Seanad Éireann debate -
Wednesday, 26 Jan 1927

Vol. 8 No. 3

LOCAL GOVERNMENT BILL, 1926—SECOND STAGE.

Question proposed: "That the Bill be read a second time."

Mr. O'FARRELL

I should like to draw the attention of the House to Section 11 of this Bill, which proposes to aggravate the position in regard to rates which is already a subject of keen discussion and controversy before different local authorities.

The House will remember that the Local Government Act of 1925, Section 69, made provision for exempting certain buildings from rates to the extent of two-thirds of the total amount, provided those buildings were commenced and completed within the period 1st April, 1920, to 1st April, 1927.

As an indication of the effect of that exemption we have only to take the City of Dublin. The Minister, in reply to a question in the Dáil recently, indicated that the exemption applied to 64 buildings in Dublin with valuations of over £100, and that the total valuation of the exempted buildings was over £31,000. Now, with the rates at 16/- in the £, that means that rates on those new buildings were remitted to the extent of £16,500; in other words, the remainder of the ratepayers had not only to pay their own rates but they had to make up this exemption to the extent of £16,500. That applies not only to the City of Dublin but to the whole of the Saorstát. But what does the new Bill propose to do? It proposes not only to leave that unrelieved but it actually proceeds to aggravate the position. Section 11 of this Bill proceeds to extend this exemption to all houses completed before the 1st April, 1930; in other words, it extends the period for building by three years, and it goes further and provides that the period of exemption from the payment of the full rates charged shall be in the future seven years from the date the house is built. In other words, a building completed in the last day in April, 1930, need pay only one-third of the rates until 1937, whilst previously, the latest date on which such rates would operate was 1933. It is here extended by four years in the period during which the lower rate shall obtain, and there is an extension of three years in the time during which new buildings shall come within the scope of the exemption. Now, it is very good to be generous and to encourage building and so forth, but I do not know that we are entitled to do that to excess at the expense of the other ratepayers. We have complaints every day of business houses closing down in Dublin, and one of the reasons given is the high rates obtaining; and here we proceed not to reduce the rates on these in business for some years but actually to increase them in order that people with new buildings who will be their very competitors will only be paying one-third of their rates.

I know that one of the arguments will be that this will encourage the building of factories and business houses and so forth that give employment. But we have to consider the people in business to-day and who are giving employment now. It is said "A bird in the hand is worth two in the bush." We should not seek to impose too great a burden upon the people who are giving employment all the time, paying their rates, and meeting their calls, by being over generous to and solicitous for those who are coming along. There have been demands for the repeal of Section 69 of the Act of 1925. Instead of responding to that the Minister has decided to extend the principle very extensively and thereby aggravate the anomaly already existing. I do not know that he has made any case at all. It is well we should know that any alleged generosity that we are extending in this case is not at the expense of the State as a whole but at the expense of the remainder of the ratepayers who have to make up the rates that those who get remissions do not pay.

Mr. DOUGLAS

I agree with Senator O'Farrell, to the extent that Section 11 is a section that wants to be very carefully examined into with a view to seeing whether it ought to be amended. I do not agree with him in his general attitude. It seems to me that there are three classes of buildings that can be described as new under Section 69 of the old Act and Section 11 of this Act. One is the case where an absolutely new house is built where no house was before. In that case it is true that for seven years the rate will be one-third of the rate fixed upon the house. I think it is quite possible that one-third is too low where a house was put where there was no house before. The second class is that of a house pulled down in the City and a better class house built in its place. Under the new section, if I understand it rightly, what will happen will be this: The new house will be valued, then either one-third, or the old valuation, whichever is the higher, will be payable in that case. Then again, there is another class which is deemed under both Acts to be new buildings, that is, houses substantially enlarged and improved. In that case, under the old Act, if the Commissioners and the Minister in the event of an appeal agree that it was substantially enlarged under the old Act, then, on that, one-third of the rates shall be so chargeable—a condition which I agree was not fair to the citizens or the ratepayers. But may I point out to the Senator that when it provides that, in the case of the improvement of an old house, it shall pay the same rates as before, the City is not losing anything. Whether seven years is too long or not is a detail; a shorter period could be provided if necessary, but I think it is a perfectly reasonable proposal, if we are to encourage the pulling down of old houses and the replacing of these old houses by new buildings. If we are to have substantial improvements, it is quite reasonable to say that the rates shall not be increased for a period. The City does not lose.

In the case of very wealthy companies it does not much matter, but in the case of smaller firms or houses in the City where capital has nearly always to be borrowed in order to make improvements which are of ultimate value to the City, they should be free from rates during a number of years in which heavy payments have to be made on the loans. I think that is a reasonable proposal and one that I would like to see made clearer, that during certain years there should be no increase. The previous proposal was that it should be one-third. That was not a reasonable proposal, I think, but the principle adopted in the new Act is, I think, reasonable. But I do not like the arrangement which simply says if there is a substantial enlargement or improvement, the right of appeal to the Minister is given. It does not mean a judicial inquiry at all. Papers are simply sent to him and someone may look at them and, according to some principle or other of size, a decision is arrived at. What I suggest is that if, as in the new Act, Section 11, you are doing away with the old evil principle that it shall be one-third even though it meant a reduction in the rates previously—I am referring to old buildings substantially enlarged, not to the other section—I think any enlargement that involves an increase should be applicable and there should be no need to say "substantial."

