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Dáil Éireann debate -
Tuesday, 11 May 1982

Vol. 334 No. 4

Private Members' Business. - Local Government (Building Land) Bill, 1982: Second Stage.

On a point of information, is the debate on this Bill to be a two-week debate?

Yes, it is a six-hour debate.

There will be 40 minutes for the mover and 30 minutes for each subsequent speaker.

I move: "That the Bill be now read a Second Time".

Not so very long ago — in fact almost two years to the day — the House had an opportunity of debating for a similar length of time a Bill exactly like this one. Therefore, there is a certain sense of déjá vu about this debate. The subject matter has been argued many times. I have argued it ad nauseam, sometimes even in my sleep, but if there should be any sense of weariness in the phraseology which tends sometimes to sound like well-worn cliches, or if it should in any way dull the palate of the legislators in this House, I would wish to remove very clearly any such sense of tiredness.

By virtue of being an open economy, a small people in a large Economic Community within which, as recent events have shown, we have very little influence, we suffer from many factors which make economic survival, let alone well-being, extremely difficult for us. Many of those forces are totally outside the control and the decisions of this House.

The price of land within our society is not determined in Brussels, is not subject to the whims of the gnomes of Zurich or the vagaries of the oil market in Libya or in Saudi Arabia. It is difficult enough for us to battle against the forces of international powers and of factors outside our control without having to wrap around our necks the absurdity of constraints which do not do anything for the well-being of the vast majority of our people. We are talking uniquely about a totally self-imposed constraint. The area we are talking of is one of the few remaining to us in the sovereignty of the Republic in respect of which the House does not have to have regard to the UN Charter, to the Treaty of Rome or to the prevailing price of oil on the open market. It is therefore for that reason alone that the failure of successive Governments to deal with this problem is perhaps the biggest scandal that our generation of politicians are bequeathing to anybody who has been trying to buy a home in the past decade and a half.

As a result of political pressure in the mid-sixties, of which as a young student in the school of architecture I was part, being a member of the Dublin Housing Action Committee and very much in the vanguard of it, the Government of the day, headed by the then Deputy Lynch, brought out what was known as the Kenny Report. Perhaps it is appropriate at this stage to give recognition to the fact that Justice Kenny retired prematurely recently from the Supreme Court. A member of that report team who was then a little-known economist working in the backroom of the Taoiseach's Department has since been elevated. I refer to Deputy O'Donoghue whose input into the document which became known as the Kenny Report was a major one.

Since being elected to this House in 1977, apart from my temporary elevation to the Seanad from 1981 to 1982, I, perhaps more than any other Deputy — and I am not taking any personal credit for this — asked every six months to the day as to what the Government were doing in regard to the Kenny Report. As the Minister's files will show the stock answer was dusted down and wheeled out on each occasion with monotonous precision, that was, that the Government were reviewing legislation with a view to implementing the Kenny Report. When any of us asked how soon that would be we were told that it would be "in the near future" or in the "foreseeable future". During all of that time the price of building land was soaring in real terms relative to the cost of house prices. This is not just pub talk or everyday experience on the part of ordinary individuals. It has been fairly accurately documented with substantial case studies both by An Foras Forbartha and by private students doing theses and studies of one kind or another in the various third level institutions.

By way of summary of my introduction it is fair to say that at a time when this country is organising faster than any other in Europe and at a time when Dublin is growing at a rate faster than that of any other capital city within the Community, the failure of successive Governments to deal realistically and adequately with the problem of house prices, of the provision of housing and of housing lands, is a national scandal. It is, I suggest, a scandal for two reasons. First, because it is a self-imposed constraint. We were not prevented by any outside factor from dealing with the problem. Secondly, our failure in this regard enabled a tiny proportion of people within our society to become obscenely rich at the expense of the community. There are couples tonight who are paying off mortgages, who will continue to pay them for the next ten or 15 years, and a large portion of the monthly payments which they have difficulty in meeting will be purely for the benefit of land developers, speculators and fortuitously-placed pirates who were enabled by the failure of this legislation to capture the community-created value of that land and retain it for their own personal benefit without any form of taxation which would recycle back into our economy the benefit of the community value so created.

What does the Bill seek to do? It seeks to redress what the Labour Party has long and consistently argued and identified as an unacceptable and unjustifiable social evil that is unquestionably sustained by forces which I cannot fully understand within the House for the benefit of a tiny minority of people who would not even provide a quota of votes in a by-election and who, I suspect, would not purchase them either notwithstanding the debate we have had in the last three hours. This has gone on since 1967 and at every twist and turn it has been able to hide itself behind the phrase which now surfaces yet again in the Minister's carefully worded amendment:

(i) in view of the probability that its provisions are repugnant to the Constitution;

Since 1967 we have had the possibility of finding out whether it was constitutional by going through the simple mechanism of legislating the Kenny Report signalling, as the Minister for the Environment did in relation to the Bill dealing with private rented accommodation, that the provisions may raise some constitutional difficulties. Within the proper operation of our Constitution the President is enabled to refer a Bill to the Supreme Court and obtain from that court within 60 days a decision on its constitutionality.

I accept that there is a valid legal view surrounding the question of constitutionality on the whole question of designation. I have always accepted that it was a valid view and I do not share the views of the negative participants who say that it is unconstitutional but I recognise that they have a case. Where, in the name of all that is reasonable in our society, is the justice in not doing anything since 1973 when the report was published, when we could have had a formal decision within 60 days after a Bill had gone through all Stages of both Houses? The first argument that is trotted out is the one put forward by the Government in their amendment. The Labour Party are arguing today and I suspect they will have to argue again, that our Bill meets the objects of the Constitution, and reasonable interpretations by reasonable members of the Judiciary — that is a presumption that is not necessarily based on fact but let us run with it for the moment — will be that it meets in balance all Articles of the Constitution. I am not referring to the flannel Articles that come in after Article 45, which are there for window-dressing and for which no judge has to have legal regard.

