Since there are no amendments on Report, we will proceed to the Fifth Stage of this Bill in accordance with Standing Orders.
Local Loans Fund (Amendment) Bill, 1987: Fifth Stage.
Question proposed: "That the Bill do now pass".
(Limerick East): I wonder if the Minister intends to speak on the Fifth Stage. I raised a number of questions last day but I did not put down amendments on Report Stage though I was seeking information. I got a fairly full brief from an official in the Department of Finance and I would like the Minister to deal with the effect of this legislation and the amount of money he intends writing off under the powers conferred by section 1. As I understand it, the Minister intends using the powers under this Bill which will be effective from 1 May 1988. I understand that is a gale day in the Office of Public Works, that on that day the Minister will write off capital and interest owed by local authorities to central Government amounting to £2.7 billion. Because of the double counting of certain portions of the local loans fund in the computation of the national debt, this will effectively reduce the nominal debt by £1.6 billion. I would like the Minister to confirm that this information is correct and that he intends to proceed as described from 1 May 1988.
This legislation has obvious implications. As I said, I think it is a good idea to introduce this Bill and I am not opposing its passing. If there is double counting, and there obviously is, there is no reason why we should make the national debt appear larger than it actually is. We owe enough without exaggerating it. I would like the Minister to confirm the size of the write off and the effect this will have on the national debt. Does he intend at any future date, either before or subsequent to 1 May 1988, to write off more than the £2.7 billion mentioned? Does he have any intention of introducing other legislation to eliminate further double counting in the national debt? This eliminates circular transfers. There are some savings on the administrative side in both local authorities and central Government. This Bill is to be welcomed because it will reduce the national debt nominally.
When we pick up our newspapers next May, I would not like to be informed by a Government spokesman that the debt is coming under control. I presume the Minister will be running a deficit of around £1.6 billion next year. If he is able to get a write off of £1.6 billion from the national debt from 1 May it will appear that the deficit has disappeared into thin air and that in 1988 we can borrow that much without increasing the national debt. As I said outside this House when the Minister does something like this he should put all his cards on the table. There is nothing in the explanatory memorandum or in the Minister's Second Stage speech to indicate that this Bill will have any consequences for the national debt. When we are talking about very large sums of money — and billions of pounds is a very large sum — the cards should be face up on the table and we should know not only the intent of the Bill but its consequences.
The Minister may tell the House that this is a great idea because we are eliminating the double counting and making the nominal debt look lower, and I agree with that, but why did he not tell us this when he introduced the Bill? Why did we have to drag it out of him in the House? This legislation will have more than a nominal effect.
The new economic totem is not the size of the national debt or its pecentage expressed in terms of GNP; the new economic totem is to bring the debt GNP ratio into equilibrium. If the nominal debt is reduced, we will be able to show equilibrium at a higher level of borrowing from 1 May next than we are able to do today or even next month. Therefore this does have a real economic effect. I want to make sure we are comparing like with like when we look at the figures next year — the level of debt and the debt-GNP ratio.
I ask the Minister to use this opportunity to clarify these matters and not to be tempted to do things in a surreptitious way but to inform the House fully, not alone of the intent of any legislation he introduces, but also of the consequences.
I thank the Minister for facilitating me by giving me access to one of his officials who briefed me very fully once this matter was raised — I want to give the Minister credit for that — but the issue should not have arisen. If the Minister had explained that there was double counting and that the major consequence of the Bill was to eliminate that double counting and if he had dealt in particular with the debt-GNP ratio, which is a real economic consequence, I would have been satisfied and we would not be discussing this Bill today because it would have been nodded through the last day.
Earlier I indicated that I had no objection to the Bill passing all Stages and my attitude has not changed. I do not accept entirely what Deputy Noonan has said, that this had to be extracted from or dragged out of the Minister. In my view he was forthcoming on the consequences for national accounting. I do not think the Bill was introduced as a measure to change the system of national accounting but to obviate unnecessary bureaucracy and the paperwork that went with it. I must reflect ruefully on the fact that having issued a statement to that effect pointing out that it did not have a significant effect from the point of view of national accounts and that it would be simplistic to interpret it as having that effect, Deputy Noonan manged to get more publicity by characterising this as a potential piece of stroke politics. It may be that the media are more alive to an allegation of that kind.
