Housing (Miscellaneous Provisions) Bill, 1979: Committee Stage (Resumed).

Debate resumed on amendment No. 23:
In page 13, lines 37 to 54, to delete subsection (2) and to substitute the following subsection:
"(2) (a) Regulations for the purposes of this subsection may specify the loans to which this subsection applies, and the specification may relate to all loans or to loans that do not exceed a specified amount or to loans that are not less than a specified amount or to loans that do not exceed a specified amount and are not less than another specified amount.
(b) If and whenever regulations for the purposes of this subsection specifying the loans to which this subsection applies are in force, a loan so specified shall not be made by an assurance company, a bank, a building society, or other industrial or commercial organisation or a housing authority (hereinafter referred to as `the lender') in respect of a new house unless the person who made the application for the loan furnishes to the lender either a certificate in respect of the sale of the house, or a certificate of exemption in respect of the house, and the provisions of any regulations for the purposes of this subsection are complied with.
(c) A person who contravenes paragraph (b) of this subsection shall be guilty of an offence.".
—(Minister for the Environment).

As we mentioned to the Minister the language used in this Bill is difficult to understand and perhaps the Minister in the interval has got some of his officials to decipher it. Perhaps he will explain to the House what subsection (2) (a) means. It states:

(a) Regulations for the purposes of this subsection may specify the loans to which this subsection applies, and the specification may relate to all loans or to loans that do not exceed a specified amount or to loans that are not less than a specified amount or to loans that do not exceed a specified amount and are not less than another specified amount.

What is meant is that it can cover different situations with regard to loans of different amounts at different times.

I do not understand the phrase "loans that do not exceed a specified amount".

Say, £5,000.

It refers also to loans that are "not less than another specified amount".

Say, £20,000.

I am not sure what the Minister is trying to regulate.

One can pick one or two of them. It is not necessary to pick them all at the one time.

Evidently I am somewhat dull because it is not clear to me what is meant. Perhaps the Minister would give an example so that the House might understand what is meant.

A simple example is that by regulation one could say that loans up to £20,000 are subject to CRV and in six months' time there could be a different regulation.

That is what regulations are about. We should not have this kind of gobbledegook. I am still not sure what we are talking about and I do not think the Minister or his advisers are too sure what they are talking about. I still do not understand the subsection.

Whether we like or dislike the language of the parliamentary draftsman, what it amounts to is that you can specify loans up to £20,000 to have a CRV. It might be decided in six months' time that it should be £10,000 or £30,000 and this gives flexibility to vary the amount as necessary. In the end that is what it amounts to.

When we are legislating the language should be clearly understood. If parliamentarians cannot understand it, God help the unfortunate public and the people who have to operate the regulations. Perhaps the Minister in the future would get the parliamentary draftsman to use language that can be understood and which is meaningful. When a Bill is read through it should make sense. I am not trying to argue this point but I am still as wise as when I stood up to ask the Minister about the matter. I do not think that all of this is necessary.

The reference to "not less than" confuses me. If, for instance, the Minister is talking about a figure of £13,000 and if the builder produces a figure of £10,000, would he be refused a CRV because the £10,000 was less than the amount specified? As I see it, in the unlikely event of a builder being able to build cheap houses he would be refused a CRV. What is meant by the words "less than specified?"

Loans of up to £20,000. In respect of a loan of £20,000 it would be necessary to furnish a CRV. I appreciate the difficulty regarding the parliamentary drafting but the wording used is not peculiar to this Bill. The end result is that as well as specifying an amount there is provision for flexibility to vary that amount if experience should prove that necessary in, say, six months.

The late Deputy Seán Dunne referred to drafting of this kind as gobbledegook. We must accept that the phraseology used is such that it makes sense legally but there is an onus on all of us to ensure also that it makes sense to this House. I agree with Deputy O'Brien because I cannot see the sense of this wording. It appears to be merely a lot of verbiage. Perhaps sometime some Minister will decide that Bills are to be framed in ordinary English or Irish.

I can understand the necessity for an upper limit but I cannot understand the reason for a minimum limit because this means that if a house is too cheap in terms of the lower limit, a different set of conditions operate. Can the Minister explain the reason for this in plain English?

It could apply to all loans. I am giving examples now. Or it could apply to loans of less than £20,000 to loans of £5,000 or more or to loans that do not exceed £20,000 but which do exceed £5,000.

Would it not make sense to stop at all loans?

It may not be desirable to apply CRVs to all loans.

The Minister has said that they apply to all loans.

I was giving examples. Any of the alternatives mentioned could be included. That covers the part about more than the specified amount and less than another specified amount.

I am still confused about what is involved. However, basically what we are talking about in this amendment is that the Minister may make a regulation imposing a ceiling in respect of which CRVs can be obtained.

A ceiling for loans.

In other words, the Minister is telling lending agencies that they may lend only £13,000 but is the house type specified when talking in those terms?

No. It refers to a loan only.

Is the Minister not telling lending agencies that he is putting a ceiling of £20,000 on loans?

We are talking about CRVs and not about a limitation on the amount of loans. What we are saying is that in respect of loans of less than £20,000 CRVs must be obtained.

Is the Minister saying that somebody might get a loan for more than the value of the house? Is it the object of the provision to prevent that? A person buying a house has enough problems without having this additional proviso to cope with.

It must be tied in with the CRVs. Since last August 60 per cent of all loans from building societies were in the £13,000 band while 20 per cent were in the £13,000 to £16,000 band. Within those bands all the houses to which the loans apply have to be subject to CRVs. The purpose of the limitation is not to limit merely the amount of the loan but it is to provide that for loans greater than a certain amount CRVs are necessary.

(Cavan-Monaghan): There is not much point in spending all day on this. I am still not clear on it. The Minister said that the limit may relate to all loans.

I was giving examples.

(Cavan-Monaghan): But we think it could stop there. Regarding the reference to all loans that do not exceed a specified amount, if we take a figure of £20,000 the reference might be to loans of less than £20,000. The reference to loans that are not less than a specified amount is another way of saying loans of £20,000 or more. There is reference then to loans that do not exceed a specified amount or which are less than a specified amount. That is another way of saying that the proviso shall be in respect of loans of £20,000 but which do not exceed £50,000. Is that not so?

It could amount to that.

Amendment agreed to.

(Cavan-Monaghan): I move amendment No. 23a:

In page 14, subsection (3), line 11, after "certificate" to add:


(d) if the amount of the consideration for the site does not, in the opinion of the Minister, represent reasonable value".

Section 18 (3) provides:

The Minister shall not grant a certificate in respect of the sale of a house—

(a) if the amount of the consideration for the sale (in this section subsequently referred to as "the price") is greater than the greatest amount for which, in the opinion of the Minister, the house represents reasonable value, or

(b) if the price is greater than an amount standing prescribed for the time being under subsection (7) (g) of this section, or

(c) if the sale is completed before the date of the receipt by the Minister of an application for the certificate.

We propose to add in another paragraph providing that the Minister shall not grant a certificate in respect of the sale of a house if the amount of the consideration for the site does not, in the opinion of the Minister, represent reasonable value. We are convinced that you cannot regulate the price of houses satisfactorily unless you regulate the price of sites for houses. Just as you cannot make an omelette without breaking eggs, you cannot build houses without providing sites. Over the years no attempt has been made to regulate the price of sites or to control the cost of building land. While that is not the sole cause of the escalation of house prices, it is a very important and relevant ingredient.

This Bill, which has been introduced with a considerable amount of song and dance, and put forward as a remedy for the increase in the price of houses, does absolutely nothing about the price of land. While in the short term this amendment might make it more difficult in a way for people who are buying housing, in the medium term it would reduce the price of housing sites because the Minister, in deciding whether or not he would give a certificate of reasonable value, would have to see what the site cost. If it was bought by the developer or the builder he would know immediately whether it was a reasonable price to pay for a site, or whether it was an inflated price. If he found the land was bought by a small builder from what I would call a site baron, who had bought the land some years ago and let it lie there and appreciate in value, he might come to the conclusion that it was not reasonable value for money.

In the CRV system the Minister has taken upon himself the onerous task of deciding what is reasonable value for money. Why not go the whole hog and decide whether the site is reasonable value for money? If he did that, it would have some effect, and a very considerable effect in the medium term. When things settled down and people saw they would not get any price they held out for for building land, it would have a very important and stabilising effect on the price of building land and consequently on the price of houses.

The effect of this amendment would be to compel the Minister to refuse a CRV in any case where the cost of a site was not considered reasonable, even if the total price for the house including the site represented reasonable value. It is somewhat akin to part of amendment No. 21 which we debated yesterday which would require the Minister to give particular reasons for refusing CRVs. For that and other reasons I am not prepared to accept this amendment.

First, it would be against the concept of the house and site as one unit being considered reasonable value for a certain price. Even though a builder may have paid more than might be considered reasonable for the site he could, through economies and efficiency in his building operations, still sell the house at a reasonable price. This amendment would deprive him of a CRV because he paid too much for the site. Secondly, it would seek to impose an indirect control on the price of housing land. I do not regard the CRV system in itself as an appropriate means of controlling land prices.

This is far too big and too complex a question to be dealt with in an amendment of this nature. I informed the House recently that I am in the process of preparing a submission to the Government on the whole question of land prices. Acceptance of the amendment could affect the amount of building land becoming available and, consequently, the whole housing programme could be interrupted or interfered with.

Thirdly, it would affect the builder rather than the developer or land speculator who may be making the really big profits and, therefore, would not be tackling the problem at source. It would also add a new dimension to the operations of the CRV system in that all builders, irrespective of the prices proposed, would have to produce evidence of site cost. At present the majority of applicants succeed without having to give such evidence of site cost. On the whole it would complicate and slow up the whole process of getting CRVs. I regret I cannot accept the amendment.

While I accept that the Minister's argument has some validity, basically what we are talking about is trying to keep down the price of houses to as low a level as we can. Speculators are taking the cream off the market. A few years ago 65 per cent of the cost of a house was labour and materials. Now the figure is around 35 per cent. The whole emphasis has shifted on to the price of the site. I am glad to hear the Minister will be making some proposals about land. All Governments seem to fight shy and run away from that matter on constitutional or other grounds. It is a matter which has to be tackled.

The Minister thinks this amendment might restrict land from coming onto the market. Local authorities should play a more useful role in land acquisition: through the mechanism of CPOs, and so on, land can be made available providing the money is there. I do not accept that. When I decided to table this amendment I did not expect the Minister to accept it but the reply he has given is not valid. It is possible to measure the increased costs because cement, plastic piping, timber and other building materials rise in price almost daily while land is forced up in price by market forces. Unless we are prepared to control the market forces and the way land should be disposed of we are only paying lip service to keeping the cost of houses down.

I am sure the Minister is aware of many builders who purchased huge tracts of land some years ago and are now selling them off at exorbitant prices. Those people can make a lot more money by disposing of such land without taking on the responsibility of building houses. If we are anxious to control the price of land we must start at the site acquisition stage. If we are not prepared to impose some restrictions we are engaging in an exercise of political expediency rather than one of sincerity. I hope the submission the Minister intends putting before the Government will contain something meaningful to control land prices. We hear a lot about the Kenny report but various Governments were shy of it. If it is not possible to implement that report in full I am sure it must be possible to adopt certain sections of it.

It is not my intention to seek to impose hardships on those anxious to acquire sites but I am anxious to see land prices controlled and, if possible, kept within the area of the price of agricultural land. When a local authority develop land in an area all the land in the immediate vicinity rockets in price even though the owners do not carry out any work on it. Those who are anxious to provide a home for themselves must carry the brunt of that increase. It is an indictment of our society that we have allowed that terrible scandal to be perpetrated on home seekers. The amendment is intended to highlight this problem because the question of the control of land prices is not dealt with in the Bill. Once again it has been put on the long finger. This section afforded the Minister an opportunity to do something about controlling the price of land and, therefore, reduce the cost of housing. The Minister should remember that this is the only area in which we can play a meaningful role in curbing house prices. The fact that he has not done so makes me suspicious of the reasons for the CRVs. We must get at the source of the vast profits in house building, land. The profit margins of builders can be cut back while those who own the land can reap bigger rewards without any effort or risk. Unless we tackle the question of land prices we are paying humble lip-service to controlling housing prices.

I was not present when the amendment was moved and I did not hear everything Deputy Fitzpatrick had to say but I heard the Minister's reply. I was amused but saddened by the contradictory arguments he put forward trying to justify the decision not to accept this enabling amendment. The amendment does not ask the Minister to control the price of land. We are realistic enough to know the true colours of Fianna Fáil and be aware of the shrieks of horror of the supporters of that party if we asked the Minister to do that much. The amendment asks the Minister, in the context of this enabling legislation, to add this to the other provisions he has seen fit to take upon himself if the amount of the consideration for the site does not, in the opinion of the Minister, represent reasonable value. There are two perfect outs for the Minister in that. If the Minister is not prepared to do anything about the price of building land he should say so. I accept that the moneys going into the Fianna Fáil Party are so enormous that the difficulties in that regard are fantastic, but if the Minister is seeking enabling legislation so that he can put the mortgage manager of a building society to jail or fine him up to £10,000 if he does not comply with the economic strategy of the Government surely he can accept this amendment.

The Fine Gael amendment is merely asking the Minister, in taking into consideration the factors for a CRV, to have regard to the amount of the consideration for the site. He can exercise his opinion on that in terms of his opinion as to what is "value" and he can stretch the meaning of the word "reasonable". The amendment seeks to give the Minister some additional facility by way of enablement to operate this section. It must be remembered that this is the longest section in the Bill. It is total nonsense for the Minister to say that he is not going to do anything about land prices now because it is his intention to do something in the future. There is no reason why he cannot accept the amendment and activate it in terms of the regulations of the Department until such time as the land legislation is through. The Minister has already reassured the House, in relation to other sections, that the fact that he is moving a section does not mean he is going to activate it immediately. We spent a lot of time trying to find out what was meant in certain sections although it is clear that the regulations relating to those sections will not be activated for some time. For example, we dealt with a section that will enable a programme of inner city rehabilitation to take place. Therefore, the Minister's argument in this regard does not hold up. The amendment is an enabling one to take into account the cost of labour, materials, capital charges and the cost of the site. The Minister is running away from it.

I said last night that the building industry would be distorted if this legislation went through in its present form. One of the ways in which the distortion is likely to take place is that the bigger property companies in the house-building industry who have land banks will simply get out of the business of house building and will sell off the developed sites to smaller house builders who cannot afford to be as generous, who have to act as a consumer after-sales service organisation as well as builders. The small house builders will be squeezed between the understandable consumer demands for quality and value, and rising prices and costs and scarcity of labour in some areas. They will also be forced to pay an exorbitant site charge because the developer acquired the land, developed it and sold it. As Deputy O'Brien said, the value of the site bears no relation to anything other than the market forces of supply and demand. A lot of the capital required by these people, ripped off the backs of young house purchasers, financed by the building societies and subsidised by the tax-payer, will find its way into the coffers of a minority of the private sector in the building industry. This minority have shown in the past a marked capacity not to reinvest in this country. The Minister's evasion in this instance is effecting a potential loophole for housing capital to go through the CRV system, to be taken out for an unreasonably high site charge over which the Minister refuses to take control by rejecting this amendment, to find its way out of the economy or into unproductive areas.

