted. With your permission, a Leas-Cheann Comhairle, I will outline the situation of a typical family farm in rural Ireland. Take a situation in which there is a father of 65 years whose son remains at home to help work the family farm. The situation arises then that the son decides to marry and to bring his wife to live in the family home. There is a family arrangement whereby the father who is the major owner agrees, with the consent of the mother, to transfer the farm to the son. The necessary papers are drawn up. In some cases there may be included provisions for certain financial sums but in the majority of cases no such provisions are inserted. Normally the provision is that for considerations of natural love and affection the father decides to transfer the farm to his son but the father and mother in order to protect their own interests usually have inserted in the conveyance certain rights, usually the right of residence in the dwelling house or in a specific section of it and also the right to maintenance by the son. These rights are registered on the folio in the Land Registry and they afford protection for the parents for their old age.
Should it transpire that the son, instead of attending to his duties on the farm, chose to spend his time on such pursuits as attending race meetings and drinking to excess, the rights included in the folio would prevent him from disposing of the family farm. However, the amendment is designed to cater for the vast majority of cases that work out satisfactorily for all parties concerned. I am thinking of a son who may be most diligent in regard to working the farm but who, in order to develop the farm further, may apply for a loan to the ACC. He may intend investing in an extensive way in dairying, for instance, and may seek a loan of up to £20,000. The local manager of the ACC will help with the application form which is then sent to Dublin where, ultimately, it arrives on the desk of the law agent in the ACC. He will discover that there are rights on the folio in favour of the parents of the applicant and, consequently, he will decide at that stage not to agree to the mortgage of the farm and will notify the applicant that in order to qualify for the loan it will be necessary for his parents to renounce their rights of residence, support and so on in favour of the ACC, thereby giving the corporation the first charge on the land certificate or title deeds.
The applicant tells his parents this and reminds them that he is being restricted in the further development of his farm first because of the lack of sufficient capital and, secondly, because of his inability to raise the loan other than under the conditions stipulated by the ACC regarding the parents renouncing their rights. The parents are now being asked to agree to release their charge in favour of the corporation and they are placed in the invidious position of having to make a choice between renouncing their rights and being the cause of preventing their son from expanding the holding. They know that they may be the ones to be the sufferers in the long run.
A decision to renounce their rights is likely to be satisfactory if the investment for which the loan is obtained proves successful but difficulties would arise if the applicant found himself in some difficulties after he had obtained the loan. For example, he might find that a sizeable number of his dairy herd suffered serious damage as a result of brucellosis and had to be got rid of. In such circumstances it might be very difficult to restock. The farmer is tied up with the ACC and may have great difficulty in meeting repayments and so on. He may find that he has no income for a year or two. If he continues to fall behind with his repayments to the ACC they may decide to call in the mortgage and the farm may have to be sold. In such circumstances the parents rights are whittled away completely.
There are two sides to this question. Irish farming has been developed consistently down through the years. There has been fantastic progress in our agriculture, particularly in the last four to seven years. The achievement in agriculture is something of which we can be proud, in comparison with the achievements of any farmers in the world. Irish agriculture has stood the test of time.
Agreed, but we are moving away from the amendment.
We have stood the test of time. Our procedures and methods of farming have proved satisfactory. The transfer of family farms has proved a workable and satisfactory arrangement in almost all cases. One reads articles in local and national papers, by Macra na Feirme, by the IFA and others, encouraging early transfer of the family farm by parents to a son or daughter who stays at home. It is a good thing that we should continue to have early transfer of the family farm from father to son. It is good for Irish agriculture that a young man should obtain the family farm at an early age rather than having it transferred to him when he is 35 or 40 years of age, at which stage a great deal of his initiative may have been dulled because of the fact that he has been playing second fiddle for so long. I would hope that the policy of transfer of family farms would continue.
Any restriction resulting in the curtailment of such transfers would be detrimental to traditions in agriculture. The Agricultural Credit Corporation in the majority of instances ask that the parent release in favour of them when getting a priority charge. It is in the mind of every father and mother when making a transfer of the family farm that they will be asked later to renounce their rights in favour of some financial institution such as the Agricultural Credit Corporation or a commercial bank. This causes worry because this is the only occasion when parents are asked to renounce their rights when applying for a loan. The vast majority of farmers obtain their credit facilities from the ACC. There-fore, under this Bill, the ACC should be granted power—in fact, they should be directed by this House on behalf of the farming community—to allow credit facilities to persons and to ensure that the parents' rights will be maintained as a first right and that the Agricultural Credit Corporation right will take second place.