If a man spent £500 in improving the appearance of his house in the city of Dublin and, as a result, his rating was increased by £50, he is just as much entitled to go on the old rates as a person who spends £5,000 and whose rates are increased by £150. Under the old system, if the improvements were substantial you got the benefit, but if the rates did not reach a certain figure there was no benefit at all. I suggest when this Bill comes before us on the Committee Stage we should try to remedy that. I agree with some of the points raised by Senator O'Farrell, but I think it would be a great mistake to take out this section. I cannot agree that in an old city like Dublin, when a man pulls down a house and replaces it by a new building, the city is losing, if that man continues to pay the same rates as heretofore. Anything that will encourage people to erect new houses instead of old ones, should receive our support, and it is quite reasonable to give these people some concession. As long as the City loses nothing during the period that the concession will be offered, I think it is perfectly reasonable.

Mr. DOWDALL

I find it rather hard to understand the attitude of Senator O'Farrell on this question. Every possible effort is being made not only in this country but in nearly every country in the world, to induce people to build and this process of giving exemption from rates I believe was originally initiated in New York. If ever there was a case where a speculative builder and anybody impregnated with a little enterprise should be encouraged, I think it is in this country. With regard to the points raised by Senator O'Farrell I wish to put this aspect of the case to the House. A man has a house which has been burned down maliciously, or otherwise. He pulls down the walls and re-erects it. The valuation on that house is increased to a very large figure. This new building is immediately valued on a higher scale and while that man gets a remission for a few years of a certain amount of rates, eventually after a lapse of five or six years, he will be paying on a heavier scale than his neighbours.

I do not think Senator O'Farrell has given such considerations as these the attention they really deserve. Everybody wants houses. The Government has been introducing Acts providing subsidies to encourage the speculative builder to proceed and build but on the whole while something has been done the result is not in any way sufficient to cope with the existing shortage of houses. I know cases where men in business whose premises were destroyed during the recent trouble, have been at a great loss trying to carry on in temporary premises, and when they rebuilt the premises were valued at three or four times the amount of the old valuation. It would be an injustice to those people if they did not get some remission for a periods as to enable them to recover.

Mr. KENNY

The arguments put forward by Senator O'Farrell, as to the additional burdens that are being placed on the ratepayers, by the operations called into existence through the exemptions given in this Bill, do not seem to bear examination at all. Take the position to-day. If no inducement is offered to men to build new houses or substantially to improve existing buildings, then they will not engage in this work and the ratepayers will not be relieved, but if you call into existence an asset of that sort, upon which a valuation is placed, even though an exemption of two-thirds of the rates is given, the ratepayers benefit to the extent of whatever amount of rates is paid by the new building. It represents an increase in the rating of the whole city. To that extent the other ratepayers are relieved.

The argument is also put forward that it is not fair to persons who are at present engaged in business, that facilities should be given in this way to rivals who crop up in their vicinity or in their locality, or that they should be placed on a different footing as regards rating. I think any man to-day who would even contemplate building new premises in a locality where there are established businesses of the same kind he intends to engage in deserves encouragement. I do not think that the remissions allowed under this Bill will be such as need cause any nervousness to persons who have established business of the same kind as a man who benefits under this Bill intends to engage in. Another factor that has to be considered is that the man with an established business possibly built his house many years ago, and the man who builds to-day has to invest far more capital in the building of his house. In the next place, a man who wishes to establish a business has a pretty difficult task before him. He has to form his business, and I do not think this clause needs any comment on that score. A man starting in business is placed at a very considerable disadvantage and, as I say, he requires to have a considerable amount of courage—to be very optimistic—to engage in the setting up of a new building and the formation of a new business among rivals. I suggest that as there is no loss to the ratepayers under the present conditions, unless you offer some considerable inducement, men will not engage in building new premises. As for the Labour point of view, I think it has rather surprised this House very much, that the opposition shown to this particular clause comes from the people who will benefit mostly. If you do not offer some inducement this work will not go on. By offering these inducements, if work results from them the ratepayers will benefit certainly, because extra rates come in, and Labour benefits by the extra employment provided.

Mr. BENNETT

It seems to me that the proposal commits the county councils to certain new charges. These were allocated within the last year or so, owing to the dissolution of the rural district councils and the boards of guardians. Hitherto the rate was on the area of the boards of guardians, but now it seems to be varied.

MINISTER for LOCAL GOVERNMENT and PUBLIC HEALTH (Mr. Burke)

What section is the Senator referring to?