It was Deputy Noonan who pulled the stroke.
(Limerick East): We understand all about strokes since 1981.
My carefully and conservatively worded statement on the matter was gazumped by an allegation of stroke politics but I congratulate the Deputy on getting a few minutes on the radio in those circumstances. I should like to reiterate our welcome for this measure and I do not think it was necessary to delay it until today to get another day's mileage out of the allegation of stroke politics. In my view the measure should go through unchallenged.
Some Members, particularly those from Dublin and the big centres of population, are not familiar with the financial arrangements for small local authorities. I am interested in such authorities but I am sure that Deputy McDowell does not know anything about them. I am satisfied that the special subvention for small local authorities will continue but I should like to ask a question in regard to the financing of sanitary services. I understand that the subsidy for sanitary services for Dublin was 40 per cent, for county councils it was 50 per cent and for urban councils with valuations under £25,000 it was 60 per cent. The valuations for many urban councils has been increased well in excess of £25,000 with the result that the subsidy has reduced. The subsidies were introduced in the mid-sixties but the valuations of most urban authorities have increased since then because of the building boom in business premises and private houses. As a consequence, many urban authorities have gone to a valuation figure in excess of £25,000 and their subsidy has been reduced from 60 per cent to 50 per cent. Smaller urban councils are being victimised and I appeal to the Minister to eliminate that anomaly.
Deputy Sherlock may not have been present when I replied to the debate on the last day because I pointed out that local authorities will not be any worse off or better off as a result of this legislation, irrespective of whether the subsidy was 40 per cent, 50 per cent or 60 per cent. I should like to thank Deputy McDowell for his recollection of what happened on the last day. I was wondering over the weekend who was getting involved in stroke politics. I was amazed because I thought we were more than helpful in responding to the queries about why the legislation was introduced. If this is to be labelled as stroke politics, it may be that Deputy Noonan and his colleagues were responsible for the strokes because the measure was approved in his time in Government.
(Limerick East): That is not so.
If there were strokes it was the Deputy, or one of his former colleagues, who is responsible for them. What we are doing is stopping the non-sensical circular transfers that are costing hundreds of thousands of pounds in administrative expenses. That will be eliminated from now on. I told Members last week, particularly Deputy Dempsey, that the suggestions put forward during the debate will be pursued by my Department and the other relevant Departments. If we are to achieve savings of hundreds of thousands of pounds, as we will in this case, we will take the action necessary to bring them about.
I cannot understand why Deputy Noonan adopted a different attitude outside the House. The Finance accounts are published annually and they make the position abundantly clear. The figures and statistics compiled by the Central Bank and the OECD have taken into account the issue of double accounting and have been doing so for years. There is no question of anybody trying to hide what is being done now. Such a system was in operation many years before Deputy Noonan or I were appointed Ministers.
(Limerick East): It was taken into account in response to Dáil questions.
As I pointed out on the last occasion, while this showed a reduction in the figure of national debt it did not change our indebtedness by one ha'penny. That was made abundantly clear by me and I should like to confirm it now. It is better to deal with such issues in the House rather than running off to grab a headline on non-sensical stroke proposals, as Deputy Noonan did.
(Limerick East): What about the debt GNP ratio?
What about the Deputy listening to the Minister's reply without interruption?
It is a pity the Deputy did not listen to me on the last occasion when I relayed that information to the House. At Deputy's Noonan's request I made officials available to him to give him all the details. They spent some time on the phone with him answering his queries but, arising out of that, he ran off looking for a cheap headline. The Deputy is entitled to do that but he should be factual and honest when making statements outside the House. I have been very honest in regard to this legislation, as Deputy McDowell and others have acknowledged.
(Limerick East): Had I not raised this issue it would not have been mentioned by the Minister. It was not contained in his Second Stage speech.
That is nonsense. The system operates in the Finance accounts annually and the Deputy's former colleague, my predecessor, approved this legislation. I am sorry if he did not inform the Deputy about it.
(Limerick East): That is not true.
If there are strokes involved in this they lie where all the strokes lie, with the Deputy and his party when in Government.
(Limerick East): The stroke was in not informing the House until the information was drawn out of the Minister by questions.
That is nonsense.
The Chair will get a stroke if the House does not move away from this.