To take the other side of the coin, I am certain that the Minister will be able to tell me that this would not be good banking practice or good practice for the Agricultural Credit Corporation to take a second charge and that this would be setting a precedent which would not be good for the standing of the ACC or that the ACC would be weakening their charges. I am quite confident that the Minister will be able to tell me in a few minutes from now that to have a provision in the Bill directing the ACC to grant a loan would mean that the ACC would be unable to lend as much money as otherwise they might, in other words that there would be a curtailment in the amount of credit facilities they could extend. This argument, while having a certain amount of merit, does not hold water. Such a provision in the Bill should not restrict the ACC in the amount of money they would lend to a farmer. I do not think it would affect it in any way. My reason for saying this is that the interest to which I refer is limited to the life expectancy of the father and mother. They are rights which pass away on the death of the parents. They are not rights which will remain in existence indefinitely. They are for a limited period. This shows that the ACC would be in a position to take a second charge in respect of their mortgage. There is no difficulty. The rights that I mention in the amendment remain on the folio, the rights of residence and so on. They are a first charge. The second charge would be the ACC charge and that will be written into the folio. It will give the security. It will be written into the land certificate and the title documents and it will be on the person's folio in the Land Registry. There will be no problem with regard to the security the ACC will have.
The ACC normally retain the land certificates or the title documents relating to the property of a borrower. It is standard practice that the ACC retain these title documents in the hands of the law agent in head office in Dublin. Every farmer is quite happy to agree to this and is satisfied with it. There are no problems. The persons involved are quite agreeable to this procedure and there are no quibbles or questions and there is no difficulty. The ACC have their charges registered in the folios. They retain possession of the land certificates.
I am hoping that by my pressing this amendment and having it accepted the ACC will be entitled to grant loan facilities and will be directed to grant such loans facilities. It will in no way impinge on the powers of the ACC to grant loan facilities.
These are highly important matters. We wish to continue to encourage parents to transfer their farms. This Bill must be seen to encourage farmers to transfer their farms at an early age. The one way of ensuring early transfer is to do exactly what I have specified in the amendment.
Deputy Enright has gone to great lengths to explain the position that obtains in practically every farm, big and small. He mentioned the age at which persons transfer their farms and the danger involved. There seems to be a slight contradiction. Deputy Enright wants the full loan that would be given if there were no charges on the place, without asking that the charge be taken off the folio. Deputy Fitzpatrick argued that we should not do that and that the ACC should not give loans to anyone who had a charge on the folio. I said that in such case very few loans would be given. In almost every case there is an agreement whereby parents have the right of residence and it is news to me that the ACC ask them to give away that right. No parent would dare sign away such a right. This was explained in rather too much detail by Deputy Enright, but everything he said was true. If we want to encourage people to sign over the land at a younger age we must see that the right of residence is not taken away.
I have relatives who have fairly high loans from the ACC and this has not been asked of the father and mother and would not be given. Young people could tell them that their place is in the local home or in a private home. I have not known of the ACC insisting that the folio be clear. Almost every folio has the type of commitment to parents which Deputy Enright mentioned. If the events described by Deputy Enright should occur and if the parents do not give their consent to remove the charge, the place could not be sold. The ACC are taking this chance. I do not know of anyone in my own area having to withdraw the charge. In the case of a charge against another borrower, the ACC insist that they must have the first charge. County councils insist on that, too, but not in the case of a father and mother. They will give a loan to a registered owner if the parents have a charge. I should like this matter to be clarified. I know people who have received loans from the ACC while their parents had the right of residence; the loan has been granted provided the ACC have the first charge. A bank or any other lending institution would not give the money in such a case. The ACC are caught if they allowed the charge to remain because they can never sell the place.
I understand that Deputy Enright wants the ACC to consider a second charge. Anyone with a second charge cannot sell without the consent of the first charge. I am in favour of what Deputy Enright is saying but how could the amendment be implemented? If the Minister accepts the amendment and the parents have the first charge and the ACC the second charge, how can the place be sold if the son fails on the loan?
Sell the place, but not the house.
Exactly. Can this be done?
It can be done.
At what cost? If I want to sign over a place to my son and I want the right of residence for myself and my wife, I will have to go to the bother of taking out the house.
Not until it comes to be sold.
I will be bringing in Deputy Bruton after questions.
I am very keen on this point. I am asked every day for advice about this, even though I am not a lawyer. I want to learn as much as possible about it so that I will not give the wrong advice. If a house is taken out, a second folio must be issued.