The Minister yesterday morning refused to answer a simple question in relation to another matter and has demonstrated a great capacity for silence; he simply will not answer any questions which he finds difficult or embarrassing to answer, in the security that if we ring the bells, 84 Deputies will troop in and the matter will be resolved. It is not sufficient to justify this kind of legislation on the ground that it is down in black and white, and on the ground that if one is asked difficult questions one can call for a division and a section is passed. There is sufficient evidence now to suggest that the Government do not want to build more than 25,000 houses a year.

We should dispose of the amendment first and all these other matters can be raised on the section afterwards. The amendment only deals with one specific matter: the question of bringing the site into the CRVs.

I appreciate that. Before this amendment is rejected by the numerical superiority in the House it should be made clear that the Government who professed to have an interest in securing a home for everybody, and to be concerned about the application of the system of certificates of reasonable value, who professed to understand the building and the house building industry in particular, did not avail of the opportunity to take within a miscellaneous housing Bill an enabling section which would enable any future Minister to draft regulations in relation to the administration of the CRV system whereby he or she could have regard to the amount that would be paid for a site and if it was found to be not within reason, could reject it. The Minister argued that this amendment was not practicable because he was about to do something about land in the near future. That is a dishonest argument which does not stand up. The other reason that the Minister offered for rejecting this amendment was that this would require additional delays in processing CRVs, that that in turn would aggravate the situation and that the whole question of valuations is a difficult question.

I would remind the Minister that there is a semi-redundant office, called the office of valuations, which since derating, have far less to do than usual, and they would be in a position to assist on the question of valuations. This office employs qualified valuers who could do the job if the Department cannot do it. Certainly all the major local authorities employ valuers in a valuation section and they are in a position to offer an opinion in relation to what would be a reasonable value. Having worked with compulsory purchase legislation for many years each local authority has not only the staff but the expertise to deal with land valuations. The Minister is claiming despite this that resource facilities in administrative terms do not exist to implement this amendment, if it were accepted, and that this would aggravate the administration of the CRV and that because of that the amendment cannot be accepted. The Minister's arguments do not stand up and his first argument is patently dishonest.

What was the first one?

The first argument was that because the Minister was going to bring in legislation to deal with the price of land there was no need to accept this. It is just a question of evading one of the major causes of the increases in land prices and consequently one of the major causes in the increased price of houses.

During his contribution Deputy O'Brien said that a site now represents 65 per cent of the price of a typical house.

I did not say that.

That is what I understood the Deputy to say.

I said that 35 per cent represents materials and labour. There can be other charges as well.

If the materials and labour amounted to 35 per cent that leaves 65 per cent. Just to clarify this, let part of it be profit. In 1978 the average new house price in Dublin was £20,276. In the same year the typical price of a site for a house in the Dublin suburbs was £3,800 and in the new town areas such as Tallaght and Blanchardstown it was much less but greater in the cases of smaller developments in other areas. That was the average in the Dublin suburbs—£3,800, based on an extensive survey of building site costs.

The Kenny Report was mentioned on more than one occasion. I should make it clear that the report has been lying around since March 1973; between that date and June 1977 it has merely been collecting dust; absolutely nothing has been done about it. At least in the past two years something has happened in regard to it. I have received the report I commissioned from An Foras Forbartha. I have said already I am preparing proposals for submission to the Government. I have no intention of sitting around for four years——

Two of them have expired already.

——like the previous Government without doing anything about Judge Kenny and his report. Perhaps I may pick out just two of the four reasons I gave for not accepting this amendment. At present the price of a site does not have to be specified. The builder may very well have paid too much money for the site; he may, through good management and by carrying out his operation very effectively, be able to balance the extra cost and, in the overall picture of his submission, be entitled to a CRV. Another reason I gave is that if this amendment, as worded, were to be accepted it would affect the builder, particularly the small builder, not the big builder who may own a lot of land, or a speculator, who might sell small parcels to small builders, as has happened. I am sure Dublin Deputies are aware of this. People and firms who have had a lot of land over the past two years, instead of building houses on some of it, have been selling it off at enormous profit to small builders, very good people, who are prepared to build a small number of houses as they go along, not building in units of 500 or 600, but undertaking a nice little operation. They have been forced into paying big prices for these sites by the people who bought them previously and who were able to carry them because of their financial position and so on. Therefore if the amendment, as worded, were accepted they are the people who would be directly affected and who would be refused CRVs, not the big speculator or the person with a large bank of land. Therefore, I have no intention of hurting the small builder by accepting this amendment, as worded; I reiterate "as worded".

Listening to Deputy Quinn I could safely say that at least 12 times he used the phrase: "this is enabling the Minister". I regret to have to inform him that it is mandatory, not enabling, which he will find if he reads subsection (3) which commences with the words "The Minister shall not grant..." That is not enabling; that is mandatory and most of the Deputy's contribution revolved around that phrase he kept repeating. Perhaps he will now accept that it is mandatory.

Having said that, I would be prepared to consider making it an enabling amendment. If we are to do that I would point out also that I would have no intention of implementing it on the lines suggested in the original amendment, as worded, until such time as I have completed my undertaking with regard to making a submission to the Government and awaiting its outcome. I am prepared to consider making it an enabling measure in the interests of being able to utilise it another day.

The Chair might point out that we appear now to be getting into a full scale debate on land prices. The amendment is a fairly specific one, to do one thing only.

(Cavan-Monaghan): Listening to the Minister's second intervention in the debate on this amendment one would get the impression that he was satisfied with the price of land——

I am not satisfied.

(Cavan-Monaghan): ——that he does not regard the price of land as constituting a serious ingredient of the price of a house.

The Deputy has listened to me time and again in regard to the price of land.

(Cavan-Monaghan): He has said that the average price of a site in Dublin is about £3,000.

Last year, £3,800.

(Cavan-Monaghan): One might say that is £4,000, which is approximately 20 per cent of the price of a house. I take it that the Minister, in arriving at that average, was thinking of an estate where there are hundreds and hundreds of semidetached houses built, and averaging the whole thing up. Without going into the more expensive type of house, I am told that frequently the site represents approximately 40 per cent of the purchase price of a house. That is a very serious consideration.

My amendment would enable the Minister to influence the price of the site of a house without resorting to the Kenny report. When the Kenny report is spoken about there is always a suggestion that to do what it advocates might not be constitutional. I do not know whether or not that is correct. But there is nothing unconstitutional about my amendment because it does not seek to control the price of land. It gives the Minister the right to say that a house, the site of which costs too much should not be granted a loan. That will influence the price of building land, which is what we want to do. The Minister has said that my amendment, as worded—and he emphasised the words "as worded"——

As worded, within subsection (3).

(Cavan-Monaghan): ——would hit the small man. I do not agree with that. I think it would be in ease of the small man, would get at the man who bought the land a few years ago, who does not now want to build houses on it, is leaving it to appreciate rather than selling it off to the small builder because he would not get them to buy it from him at exorbitant prices. They and he would know that they would not get a CRV if he sold it to them at a fancy price. He would have to come down to earth and sell it at a reasonable price or build houses on it himself. Certainly that would be in the interests of people who want to buy houses and, in my opinion, also in the interests of the small builders.

In this section as drafted, virtually no regard is being had to the price of land for a house. The Minister gives as his reason that it would complicate matters, make things too difficult and lead to all sorts of problems. The Minister is not prepared to grasp the nettle. Yet his party are the people who spoke time and again about grasping the nettle. If a party with a majority of nearly 20 is not prepared to deal with difficult matters such as these, take difficult decisions like these, what are they there for; why did the people give them that majority? They are well equipped to grasp the nettle, to take difficult decisions, and I admit that this is a difficult one. Any section that deals with CRVs in connection with housebuilding and has no regard to the value of the site is only a sham, a cosmetic exercise, make-believe, because the site is a big part of the cost of a house and in many parts of the country outside Dublin it is a very serious element.

If the amendments, as drafted, were written into the section the Minister would be obliged to take it into consideration, and if he came to the conclusion that the site did not represent value for money he could not give a certificate of reasonable value. I would not be satisfied with the Minister's proposal to take it in as an enabling provision to be applied sometime in the distant future. It would be an improvement if he were to put into the subsection a paragraph saying that in deciding whether to grant a certificate of reasonable value the Minister would have regard to the cost of the site.

There is no reason why we should sit here as a parliament and do nothing about a situation in which people bought up land at low prices, some in doubtful circumstances, on the outskirts of this city some years ago, got planning permission but did nothing about it. They are selling this land to small builders and young married couples looking for houses at prices that are quite unconscionable. That is a disgrace. We would be doing much less than our duty if we did not give the Minister, and insist that he take power to have regard to the price paid by those people who knew the land would eventually be used for housebuilding. They are the speculators we want to catch. We do not have to violate the Constitution or the rights of private ownership. We can tell them that they may not bleed white young married couples on modest incomes who are looking for houses by selling this land to them at exorbitant prices.

This is a very worthwhile amendment. If the man in the street knew we were spending days discussing a Bill to control the price of houses, but that there was no mention of the cost of a site, he would think we were playing games.

There was talk about who was responsible for putting the dust on or taking it off the Kenny report, or binding it in leather, but that does not matter very much. We are here now and can do something about this, if we have the will to do it.

We are doing it.

(Cavan-Monaghan): The Minister has the power and the Deputies to enable him to do it. I am inviting him to do something tangible.

I want to say a few words about site costs under the CRV. First we will take developed sites. Where a builder supplies bona fide evidence of his actual site cost, it is normally accepted for CRV purposes. This does not mean that we are committed to allowing actual costs in all cases because first, a builder may have paid an unreasonably high price for the sites, and secondly, it is difficult sometimes to prove the certain bogus transactions involving the sale of sites between inter-related companies are not genuine, or even to detect such deeds is difficult at times. In either case only the reasonable cost is allowed.

With regard to current value, builders building larger schemes on land which they held for quite some time tend to claim on the basis of the current value of the land since this would normally be much higher than what they paid, even if we allow for holding charges and profit. In these cases we allow a reasonable value per acre for the area in question. This reasonable value is based on advice from the Valuation Office and on other information available to the relevant section in my Department, from our knowledge of individual transactions and from local authorities.

The third value is the replacement value. Some builders take this to mean some kind of future value. The CIF have been informed that replacement value cannot be allowed for CRV purposes, and rightly so, since it would be asking house purchasers to pay for future increases in land prices which would not be compatible with the concept of current reasonable value.

That information might enlighten Deputies as to the sense of fairness that can be involved with regard to taking land costs into consideration for CRVs. With regard to the Kenny report, I do not know how Opposition Deputies can keep referring to the lack of action in this area. This report has been lying around since March 1973 and nothing has been done about it. It is difficult to listen to the Opposition criticising this Government about this report—

(Cavan-Monaghan): I did not criticise the Minister.

I have been criticised. I have already outlined what I did with regard to this report, I am not prepared to accept this amendment.

(Cavan-Monaghan): Is the Minister prepared to introduce an amendment on Report Stage which would provide that he may have regard to the cost of the site?

No. I said I would be prepared to consider it in the light of its not being mandatory; it would be enabling.

(Cavan-Monaghan): We want to make this legislation as effective as possible. The Minister might put in another subsection saying that in considering an application for a CRV, the Minister may have regard to the cost of the site or something like that. It would achieve something.

It is not necessary to say that. As I have explained, we already have regard to the cost of the site.

(Cavan-Monaghan): That is not accepted. It is accepted if the applicant can convince the Minister that this was the best bargain he could make and that he could not get one cheaper. Then he will get a CRV. If something is written into this section in regard to the price of land it will provide a bargaining basis by the purchaser against the land buyer. That is what we should be trying to do here.

This section enables the Minister to administer the CRV system and requires him to do certain things, and he should be required to look at the price of land as a factor in the cost of housing in a way other than is being done at the moment. The Minister clearly is outlining the way the present CRV system is operating. We are talking about the way the new CRV scheme is to be operated under this legislation. As the subsection stands without including the amendment either in its present form or in some substantial form similar to the way it is at the moment, the whole question of site values is not to be taken into account whether it is the Minister or Department who are making the decision. I accept the point that the Minister made that the section is a mandatory one and I was wrong to use it as an enabling section. However, the words "opinion" and "reasonable" enable him to decide whether he wants to let market forces operate as he does at the moment, having sorted out those sections which seem obviously evasive and which attempt to conceal the cost of housing. The words allow him to decide either to allow the reasonable value as displayed by the market to prevail and therefore to grant the CRVs if the small builder to whom he refers simply produces the deeds of sale properly authorised and stamped, or alternatively, to refer to the new legislation to which he refers when it comes into effect. To that extent the subsection enables any Minister in law to operate the CRV system and to make specific references to the cost of land and of sites.

I cannot see why the Minister does not want to accept the amendment. The formula that Deputy Fitzpatrick put forward in the sense that he may have regard to this perhaps would be a compromise that would be acceptable to the Minister. I think that personally he is not opposed to this section and that his concern for the small builder is genuine. While his announcement would suggest that the small builder is going to suffer most as a result of this provision being put in, I would prefer to accept Deputy Fitzpatrick's assessment of it that the land barons will realise that there is an upward ceiling to the price and that they cannot go beyond a certain price.

The whole question of the control of land is complex and does not really fall within the ambit of this section. There is no simple way of dealing with it. Perhaps the Kenny approach was the most simplistic of all. It concerned simply new land and agricultural land and did not deal with the fundamental question of existing built-up land, whereas there are land prices of astronomical figures. However, we are not talking about Kenny, we are talking about this legislation and about obtaining CRVs for house purchases which I hope include the site. All that the Department and the Minister are being asked to consider is to include in section 18(3) a clause which will give the Minister the legal right to have regard to the price of the site separate from the price of the house.

We have made some progress in a number of these provisions in the last couple of days. The Minister has, first of all, listened to the points we have made and has met us in so far as a meeting is possible, and I appreciate that. In the context of what we discuss tonight there is a possible formula that could be found. On the assumption that there is no fundamental opposition from the Minister or the Minister of State, and if the land legislation goes through—and I wish the Minister the best in that—in future the application of the CRV can have regard to the site value. In subsection (3) we have (a), (b) and (c). There should be another one, 3(d) which would ensure that no well-paid lawyer acting on behalf of a large property company could go in and appeal against the CRV on the ground that the Act did not make specific reference to the question of site cost. We will not have this kind of housing Bill back in the House for about four or five years, the way that legislation is done in this House. This is our only opportunity. The Minister said on an earlier section that a lot of matters in relation to housing administration can be dealt with. That suspends all the arguments about the Constitution and the rights of private property and so on, and it introduces the elements of price control in the question of land. This opportunity should not be missed. I recognise that there are pressures on the Minister, but I suggest that if he can find a formula along the lines suggested it would be a good day's work in legislation in this House.