Mr. BENNETT

Section 10, which seems to charge the county councils with the superannuation of various persons superannuated by the local bodies. If that was so in every instance it would be a good idea, but Section 5 continues the existing system of charges for labourers cottages in particular rural districts. In this instance the same treatment should be adhered to. It is within my knowledge that at the establishment of the boards of health, furniture and other materials were taken from one rural area and given to the county councils without any resulting compensation to the district from which they were taken. I think that was unjust. On top of that, I think it is not just that the county council, as a whole, should be made bear the cost of the abolition of particular services in these areas. Some areas may have been much more liberal in granting superannuation than the council as a whole would have been. It would be a much better plan, I think to allow the district councils to superannuate these persons and bear the cost. This particular section, I notice does not apply to Dublin County Council. I would like if the Minister informed the Seanad why that is so. There should be equal treatment in each county council area.

Mr. FARREN

From the remarks of Senators, it seems very easy to talk of giving people encouragement to build. There is, however, such a thing as being generous at other people's expense. The principle involved in Section 11 of this Bill was fully discussed on Section 69 of the Local Government Act of 1925. I have a distinct recollection of an amendment being moved to that section for the purpose of relieving from the payment of rates people who rebuild their premises or who intended to rebuild. The section was made retrospective from 1925 to 1920. The net result was that premises were built that could not be built owing to the abnormal circumstances that prevailed. By making the section retrospective rates paid on premises that had been built three years had to be refunded. These rates amounted to £16,000 annually. Counting up what that represents, I suppose on the valuation of Dublin it would come to something like 6d. or 8d. in the £. The net result was that the ratepayers of Dublin, in addition to having to pay their own rates, had to pay a further 8d. in the £ owing to the generosity bestowed on other people who had not to pay their just dues. The amendment was an afterthought and was not in the Bill at first. It was suggested on the Report Stage in the Seanad, and the argument put forward for it was that it was to encourage people to build houses and to build them quickly. Another extraordinary thing occurred at that time. With the usual generosity, the "class" line was drawn so that the section did not apply to houses built under the Housing of the Working Classes Act.

Somebody will come along and say they were built under subsidies, but the other houses to which this particular section applies got subsidies up to £200. That section, as far as subsidies are concerned, applied to them, and there was a remission of rates for 20 years. The whole principle is vicious, I believe, in giving encouragement to people to build houses under certain circumstances, but in being generous to one section of the community why should that generosity be at the expense of another section of the community? I think the whole thing will require very careful consideration, and I will oppose it as much as I can until the principle is made to apply all round. I think it is most unjust and unfair that working class dwellings in Dublin, for which ordinary working class people with small means are being compelled to pay 16/- and 17/- a week out of their income for rent, are not exempt. These dwellings pay rates, and I think the exemption given to large premises is unfair and unjust.

Mr. BROWN

The reason the houses of the working people were exempted from relief given by Section 69 of the Act of 1925 was this, that they got relief—they were exempted from rates under this very Act mentioned in sub-section (3) of Section 69 of the Act of 1925. But I agree that if the relief they get under that Act is smaller than the relief they would get under this Bill that they ought to get the larger relief.

Mr. BURKE

Senator Douglas replied very effectively to Senator O'Farrell. This particular section is one that we will have most discussion on at the Committee Stage. I think everybody realises pretty clearly that a person undertaking building in Ireland at the present time is facing a very difficult problem. The overhead charges and the other expenses that a person engaging in building at present has to meet are appalling, and it is only right at a time when we are anxious to give employment and to encourage the building of factories and the housing of working classes and schemes of that kind, that the State should do its part also. I am quite willing to admit that the 1925 Act was defective in one respect, namely, that local authorities were placed at a considerable disadvantage where they had calculated on getting rates of a certain amount from certain property and where they were in the habit of getting those rates for a number of years. If this Act is not put into operation very quickly the whole rates of the year will be upset. In this Act we have taken the precaution against that happening, because any building constructed under this Act, if revalued, the remission will not operate to make the rate less than it was before the revaluation. It is only where the valuation is increased that this two-thirds rate will operate. If Senator O'Farrell had read paragraph (b) of sub-section (6) of the clause I think it would be quite clear to him. That paragraph reads:

"The valuation of the rateable tenement or hereditament consisting of or comprising a new building shall not be deemed to be reduced in pursuance of sub-section (2) of Section 69 to an amount less than the amount at which such tenement or hereditament was valued immediately before the completion of such erection, enlargement or improvement."

That makes it quite clear. Senator Farren dealt more with the previous Act than with this Act, which is an amendment to it. He made one statement with regard to the retrospective provision in Section 69 which is inaccurate, namely, that it resulted in various local authorities having to refund the rate that had been collected. That was quite untrue, as the Act did not come into operation until 1926, and in no case was there a refund collected from the local authorities.

Mr. O'FARRELL

Will not the Minister admit that the rates that were previously being paid were reduced by two-thirds, and to that extent the existing ratepayers had to make up the deficit by increased rates?

Mr. BURKE

That is not the point that Senator Farren made.

Mr. O'FARRELL

It amounts to the same thing.

Mr. BURKE

Senator Bennett made a few points that will probably be dealt with on the Committee Stage.

Question put and agreed to.

The Seanad adjourned at 4.55 p.m. until Wednesday, 2nd February, 1927.