In the Bill we are arguing that if a person selling a piece of ground in an area designated by a local authority through an open and clearly democratic process under which a person affected may lodge an objection and, in the end of the day, appeal to the Minister, ends up holding land of a certain type in that area, he will be paid what the land is worth, no more and no less. In addition we propose that the lands tribunal be given the power to provide adequate compensation to take into account dislocation and restarting costs if such a person wished to restart his business in another location. It is argued by some that because we are giving somebody what the land is worth it may be equated to an arbitrary confiscation of property rights and that, somehow or other, a person is entitled to more. I should like to put on record what the situation is at present. Under the present open market system the value of land is not based on what it is worth but on what it can achieve, subject to certain factors being taken into account. For example, when Dublin Corporation acquired from a coal merchant land across from the Minister's office on the side of the Liffey, what was a coalyard, it was not compulsorily purchased on the basis of the going rate for a coalyard on the edge of the quay with a good view of the Custom House but on the basis that it was theoretically an office block with all the profit that accrues to an office block. And so in 1973-74 it sold at a price equivalent to £100,000 per acre. Ordinary residential development land in Tallaght at the same time was trading for £10,000 per acre.

The argument that sustains that kind of pricing and mechanism is similar to saying that if somebody goes to sell a secondhand car that has 50,000 miles on the clock and is a bit battered, it really is not a five-year-old volkswagon if one looks at it through glazed eyes and thinks of the real potential development value of it but is, in fact, a new car, without any dints on the body or miles on the clock. One is saying that one should pay the price of a totally new car rather than the of any other way I can try to explain the difference between hope value and existing value. But how anybody could argue that the very general clause in the Constitution about property rights which guarantees to any property owner the full value in existing use terms of what they hold as being unconstitutional or contrary to the provisions of the property clause in the Constitution is inexplicable.

There is another factor in this. A landowner who happens fortuitously to have his land rezoned — recent events in the area of County Dublin suggest that it is perhaps not a fortuitous rezoning but subject to a certain degree of lobbying — suddenly finds, as The Irish Times indicated recently, that land which trades in North County Dublin at agricultural use price value of approximately £2,500 to £3,000 per acre, as a consequence of such a decision trades at a minimum price of £25,000. This is for land for which there was no possibility in the foreseeable future of services of any kind and, consequently, of planning permission being granted by the local authority. That additional £20,000 odd of value per acre was in no way created by the owner. The owner could not magically add to the quality or quantity of the value of the land. Yet, until the Bruton budget in January last, if that landowner had held that land for a long period of time, the additional value which was effectively added to the property by virtue of the legal decision of the local authority was captured by the individual and retained for his or her exclusive benefit.

One could argue at great length on what has been known in this on-going debate as the equity argument in relation to land prices. For anybody with a sense of justice and fairness, other than somebody who believes in the innate inequalities of our society and in good luck or whatever, there is no utilitarian or moral argument in favour of windfall profits of the nature which we are discussing, particularly in the case of people who do nothing to make those profits come about, or who take no risks whatever in bringing about such added value.

I propose to move from the equity argument and to make perhaps, as far as the Labour Party and I are concerned, an equally pressing argument of a much more utilitarian nature. I said at the outset that the city of Dublin in particular, but the country in general, is becoming rapidly urbanised. We are the most rapidly urbanising State within the Community, Greece nothwithstanding. Even allowing for the accession of Portugal we will still be the second fastest, if not the fastest, urbanising society within the Community. There are many reasons for this, with the net effect that the demand for urban space, whether for homes, factories, schools, community centres, or infrastructural services, is absolutely enormous. The cost of such urban space and of providing services to ground, of providing motorways, electrified trains, playing fields, schools, churches and community centres is increasingly expensive. Having regard to the present state of public finances it is obviously beyond the capabilities of the Government and the present capacity of the economy to provide these.

If we do not now move to seriously regulate and plan the growth of urban Ireland we will be building into the urban fabric of our society structural injustices from which it will be impossible to extricate ourselves for at least one to two generations. Some of us like to pride ourselves on not having a class-based society with real class distinctions. If there are people in this House who support that view — and I want to put on record that I do not support it, because I believe there are class distinctions, both social and economic, in our society — who, for whatever reasons, think that we are still, by contrast with France, Germany, or Britain, a society within which formal class divisions and distinctions do not effectively exist, then I would earnestly tell them that if they allow the present development of our urban areas, whether in Limerick, Cork, Dublin or, indeed, smaller towns like Galway and Waterford, to continue within the present landownership structure, serious structural class ghettos will be built into the nature of our urban areas between now and the end of this century. We simply are not in a position — and every Deputy who is a member of a local authority will concede this, irrespective of what side of the House he belongs to — to service all the land currently zoned as residential, or for development purposes in general. There is not the slightest hope that any administration would be in a position to do so over the next ten to 15 years. That is not a great admission for anybody in this House to make. At present, the local authorities cannot organise the phased investment of scarce development capital into areas for urban development because of the way in which the present system operates.