The Minister says that he cannot accept this amendment because it would be mandatory and would impose hardships on small builders. Of course he can bring it in. It is his Department who will decide what is good or bad value because they have the facts before them. As he has said that he is going to bring in some form of control on land, it will be already copper-fastened in the Bill. Then he can really act. In the meantime he can operate the CRV system and still have control. When the Minister says he cannot accept this it puts a little doubt in my mind about his overall sincerity about planning. By accepting the amendment he would demonstrate his sincerity and when he brings in his proposals on land control he will have everything copper-fastened here and people will not be able to run away from it. That is why I am a little worried as to why the Minister will not accept this amendment. He issues the CRVs and he controls the criteria governing them and there should be no trouble at this stage. His refusal to accept the amendment makes me a little suspicious.

The amendment highlights one of the major problems in house development, namely land prices. The Minister should see his way to accepting this amendment and having it enshrined in the legislation. When he brings in whatever ideas he has regarding land he will have his machinery built in hard and fast. He should accept the amendment and therby make things easier for himself at the end of the day.

To provide in the Bill that I should have regard to the cost of sites is not necessary because, as I have explained, I have regard to the cost of sites. I am prepared to consider amending the subsection to make it an enabling one taking the amendment into account, but I maintain the drafting should be left to us.

This will be done on Report Stage.

I am prepared to consider having it done on Report Stage.

Amendment, by leave, withdrawn.

I move amendment No. 24:

In page 14, between lines 11 and 12, after subsection (3), to insert the following subsection:

"(4) (a) Where the Minister decides under subsection (3) (a) of this section not to grant a certificate, he shall notify in writing the person who applied for such grant of his decision and the person may, within a period of 21 days beginning on the date of receipt by him of the notification, appeal to the Circuit Court against the decision and that Court may, on the hearing of the appeal, as it thinks proper, affirm the decision or direct the Minister to grant the certificate.

(b) Notice of an appeal under this section shall be given to the Minister and an officer of the Minister shall be entitled to appear and be heard on the hearing of the appeal.

(c) No appeal shall lie from a decision of the Circuit Court on an appeal under this subsection.".

The purpose of this amendment is to enable a person who is refused a CRV under subsection (3)(a) to appeal against the decision to the Circuit Court, which will be empowered either to confirm the refusal by the Minister or to direct him to grant the certificate. Because of the substantial amount of money which could be involved in the grant or refusal of a certificate and in view of the technical nature of submissions likely to be made by expert advisers to the appellant and the Minister, an appeal to the District Court would be inappropriate.

(Cavan-Monaghan): The Bill as introduced did not contain any provision for an appeal against the decision of the Minister in refusing an application for a CRV. Of course, that was entirely unacceptable to the building industry and to any fairminded person. To the extent that the Minister has introduced this amendment making provision for an appeal, it is an improvement. I would be one of the last people to say that an appeal to a court is not the best method of appealing against a decision with which the applicant is not satisfied. However, in this particular case I am satisfied that an appeal to the Circuit Court or to any other court which has a lot of business to attend to is entirely unsuitable. I will speak first about the machinery for bringing an appeal.

An appeal under this subsection would be an ordinary appeal to the Circuit Court. The dissatisfied builder would consult his solicitor. The solicitor, under present practice, would have to get the assistance of counsel, who would probably require an architect's or quantity surveyor's report in order to advise on the matter. When all that information was assembled he would settle the grounds on which the appeal would be based. We must bear in mind that the Minister, as the Bill stands, does not have to give reasons for the refusal of a certificate. He resisted an amendment on this point. The first thing any lawyer would tell his client would be to get the reasons for the refusal and, this being done, the matter would be considered and the appeal drawn up and lodged in the Circuit Court. I do not know whether the Minister would be expected to put in a defence. The appeal would be against his decision and he would be placed in the position of a respondent. Under present procedure the Minister would put in some sort of reply and then the appeal would be set down for hearing.

I am being extremely conservative in saying that it would take at least two months to get to that stage and probably much longer. At this time of year lawyers and architects might be on holiday and it could take until October or November to get the appeal set up. If everything were to progress quickly it would take anything between two and six months to get the appeal to the Circuit Court office.

In country areas the Circuit Court sits only two or three times a year and in many cases there are arrears. In Dublin, with the exception of holidays, it sits all year round; but I understand there are arrears and it would probably take a year or more between the setting down of the appeal and the date of hearing. Court cases and appeals have a happy knack of being adjourned from time to time. It will be seen that it might take anything up to two years to get the appeal heard and that is so unsatisfactory as to be useless and meaningless. A builder who wants to get on with his work, keep his workers in employment and build houses for people getting married cannot have that sort of delay.

I would be one of the last to object to an appeal to a judge. It is one of the fairest systems of litigation there is. That is not to say that all judges are infallible; they are quite fallible, but so is everybody else. A judge engaged in hearing these appeals would have to act as an arbitrator while retaining his Circuit Court status and judicial status under the Constitution and would have to be relieved of all the other civil and criminal work which might come before him. There are many precedents for this. Many years ago there were appeals under the Army Pensions Act by people who claimed they were entitled to an Old IRA pension. The judge was relieved of other duties and devoted himself full-time to the hearing of those appeals. He sat as an arbitrator in an informal way. In this case he would probably need the assistance of an assessor or two so that he could work expeditiously and informally. That is my suggestion.

The Minister's amendment is unworkable because it simply provides for an appeal to the Circuit Court with all the necessary formal procedures and the long delays which pressure of business in the court would involve. It is quite unacceptable to any sensible people. Anybody who is familiar with the working of courts knows that this would not work. He knows that, for example, since 1977 to date the price of houses in this city has doubled, or, if the Minister disagrees with that that they have gone up by 75 per cent, and there would be no sense in having an appeal now against an application for a CRV which was refused in 1977.

Does arbitration not work in that way?

(Cavan-Monaghan): If the judge has nothing else to do and is relieved of his other judicial functions the appeal could be held much quicker in an informal way.

The point I am making is that arbitration hearings often take place three and four years after the land has been taken over by local authorities and built on.

(Cavan-Monaghan): That is because the arbitrator has a long way to travel and has a lot of things to do and might not get there for a long time. If this appeal is to mean anything it will have to be done quickly. I have received some suggestions that the appeal should not be to a court but to some other body. The National Prices Commission has been suggested. One submission made to me said:

We suggest that the National Prices Commission is the most suitable organisation to deal with the people. The Minister's suggestion of a right of appeal to a court seems to be impracticable.

It certainly is. An appeal must be a meaningful one and it must be heard and disposed of quickly.

There is another shortcoming which I see in the amendment. It says: "and that court may on the hearing of the appeal as it thinks proper affirm the decision or direct the Minister to grant the certificate". That is a bit like regulations coming into the Dáil. The Dáil can either accept them or reject them, but cannot amend them. If the appeal is to be meaningful the appeal tribunal must have the right either to affirm the decision of the Minister to grant the certificate for the sum applied for by the applicant or to make a decision in between as otherwise it will not be a rehearing. If the subsection does not allow the appeal tribunal to do that it is not meaningful.

I do not believe that the Minister will convince anybody that an appeal to a court, as we understand it at the moment, is any use for the reasons I have given. There are great delays and circumstances will change. If circumstances did not change and even if prices did not vary between the date of the Minister's decision and the date of the hearing of the appeal so much time would be lost that the builders would be out of business, people would be unemployed and everybody would be frustrated.

I believe Deputy Fitzpatrick described proceedings in the Circuit Court very accurately. The House now realises that while a nominal appeal is being offered the effectiveness of it in real terms is far less than appears at first. The Minister should think of something like the appeals board. If a builder has a dispute with the Department on the question of the construction value and the cost of materials, labour or the site and it is a question relating principally to figures, the value of this and the value of that, I do not see why one has to go to the trouble, with all due respect to Deputy Fitzpatrick, of hiring a solicitor and hiring counsel, who in turn will have to hire a quantity surveyor. At the end of the day counsel will simply use the quantity surveyor's arguments to advance the case of his client in court. He will charge quite a considerable sum of money for the privilege.

We all know that the courts are overcrowded with legitimate legal cases. Now questions relating to certificates of reasonable value are being brought into the courts. This is unfair in view of the cost and is not the best option the Minister has. He has a far better model in the appeals board, who would be capable of dealing with this and have their own full-time staff. The Minister could have appointed extra members to that board. A High Court judge is the chairperson of the appeals board and the expertise on it could be reflected in the new appointees, ranging over the local authority people and technical people as well as representatives of the ordinary consumers. They are in as good a position, in terms of judgment, as a judge in a Circuit Court. They are more accessible because they are not confined to the sittings Deputy Fitzpatrick referred to. They have an independent secretariat so one has not to queue up in between all types of legal cases which have nothing to do with CRVs. They would develop an expertise very rapidly to enable them to process appeals quickly and efficiently.

If the Minister's object is to grant an efficient and just appeals procedure, some formula based on the appeals board, as distinct from one based on what is suggested in the amendment, would be a more equitable, just and efficient one. It would be less expensive, from the point of view of the builder and the house purchaser, for a person to exercise his or her option to appeal to the appeals board than to the Circuit Court. I expect that the Labour Party's response to this particular amendment comes late in the day and that there are implications in what I am suggesting which would need to be looked at. The Minister is genuinely offering in his amendment some process of appeal and because of the factors described by Deputy Fitzpatrick, which are common knowledge to people who are aware of the legal process, perhaps the Department who have successfully established the appeals board could see that those CRV appeals are heard by the appeals board. Everybody agrees, politicians as well as everybody else, that the appeals board is a success. The success of that model should encourage the Minister to look at the possibility of using an extended version of the appeals board to process appeals under the CRV system. They are dealing already in an area that is not far removed from the whole question of building since they are handling planning permission applications and it would be logical and sensible to move the two together.

However, the one great difference in relation to a planning appeal made to An Bord Pleanála as distinct from an appeal made in relation to a refusal for a CRV is that at least one knows what one is appealing against. In a refusal for planning permission the reasons for refusal are given. The normal process of lodging an appeal with An Bord Pleanála is to take the local authority's reasons for refusal, to attempt logically to refute them and to put them before the board.

Last evening the Minister rejected the suggestion that the reasons for refusal of a CRV be given and we are as much in the dark about the matter. We are engaged in a form of bureaucratic "spot the ball" where a person gets the refusal but he has to guess the reason. As I understand it, making a case in a Circuit Court appealing against a refusal for a CRV one would have to try to prove the house was of reasonable value. For argument's sake one would have to go through the 100 variable factors that constitute the cost of the house when the application may have been turned down because two out of the 100 factors were considered to be unreasonably valued or unreasonably priced. There might be no dispute about the other 98 factors but yet the time of the court, the quantity surveyor and the builder will be wasted in arguing the reasonable value of items over which there is no dispute.

If we are going to have an appeals procedure that actually functions there is even a greater reason to provide for the appellant some grounds on which an appeal can be constructed. The small builder cannot afford to have a delay in the CRV process and the last thing he can afford is to go to the Circuit Court and attempt to prove the reasonable value of the property he is offering for sale. Between the drafting of the Bill and the drafting of the amendment the Minister and the Government decided that some process of appeal was required. Perhaps the Minister will enlighten the House how the Government envisage the appeals procedure being implemented. Does he accept the factual criticism put forward by Deputy Fitzpatrick and myself?

We believe that where reasons for a refusal are not given a person should be entitled to appeal. In the Bill there was no section under which someone could appeal and because of pressure or representations the Minister decided to do something about the matter. In my opinion it was done in a typically lazy way.

It takes between a year and a year and a half to get a case to the Circuit Court. What the Minister is saying in this Bill is that people have no right to appeal. There is much lip service given to the right to appeal but nothing has been done about it. The situation is very serious. I do not know how the Minister can expect us to accept this kind of amendment. It is not worthy of him and the House does not deserve that kind of treatment.

Deputy Fitzpatrick and Deputy Quinn pointed out the costs that would be involved. If a builder is refused a CRV he has to calculate the costs involved in engaging counsel, an architect, a quantity surveyor and the other professional people who will get a reasonable fee for doing a job they should not have been asked to do. The builder adds all the costs and the total is astronomical. Therefore, he cuts back on the profit margin and sells the house at a loss rather than incur the expense and waste time.

A building society may give a loan approval subject to a CRV and the bank will accept that for bridging finance pending receipt of the CRV. If the builder's application is turned down there may be a wait of nine months to one year and all that time the person concerned is getting bridging finance from the bank. The whole business is pathetic.

The Minister should be honest about this matter. He should tell us openly that he does not want appeals, that he is not interested in them, that he is interested only in the kind of dictatorship that gives a decision and that is the end of the story. The person concerned is not given any explanation and is forced back to the Circuit Court. We know that this court is working at full capacity and that the waiting period for cases to be heard is very long. We are adding to the workload of the Circuit Court.

We accept the principle of an appeal system but we must reject this amendment. Deputy Fitzpatrick said that the matter might be referred to the National Prices Commission. I do not know if they would be capable of doing this work. Personally I have my doubts that they would be the competent people to deal with the matter. We should set up an appeals board consisting of people involved in the industry, the building societies and the Department with an independent chairperson. That is the only way to do the job fairly. Our amendment setting out the period of 21 days was rejected but we would expect the Minister to put forward something on similar lines. The appeals board should do their business in a speedy way because people would be involved in the expenditure of vast sums of money and those on bridging finance would be paying high interest rates. The Minister must reconsider this amendment. He must treat this legislation seriously.

An appeals board drawn from interested parties would have the confidence of interested parties and would perhaps keep down costs of counsel and so on because of the expertise that would be available on the board. They would be in a position to make fair and reasonable decisions. That is the only way that we will have a sense of fair play. In the case of a builder who was considered to be charging too much it would be no harm that he be taught a lesson but we must ensure that there is a fair deal for those builders who are honest and who are trying to provide houses at reasonable cost. In particular we must not put small builders out of business. The big builder is usually well established enough to survive but the situation of the small builder is different and the small man is the backbone of any industry. Therefore, I ask the Minister to withdraw this amendment and to table one for Report Stage on the lines we are suggesting. Such amendment would be welcomed within the industry and would be of benefit also to those people about whom we are very concerned—the house purchasers. If the Minister fails to comply with our request we must reject his amendment and put down one in our own names for Report Stage in the hope that in the meantime the Minister will have realised the sense of our proposal. We are not acting here on behalf of any vested interest. We are concerned that a sense of justice prevails for everyone concerned. What the Minister is proposing is neither fair nor workable. Perhaps it was never the intention that it would work.