The Chair must be in bad form; there is nothing wrong with a little repartee.
In the course of my Second Stage speech I mentioned a figure of £4.5 billion as being the maximum amount authorised by the Oireachtas as against £5 million when this was introduced some years ago. That amount had not been reached and is not relevant to the amount of the write off as it includes funds advanced for mortgages which will not be affected by the present proposals. The amount involved on mortgages is about £700 million. There will be a write off of £2.7 billion as confirmed, leaving a reduction in the debt of £1.6 billion. I repeat that there will be no change in our indebtedness arising from this position.
We will still have to pay all that we owe and it does not change one iota in that regard. As I said when we previously debated this matter, nobody wants to give a misleading impression——
(Limerick East): What about the GNP ratio?
What about it?
(Limerick East): Will it change anything?
It does not change anything apart from the statistic. In so far as it was accounted for in the Central Bank or OECD statistics it did not make any difference.
Why has the Bill been introduced?
It has been introduced for the purpose of administrative savings. I am sorry the Deputy was not here the last day when I explained it.
I am sorry, I could not be here.
(Limerick East): We have had to ask parliamentary questions in regard to double counting as that information is not given automatically to the House. I presume such information will be given in future. It appears that the debt will be an equilibrium as a ratio of GNP after the write off. Will the Minister restructure the whole thing or will he take advantage of the proportion? That is the real economic issue.
It is quite easy to get the relationship to which the Deputy referred for any year by adding or subtracting particular amounts, including the changes that may accrue in this area but it does not change the underlying fact of what we owe and will continue to owe.
(Limerick East): In striking the proportion in future between the debt and GNP, will the Minister be working from the same nominal base or from the new, lower nominal base?
Deputy Noonan knows that Fifth Stage is not Committee Stage. The Minister has been called on to conclude and the question will be put at 4.30 p.m. If he concludes earlier perhaps he will answer a specific question but we cannot treat this as Committee Stage.
I asked the Minister a question but he did not answer me. I referred to the reduction from 60 per cent to 50 per cent subsidy for smaller local authorities as a result of going over the £25,000 valuation and I asked if he would review the threshold in view of the fact that some smaller local authorities are affected.
I was making sure that where there were anomalies of 40 per cent, 50 per cent and 60 per cent local authorities would not be discriminated against arising from this change. The question in relation to policy is a matter for the Minister for the Environment and if he wishes to give an increased grant towards the schemes it is a matter for him.
Arising from this Bill, does the Minister expect to issue a revised series of national debt figures for the last five or six years for comparison purposes as was done after the vesting of An Post and Telecom Éireann which had a significant effect on national accounts?
If the Deputy puts down a question in that regard I will be glad to deal with it.
I am asking a question now. Is the Minister trying to rig the figures? If that is not the case will he agree to issue a revised series for the last five or six years so that we can have comparisons and know what improvements have taken place?
I have no hesitation in agreeing to such a request. I resent the Deputy's attitude in regard to rigging figures. Indeed, I resent anybody inside or outside the House talking in that manner when they know it is untrue.
I did not mean to offend the Minister but those of us who were here in 1980——
Deputy Mitchell should know that on Fifth Stage he may only refer to what is in the Bill.
This is pertinent——
It is not in the Bill.
The Minister was a member of the Government in 1980——
The Deputy may only refer to the Bill. You are imposing on what I regard as a concession by the Chair to allow this type of questioning. The Minister has answered and the question which Deputy Mitchell seeks to ask is not pertinent to the Bill.
I am sorry for encroaching on your generosity. The Minister has now agreed to issue revised figures for the last five or six years for purposes of comparison. These are badly needed so that there will not be false claims about improvements in the national debt.
(Limerick East): The last time we discussed this matter I asked a question about the powers in section 1 and the Minister said he would give me an explanation as to why he needs to waive not only the capital and all the interest but also part of the interest. What circumstances would arise where part of the interest would be waived?
I replied to that question the last day. It is included to give the necessary flexibility to deal with an unusual case which might arise in future without having to legislate again. It may never arise but if it does we will have the flexibility to deal with it.
(Limerick East): Has the Minister a specific case in mind?
No.
Question put and agreed to.
The Bill is certified a Money Bill in accordance with Article 22 of the Constitution.