Some Deputies are having some experience at present in Dublin West and are probably familiar with just what that actually means on the ground, but the reality for any couple trying to get a house on the outskirts of Dublin is, firstly, they have to attempt to unravel the labyrinthine operations of the Finance Housing Act. Then if the hard-pressed and decent officials of Dublin Corporation have the patience to explain how long it might take to get a loan under the excellent legislation called the Housing Finance Act and can actually interpret the Minister's mind, and the couple can afford to stay on bridging loans for the length of time it requires, and manage to buy a house in west County Dublin, it is quite likely that they will buy one in an area in which the provision of schools, the extension of CIE's erratic public transport system and the delivery of such things as safe play areas for children will all come in a totally haphazard and unplanned way.

It has perhaps become unfashionable to talk about the difficulties of suburban areas and in some cases to over-exaggerate them. It is, however, not for nothing that general practitioners have described certain areas of suburban Dublin as Librium Valley or the Valley of Valium, and so forth. It was not for nothing that quite recently a major practitioner at the IMA conference talked about the disintegration of aspects in our society brought about by pressures of unco-ordinated and unplanned suburban growth. Despite the repeated attempts on paper of the local authorities to plan for the co-ordinated development of our urban areas, the fact that they cannot effectively manage our land resources — which is the stage upon which all this development will take place — virtually negatives all their efforts from Day One. Those sound like very sweeping phrases and there is, undoubtedly, a degree of deliberate exaggeration in some of the adjectives, purely to bring home to the Minister and the House the desperate need for action in the area.

We can actually do something about it. There is nothing in the Treaty of Rome which prevents that. We are not going to earn for ourselves the wrath of Prime Minister Thatcher, or put the unity of the country at stake and certainly we are not going to endanger a peaceful solution to the Falkland Islands crisis if we handle this problem. What we may very well do, however, is upset a number of very substantial supporters of the two major parties. That may be a problem to which this House should get a response. In all the arguments put forward against the implementation of such a measure I have yet to hear a coherent, rational and well argued one.

This is the Deputy's chance to give the House one now.

I will do so and hopefully it will be slightly better argued than that argued by the Minister's predecessor in June 1980.

I wish to refer to the Minister's amendment. I appreciate I am speaking to people who are more than familiar with the provisions of this measure and with the issue itself. However, lest the record should be deficient in that regard, I will simply refer any readers of this debate to the substantial contribution I made on Second Stage on 3 June 1980, because the arguments I made then still stand. I want to take account of the fact that time has moved on and that there have been some discussion and fiscal developments since that time. I also have had time, in conjunction with a number of experts, to look at aspects of the Bill suggested by me on behalf of the Labour Party. As I said on another occasion to the Minister, we deliberately did not change the text so as not to undo any of the briefing material which had been prepared in advance for him. The same arguments which were used in 1980 no doubt will still be used now. Leaving that touch of levity to one side, it could be argued in this House that the most effective way to intervene in this on the grounds of equity is to do it through the capital taxation system, and section 2 of the Minister's amendment makes that point.

On the question of equity, it is my considered view — although I am open to be persuaded otherwise — that recourse to budgetary action alone or fiscal action alone will not reduce the end cost of the building product, whether it is a house, a factory or a building centre, to the user. The end cost of the product will remain the same. It is arguable that the introduction of taxation of capital gains will have the initial effect of putting up the price on the grounds that the vendor of land will need to have more net cash into his or her fist in order to release the profit. It becomes rather boring for a socialist in this House to explain the workings of capitalism to Members who profess to defend the free enterprise system but, nevertheless, I shall try to do so. Initially, if the amendment was to be implemented it would probably have an inflationary impact on land prices in areas adjoining urban centres. Therefore, the end cost would not be cheaper and it would possibly be dearer in the short term before the market readjusted itself. There is much precedent in taxation circles to sustain that point of view and that argument. Unless the Revenue Commissioners and the Minister for Finance were prepared to concede by right and by law that all the taxation raised by way of some form of CGT went automatically to the local authority within which the transaction took place and that the proceeds from such a transfer were to be considered in isolation from any capital grant that the Department of the Environment would grant, then the benefits of betterment on which this whole argument rests would not accrue to the local authority and, consequently, to the community. Perhaps the Minister would clarify that point. In so doing he might also clarify a point that is currently agitating a large number of people in the property development area, and to whom reference has been made, that in the collapse recently of a major company the operation by the Revenue Commissioners of the 30 per cent deposit scheme is a contributing factor to extreme liquidity problems with consequent depression in the market. Can the Minister explain the use of fiscal measures to achieve equity in this market. as well as maintaining efficiency?

The press should take note of the last point of the Minister's amendment because it marks a very significant departure by successive Fianna Fáil Governments on this question. It is not insignificant that it occurs under the leadership of Deputy Haughey, the Taoiseach, whose connection with benefits from land purchase and sales is clearly a matter of public record. I say this with a certain degree of caution because I do not wish to be personal; but my reading of part 3 of this amendment is that, for the first time, Fianna Fáil are now clearly moving away from any commitment to introduce effective legislation based in whole or in part on the Kenny Report. If I am misreading it, I would be happy to be corrected. Fianna Fáil set up the Kenny Committee. From 1977 to 1981, in official replies to questions in the House they stated they were in the process of preparing legislation, legislation which Deputy Barry in his regrettably all too short occupancy of the Custom House found was in a very infantile state. Fianna Fáil are now signalling in this House and to everyone whose door is being knocked on in Dublin West tonight that, after all the years of promises, there is no commitment from the party of reality to introduce legislation based on the Kenny Report.