Could anybody be as impartial as a Circuit Court judge? Regardless of what means we would decide on in relation to impartiality, we must admit that a court is the place for impartiality. I do not know whether Deputy O'Brien meant to say that the courts are not impartial.

I did not say that.

We gave a good deal of thought to this matter.

One would not have thought so.

The Deputies can be assured that we gave much thought to the matter and we decided finally that the most impartial way of dealing with the situation would be through the Circuit Court. I share Deputy Fitzpatrick's and other Deputies' concern about long delays. Perhaps there is a big queue so far as appeals are concerned but the number of applications that were refused in the final analysis is only 5 per cent. In some cases there were initial refusals but after further consideration and discussion a big percentage of those were allowed. The number of applications received in 1978, for example, was 1,356 and if the 5 per cent is consistent that would mean a total of only about 68 refusals in that year.

The point is that because of this legislation more people would find it necessary to apply for CRVs.

That is so. But I am giving the 1978 figure as an example. It will be seen then that the percentage is not as great as Deputies might think.

Having considered this matter carefully we regard what is proposed in the Bill as the best way of dealing with the situation, that is, by appointing a specific Circuit Court judge to deal with appeals. This point was raised, too, during the Second Reading debate. There was the question of having to go through all this paraphernalia regarding legal advice, perhaps engaging counsel—junior counsel rather than senior counsel presumably—and technical advisers but even in respect of an ordinary arbitration hearing where a local authority were concerned that procedure would still be followed.

Regarding the involvement of the planning board, because of the relationship of the board with my Department, I do not think their involvement would be the appropriate way to approach this matter. Their main function is really planning.

The NPC have been mentioned. The question of their involvement was considered when the Prices Bill was being prepared in 1970 but the suggestion was rejected in favour of the CRV system. This decision was backed by the Coalition in the meantime. It would not be possible to impose the same form of price control on new houses or flats as would be the case in respect of services or manufactured commodities with which the NPC are dealing every day. Any two houses are not necessarily identical in all respects. Site or sub-site conditions can vary from one site to another even within the same scheme of houses. There are also such factors as the cost of roads, water supply, sewerage, planning conditions and so on, which vary from scheme to scheme. The quantity and quality of fittings vary widely. Flats are considerably more varied and complex.

It was accepted by both sides that the National Prices Commission would not be the ideal way to approach it. This is the most impartial way to deal with the problem, by setting up a system of appeal or a mechanism for appealing against a refusal. I doubt that the delay will be as long as we might think, when we consider the small percentage which are finally refused. It would be my intention, in consultation with my colleague the Minister for Justice, to make every endeavour to have the hearings brought forward as quickly as possible. Deputy Fitzpatrick has more experience of courts than some of us, but it may be possible to help to speed them up. This is the fairest and most impartial system we can come up with after long discussions.

(Cavan-Monaghan): I did not really think the Minister would seek to justify or defend the appeal procedure he offers. I thought he put down the amendment in haste and under pressure from the building industry or others. I am amazed that he tries to defend it, because it cannot be defended. As an appeal procedure it is unworkable and useless. The Minister said only 5 per cent of the applications were finally turned down last year, amounting to 68.

Five per cent based on last year's applications amounted to 68.

(Cavan-Monaghan): Only about 30 per cent of the houses built came within the CRV net last year. Practically 100 per cent of them will now come within the net. The Minister has strengthened his machinery for dealing with them, and it is likely that more will be refused.

The Minister has not told us whether he will give reasons in the case of appeals. How can a person prepare his appeal successfully if he does not know what he is appealing against, if he does not know the grounds on which the Minister has refused his application for a CRV? If the points in dispute were isolated between the Minister and the applicant that would shorten and simplify the hearing of the appeal. If an applicant has to go into the appeal in blinkers, simply in the knowledge that his appeal was refused, he will have to start all over again from the very beginning and the appeal tribunal will have to scrutinise virtually every nail that goes into the house.

The system of appeal offered is absolutely absurd. Anyone will tell the Minister that it can take anything from six months to two years to have an appeal heard. There could be a reserved judgment at the end of it which would prolong it for another while. The Minister said that he will assign a judge to hear these appeals exclusively. That will be an improvement. There is nothing in the amendment about that and there is nothing in the section about it. It just says you can appeal to the Circuit Court.

I am not satisfied with it and I do not think anyone in the building industry will be satisfied with it, if he is refused and he knows he has to start again, with all the frustration of court proceedings. He will have to go down to the Four Courts and hang around with people who are up for pinching things, people having domestic squabbles resolved, and so on. That sort of approach does not appeal to a businessman. There will have to be a proper appeal system stripped of red tape and formal court procedure. The Minister says he has given this great consideration. I doubt that. When the Bill was introduced there was no provision for an appeal in it.

I said in my Second Stage speech that I would introduce it.

(Cavan-Monaghan): At some stage after the publication of the Bill when the representations started to come in to the Minister from interested people, he started to think about it. This appeal system is totally unacceptable. The planning board would be acceptable, or the prices commission would be acceptable, or a judge sitting as an arbitrator. That would take a great deal of formality out of it, and it would simplify it. The hearing would probably take place away from the Circuit Court, or the Four Courts, or the courts down the country, and it would be a more informal hearing. This appeal is as good as no appeal. It is the same as no appeal.

We have reached the stage of repetition now. The Deputy is repeating the same thing over and over again.

(Cavan-Monaghan): I would not say over and over again.

It sounds like that to the Chair.

(Cavan-Monaghan): We have to reply to the Minister's case. I appeal to the Minister to reconsider this matter between now and Report Stage next Tuesday, and introduce a helpful appeal system which would be acceptable to the building industry and house builders. If this CRV system which is now being extended to practically every house that will be built does not work, it will cause irreparable damage, a breakdown in the building trade, and unemployment. Housing will be more expensive instead of less expensive. They will be harder to get. It is up to us to try to find a system that will work.

Could I be clear on the Deputy's suggestions as alternatives?

(Cavan-Monaghan): I suggest an arbitration board with a Circuit Judge sitting as an arbitrator with two assessors. The judge would make the decisions and he would be advised by the assessors. It would be an informal hearing. The judge would iron out his own procedure. That is one. I am told some people would be satisfied with the prices commission. The Minister said that would not work but some people say it would not work. Deputy Quinn suggested the planning board.

The planning board have worked well since their establishment. They have inspired confidence. They act in a humane way and as a living tribunal, and not a bureaucratic institution. I know someone who built a house in what appeared to be a ridiculous place because he was misled by somebody who should not have misled him. The house was half built. A planning board without a heart would have told him to take it down again, but the board found a way out, knowing all the circumstances. In my view that board is working well. For that reason a section of that board would be acceptable to me or the prices commission or a judge acting as an arbitrator and two assessors.

Can we safely assume that Report Stage will be next Tuesday and not tonight?

(Cavan-Monaghan): The Minister has undertaken to do so many things that we could not take Report Stage tonight.

What we have undertaken to do so far could be dealt with tonight. Assuming that Report Stage will be taken next Tuesday, I am prepared to re-examine this. However, I am not making any formal commitment.

(Cavan-Monaghan): I made an effort to find out the extent of the backlog in the Circuit Court today and I was told that it is up to 12 months in the Dublin circuit.

I appreciate the concern of the Deputies.

I am pleased that the Minister intends having another look at this. It is important to have an appeals procedure because what is in existence at present is tantamount to not having an appeal. We hope the Minister will suggest new proposals on Report Stage.

Amendment, by leave, withdrawn.

I move amendment No. 25:

In page 14, lines 12 to 14, to delete subsection (4) and to insert the following subsection:

"( ) The Minister may, on the application in writing of a person to whom a certificate was granted under subsection (1) (a) of this section, or of any other person who appears to the Minister at the time of the application to be providing a house referred to in a certificate, revoke the certificate and grant another certificate in different terms from the first-mentioned certificate in respect of the sale to which the first-mentioned certificate related.".

As drafted, section 18 (4) could be interpreted as giving the Minister wide discretionary powers to revoke certificates of reasonable value. The power was designed mainly to facilitate applicants for CRVs who may, for example, wish to vary the price approved in an earlier certificate. The purpose of the amendment is to limit the Minister's power under the new subsection to revoke a CRV to cases where a person who has obtained a certificate subsequently requests him to revoke it and grant another certificate. The amendment will also facilitate an application by any other person providing the house in question—for instance, a person who has in the meantime acquired the sites in question and is providing houses for sale. Subsection (8) also provides for the revocation of CRVs where a person has supplied false or misleading information for or has otherwise contravened the terms of a CRV.

(Cavan-Monaghan): The only substantial difference is that the Minister can only revoke it on the application of some interested party?

(Cavan-Monaghan): As originally drafted it appeared that the Minister could for any or no reason and on his own initiative revoke it.

Amendment agreed to.

I move amendment No. 26:

In page 15, subsection (7), line 12, to delete "requirements in relation to".

This is a minor technical amendment. The words in question are superfluous having regard to the terms of the rest of paragraph (d).

Amendment agreed to.

I move amendment No. 27:

In page 16, subsection (12), line 25, after "section" to insert "(other than subsection (9))".

Section 18 (12), as drafted, is designed to ensure that where a person is charged with an offence under the section it shall be a defence for him to plead that the commission of the offence was due to the act or default of another person or to the reliance by the person charged on information supplied by another person or to other circumstances beyond his control and that he took all reasonable precautions to avoid the commission of the offence. It is not considered appropriate that such a plea should be admissible in the case of a person who forges CRVs or certificates of exemption or alters them with intent to deceive. The amendment is drafted accordingly.

It does not give an out to people who forge a certificate?

It does not give them a defence.

Amendment agreed to.

I move amendment No. 28:

In page 17, subsection (14) to delete lines 21 and 22 and to substitute the following definition:

"‘company" means a company within the meaning of section 2 of the Companies Act, 1963, or a company incorporated outside the State;".

The purpose of this technical amendment is to ensure that the provisions of section 18 will be applicable to all companies engaged in the provision of new houses for sale here irrespective of whether the company is registered in Ireland or outside the State. Section 352 of the Companies Act, 1963, requires that when a company establishes a place of business here it is obliged to register with the Registrar of Companies. A company incorporated outside the State and operating from, for example, semipermanent places of business such as mobile homes and so on, would come within the scope of the proposed amendment. The amendment makes the definition of "company" consistent with that in the Local Government (Planning and Development) Act, 1976.

(Cavan-Monaghan): The amendment seeks to add companies incorporated outside the State as well as those incorporated under the Companies Act.

Amendment agreed to.

I move amendment No. 29:

In page 17, subsection (14), to delete lines 23 and 24.

The amendment provides for the deletion of the definition "loan" in subsection (14). This definition was included in the Bill for the purpose of excluding bridging finance from the scope of section 18(2). It is now proposed to exclude the definition of "loan" for two reasons. Firstly, the Minister is legally advised that bridging loans could be excluded from the scope of subsection (2) having regard to the revised terms of subsection (2) (a) set out in amendment No. 23. Secondly, it is extremely difficult to draft the definition of "loan" in such a way that it will exclude bridging finance but not result in the primary purpose of section 18(2) being circumvented.

(Cavan-Monaghan): This means that the word “loan” will not be defined. Subsection (14) states:

"loan" shall not include moneys advanced for a period not exceeding three years;

The Minister is deleting the definition with the result that "loan" will be defined in accordance with the ordinary meaning of the word in ordinary language. Presumably, "loan" will then mean any lending of money for the purpose of houses, including bridging loans?

No. We want to include bridging loans.

(Cavan-Monaghan): It is certainly spreading the net very wide. That would mean that a person who only wanted a loan for a few months could not buy a house. Supposing I saw a house that suited me but did not want to sell my house or land until I was sure of having a house to move into, I would not be able to buy that house for £25,000 knowing full well that I could get a loan for that amount from a bank for six months, although I knew that I would be able to sell my farm or house within that time for £35,000 or £40,000. I would be unable to do that unless I got a certificate of reasonable value although I do not really need a loan but can-finance my own purchases when my assets are realised. That is not reasonable. That is interfering with people who can buy or build their own houses from their own resources, and it is entirely uncalled for.

The real purpose is to ensure that a bank would not give a bridging loan unless the house being bought had a CRV, where a CRV was required.

(Cavan-Monaghan): Why would they not give a bridging loan?

The bridging loan is usually only for a very short time, while one is waiting for a long term loan and this is to ensure that a bank when giving a bridging loan would comply with the stipulation that the house would have a CRV.

(Cavan-Monaghan): The Minister wants to prevent the bank from giving a bridging loan without a CRV?

(Cavan-Monaghan): In certain circumstances that is quite unreasonable. If I won the prize bonds and got £50,000 there is nothing to prevent me from buying a house for £40,000 if it suits me without referring to the Minister or anybody else.

The Deputy would not be looking for a CRV.

(Cavan-Monaghan): That is the point. There is nothing to prevent me from buying the house if I win the prize bonds. Instead of a prize bond, if I have 20 acres of land or a house that I know is worth £50,000 but I do not want to sell either of them until I have some place else to move into, and I enter a contract to buy a new house, I am in the very same position as the man with the £50,000 prize bond win, except that instead of a prize bond I have a house which I must convert into money. If the Minister carries this amendment and the contractor tells me that unless I sign the contract now the house will be gone, I will not be able to go into the bank and borrow £25,000 for three or six months until I sell my land, I will first have to get a certificate of reasonable value. That is an unreasonable intrusion into the activities of private people who are solvent and who do not want a loan in reality. If the Minister is afraid that this will be used as a device to circumvent, he will have to get some other way of getting around it other than by blocking legitimate transactions.

In relation to the instance mentioned by the Deputy of a man who has 20 acres of land or a house, who sees a house that suits him, but the house would be gone if he waited to sell his own land, who goes to the bank to get a loan in advance of selling his land, that man would not be involved in CRVs unless he was looking for the £1,000 grant or a loan, so there would be no restriction on the bank in giving him a loan any more than there would be on the bank in giving a loan to the farmer who wished to buy more land. I appreciate the Deputy's concern, but in the case mentioned by the Deputy the CRV would not be involved.

(Cavan-Monaghan): If the bank loaned me the £25,000 to pay for a new house they would technically be giving me a loan of £25,000 to buy a house, and they would have to get a CRV, would they not, because it would be a bank loan?

(Cavan-Monaghan): If I went into a bank and asked for a loan of £25,000 and they gave it to me that would be all right. But if I have only 20 acres and I want a loan of £25,000 they will want to know what I am going to do with it and if I do not tell them the whole story they will not give me the loan. I would have to say I wanted to buy a house and that I only wanted the loan for three months as I was going to sell my land to pay for the house. So I would technically be in the CRV net.

We are trying to close loopholes.

(Cavan-Monaghan): I saw that. As a matter of fact I had written opposite that definition “escape hatch” before the Minister ever introduced his amendment. However, in closing the gap in that way the Minister will affect legitimate transactions which should not be affected.

