There are a few matters to which I want to refer, and for which I asked the indulgence of the Committee on this sub-section. The sub-section provides that the bonds shall be redeemable at par in British currency together with the payment of all arrears of interest, and the Minister for Finance shall make arrangements for the redemption thereof within eighteen years from the 18th December, 1924, by means of yearly or half-yearly drawings. The part to which I direct attention is the fixing of eighty years as the time limit in which the bonds should be redeemed at par. I think that as in other financial arrangements made under previous Land Acts, and every other security in the British Empire, the fact that no time limit is fixed for the redemption of the money, is a system which I think we ought to follow here, and leave to the Minister or the Government of the day the option of redeeming them whenever they thought fit. The very fact of the fixing of this period of eighty years greatly enhances the value of the bonds, and correspondingly increases the liability of the tenants who will have to repay them.
SEANAD IN COMMITTEE. - LAND BOND BILL, 1925—THIRD STAGE.
AN CATHAOIRLEACH
I thought that was more or less regarded as a fallacy, and was exploded on Second Reading.
No, not quite. I was not quite satisfied with the argument of the Minister in endeavouring to explode that, because we had it stated here by one supporter of the Government that there was at least one class of tenant who would gain by not inflating the value of the bonds, and that those tenants would be able to redeem the bonds on their face value.
AN CATHAOIRLEACH
Are you right in saying that there is an absolute provision that the bonds are only to be redeemed at the end of eighty years. It says "within eighty years." Would not that entitle them to be redeemed at any time?
What I wish is to have them go beyond eighty years.
If I may interpose for a moment I would point out that the Land Act provides that bonds should be redeemed in 67 years odd. It is presumed that we would be able to complete land purchased in 10 years' time. The idea of the eighty years is simply that some bonds may be found to be so advanced as that they will be redeemed in 67 years. Ten and sixty-seven are seventy-seven, so we say eighty years. This particular provision has nothing whatever to do with the inflation of bonds. It is simply a provision under the Land Act of 1923.
When the Land Act of 1923 was going through I suggested to the Minister an amendment fixing 67 instead of 80 years. My amendment was not accepted. The tenants will have to pay annuities at a rate governed by the interest at which the Sinking Fund will be invested. There is nothing that shows that the tenants will have to pay only for 67 years. I would not accept that statement unless it was put in writing. The rate at which the Sinking Fund will be invested entirely determines the period during which the tenants have to pay their annuities, because the Act does not specify any term of years during which the tenants would have to pay. It merely says that the annuities would have to be paid until the principal is repaid and until it ois certified by the Minister that such principal has been repayed. The effect of binding the Government of this country to repay these bonds at the end of eighty years greatly enhances their value and correspondingly increases the tenants' liability. I, therefore, move that that portion of the paragraph referring to the eighty years' period be deleted.
AN CATHAOIRLEACH
What you propose is, to strike out the words "within eighty years?"
Yes.
Mr. HOGAN
The fact is that annuities will be redeemed under the Act of 1923 within sixty-seven years. That is a fact. It is a matter of intricate calculation which we need not go into now. There was an offer made to us to give a guarantee providing that redemption shall take place within eighty years. That was the offer, and we accepted, because we know that we can complete land purchase within ten years.
AN CATHAOIRLEACH
That was one of the conditions on which the guarantee was given?
Mr. HOGAN
Yes, that was the offer.
I would be very glad to hear from the Minister what it is proposed to do as regards the investments of the Sinking Fund under this Act.
AN CATHAOIRLEACH
Has this anything to do with your amendment? You could put it as a question to the Mnister, but remember we are in Committee.
I take it that the annuities under this Act will be re-retained by the Free State Government here and not transferred to London, as the annuities under the other Acts have been. I wish to know whether there will be any department for here to deal with this matter of the investment of the Sinking Fund, and also for furnishing the yearly reports of the investments in which they put this money, because at present if the Sinking Fund were iinvested in National Loan it would realise 5¼ per cent. In that way, if it is always invested at the highest possible rate of the interest consistent with thorough the security it ought to diminish greatly the number of years during which the tenants will be paying.
Mr. HOGAN
The troubles seems to be that Senator Linehan thinks that the Sinking Fund will be invested at 2, 3, 4, or anything up to 10 per cent., and that no one can say in what time the bonds will be redeemed. That is not the position. The Sinking Fund is used yearly to redeem bonds and, in fact, it is always invested at 4½ per cent. It is used for the purpose of redeeming bonds and yearly drawings are provided for under the Land Act. The money is, in fact, invested at 4½ per cent. It is on that basis the calculations are made and it is on that basis that you are absolutely certain of the period.
There is nothing in the Act which compels the Government to invest the Sinking Fund for the redemption of the bonds?
Mr. HOGAN
There is in the Act of 1923.
If they are bound they cannot go outside it, of course.
Mr. HOGAN
That is the whole scheme of the Act.