There is something even more ominous contained in the amendment, and I shall welcome clarification from the Minister on it. While I have been critical of decisions by local authority members in relation to the question of re-zoning, the right of local authority members to make mistakes is something that should be safeguarded at all times in view of the added intrusion by the Custom House into one of the few remaining areas of autonomy that local authorities have. I may perhaps have been harsh in reading into part 3 of the amendment the abandonment of a commitment to introduce legislation but my reading of additional measures tends to show that. It would be a significant political departure if the Minister were to confirm what I suspect is behind this. It would also be confirmed by the repeated refusal of the Taoiseach to consider any form of constitutional amendment other than that in relation to the pro-life lobby and to indicate that legislation based on the Kenny Report is probably repugnant to the Constitution.

We have reached a serious stage when, after all these years, the consensus which is shared on all sides of the House in relation to the recognised and perceived need for legislation has now been apparently abandoned. The Minister has a duty to clarify that point. There is a certain amount of déjà vu in this debate. The Labour Party are convinced that legislation based on the document before the House is essential for the well-being of our community. We have no guarantee that it will work magically or super-efficiently, but we have every reason to believe that, brought in on a phased basis — and there is provision in the Act for that — it can regulate the present haphazard operations of the market to the benefit of everybody.

We are more than prepared when we get to Committee Stage to discuss changes or amendments in relation to the operation of the Bill. We do not propose to have some kind of a monopoly of technical wisdom in this area or of commitment to achieve an equitable solution. The Workers' Party have put down an amendment to the objectives of the Bill. We honestly say that it is time for a serious response to this problem because if such is not forthcoming growing numbers of our young people will not thank us for the way this Legislature have abandoned it. I thank the House for agreeing to hear the debate. In the spirit of co-operation within the House I am asking the Minister to respond to the points made and to the political arguments we made elsewhere. A reasoned debate here would demonstrate that the House has the political will to enact legislation covering this area.

I move amendment No. 1:

To delete all words after "That" and substitute the following:—

"Dail Éireann declines to give a second reading to the Bill:

(i) in view of the probability that its provisions are repugnant to the Constitution;

(ii) because of the actions which the Government have taken in the Budget to ensure that a major part of the increased value of development land will accrue to the public through the substantially increased capital gains taxes on disposals of such land; and

(iii) because the Government intend to take whatever additional measures may be necessary to ensure that land is made available to local authorities for development free of any element of speculative gains, in line with the aims of the Kenny report, and to review the provisions of the Local Government (Planning and Development) Acts, 1963 and 1976 in regard to the zoning of land by local authorities and the operation of Section 4 of the City and County Management (Amendment) Act, 1955 in relation to planning decisions.".

This Bill is similar in all respects to a Bill which was presented by Deputy Quinn to this House on 12 May 1980. The present Bill even contains the same minor printing errors as the 1980 Bill and the only differences that I can see between the two Bills are that the date and price are different.

The 1980 Bill was debated in this House on four days during June, 1980. On that occasion, only Labour Deputies spoke and voted in favour of the Bill. Fine Gael abstained from voting but spoke against the Bill while Fianna Fáil speakers adopted the only sensible and realistic approach in relation to it: they suggested that while action was necessary in relation to building land and the profits which could be made by individual landowners or speculators, the Bill represented an entirely inappropriate and unworkable response to what is undoubtedly a very serious and complex problem.

In winding up the 1980 debate, Deputy Quinn indicated that he was prepared to accept that there were many ways in which the Bill could be improved. However, the Deputy has now chosen to reintroduce exactly the same Bill. One can only regard this as a cynical and dishonest exercise — a cheap playing to the gallery in the hope of gaining electoral benefit. I suggest people are not going to be fooled that easily.

If the Labour Party and Deputy Quinn were serious about this Bill, surely they would have arranged to have it re-introduced here during the period when they and their Coalition colleagues had an effective majority in the House and formed the Government of the country. During that period, official resources could have been made available by the Government in order to improve the Bill in whatever way Deputy Quinn had in mind when he spoke here in 1980. But no such action was taken.

It is true that the infamous Gaiety Theatre document contained high sounding pledges to take action basically similar to that proposed in Deputy Quinn's Bill. But no such legislation was presented to this House by the Coalition Government during their period of office and, so far as I am aware, no such legislation was being prepared by them. Against this background, I think I can justifiably claim that Deputy Quinn's decision to trot out his 1980 Bill for a further four-day debate is nothing more than an exercise in political opportunism. I have little doubt that it will be seen in this light by the Members of this House and by the country as a whole.

I do not propose to examine the Bill presented by Deputy Quinn, section by section, because this would only be a waste of the limited time available to me. Instead, I propose to concentrate on the major matters of principle involved and to show conclusively that, while the Bill may appear to be a simple and easy solution for unthinking people, it is not the kind of solution that any responsible administration could adopt or, indeed, can it be described as a solution at all.

We cannot, in this House, be selective in our approach to the personal rights enshrined in the Constitution and we cannot adopt an interpretation of the relevant provisions of the Constitution which would conflict with that of the Supreme Court. The Oireachtas is precluded by the Constitution from enacting any law which is in any respect repugnant to the Constitution or any provision of it. I believe that this Bill is not, in fact, consistent with the Constitution and I shall elaborate on this for the benefit of those Deputies who do not have closed minds on the subject. Such Deputies, I believe, form the vast majority in the House.

The Kenny Majority Report dealt in some detail with the question of whether various schemes to deal with the price of building land would be repugnant to the Constitution. The report advised — and I quote now from paragraph 101:

that the jurisdiction to designate an area must be conferred on a Court established under the Constitution if it is to be valid.