Will the Deputy agree to allow me to have another look at it on Report Stage?

(Cavan-Monaghan): Yes.

I will withdraw it, retaining the option to re-introduce it on Report Stage.

Amendment, by leave, withdrawn.
Question proposed: "That section 18, as amended, stand part of the Bill."

(Cavan-Monaghan): One could make a speech lasting two hours on section 18 which is a very large section and is a complete innovation. In relation to CRVs in general, the Minister is taking power under this section to apply the CRV system to the entire building industry and the effect of that may be dramatic. Prior to last August the CRV system applied to about 52 per cent of the houses built, but since the Minister related CRVs to borrowing the percentage dropped from 52 per cent to about 30 per cent. That meant that a lot of builders moved out of building CRV type houses, and it also meant that many people forgot about the £1,000 grant, built their houses and borrowed money from building societies and other people for houses that were not affected by the CRV. The big builders went out of that type of building and some of the small builders stayed in.

It is feared that this new system, if not reasonably operated and delays eliminated, will make it impossible for small builders to remain in the trade because of financial constraints, delays and so on. If the small builders are driven out and the big builders do not come back the housing industry will be in a sorry state, and there is every likelihood that that will happen. However, we shall talk about that when we come to section 20 which seems to take building societies and other institutions by the throat.

The possible effect of what we are now doing is mainly to nationalise the building trade. If that works, it is all right but, if it does not, it will be all wrong. After the intervention of the Minister last August we have seen the percentage of houses drop from 50 per cent to 30 per cent although private house building increased generally. If that pattern continues, if instead of moving into the more expensive type of house building, builders stop building houses or are driven out of housebuilding, then we shall be in a very bad state.

It is generally accepted that the policy of this Government is to restrict housing. We know from various papers, the Green Paper and the White Paper, that, so far as local authority housing is concerned, their policy is to cut back on housebuilding. Indeed, the Minister in this House in recent months has used such expressions as: we are building as many houses as the economy can afford, or as the industry can afford. He used that expression several times. I understand the Minister has said to the building societies that he proposes to confine housebuilding to not more than 25,000 a year.

I never said any such thing.

(Cavan-Monaghan): I am assured on reliable authority that either the Minister or his agents said to building societies that it was the policy of the Government to confine housebuilding to 25,000 per year. If the Minister denies that he can fight it out with somebody else but that is the information I have been given. That is a dangerous policy. Having regard to the expressions of the Minister in the House here from time to time that we are building as many houses as the industry or the economy can carry—I am not absolutely certain of the expression—I was not surprised to hear that it is Government policy to restrict housebuilding to 25,000 per year, that the Government believe that single people should not have houses——

When did I say that?

(Cavan-Monaghan): It is my information that the Minister's agents said that to the building societies—that single people need not have houses——

I never said that.

(Cavan-Monaghan): ——that elderly people should not have houses——

When? I never said that; who said it?

(Cavan-Monaghan): My information is that that is Government policy, and that is only a short step away from——

From where did that information emanate, or who are my agents?

(Cavan-Monaghan): The Minister's civil servants.

That was never said.

(Cavan-Monaghan): That is only a short step away from saying that childless couples should not have houses. The Minister did not say that and I am not suggesting for a moment that he did.

Oh, he did; he said it in regard to local authority houses.

Unmarried mothers could get them all right, but not childless couples.

That is the low-rise mortgage scheme.

That the Minister would not allow a local authority to build a house for a childless couple.

The Deputy is talking about the low-rise mortgage scheme.

No, I am not; I know more about the low-rise mortgage scheme than the Minister.

I know what I have done; I know what I have said; that refers to the low-rise mortgage scheme.

(Cavan-Monaghan): As a matter of fact the Minister said this, or something like it in a Second Reading speech—that, for example, from time to time it is necessary to take steps to reconcile the anticipated mortgage level for new houses with the financial needs of the national housing programme. We know what is the Minister's target because that target was given to the building societies as being 25,000 houses per year.

That is not so. It is obvious that somebody from the building societies made that allegation, but that is not so.

(Cavan-Monaghan): The Minister can deny that—

It is true to say that there were 25,400-odd houses built last year.

(Cavan-Monaghan):——that is the Government's target; that the Government believe that single and elderly people do not necessarily have to have houses.

If the Deputy refers to the White Paper of last year he will see the target.

(Cavan-Monaghan): That is a dangerous antisocial policy.

It is not right; that is the point I want to make.

The Chair might intervene to point out that we are on section 18.

(Cavan-Monaghan): If the Chair would intervene over on that side of the House and get me a peaceful audience I should be much obliged.

The Deputy will continue without interruption provided he is relevant.

(Cavan-Monaghan): I believe this CRV system could be operated in such a way as to implement this Government policy of restricting housebuilding. I do not think that should be done because it is antisocial and is not in the interests of the economy or the country generally. I know from the White Paper that the Minister believes that local authority housing should be cut back but I did not know until recently that they had a similar policy in regard to the private sector.

I tried my best, through an amendment here, to ensure that the Minister, in refusing a certificate of reasonable value, would give his reasons to the applicant. He has resisted that, and, as the Bill now stands, the Minister may refuse a certificate without giving any reason. He can keep an application on his desk for six months or 12 months without dealing with it, and there is nothing anybody can do about it. I am against that. It is a great pity the Minister did not accept the amendment obliging him to give reasons for his refusal. I say to him now, when he is considering a different form of appeal, that he should write into the Bill that he would give his reasons because, otherwise, it will be impossible to proceed with an appeal.

We had a discussion today about sites, something about which the Minister will think between now and Report Stage. I strongly urge on him that he take authority in the section to take into account the value of the site because that is basic to the building of a house. I notice that in subsection (3) it is said that the Minister shall not grant a certificate in respect of the sale of a house if the sale is completed before the date of the receipt by the Minister of an application for the certificate. I take it that means that the sale is not completed, the deeds handed over and the money paid; that it does not mean that a contract has not been signed. I take it a person can enter into a contract and then apply for a certificate of reasonable value. As a solicitor with some experience in conveyancing, I would take the expression "sale completed" to mean that the sale was completed, the house paid for and the deed handed over.

There are very heavy penalties provided in this measure for people who are guilty of offences under it. A person may be fined up to £10,000. Offences are created which apply to lenders and purchasers. They could be very serious but on the other hand in certain circumstances they might not be so serious and I am sure the court will have regard to these matters when adjudicating on them.

Section 18 (12) (b) states:

If in any case the defence provided by paragraph (a)——

——that is, the defence of saying that the commission of the offence was due to a mistake or to the act or default of another person——

——of this subsection involves the allegation that the commission of the offence was due to the act or default of another person or to reliance on information supplied by another person, the person charged shall not, without leave of the court, be entitled to rely on that defence unless, not less than seven clear days before the hearing, he has served on the prosecutor a notice in writing giving such information identifying or assisting in the identification of that other person as was then in his possession.

As far as I know this is a complete departure from the established principle of criminal law. There has been thinking abroad for quite a considerable time that when an accused person pleads an alibi he should give particulars of that alibi to the prosecutor a certain time before the case is heard, but that is not the law at the moment. If the criminal law is to be changed, in my opinion, it should not be changed piecemeal. It should not be changed in relation to one offence without creating it right across the board.

The Minister may be able to tell me whether the criminal law has been changed but I do not think it has. In criminal prosecutions at the moment the accused person can go into the witness box and his counsel can make an alibi on the hearing when his defence is open for the first time. He need not have given any particulars of that alibi to the prosecution. If this is going to be changed it should be changed right across the board because it is wrong to change fundamental principles of criminal law piecemeal. If I am up to date with my criminal law, this is a new departure and an attempt to change a fundamental principle in criminal law piecemeal. I am against that. I will put down an amendment on Report Stage to delete paragraph (b).

When I read this section I saw that the definition of "loan" provided a loophole in the Bill. I wrote opposite it "escape hatch" because I thought it could be used to get outside the CRV system. The Minister proposed to close the gap by simply removing the definition of "loan". By doing that he interfered with perfectly legitimate transactions of bridging loans, not from a bank or a building society, but where it was simply a temporary loan until a person could sell his house or his land or even have his money transferred from another country. That is not the Minister's intention. When he has another look at this he will find a way of closing that loophole without imposing hardship on perfectly legitimate transactions by individuals who are in no way concerned with the long-term loan properly so called. What the Minister wants to do here is to ensure that all long-term loans, if they are for three years and extended to six and so on, will not be permitted. If we accept the CRV system, which I do not as it is here, then the Minister is right, but in closing that loophole he cannot be allowed to intrude on the private transactions of individuals who are able to finance their own house purchasing or house building without resorting to lending agencies, other than for a very short, temporary period.

As I said, one could make a very long speech about this section. We have done our best to deal with this in Committee by way of amendment. I have now given my views on the section, and we will have an opportunity of discussing the effects of CRVs as related to lending for houses when we come to section 20.

The House is to be commended on the progress made on this section. The Minister proposes to be reasonable about some of the points and that is the way legislation could be carried out. I am a great believer in discussing matters across the House and sensible views, no matter from which side of the House they come, should be accepted and an effort made to try to meet them.

What I am not very happy about is the question of the CRVs. I believe there will be the greatest difficulty in operating the new CRV proposals. Staffing problems will be very great. Deputy Fitzpatrick is quite correct when he talks about the fact that we have gone completely out of building normally priced houses. The type of houses being built now are what were formerly referred to as luxury houses. A large number of people have gone into luxury type houses. One of the main reasons why the prices of houses has gone up is that the smaller type houses are not being built and the demand for them cannot be met.

With regard to the CRVs, it was always difficult to get contractors to display their price on the site, as they are bound to do by law. I harried the officials in an effort to get the builders to do that. There are hundreds of sites throughout this country where a price may or may not be displayed, where the sale terms are advertised and where the CRV is ignored completely. That is happening now. What is likely to happen when this legislation goes into operation? The Minister is piling up a lot of trouble for himself and for the building industry. The net result of the passing of this Act will be that the situation in the building industry will be chaotic. That is not the intention of the Minister or his officials who advised him. I ask him to be careful about what he does before the next stage. I hope he will consider the points raised in this House.

Deputy Fitzpatrick has referred, rightly, to the question of the loan and the limits on loans because of the CRV being necessary for the purpose of getting a loan. The fellow who has a farm which might possibly be sold and from which he could raise the £20,000 or £25,000 can therefore get a loan from a bank. It is proposed to consider the covering of that situation so that it will not be interfered with. Many people have not got farms or property but they need houses badly and their jobs will not enable them to pay for houses. They cannot raise the necessary capital unless they borrow it. Now further obstacles are being put in the way of these people by the Department because of the CRV regulation. That is wrong. It is a mistake to make it more and more difficult for people to build houses for themselves or to have houses built for them. It is quite common for a scheme of houses to be prepared and then the houses are bespoke, as was done with other things long ago. People come along and choose the house they want and the CRV may not be obtained.

If that is done under the legislation as proposed there may be a legal difficulty. The Minister refers to the date on which a person bought a local authority house as the date on which the house was vested in him, not the day on which he paid the money. This evening the Minister told Deputy Fitzpatrick that what he was talking about with regard to these houses is when the person becomes the owner of the house and, if ownership of the house is completed before the CRV is produced, then there is an offence. That sort of thing is a bit too tricky for the ordinary person. If I am wrong I would like the Minister to point out where I am wrong. However, if we go by what he said the other evening, a person becomes the owner of a house when he indicates that he is purchasing the house. Now he does not become the owner until the last deed is signed and the documents and money are handed over. Quite innocent people who have no intention of doing anything except purchasing a house for themselves and their family will find themselves committing an offence under this Bill. I hope the Minister will indicate what he means about this.

This section deals with CRVs, their implementation and the regulations for the operation of them. We on this side of the House have said throughout the debate that we are in favour of CRVs because we feel that they are a form of consumer protection, and that is a help.

We are all in favour of CRVs.

While we are critical of this section, we are not critical of CRVs. However, with the amount of legislation and regulation that the Minister is imposing on the industry, one would get the impression, not that he is building 25,000 houses, but that he is trying to have a stranglehold on building and development and that the more impediments he can put in the way the easier that will be for him. This is the whole basis of this legislation. We have argued out a number of the sections and the amendments which the Minister put down. He is going to look at some of them again. As Deputy Tully has said, I hope that he will look at the whole legislation between now and Report Stage and that he will be fully satisfied that nothing in this section will impede the building industry from playing the very important and useful role that it is playing, has played and we hope it will continue to play in the future.

A large number of builders, particularly those who are in the industry in a small way, are very fearful that they will not be able to stay in business if the type of restrictions being imposed are implemented fully. This is regrettable. The small builder and developer is the backbone of the industry and without him we will not develop the housing programme. The Government tend to talk about the market force prevailing and the free society. This section would indicate the very opposite, that the Government now want to take, technically, complete control of the building industry without having to finance it or to carry the responsibility of it. That is unjust and unfair. The building industry has always been the backbone of employment in this country. When that industry is going well, employment is going well. That was the kind of criteria that we had. However, the builders—I am not talking about the big builders—are certainly fearful that they may have to go out of business if these measures are brought into force. If they are brought into force and are seen not to work properly, then it is important that the Minister take the necessary action to annul the various measures which he feels are upsetting the orderly development of the industry.

Both this section and section 20 are deliberate attempts by the Government to impose their will on the industry, to stragle it and to prevent it from developing. That is quite obvious. When they set a target for development, that is dangerous. It should operate on a supply and demand basis. If we put restrictions on development the law of supply and demand will bring about much higher prices. A scarcity will cause prices to rise, and it seems that the Government want to control the number of houses which will be built in the future because of financial constraints. I doubt if this is the policy of the Minister for the Environment; it is much more likely to be the policy laid down by the Minister for Finance or the Minister for Economic Planning and Development, people who would not be aware of housing problems.

I am afraid that the building industry, particularly the housing sector, will run into trouble within a very short time because of the rigid conditions being imposed on both the building and lending areas. There was nothing to curtail land prices until we put down an amendment.

The Minister said there was a shortage of trained staff to deal with applications for CRVs. I believe the Minister refused to accept the amendment providing for a decision on these applications within 21 days because he knows that his Department will be unable to cope with the large number of applications. There will be chaos and builders will go bankrupt. They will not be able to dispose of houses unless they have CRVs and undue delays will cause costs to rise in some way. If a builder does not make a profit he very quickly goes to the wall. The matter of CRVs could have been dealt with in a simpler way which would have had the effect of keeping prices down as much as possible. Instead, there are many constraints here which will have the effect of increasing prices. Costs are increasing rapidly in the housing sector and delays will tend to increase them further, thus defeating the aim of giving people reasonable value. That is why we are so critical of this section.