However, Deputy Quinn's Bill completely ignores this basic principle of the Kenny scheme and, instead, proposes to give local authorities a discretionary power to designate the land to which the scheme would apply. Personally, I feel that any scheme based on designation by a court would be cumbersome, costly, time-consuming and generally unsuited to the task involved. But, if we are talking about implementing the Kenny Majority Report, we cannot get away from the fact that the authors of the report felt that the scheme would be consititutional only if the whole process were handled by the courts. Under Deputy Quinn's scheme, the elected members of local authorities would have an almost unfettered discretion to designate the land which would be acquired on the basis of current use value, subject only to confirmation by the Minister for the Environment. They would be responsible for dividing up their functional areas into areas where a normal free market in land would apply and areas where the market would be restricted and would operate on a current use value basis.

I very much doubt whether our local councils would ever be prepared to operate such draconian legislation but if they were to do so, could their actions be described as anything other than a discriminatory and, therefore, unjust attack on property rights? There is no doubt, therefore, that the Supreme Court would be obliged to view Deputy Quinn's scheme as an unconstitutional one.

Indeed I venture to suggest that one would not need to be a judge of the Supreme Court to reach this conclusion. On the contrary, any fair-minded man-in-the-street would surely consider it to be inequitable that parcels of land being acquired for development should be valued on two entirely different bases, even within the same county, with one landowner getting, perhaps, ten per cent of what another is able to obtain.

That is exactly what Deputy Quinn's Bill would achieve and that alone is enough to make it unconstitutional. I might mention in passing that it is hard to reconcile Deputy Quinn's readiness to confer such wide new powers on local councils with the constant barrage of criticism levelled by his colleagues at the use of the existing powers of planning authorities to rezone land for various forms of development. Any benefits or disadvantages conferred by such zoning decisions would pale into insignificance when compared to the effects which the provisions of the Bill would have on land values.

Even if the Bill now before the House retained the High Court as the designating authority, as well as all of the other fundamental provisions of the Kenny Majority Report, the constitutional question would still be a very serious one. The majority report stated in paragraph 110 that the meaning of the articles in the Constitution dealing with property rights is uncertain. But that was written in 1973 and, since then, major judgments on the relevant articles have been delivered in the High Court and in the Supreme Court. The time available does not permit me to go into these in detail but I wish to draw attention to just two points arising from the judgments.

First, in analysing the constitutional position, the majority report assumed that the Rent Restrictions Acts were not unconstitutional, nothing that "nobody has ever suggested this in the thousands of cases under those Acts which have come before the Courts" (paragraph 88). Yet, in 1981 the full Supreme Court — of which Mr. Justice Kenny was than a member — held that substantial parts of those Acts constituted an unjust attack on property rights and were therefore contrary to Article 40, Section 3, (2) of the Constitution.

Secondly, the majority report took the view in paragraph 88 that the property rights referred to in Article 40, Section 3 of the Constitution, are those specified in Article 43. It was reasonable for the authors of the report to adopt this view since it had been expressed in a 1960 Supreme Court judgment. However, in its 1981 judgment in relation to the Rent Restrictions Acts, the Supreme Court expressly stated that "the Court is unable to accept this view" and went on to explain that there is a double protection in the Constitution for the property rights of the citizen.

My reason for making the foregoing points is to demonstrate that there are weaknesses in the argument for the constitutionality of the scheme put forward in the Kenny Majority Report. Developments in constitutional law in the last ten years have rocked the structure of the Kenny scheme to its very foundations and this Bill, by eliminating the High Court from the entire process, seems to remove the foundations entirely.

I have asked the Attorney General to examine the general legal and constitutional issues which arise from the Kenny Majority Report, so that an authoritative up-to-date opinion, taking account of the judgments to which I referred earlier, will be available to the Government in assessing the options available. I might mention that my predecessor made a similar request to the former Attorney General last year but the latter had not concluded his examination when the last Dáil was dissolved. The review by the Attorney General will be a vital input to the Government's further consideration of the land prices issue. Pending completion of the review, I can only say that the advice available at present is that there are serious doubts about the constitutionality of the Kenny scheme. There is, however, no doubt but that the modified scheme proposed in the Bill now before the House is unconstitutional and I must, therefore, ask the House not to give the Bill a Second Reading.

Apart altogether from the constitutional issues, the Bill presented by Deputy Quinn raises a number of other serious issues. It would have major staffing implications for local authorities and could generate demands for heavy capital investment. It could seriously disrupt the land market, adversely affect the building industry and reduce the numbers it employs. There would be a serious risk that every stage of the procedure would be resisted in the courts and that the delays in making land available for development in designated areas would frustrate rather than facilitate the development of those areas. There would be a strong possibility that development would shift to non-designated areas, with adverse consequences for orderly planning and for the provision of services. Local authorities and their officials would be placed in a very difficult position and the Minister for the Environment would be left open once more to accusations and allegations of the kind formerly levelled against Ministers for local government who had to deal with planning appeals. These and other factors lead inevitably to the conclusion that the scheme proposed in Deputy Quinn's Bill is unsatisfactory and inappropriate and that it would create far more problems, hardship and disruption than any problems and hardship it is designed to meet.

The availability and price of building land are critically important issues and the Government are determined to deal with them. A start has already been made on the taxation side. One of the last acts of the Fianna Fáil Government before the June 1981 General Election was to introduce, by way of the Finance Act, 1981, major new provisions designed to counter complex tax avoidance schemes which had been devised to reduce liability to income tax and corporation tax on profits or gains from dealing in or developing land. On our return to office last March, we reviewed the changes in capital gains tax proposed in the January budget. In order to crack down on exorbitant profits from dealing in building land, and to ensure that a significant proportion of windfall gains resulting from the provision of local services are returned to the community, significant changes were decided on and announced in the budget statement of 25 March. A capital gains tax rate of 50 per cent on gains from disposals of development land was announced, 5 per cent higher than the rate proposed in the Coalition's budget. A new rate of 60 per cent is being introduced for gains within one year of acquisition and a 40 per cent rate will normally apply where land is compulsorily acquired. In addition, there are new restrictions on certain reliefs hitherto available; these restrictions affect the indexation relief, roll-over relief, and the right to set-off losses. These are substantial changes and, in addition to generating much needed revenue, they should help to allay public concern about the tax-free fortunes which are sometimes alleged to be made from land speculation. I should also mention the budget proposal for a special new charge on derelict sites. This should discourage the hoarding of such property for capital gain as well as the resulting urban blight.

An approach based on taxation is one way of dealing with the land prices question. But it is not, in itself, a complete answer and for that reason, other options are being considered by the Government. Time does not permit me to deal with all of these but I wish to mention some of the major ones.

Under the Housing (Miscellaneous Provisions) Act, 1979, the Minister for the Environment has power to control house prices generally and a specific power to control house site prices through the CRV system. In particular, a CRV can be refused if the Minister is not satisfied that the amount of the cost or value of a site included in the overall house price is reasonable. The Minister may apply a maximum site value and refuse a CRV in any case where the cost of a site included in a CRV application exceeds that value. There is provision also for giving rulings in advance on site cost-values.

The operation of these provisions of the 1979 Act would present considerable practical difficulties and the powers have not been used to date. A single maximum site value could not, for example, be prescribed for County Dublin as a whole or for the peripheral areas of any other large urban area; instead, one would obviously have to take account of factors which would justify disparities in site values as between one location and another. The implications of this in terms of expert staffing and information needs are formidable. Notwithstanding these and other difficulties, I am having a fresh look at the possibility of activating the now dormant provisions of the 1979 Act in order to introduce a specific measure of control over house site prices.

Fianna Fáil Governments have always taken the view that the supply of serviced land is a vital element in any consideration of the problem of urban land prices. It has been our objective to bring about a significant increase in the supply of land for housing, industrial and other development by making additional funds available to local authorities in the major growth areas for new water supply, sewerage and drainage schemes. Our recent record in this regard speaks for itself. Between 1977 and 1980 the overall public capital programme provision for public water and sewerage schemes was almost doubled — from just under £25 million in 1977 to almost £47 million in 1980. In 1981 — my own first year as Minister — £66 million was provided for these services. However, the sum of £76 million originally provided by the Coalition Government for public water and sewerage schemes in 1982 represented a reduction in real terms on the 1981 provision, when allowance is made for increased construction costs. Their proposed capital provision was not adequate to allow a substantial volume of major new schemes to start this year. Furthermore their original provision of £4 million for public schemes eligible for FEOGA aid was substantially less than the projected grant liability in 1982. On returning to office, one of my first priorities was to review the sanitary services programme. I have been able to allocate an extra £7.4 million for public water and sewerage schemes over and above what was proposed in the Coalition's budget. This brings the total allocation for 1982 to £87.4 million — an increase of over 30 per cent on last year's figure.

The provision of adequate water and sewerage services is a necessary pre-condition for the whole process of economic development. In particular, this programme is essential if there is to be an adequate supply of building land. The price of such land, in common with that of most other commodities, is affected by the laws of supply and demand and if we can maintain and increase the supply, there is every reason to expect that this will be reflected in the price.

The acquisition of land by local authorities well in advance of development would be a significant step towards ensuring that development value accrues to the community and that speculative gains are not made on foot of the provision of public services. The long-term benefits of such an approach are clear, but we have to balance against this the shorter-term job creation opportunities that may have to be foregone if capital is diverted to land acquisition.

Exactly.

The Government are in favour of forward land acquisition on as wide a scale as possible and we are considering what measures could be devised to ensure that major local authorities can have available sufficient capital to enable them to acquire land at reasonable prices to meet future housing and other needs in their areas. In addition, we intend to explore the possibility of inducing financial institutions to acquire and hold land for release to local authorities to meet their future requirements.

The acquisition of land by local authorities for various forms of development can be retarded and sometimes frustrated by the state of the law in regard to compulsory land acquisition. My Department has been reviewing this complex body of law with a view to formulating proposals for changes designed to streamline and speed up the process. Tentative proposals have been produced, taking account of the legal and constitutional constraints and I am awaiting the advice of the Attorney General on these before deciding how best we might proceed. This is not the occasion for a detailed discussion of these proposals but I wish to mention one particular suggestion which is being seriously considered. What I have in mind is the possible introduction of a system under which local authorities would have a right of pre-emption in respect of any land offered for sale in defined areas, whether new development areas or obsolete or other areas in our cities and towns. This system could possibly be grafted on to the existing CPO system and it could be a very useful weapon in the armoury of a local authority. It would not only enable the authority to acquire title to land quickly but would also considerably strengthen their hand in securing orderly development.

In my contribution to the budget debate on 30 March last, I already informed the House of my intention to carry out a general review of planning legislation. As part of that review, I intend to look at the use by local councillors of section 4 of the City and County Management (Amendment) Act, 1955, in relation to planning decisions. I know that section 4 is an important part of the balance between the reserved and the executive powers of local authorities and I would be reluctant to see planning decisions removed from the scope of this provision. However, there appear to be genuine grounds for concern about the way in which the section is being used in a limited number of areas as a means of discarding reasonable and necessary planning considerations in particular cases. I will have to see what can be done to meet that situation. I also intend to examine the provisions of the legislation under which land zoning and re-zoning decisions are made by planning authorities. I have no wish to undermine the basic responsibility of elected councils for making and reviewing development plans. However, I am concerned that the manner in which these powers are being used is causing a great deal of public concern. There is the impression in the public mind that fortunes are being made overnight as a result of decisions made without proper consideration of all relevant planning issues. The figures of estimated gains which are bandied about in the media and indeed by some politicians are often exaggerated, to say the least, but if the operation of the system is such that allegations of this kind can be made, there is a prima facie case for taking action to allay public fears and suspicion in this regard.