The Minister and the Government are trying to take hold of the building industry by a backdoor method. If they want to nationalise the industry they should say so, though it seems they want control without responsibility. These measures will have the effect of restricting the number of houses being built, and this appears to be Government policy. Statements on housing policy in the White Paper and those made by Ministers clearly indicate that they are anxious for a cutback. It is difficult to force such a cutback per se so they have brought in legislation which will make conditions so miserable that people will be driven out of the building industry. There is much validity in this point. Builders are to be strangled by red tape and threats of large fines, and that is not the way to encourage them.

When this Government came into office one area of potential employment was the building industry and they stated their intention to expand and develop it. Now it is quite clear that they wish to restrict the housing sector in a mean way by forcing people out of business. Houses will become scarce and as a result prices will rise. This is a most unsatisfactory state of affairs.

Section 20 will also impose hardship on intending purchasers which should not be allowed. The Minister is giving himself the right to tell building societies how much they can lend on a house. The people who have to borrow money will not have the difference between the cost of the house and the loan and therefore will not be in a position to buy.

A lot was said on section 18 when we were discussing the amendments. I appreciate that the Minister has seen fit in relation to two amendments to give an undertaking to the House, without prejudice, to look at those amendments and to come back to us on Report Stage. That is a response to reasonable argument on Committee Stage and I welcome it. One of those two amendments referred to the cost of the site as an element in the consideration of the CRV and the other relates to the system of appeal that is open to somebody who is denied a CRV.

I would like, in putting forward my arguments against this section, to look at what the Minister said on 27 June last when he introduced this Bill. He stated in Volume 315, column 1115:

To sum up, I think that section 18 will provide a comprehensive statutory framework for the operation of a form of control on the price of new houses and flats which benefit from State funds or which are financed by mortgages available from limited resources. The section attempts to strike a fair balance between the interest of the public authorities, the householder, the builder and lending agencies.

I do not believe anybody on this side of the House, especially Members of the Labour Party, have any argument whatsoever with the objectives defined in that quotation I have given from the Minister's speech. The reasonable objective of section 18 has been explicitly supported by us. We have said that the principle of the CRV has not been or will not be in question as far as we are concerned but that, subject to the two amendments to which I referred, the method of administration and assessment as set out in the amended section will not reach the objectives which the Minister set out in the quotation I have just given.

I do not believe it is the Minister's intention to screw up the building industry or to cause the kind of difficulties that have been represented to us. The Minister can readily understand that the building industry do not come to the Labour Party to seek protection. It is a mistake when talking about the building industry to think that it is a sectional interest within the community controlled by a minority of people. There are vast numbers of craftsmen and their families who depend on the vitality of that industry for their livelihood. The house building section is the largest part of that industry. Those are people removed from this House, from administration and from other stages of consideration of those matters whether in the National Prices Commission or in the appeals board. Those people are expressing concern in very real terms. Their concern is that the CRV system, as administered, does not work satisfactorily. It only applies to approximately 30 per cent of the total number of houses constructed. It will now effectively extend to 100 per cent of the houses constructed.

The system of administration has not been significantly modified by the Minister in his approach to the various amendments put down to section 18. The basic reservation expressed by the company whose submission I read out yesterday claimed among other things, that the refusal of the Department to give the reasons for their refusal of an application for a CRV made it almost impossible for a builder to calculate within reason in terms of time, programme and the rest of it what the prospects were and where he was in relation to organising his finance and sales and, consequently, organising his economic viability.

I know that this section has been dealt with by the Minister, by Deputy Fitzpatrick and by my colleague, Deputy Tully. I prefer to deal with what I consider is the major objection to section 18 as far, as the Labour Party are concerned. We have yet to get sufficient reassurance from the Minister that there is not a state of war between him and the CIF, that the industry is not concerned with the implementation of this section, that there will be no distortion in the housing market as a component of the building industry. All of my comments are made in the context of a housing strategy with which the Labour Party fundamentally disagree. We fundamentally disagree with the way the Government are pursuing housing objectives at the moment. It is wrong, economically and socially; and in planning and environmental terms, to say nothing about the energy conservation content, it is wrong as well.

The Minister has the majority to pursue a housing strategy. While I disagree with that strategy I would argue that whatever strategy he elects to pursue should at least be pursued with professional and administrative expertise and competence. The CIF cannot be described exactly as Marxist-Leninist at the best of times. After the pronouncements which came from the Rotary Club in Bray last night they could hardly qualify for inclusion in the selected works of Left Wing thinking. When I see the CIF, with their present leadership, expressing in a press statement major reservations about the applications of the CRV, when I hear the Minister refuting in the Second Stage debate that there are a number of misleading comments in that press statement, as he did on 27 June last, and when they in turn state they have nothing to add, when they place advertisements in the newspapers that they are calling meetings to discuss the implications of the Bill, I am fearful that the selected housing strategy, with which the Labour Party fundamentally disagree, is not going to be successful. Failure in housing is to the advantage of nobody, and certainly it is not to the advantage of people who are forced into trying to buy a house in the private sector because of a conscious political strategy on behalf of the Government.

A claim was made by the building societies in a submission to me and which was also submitted to the Minister, according to the covering note I received from Mr. James Malone, secretary of the Irish Building Societies' Association. It is a very serious claim and I should like to put it on the record of the House. I understand that part of it has already been put on the record of the House, but in case there is any doubt about it I shall read it into the record now. It is dated 27 June, the day the Minister spoke, and it reads as follows:

The Association was informed at a meeting on 17 May 1979 attended by officials of the Departments of the Environment, Finance and Economic Planning and Development that the societies had too much money and that the Government had decided, following an independent research, that the number of houses to be built each year should not exceed 25,000 houses.

That is an extraordinarily serious charge for any organisation to make and I do not think that the Building Societies' Association made that charge lightly.

The Minister denies that statement.

That is the building societies' statement.

We appear to have had this two or three times already.

I do not think so.

Certainly I have listened to it a few times already. We are still on section 18. At this stage it is the Deputies' own time but the Chair has some responsibility to keep the debate on the section.

I am trying to find reasons why the Minister refused to accede to a system of administering the CRVs that will allay some of the fears of the private sector building industry so that they can continue to pursue their objectives of building, in the words of their director, "as much houses as could be possible in the private sector" and, as we heard in the words of the director on the radio this morning, "reduce State involvement to virtually zero if that were possible". Therefore, one would naturally boost the private sector. The parties to do this job in the construction industry will be the CIF and the private sector, but yet there is this state of war between the two of them. The Minister has proved quite reasonable and amenable in this House and I am trying to understand why he insists on refusing to accept a reasonable amendment that would make the administration of the CRV system more in line with that of the planning permission procedure, that would make it more acceptable to the building industry in general and specifically to the organisation whose submission to me I read out in the House yesterday. Among other things it called for itemisation in the case of refusals of CRVs. When we discussed the section relating to appeals to the Circuit Court I made a point in relation to the implications of making an appeal when a person does not know the reasons for refusal. I am pleased to note yet again that the Minister undertook to look at the whole matter.

The reason I deliberately brought this statement into this debate is because it is a serious charge put into a formal submission to political representatives—I know the submission went to the three parties. The Irish Building Societies' Association have assets in excess of £700 million and they do not make allegations lightly. They do not go to a meeting with three Government Departments without at least two or three of their people there so that they know exactly what happened. I am not for a moment suggesting that anyone in the Custom House claims that 25,000 houses was enough, that there should be no more each year, that the building societies had too much money and that they should not get any more. I do not for a moment suggest that that claim came from the Minister himself, from the Minister of State or from the Custom House. But in the total madness of that claim I cannot help but recognise the dulcet tones either of the Minister for Finance or of the Minister for Economic Planning and Development. I should like the Minister to take this opportunity at least to cover himself and his Department and, consequently, every Fianna Fáil councillor and to state, that under a Fianna Fáil administration nobody in the Department of the Environment claimed that 25,000 houses per annum were enough or that the building societies had too much money. The European elections were bad enough but if the Government go into the next election with that around their neck, even a seasoned campaigner like Deputy Killilea will have more than enough to do——

As I have pointed out already, the Deputies are on their own time but the House should stay on the section.

The Opposition are anxious to avoid having a vote.

If we are going to continue in this way I will have to put the section. I realise the Deputies are on their own time now but it is not fair to the Chair to deal with the matter in this way.

I understand the Chair's difficulties in this matter. Indeed, I understand my own. To make a claim like this one must at least try to develop the argument for it.

The Chair is simply pointing out that we have been four hours on this section, that there has been repetition after repetition.

It is a far-reaching section.

I accept that, but it does not give permission to repeat the arguments over and over again and to make Second Stage speeches.

I do not wish to argue with the Chair. There is an argument against a Deputy repeating himself but is there an argument against a Deputy elaborating on or repeating an argument made by somebody else?

The argument is against a Deputy repeating himself. Certainly there is a very big argument against a Deputy making a Second Stage speech on a section. We are on Committee Stage and we should just tease out matters in the sections. It is completely out of character to make long speeches on Committee Stage. That is what we have been having for the past three or four hours.

I will try to co-operate as much as I can with the Chair. It is in my interest to do so.

The section is a long one and there have been a number of amendments to it. To sum up, I cannot think of any reason for the Government to pursue this strategy and for not giving reasons for refusing CR Vs. I have either listened to or read all the arguments put forward by the Minister in this regard but I remain unconvinced. The Department, and the Minister who is the one responsible politically in this House, have sufficient understanding of the industry and have been subject to enough pressure to understand the points which have been made. In the circumstances one is forced to look elsewhere for reasons for section 18 being pursued. To that end I, as a political representative here, must bring to the attention of the House the very serious charge made in that submission of the Irish Building Societies' Association and ask the Minister to ensure that so far as he and his officials are concerned—and the officials were referred to specifically in the submission—the charge cannot justifiably be made.

As the House is aware, in the various Government Green Papers and White Papers in respect of housing achievements there was reference to a range of between 21,000 and 28,000 per annum, but it seems that that range is being reduced by 3,000. Because of its length, if nothing else, this section merits more attention than any other but there may be some desire to shift housing funds from the house-building sector to other areas where the economic experts within the Government think these funds could be used more profitably.

I am inviting the Minister to refute clearly, if possible, the submission made by the Irish Building Societies' Association in relation to that charge and also, now that he has an amended section before him and since he has rightly offered to consider a number of points for Report Stage, to reconsider the whole question of not giving reasons for the refusal of CRVs.

(Cavan-Monaghan): When dealing with section 18 I omitted to make the point in relation to section (2) that: a building society may not make a loan in respect of a new house unless the applicant furnishes either a certificate of reasonable value or a certificate of exemption. The section provides that a building society shall be liable to a fine not exceeding £10,000. However, it is not clear from the section as to the time when the certificate must be handed over, whether, for instance, it must be furnished when the loan is approved or when the loan is paid. I expect that that is a matter for the lender, who would not part with the money until the certificate is handed over; but there would be difficulty here because the lender may not know until the very last moment and when the transaction is being closed whether a certificate is to be available. That would create practical problems for lenders in that they would not know whether the transaction would ever be completed. There would be practical difficulties also for the borrower, because if he receives the certificate only at the last moment he will not know until then whether he will get the loan. Therefore, there is a need to clarify the position regarding the handing over either of a CRV or of a certificate of exemption.

It has been suggested, and I have made this point before, that the CRV should be tied in some way to the planning permission. I know that it would not be possible to get a CRV at the time of obtaining planning permission because the House might not be built for a long time afterwards, but the planning permission should be granted subject to a CRV being made available in respect of any house built on the site that was the subject of the planning permission. In this way everybody concerned would know where he stood from the moment planning permission was obtained.

I clarified that point yesterday. It is entirely a matter for the building societies as to when they decide to ask that a CRV be furnished. There is nothing to prevent building societies from giving approval for loans subject to their being furnished with a CRV. The important factor is that they do not make the loan available until such time as a CRV has been furnished.

It is not my intention to make a Second Stage type speech now, but during the debate on this section we have heard about allegations made by the building societies. The next section deals with the question of building societies and that will provide me with an opportunity to refute these allegations. I shall have opportunities also to deal with this alleged war between myself and the CIF. I am not aware that the weapons have been drawn but I am aware that advertisements have appeared in the public press that were inaccurate in many respects. I shall clear these points up on the appropriate section. What we are proposing here is a strengthening of the very worthwhile CRV system. From the observations made by the Fine Gael Deputies during this debate one can only wonder whether they are for or against the CRV system.

(Cavan-Monaghan): We are 100 per cent for them.

It is the wooly legislation that we are concerned about.

The legislation is for the purpose of strengthening the CRV system for the benefit of house purchasers. It is laughable that Deputy O'Brien should be shedding crocodile tears for the CIF and the building industry generally when for many months members of his party accused this party of being in hock to that same industry. I am told now that building firms will be closed down as a result of this legislation, that they will go into liquidation and so on.

Will the legislation not mean a reduction in the numbers of houses being built?

Deputy O'Brien spoke for a long time without interruption. The Minister is entitled to be heard too.

The Minister mentioned my name.

The Deputy spoke for more than half an hour and was not interrupted by anybody.

We are told that increasing numbers of builders are building the up-market or more expensive type house. I am at a loss to know who are the people who will buy all these houses.

The Government's economic policies will not make it possible for many people to buy them.

I will give the Deputies an instance of an effect that the CRV system has had. During 1978 new applications for CRVs amounted to 1,356. At the end of the year the amount of money that house purchasers were saved by way of reductions in prices amounted to £1,173,000. Is that an indictment of the system that I am merely strengthening for the benefit of house purchasers? That figure is one that we can be proud of. We saved house purchasers from being the victims of those excessive profits. I am not accusing all members of the CIF in this respect. There are many builders who are not even in the confederation. There are decent, honourable, responsible builders but, as the elected Government, we have the right to protect the consumer, in this instance house purchasers, mainly young people, young couples, and we will continue to do that. It is laughable to see the crocodile tears being shed for the building industry.

(Cavan-Monaghan): There is no doubt where the Fine Gael Party stand in regard to the control of house prices. We are 100 per cent in favour of the protection of house purchasers. That has been our attitude all along. We believe it is the business of the Government to organise things in such a way that houses will be available for purchase at a reasonable price. We want a worthwhile CRV system. On this very section we tried to persuade and encourage the Minister to include land, but he resisted that. We take the view that it is utterly impossible to control house prices without controlling the price of land on which houses are built——

Why did the Deputy not bring in legislation?

(Cavan-Monaghan):——and without taking into consideration the value of the land on which houses are built. We also believe that, if this system is to work, it must be reasonable, and be seen to be reasonable. That is why we have continued to urge the Minister to deal with applications promptly, and when he refuses an applicant he should give the reasons for the refusal and provide a worthwhile appeal system.

The Deputy said all that before on at least three occasions in the past three and a half hours. The Chair has a responsibility to see that there is no repetition and to see that Deputies are relevant.

(Cavan-Monaghan): I thought it necessary to say that.