I hope that my remarks this evening will be seen as an indication of the bona fides of the Government in relation to the building land question. This is one of the most intractable problems faced by Governments throughout the western world and I am not aware of any easy solution to it. What seems to be required is a package of interlocking measures rather than an attempt to bring about radical change overnight and I have referred to various possibilities which I will be considering. There is also a real need for a more informed public debate on the whole issue. Something will have been achieved if the discussion on this unfortunate Bill helps in that direction.

Building land is an essential raw material for an industry employing almost 100,000 people. The wellbeing of this industry is my direct responsibility as Minister for the Environment. So too is the achievement of the Government's ambitious housing targets. The Government cannot risk the jobs of thousands of men in the building industry and the momentum of the housing drive simply to implement the policies proposed in this Bill. Even if the proposals were consistent with the Constitution — and they are not — they could put many jobs in jeopardy, at least in the short term. I have no wish to be a party to such a move and I, therefore, ask the House to refuse a Second Reading to the Bill and accept the amendment put down in my name.

It is significant that Deputy Quinn, on behalf of the Labour Party, introduced this Bill. He spoke about the fact that the Kenny Report came out in 1973 and the fact that since he came to the House in 1977 he has consistently asked if any action has been taken on this. I remind him that his party formed part of the Government from 1973 to 1977 when the Kenny Report was available and long before the subsequent Supreme Court decisions which have cast such doubts on its constitutionality. His party were part of the Government from June of last year up to the beginning of March and we did not see hide or hair of the Bill. I suggest, as I have already said, that it is to obtain a cheap political advantage at the time of a by-election in west County Dublin. If it was bona fides as the Deputy claims, they would have taken action long ago.

Compare their lack of action with the package we have in our amendment, the action we have taken on the capital gains side and the action we intend to take. I spell it out:

"... whatever additional measures may be necessary to ensure that land is made available to local authorities for development free of any element of speculative gains, in line with the aims of the Kenny Report, and to review the provisions of the Local Government (Planning and Development) Acts 1963 and 1976 in regard to the zoning of land by local authorities and the operation of section 4 of the City and County Management (Amendment) Act, 1955 in relation to planning decisions."

That is constructive action, not the reintroduction of a Bill, with minor drafting amendments, which Deputy Quinn did not bother to change from the time when he introduced it originally. I ask the House to reject the Bill and accept the Fianna Fáil Government amendment.

I am intrigued by the last part of what the Minister said and indeed by his speech in general, and his avoidance, when he was concluding, of any explanation of the point raised by Deputy Quinn. I suppose it is understandable that the Minister would not have had it for reply in his script because Deputy Quinn had not raised the point then, but when the Minister spoke off script for the last four or five minutes of his speech he did not answer — this is significant — the point made by Deputy Quinn in regard to the Kenny Report. He spoke of measures of reaction and the re-introduction of an inadequate Bill and he asked the House to accept the Government amendment which states:

(iii) because the Government intend to take whatever additional measures may be necessary to ensure that land is made available to local authorities for development free of any element of speculative gains, in line with the aims of the Kenny Report,...

What does that mean or how is it proposed to achieve that if there is no control on the price that local authorities pay for land? Does it mean that the Government will subsidise the local authorities to pass that land back to individual builders minus the price assessed as being speculative between the time the purchaser from whom the local authority buys, acquired the land and the time the local authority purchased from him? It would be very difficult for anybody in this House to vote for an amendment as woolly and imprecise as that. It is really buying a pig in a poke as far as this House is concerned. The Minister said that the introduction of the Bill in the House could be relevant provided the debate opened up a new discussion on this very contentious and important aspect of legislation, and he introduces quite a linking amendment by the standard of amendments coming in here in Private Members' Time. The third part of it appears to promise much and indeed obviously took some thinking out and putting together, but the Minister did not enlarge on it in his speech. That makes me, like Deputy Quinn, very suspicious of what the Government have in mind. The only indications I can get from the Minister's speech as to what they have in mind if the House accepts that amendment are, and I quote from the Minister's speech:

What I have in mind is the possible introduction of a system under which local authorities would have a right of pre-emption in respect of any land offered for sale in defined areas, whether new development areas or obsolete or other areas in our cities and towns.

As far as I am aware — I am open to correction — this is a totally new conception which has not been put forward by any Government in this House previously. I do not know what it means:

...would have a right of pre-emption in respect of any land offered for sale in defined areas,...

Does that mean that if some of this famous rezoned land in County Dublin was offered for sale the local authority would have the first right of refusal on that? If that is so, what price would they pay for the land? Would it be market price? The amendment mentions: "development free of any element of speculative gains" that may have been made by the owner of the land. Has that any precise meaning in law of which I am unaware? It may well be that "the right of pre-emption" has a precise meaning that would define this to anybody reading the Minister's speech, which I think all Members of local authorities should do——

Indeed they should.

——because a lot of other dynamite is hidden under the straw in that speech. Of course, the Minister will not be replying but I hope that whatever Minister or Minister of State comes in to contribute to this debate next week will spell out for the House precisely what is meant by that, because it is not at all clear to me what the Minister has in mind.

Hear, hear.

The amendment refers to

...any element of speculative gains, in line with the aims of the Kenny Report...