The Deputy has already said it two or three times.

(Cavan-Monaghan): I thought it necessary to put it on the record because the Minister seemed to doubt the bona fides of our approach to this section. I will deal with Government policy on section 20 when we come to it.

Question put and agreed to.
Section 19 agreed to.

I move amendment No. 30:

In page 18, line 2, after "made", to insert ",other than conditions in relation to the rate of interest chargeable on a loan".

The purpose of the amendment is to provide expressly that the question of the mortgage rate applicable to building society loans shall not come within the scope of regulations made under section 77 of the Building Societies Act, 1976, as amended by section 20 of the Bill. The Irish Building Societies' Association have represented that the term "conditions" on page 18, line 2, would undoubtedly be interpreted to include the interest rate on mortgages which in turn dictates the rate which societies can offer to investors. The Minister does not wish to have statutory control over mortgage rates. It is considered that the Minister could not invoke section 77 of the 1976 Act, as amended, for the purpose of imposing specific controls over investment rates.

Amendment agreed to.
Question proposed: "That section 20, as amended, stand part of the Bill."

(Cavan-Monaghan): We have given notice that we are opposing section 20 because we think that, instead of making more money available for house building, it will have the opposite effect. Section 20 proposes to amend section 77 of the Building Societies Act, 1976, in a number of ways. It proposes to give the Minister power to interfere in the working of the building societies by regulation having regard to the demand for loans for house purchase and having regard to the financial needs of the national housing programme.

When the Bill was being enacted in 1976 it was proposed to put those words into section 77. There was a long and learned debate in the Seanad. Amongst other Senators, Senator Brian Lenihan and Senator Eoin Ryan strongly opposed the insertion of the words "having regard to the financial needs of the national housing programme". After a long discussion the then Minister for Local Government, Deputy Tully, agreed to withdraw those words and put down an amendment accordingly. The Bill was amended. The strongest, loudest and most persuasive arguments in favour of the amendment, and in favour of those words being excluded, came from Senator Brian Lenihan who is now Minister for Fisheries and Forestry, then Leader of the Seanad, supported strongly by Senator Eoin Ryan, the present Leader of the Seanad. Those arguments are on record and I do not propose to take up the time of the House by going into them.

Over the years, building societies have organised their business in a way which commands the respect and confidence of the investing public, particularly small investors. The best evidence of that is that at present the funds available to building societies are something like £700 million. The Minister is proposing to take control of the building societies and to direct them to order their business as he thinks fit. The new subsection which it is proposed to insert in section 30 of the Building Societies Act, 1976 reads as follows:

"(2) If any officer, member or agent of the society refuses to produce to the inspector any book or document which it is his duty under this section to produce or refuses to answer any question put to him by the inspector with respect to the affairs of the society, he shall be guilty of an offence.",

He will be subject to the penalties provided.

The amendment to section 77 of the Building Societies Act, 1976, is to be done by the substitution of the following subsection for subsection (1):

"(1) Whenever the Minister considers it expedient, in the interests of the orderly and proper regulation of building society business and having regard to the demand for loans for house purchase and the financial needs of the national housing programme, he may, with the consent of the Minister for Finance and after consultation with the Registrar, make regulations in relation to the purposes and amounts of loans by societies and the conditions subject to which such loans may be made.".

In order to clarify the position the Minister found it necessary to introduce the last amendment by adding:

other than conditions in relation to the rate of interest chargeable on a loan.

As the section stood originally the Minister would have had authority to direct the building societies as to the amount of interest they should charge. As it stands now the section virtually amounts to the nationalising of the building societies, nothing more or less. It might be all right to take such action if the Minister or the Government were providing the capital being used by the building societies but that is not the case. Building societies rely for their cash flow on the investing public. The Minister's amendment virtually hands over to him, with the consent of the Minister for Finance, the right to make regulations in relation to the purposes for which they shall grant loans and the amounts and conditions subject to which the loans shall be granted.

If the Minister has that power he may regulate the amount of loans building societies shall give and the amount of money they shall lend in any year. He is virtually taking over control of the building societies. In my view the effect of that will be to slow down drastically, if not completely dry up, the inflow of investments into the societies. If that happens it will be a bad day for those who are anxious to borrow money to build houses. Building societies in the past carried out their business in a responsible way, even before the Minister gave directions to them in August last as to how they should lend money and the amounts of the loans they should give. For all practical purposes they complied with the criteria set out by the Minister. For example, one building society had advanced 1,880 loans not exceeding £10,000, 2,566 loans not exceeding £20,000 and only 115 loans exceeding £20,000. That was virtually complying with the wishes of the Minister. This all-embracing and controlling section 20 will have a bad effect on the inflow of investment money into the societies.

I am concerned about the phrase, "Whenever the Minister considers it expedient, in the interests of the orderly and proper regulation of building society business and having regard to the demand for loans for house purchase and the financial needs of the national housing programme". What does the Minister mean by that phrase because he did not mention, for example, local authority housing programmes? According to my information the Government have a national housing programme which was established after extensive independent research they had carried out. They decided that not more than 25,000 houses should be built. When I made a similar statement during the debate on section 18 the Minister denied it. I believe the Departments of Finance and Economic Planning and Development were involved in that research. As a result of the adoption of that housing programme the Government feel that the building societies have too much money and believe that they should regulate the way that money is used. They conveyed that information to the societies.

That research was carried out in 1976 but the Department of Economic Planning and Development had not been set up then.

(Cavan-Monaghan): On May 17 1979 the building societies were informed by the Departments of the Environment, Finance and Economic Planning and Development that they had too much money and that the Government had decided, following an independent research, that the number of houses to be built each year should not exceed 20,000. When one couples that with the phrase, “and the financial needs of the national housing programme”, one sees the sinister significance of the Minister taking power to control the number and the amount of loans and the purposes for which loans should be made by the building societies. It is obvious that for some reason, known to themselves, the Government believe that people are too well housed. They obviously believe that the working classes are too well housed, because they set out in one paper after another that there will be less need for local authority building. That cannot be denied. It started away back in the 1960s in a publication of theirs and has been carried forward in their publications on social and economic programmes since they came into power. They are now going a step further. They think too much money is being spent on housing in the private sector and they are going to take power to control the activities of the building societies to see that no more than a given number of houses are built. That comes very badly from a Government that can find money for a variety of things, such as abolishing the wealth tax and other extravagant manifesto objects.

Will the Deputy stay on the section?

(Cavan-Monaghan): I am staying on the section.

Every time the Deputy gets up on any section he has to drag in wealth tax and other irrelevancies.

(Cavan-Monaghan): I do not develop it.

The Deputy does not develop it but the Deputy knows better than the Chair when he is being irrelevant and he deliberately does it time and time again.

(Cavan-Monaghan): I am entitled to make a political argument as long as it is in order.

The Deputy is entitled to make any political argument he wishes so long as it is relevant to the section the Deputy is speaking on.

(Cavan-Monaghan): If I were to say that the Government could find money for this, that and the other, the Chair would not say a word but once I mention wealth tax I get on his nerves.

Deputy, please, we have had that before. The Deputy should not attack the Chair. The Chair has been so very fair to the Deputy all day long that the Chair is wondering what he is doing here really.

The Chair is supposed to be fair. It is not an indulgence for the Chair to be fair.

The Chair is supposed to be fair, but if Deputies continue to make Second Stage speeches one after another all day long the Chair has some duty to perform.

(Cavan-Monaghan): I oppose the section because it will undermine confidence in building societies. I congratulate the Minister on the fact that in recent years there has been a big inflow of money into building societies. Some of that came from across the water following our entry into the EMS system. The money is there and we should do nothing to frighten it away from the building societies who are doing a good job. Our giving authority to the Minister, with the consent of the Minister for Finance, to make regulations to direct building societies as to how much money they should lend and as to their conditions is the best way to undermine the confidence of the investing public in the building societies. The results of that will be disastrous for the housing construction industry and for young people who wish to buy houses.

The provisions I am now objecting to were written into the Bill in 1976, but on reconsideration the then Minister belatedly introduced an amendment which had the full support of the Fianna Fáil Party, who at that time were loud in their advice to the Minister as to the damage that would be done by interference from him or the bureaucracy into the working of the building societies. I could go on and on and remain in order. I am totally against the section and have been from the minute I saw it. The reference to the financial needs of the national housing programme, when related to the information given to the building societies on 17 May 1979 that the Government thought that they had too much money and had decided that not more than 25,000 houses a year should be built, and by implication that the Government would make regulations to ensure that less houses would be built, is a disgraceful approach to a problem that has blistered this country for centuries—bad housing and lack of housing. Just when the people are emerging from their hovels the Government take this view. What they will do with the money I do not know, but the Leas-Cheann Comhairle will rule me out of order if I attempt to tell them what they should not do with the money which would be much better spent on housing.

With regard to limiting houses, anyone who looks at the Government Green and White Papers will see that the target is for between 23,000 and 27,000 houses a year. In relation to the reference made to a circular from the secretary of the Building Societies Association to 25,000 houses, it was also mentioned to the building societies that the Government target was between 23,000 and 27,000 houses per year and that it would be better in the interests of the house building trade to have a steady flow of houses each year in the region of 25,000 rather than to build many more houses as a result of the extra deposits made to the building societies this year, which amount to £100 million more than last year. If all this money was suddenly poured into the housing business it would lead to a terrible over-heating. To some extent there is already over-heating. It is common knowledge that it is very difficult to find blocklayers, for instance, in most parts of the country. They are not there and are becoming more expensive to hire. The real reason for the scarcity is because in the last four or five years many young people do not get involved in apprenticeships to learn the trade. In 1978 there was a 14 per cent increase in production by the building industry and 7,000 new jobs were created. In this year alone it seems that there will be a further 7 per cent increase and a further 2,000 jobs.

In relation to the accusations that have been made against me and the Government for putting the building industry at risk, very few in the building industry would agree with that allegation. The industry was in a sorry state between 1974 and 1977, and anybody who wishes to be fair will readily agree with me in that. The industry was badly run down, but because of the action taken by this Government on returning to power we virtually lifted the building industry, which was coming to a halt, out of the gutter. The facts are that there was a 14 per cent increase in output last year and 7,000 new jobs and that there will be a further 7 per cent increase on that this year plus 2,000 new jobs.

With regard to what has been said about what happened in 1976 and the conditions prevailing at that time, it can be argued that circumstances have changed quite a lot since that time. At that time the building societing were co-operating with the Government's wishes in relation to lending policies. Even when societies did not agree with the policies pursued by the Government they were always willing to operate them on an experimental basis until the effects of those policies could be determined.

In addition, an interest subsidy was payable in respect of shares and deposits in building societies during the period from May 1973 to February 1976. The Government were able to influence the lending policies of the societies during that period by way of attaching conditions to the payment of the subsidy. Conditions attaching to the subsidy included, from time to time, a maximum limit on the amount of all building society loans and conditions requiring societies to devote a specified proportion of their lending for the purchase of new houses. Since then the subsidy payable on the shares and deposits of building societies has been terminated. From an administrative point of view it is no longer possible to enforce conditions relating to lending policy. This situation of itself, would be acceptable if an adequate degree of co-operation was forthcoming from societies in relation to the Government's priorities in the field of housing finance. The situation now is that the Government are resolved to take action to protect house purchasers from unnecessarily high prices by extending the scope of the CRV system, ensuring that the maximum benefit is derived from the total supply of mortgage finance available.

In August 1978 I asked the societies to operate for a trial period certain arrangements in relation to the apportionment of their loans. I asked them also to require a CRV to be furnished by all applicants for loans not exceeding £16,000 for the purchase of new houses. The majority of societies undertook—although reluctantly in some cases—to operate these arrangements for a trial period. But three societies including one major one, failed to do so. This produced a situation in which the societies that were complying with the Government's request were put at a serious disadvantage vis-à-vis those that were not. Such a situation is not very acceptable from a building society point of view and certainly not acceptable to the Government.

Some doubts were expressed about the scope of section 77 (1) of the Building Societies Act 1976 in that it enables regulations to be made only in relation to the amounts and purposes of loans. In order to remove any doubts as to the validity of making regulations which contained the requirement in relation to CRVs, for example, or any other matters considered appropriate, it is now proposed that section 77 (1) be amended and extended to the effect that regulations made under that section could relate not alone to the amounts and purposes of building society loans but also to the conditions under which such loans may be made. The purpose of this is to close that loophole. What the building societies were asked to do last August was in the interests of house purchasers. It did not mean a very big change for the societies. Three societies were not prepared to co-operate and one of them was a major society. Let me say that the major building societies that did cooperate—here I might express my appreciation of their co-operation—were very perturbed, annoyed and concerned at the action being taken by the other major societies because, as they saw it, it was placing them in an unfair situation. If there is anything wrong with tightening up or closing that loophole, in the interest of house purchasers and indeed the societies themselves—in the event of a similar situation recurring—giving me, or whatever Minister might be in office power to make the regulations which hopefully would be beyond dispute legally, and as we see it anyway they would be beyond legal dispute, I fail to see it.

I have listened to the contributions of the Minister and of Deputy Fitzpatrick on this section. I am interested to note that the Minister did not define specifically the phrase which appears to give the Building Societies' Association a certain degree of concern, and which gave his colleague, Senator Eoin Ryan, a lot of concern in the Seanad in 1976, that is, the definition of the national housing programme. The Bill states that "Having regard to... and then the financial needs of the national programme." I have an idea of what I would mean by that statement. But it would be very useful if the Minister could define what he and the Government have in mind when they refer to that, because he used the phrase in his Second Stage speech when he talked about it. That is one point warranting clarification.

The first part of section 20 does not cause me any trouble whatsoever; it seems to me to be logical and correct that if one is to make the CRV system work at all—and we have no argument in principle against it—if one is to make it a condition of the lending agencies to implement it, then one must have access to the societies making this money available. Let us not forget that the societies making this money available are doing so in the context of substantial tax benefits by way of mortgage relief to taxpayers, or tax relief to depositors. It should be remembered also that the people who get a loan from a building society—although frequently they do not realise it at the time of signing the mortgage deed—get a considerable mortgage subsidy from the community at large to enable them house themselves. It is right and proper that the Minister should have this power to inspect the books, to ensure that the administration of the law in regard to section 20 is properly carried out.

What is much more serious and ominous about the manner in which the financial capital resources of this country are managed is the implication of the amendment of section 77 of the principal Building Societies Act of 1976. Quite frankly, the Minister's statement in the House this evening does not allay the fears of the Building Societies' Association to which we have referred before. The Chair and the rest of us would be saved a lot of time if the Minister could concentrate specifically on this point in his reply. The implications—within the context of the Right Wing strategy the Government have opted to pursue—of getting this part of the strategy wrong in terms of managerial competence are frightening for people who seek to house themselves. One must be wary of a housing strategy which curtails local authority housing, in the interests of reducing public expenditure, suggesting that people endeavour to house themselves in the private sector by means of private loans principally through the building societies, because insurance companies, of which some members of the other House and members of another Party are common members have simply refused to become involved in house loans. Building societies by and large are the only serious lending agencies in the private sector who, in turn, depend on depositors putting money into the societies so that their managers can make funds available for house purchase.

Therefore, if in the mixed economy at present being operated by Fianna Fáil, they interfere with the credit institutions, appear to interfere or give the impression that they are taking upon themselves power to interfere, then they are seriously putting at risk the confidence of the people who would move in the financial market.

The volatility of the fiscal market depends as much on the atmosphere of competence in the investment climate as it does on anything else. It is quite irrational. It is quite crazy in many ways. There is no better example of the total irrationality of capitalism than the response of the British and Irish stock exchanges to the success or failure of horses in the grand national or the health of prime ministers, the collapse of the weather or where Skylab hits the ground, but we are stuck with it. We are stuck with the building societies depending on thousands of small investors making investment decisions on the basis of where they see their deposits being secure.

The Minister has a real obligation in this regard. I am sure it is not his intention to screw the building societies. If his actions result in the building societies becoming scared and communicating that fear to the public to the extent that the funds invested in the societies and made available for house purchase might be diverted, then we have a very serious situation on our hands. I am not confident in this Government's capacity to manage our financial affairs in macro fiscal terms. I can see reasons for trying to relate the flow of funds to the building societies and to a national housing programme.

An article in the Business Section of the Sunday Observer correlates conclusively the rise in house prices to the availability of funds as much as to the actual demand for houses. The Minister should specifically define what is meant by the phraseology in the second part of this amendment. That is the hinge on which turns a lot of the fear expressed in the building societies submission. If that cannot be adequately explained, I fear for the people who have been pushed over the edge into the private sector, seeking houses in a very cold climate, at a time when building society interest rates are rising and where the capacity of the building societies to make funds available depends on deposits. If people do not invest, house purchasers will be cold in every sense of the word.

The Minister blithely stepped over the fact that the co-operation of the building societies from May 1973 to 1976 was obtained without any difficulty and that the building societies, even though they may not necessarily have agreed with the housing strategy of the Government of the day, sought to implement it and to co-operate. Because that Government attempted to reduce the cost of interest to the mortgagees by subsidising part of it, they got the best of both worlds by, first, reducing the cost of housing and therefore reducing the CPI, and second, by giving a direct subsidy to the building societies who were able to attach certain conditions which, in turn, made this kind of condition unnecessary. I would like the Minister to explain precisely what is meant by the phrase used in the Bill and in his Second Stage speech. How does he see it in operation? What assessment, if any, has been made to the likely flow of funds into or out of the building societies as a consequence of the expressed fears of the Building Societies' Association?

I do not want the Minister to say that, because there has been a massive flood of funds into the building societies in the past year, it is evidence of a marked confidence by the societies and by depositors in the Government's attitude. We do not intend turning this debate into a financial debate, but we all know why much of this money was invested in building societies today. If investors had a second chance and did not believe the economic nonsense put forward by the Minister for Finance at that time—and which is superbly documented in today's edition of Hibernia—they would be better off. They would be far wealthier if they had kept their money in sterling. Let us leave the flow of money into the building societies before and after our entry into EMS aside from the normal performance of the building societies as repositories for small depositors.

The second part of this section is very worrying. Building societies have always been responsible bodies and even now they are still acting responsibly. In 1976 the Government tried to introduce the same legislation. The Minister said times were different then and that it was not necessary. In the Seanad the Minister of the day made the necessary amendments to meet requests from the Fianna Fáil Party who were very concerned that "meddling" from various Departments would have an adverse effect on building societies. This legislation is not new.

In 1976 good sense prevailed and the Bill was withdrawn, the Minister obviously being his own man. I believe the Department of Finance are responsible for this because they like to get their tentacles into everything that is financial and to control everything. The Minister said that because one major building society did not accede to his request in August, he was forced to take this action. I do not accept that explanation. If one looks at the record of that society, not just for last year but for the first quarter of this year, one will see that they have kept within the Minister's parameters. That should be his main concern. For the first quarter of this year there were 924 loans under £13,000 and the average loan granted was £10,584, 42 per cent; £13,000 to £16,000, 458 and the average was £14,293; £16,000 to £20,000, 272, and the average £18,331; over £20,000, 71, and the average was £24,000. The average loan across the board was £13,375. In one's wildest imagination one could not say that that building society flouted the Minister's wishes. We are talking about the first quarter of this year, and the Minister says that the average house price in Dublin is £20,000 and they are talking about an average loan in the first quarter of £13,000. This is what worries me.

The Minister says that he is introducing this legislation to deal basically with this building society. If I thought that this building society were acting against the wishes of the Minister from the point of view of lending money for the upper end of the housing area then I would agree with him. However, when one examines the facts they fall down miserably and we have to look elsewhere for the reasons why this legislation is introduced. The section says:

...having regard to the demand for loans for house purchase and the financial needs of the national housing programme,...

The national housing programme is the pertinent point here and on foot of this legislation the Minister can now instruct building societies to strike certain figures. As I said earlier with regard to the CRV's, this is another way to restrict building. Restriction of the amount of loans can cut down demand. Any undue interference from Government into financial agencies such as the building societies is dangerous. People may become suspicious and afraid that the building society are not their own masters, that the members have not really any great say and that on the whim of a Minister at any time serious changes can be made by order which can affect a building society adversely. That interference would not necessarily lead to money not being invested but there could be a serious outflow of funds which would be a disaster.

Where a Minister instructs people to co-operate with him and one out of a number of major groups do not co-operate he should not then rush before this House with legislation. The Minister said that the other building societies were at a disadvantage because this building society could operate in its own way. What is he doing now? Because of one building society he is bringing in legislation that is going to impede the building societies who are co-operating with him. It is very unfair that the building societies who are prepared to co-operate are now being penalised because of one building society. Surely the way to have done it would have been to send for this building society and lay it on the line in another way. But no, we introduce rather insidious legislation that can have serious consequences for the building societies.

Nobody can point a finger at the building societies in this country. They have always been responsible and forthcoming and they have played a major role in the private housing sector. Now, when they have done a good job, the Minister is introducing bad legislation and his reasons are not good. One could say that his reasons are vindictive because one major group who kicked are going to be brought to heel. We are going to teach these people not to disobey the wishes of a Minister or a Government. We will bring them into line and we will bring everybody else into line too. That is not the way to act in the area of finance. People are free to place their money anywhere they like. If we are to have this undue and unnecessary interference it will be to the detriment of the national housing programme. I say that regretfully.

It does not make sense that the Minister wants to take this power on himself. In his speech he was not convincing, because there is no reasonable argument for bringing in this legislation. I ask him to do what was done by the previous Minister who introduced this but saw the folly of it when a colleague, who is now a Minister and was a Senator and was very much opposed to it, was loud in his condemnation of this part of the section which is now being inserted. I cannot understand the rationale of the Minister in doing this except that it is purely vindictiveness because one society did not toe the line. I would agree with the Minister if I saw this building society operating at the upper end generally, but the situation is the very opposite. They are operating at the lower end. Their average loan for the first quarter of this year was £13,375. That was prudent and moderate and the Minister can have no cavil there. However, apparently he has. They were not good boys.

The Minister should exercise good sense here. This Bill was brought in at an inopportune time towards the end of a session. There was an attempt to rush it through this House with the threat that if it did not go through we would not be in recess by a certain time. It is not easy to recall this House to validate amendments in the Seanad. The time to make changes is now and on Report Stage. As that Stage will not be taken until Tuesday next it behoves the Minister to look at this again and to consider the body whom he wishes to restrict, to examine his conscience and to ask himself whether this group of building societies have been irresponsible. In the light of the figures of the society who have kicked, even they have been more than responsible. I am at a loss to know why the Minister will not now withdraw this and have the goodwill of the building societies and show confidence in them. There is a registrar who, surely, at all times can keep his eye on them to ensure that the wishes of the Minister are being met.

This type of co-operation is required, not draconian legislation which can lead only to disaster. Basically we are taking away from building societies the responsibility of regulating what is required for the market. They have not failed throughout the years and have been responsible and effective. It is because of the inflow of cash that the Department of Finance want to get their tentacles into this area? I am disappointed the Minister did not indicate that he would withdraw this legislation to amend section 77. Hopefully between now and Report Stage he will have second thoughts.

Deputy O'Brien has been saying that the Department of Finance want these new controls under section 20. It is I and the Government who want this section, not just the Minister for Finance or his Department.

With regard to Deputy Quinn's point about the inflow of money and its effects, the agreed measures which we brought in last August did not have a detrimental effect on the inflow of cash. Admittedly deposits grew rapidly in November, December and early January and a percentage of this would undoubtedly have been EMS money. The total figure of investment for the first six months of this year was £113 million, while in the corresponding months last year the figure was £42 million. There was some EMS investment in the early part of the year but this came to an end, perhaps before February. Taking the months March, April, May and June, the inflow for each month was at least double the figure for the corresponding months of last year. The bands which were set by agreement last August were in existence during that time and have not had any detrimental effect on inflow.

I repeat that I got the co-operation of all the major societies, with the exception of one and two smaller societies. All the others co-operated. There was found to be a doubt about the 1976 Act with regard to extending the requirement for the CRV. This copperfastens the making of regulations. If I get the co-operation of societies with regard to any measures which will be proposed to them in the interests of borrowers, I have no intention of making regulations.

(Cavan-Monaghan): It is our desire to give the Minister Committee Stage tonight so that we may have a proper but short Report Stage on Tuesday, and I do not want to hold up the House. However, I am fearful of the effects of this amendment on the activities of building societies. Some people invest in building societies because they know they will qualify for a housing loan. That right of expectation will be taken away by this enactment because they will qualify for a loan only if the Minister so decides by some regulations over which they have no control. Other people invest in building societies because they regard such an investment as sound and believe the societies manage their business well. They will be frightened away when they see the Minister for the Environment and the Minister for Finance interfering with the work of the building societies.

The Civil Service are an admirable body of people who serve the country very well to the best of their expertise, but their training does not qualify them to act as bankers or to run building societies. They suffer from the one failing of being very careful and conservative. On the other hand, they know they will never run short of money because John Taxpayer is always there to come to the rescue. The training of the bureaucracy does not qualify them to run co-operative societies. Building societies are in the nature of co-operative or mutual societies. I salute civil servants for their loyalty and impartiality in the way they serve successive Governments, but they only act within their training and to the extent of their expertise.

People put money in the Post Office and they are not taking any risk because there is a fixed rate of interest and capital is always secure. The same can be said of investment in other State enterprises such as the ACC or the ESB. If building societies are profitable and well run their capital will be safe and they will get a good return. If the societies are badly run people could lose their capital. Any tinkering with such bodies is playing with fire as far as the investing public are concerned. I am satisfied that shrewd investors will think twice about putting their money in building societies when they realise that they are at the whim of the Minister and his advisers.

I could not help but be impressed by the last contribution from Deputy O'Brien. He completely demolished the Minister's case for bringing in this measure. One building Society may have broken but it was only marginally out of line to the tune of something like 7 per cent. This particular building society in 1978, before the Minister's regulations were brought in, approved of loans to the tune of £52.5 million, of which 1,080 were for sums not exceeding £10,000, 2,566 were for sums not exceeding £20,000 and 115 were for sums exceeding £20,000. That is one of the major building societies who have influenced the Minister in bringing in this measure. As Deputy O'Brien pointed out, the same building society, for the first quarter of this year, advanced approximately £10 million in loans under £13,000 or 42.4 per cent of their lendings. In the same quarter they advanced loans of £6½ million in loans between £13,000 and £16,000 or an average of £14,000 per loan. If my figures are correct, they have, therefore, advanced 70 per cent of their lendings within the Minister's criteria and may be out of line to the tune of less than 10 per cent.

That building society cannot be said to be openly and flagrantly defying the wishes of the Minister. They are behaving in a reasonable way. It is bad policy, bad management and is not in the best interests of building societies, the investing public and house builders in general, to take the big stick to all building societies and damage their reputation. If that is the only case the Minister has for bringing in this, he was foolish to bring it in. It is literally taking a sledge hammer to kill a fly and could not be described as anything else.

Within weeks of last September I was informed by the building societies Deputy Fitzpatrick was speaking about that they would not comply and they have not complied.

(Cavan-Monaghan): They would not be bullied. I have given the figures.

The other building societies were very concerned about the fact that they were not complying and that I was taking no action. I was criticised not only by them but by people here for not taking action. Now, when I am taking action and when I am providing the machinery for taking action it is turned around the other way.

It seems strange, now that all the building societies are opposed to the Minister that he is saying that he is taking action on foot of the building societies request. He knows that the building societies do not want this. He is penalising the good building societies for the sake of one. I make a last appeal to him to send for the particular building society and tell them to put their house in order. If they again refuse I would accept that this legislation should go on but that if they agree to put their house in order he should drop it.

Question put and agreed to.
Section 21 agreed to.

I move amendment No. 31:

In page 18, before section 22, to insert the following new section:



(a) a grant or subsidy was paid by the Minister or a housing authority, being a grant or subsidy specified in a provision of this Act set out in column (2) of the Table to this section at any reference number in column (1) of the said Table on or after the date specified in column (3) of the said Table at that reference number but before the commencement of the said provision, and

(b) the grant or subsidy would have been a valid and effectual grant or subsidy, as the case may be, under the said provision if it had been paid after such commencement,

the grant or subsidy shall be as valid and effectual, and be deemed always to have been as valid and effectual, as if it had been paid after such commencement.


Reference Number

Provision of this Act






section 2

14th May, 1973


section 4

6th July, 1977


section 5

1st June, 1972


section 6

1st February, 1972


section 7

1st January, 1978


section 10

1st April, 1973


section 11

22nd November, 1976


section 12

1st June, 1977


Amendment agreed to.
Section 22, as amended, agreed to.

I move amendment No. 32:

In page 19, after line 33, to insert the following subsection:

"(3) This Act, save as is otherwise expressly provided for therein, shall come into operation on such day or days as, by order or orders made by the Minister under this section, may be fixed therefor either generally or with reference to any particular purpose or provision and different days may be so fixed for different purposes and different provisions.".

Amendment agreed to.
Section 23, as amended, agreed to.
Schedule agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Tuesday, 17 July 1979.

The next item is the Tourist Traffic Bill, 1979. If the House agrees we will leave it.

Could we leave it? Deputy Hegarty reported progress and he is not here now.

Deputy Peter Barry reported progress.

I propose to conclude the debate, which was opened by the Minister of State.

Is the Minister concluding now? We are not ready.

We will leave it until Tuesday.

I feel, in fairness to the Opposition, that they should know that I propose to conclude the debate rather than the Minister of State who opened it.

The Minister is entitled to do that. That goes without any permission of the House.