That indicates to me that in seeking a basis to control the price of land the Government are moving backwards. The Minister concluding his speech said that he could not find tittle or tattle — or some such term — of concern in the Department regarding the Kenny Report. This shows either that he is not telling the full truth to the House or that he made no inquiries. If he had inquired he would know that from virtually the first month we were in office — I give credit to Deputy Quinn for this — at the insistence of Deputy Quinn we set out to try to formulate some legislation that would deal with the situation given all the pitfalls that my party see in this legislation and in the previous Bill introduced by Deputy Quinn and in the Kenny Report. The last Government established a committee composed of the Attorney General, the special adviser to the Taoiseach, an officer from my Department, and I think an officer from the Department of the Taoiseach but I am not certain of that. Deputy Quinn attended at least two of those meetings. Therefore it is not true to say that nothing was done during those seven months.

It is true, as the Minister says, that this was under the chairmanship of the Attorney General and the committee had not reported back by the time we left office. I presume that whatever papers and documents were available to that Attorney General have been passed on to the present Attorney General and that whatever that committee achieved in that regard and whatever progress they made, that achievement and progress will be available to the present Attorney General and that we will see some light at the end of this tunnel.

The Minister went on to say that he intended to review the provisions of the local planning and development Acts, 1963 and 1976 in regard to the zoning of land by local authorities and the operation of section 4 of the City and County Management Act, 1955 in relation to planning decisions. He said, and I quote:

As part of that review, I intend to look at the use by local councillors of section 4 of the City and County Management (Amendment) Act, 1955, in relation to planning decisions. I know that section 4 is an important part of the balance between the reserved and the executive powers of local authorities and I would be reluctant to see planning decisions removed from the scope of this provision. But there appear to be genuine grounds for concern about the way in which the section is being used in a limited number of areas as a means of discarding reasonable and necessary planning considerations in particulars cases.

I have considerable reservations about many of the uses to which section 4 is put in a limited number of areas — I agree with the Minister here — and I do not think that I am using too strong a word when I say "threat" but I will resist any threat to the basic rights of elected members because of a limited amount of abuse under the Planning Acts. I hope all members of local authorities will read the Minister's speech and will resist this threat. There are abuses of section 4 in a limited number of areas, but I would estimate that less than 10 per cent of the authorities abuse that power. Some abuse disgracefully and no party can claim to be blameless in this regard. In some areas there is evidence of collusion between parties in regard to section 4.

The Deputy and the Minister could resolve the problem if they would talk to their respective party members.

Touché. To suggest the removal of the fundamental democratic right of elected members to use section 4 against managers——

The Deputy knows that this is not suggested and should not distort the situation.

It is certainly implicit. I have enough experience to know that this is the start of it. The Minister will make a speech in several months' time in which he will say——

That may be the way the Deputy operates; it is not the way I operate.

We are concerned here with how the Chair operates. The speaker in possession should not be interrupted. Deputy Barry, without interruption.

The Minister stated:

But there appear to be genuine grounds for concern about the way in which the section is being used in a limited number of areas as a means of discarding reasonable and necessary planning considerations in particular cases. I will have to see what can be done to meet that situation.

I do not think any reasonable person could take any other meaning from that statement than the one I have indicated, that is, that the Minister intends to amend the 1955 Act to remove from councillors their rights under section 4. I warn the Minister that he should not travel along that road.

Deputy Quinn is quite right in criticising both our parties but his own party are not guiltless in some areas. At least 80 per cent of elected local representatives are very jealous of their rights under the Act and very conscious of their responsibilities and we should not do anything to upset that.

The Minister went on to state:

I also intend to examine the provisions of the legislation under which land zoning and re-zoning decisions are made by planning authorities. I have no wish to undermine the basic responsibility of elected councils for making and reviewing development plans. However, I am concerned that the manner in which these powers are being used is causing a great deal of public concern.

That is a fair comment but I would be very loth to see any more powers taken away from elected representatives.

A development plan by a local authority is not written on tablets of stone and the Act insists on a review of such a plan every five years. A review will certainly mean changes affecting various areas and this amounts to rezoning. The elected members for any area are the people best qualified to deal with this matter, but I also recognise the dangers.

In a spectacular case in Dublin the whole county council constituted themselves as a committee for discussing the development plan. What happens in effect is that when a particular area is being discussed the only people who turn up are the elected members in whose electoral ward the area is. The best way around this problem would be internal to the members of Dublin County Council, and I refer to this body only as an example. I am sure it is true of any local authority or of this House that 90 per cent or 95 per cent of the Members are honest and politicians get a bad name because of the other 5 per cent or 10 per cent. I am sure these proportions reflect the population as a whole and in that sense we represent the people.

When I held office as Minister for the Environment I wanted to push power back to elected representatives, not to take it away from them. We were discussing earlier another aspect of democracy but there is no substitution for a community being responsible for organising and managing their own affairs. I am now saying publicly what I have often said privately on this topic. I should like to see the day when the Custom House would be depopulated and all power would be transferred to the local authorities, in spite of all the faults, warts, temptations and pressures to which people are subject at local level. I still think this is the right place to have the authority.

The Minister in his speech also stated:

In addition, we intend to explore the possibility of inducing financial institutions to acquire and hold land for release to local authorities to meet their future requirements.

An intriguing concept.

I presume that financial institutions such as building societies, banks, and others will naturally release the money without any interest charges in ten years' time because they exist for the good of the community and will not want any reward for holding land until the local authorities require it. This is the kind of fiction and the lack of reality frequently found when dealing with financial matters. Financial institutions, whether they are banks or pension funds, gather from a post of small savers money that is surplus to their needs.

Debate adjourned.
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