Seanad Éireann debate -
Wednesday, 22 Mar 1933

Vol. 16 No. 14

Public Business. - Land (Purchase Annuities Fund) Bill, 1933.—Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Finance (Mr. MacEntee)

In moving the Second Reading of this Bill in the Dáil, I described it as a simple and straightforward measure. Its purpose, as is clear from sub-section (1) of Section 1, is to enable the moneys which are at present in or which should hereafter be paid into the Purchase Annuities Fund to be paid out to the Central Fund. It is desirable to take this course in order to relieve, first of all, the local authorities and, secondly, the Exchequer and taxpayers generally of the disabilities which the existing position, particularly as it arises from the operation of the Guarantee Fund, might otherwise impose on them. As the Seanad, no doubt, is aware, a Guarantee Fund has been a feature of all Land Purchase Acts since 1891. As originally constituted, and as it remains to-day, the fund was formed by the hypothecation to various Land Purchase Funds and Accounts of the several Exchequer grants made to local authorities in relief of local taxation, it being arranged that the disbursement of these should be made by the Exchequer through the Guarantee Fund.

Under this arrangement, the local taxation grants are, in the first instance, paid out of the Central Fund into the Guarantee Fund, which is then used to make good to two other funds such deficiencies as may arise therein by reason of the non-payment or non-collection of land annuities. One of these two funds is known as the Land Bond Fund and was established under the Land Act of 1923 for the receipt of the annuities and payment of interest and sinking fund on bonds created for the purpose of that and subsequent Land Acts. The other fund, known as the Purchase Annuities Fund, is the fund referred to in this Bill. Like the Land Bond Fund, the Purchase Annuities Fund was also created, as many members of the House may be aware, under the Act of 1923. It constitutes a Clearance Account for the purpose of receiving the land annuities payable under the earlier Acts of 1891, 1903 and 1909. It accordingly fulfils some of the functions originally assigned to the Land Purchase Account and the Irish Land Purchase Fund, the two funds referred to in Section 12 of the 1923 Act which this Bill proposes to amend. The amount of the Guarantee Fund set out in relation to the two principal funds to which I have referred—the Land Bond Fund and the Purchase Annuities Fund—was naturally related to the total amount of annuities collected under the several Land Purchase Acts. That subsequent alteration might be made in the amount that is collectable was not foreseen and, accordingly, when the Guarantee Fund was established, no provision was made to deal with the situation which began to arise in May and June of last year.

As the House will recollect, arising out of that situation, the Government granted moratoria in respect of all the land annuity arrears arising out of and prior to the May-June gale and the November-December gale of 1932 and promised a further moratorium in respect of the May-June gale of this year. It has further been decided to introduce legislation which will reduce by 50 per cent. all annuities and rents payable under all the existing Land Acts whether passed by the British Parliament or by the Oireachtas, and this measure will involve a permanent reduction of £2,100,000 in the annuities and rents collectable under all the existing Acts. So far, therefore, as the annuities payable under the pre-1923 legislation are concerned, the position has been created in which, instead of £2,968,785 being collectable in respect of the gales of last year, there was collected, owing to the moratoria to which I have referred, only £1,061,275, or approximately 35 per cent of the amount required to fill the Purchase Annuities Fund for the current year. There was thus left a considerable deficiency in that fund which was provided for in the following way: First of all, to some small extent, by an advance of £191,978 from the Central Fund and, secondly, to the extent of £1,424,022 by impounding local taxation grants. It is true that, to some extent, the effects of the latter operation on the finances of the local authorities were off-set by a special issue of £500,000 out of the Emergency Fund but, nevertheless, there was still left due to local authorities a sum of £924,000.

It may be well at this point to clear up certain misconceptions which seem to be cherished in certain quarters as to the real origin of the moneys now in the Purchase Annuities Fund. During the discussion in the Dáil on this Bill, it was freely alleged that the purpose of the Bill was to take moneys that had been collected from the farmers and to utilise them for purposes other than those for which they were originally collected. It is hard to understand how an opinion of this sort could be held by anyone who understood the operation of the Guarantee Fund and the Purchase Annuities Fund.

As I have already endeavoured to explain, the annuities are paid into the Purchase Annuities Fund as they are collected. If there is any shortage in that collection, that shortage is made good, not out of the pockets of the tenant purchaser as a class, but out of the grants which are made by the central authority to the local authorities in relief of local taxation. Accordingly, when during last year, the land annuities collected fell short by over £1,900,000 of the amount required to fill the Purchase Annuities Fund a large part of the deficiency had to be provided for, originally, at any rate, at the expense of the local authorities mitigated, as I have already indicated, to some extent, by the operation of the Emergency Fund, but even the quantum of local taxation grants available was insufficient to wipe out the whole shortage of the fund and a further £191,978 had to be advanced from the Central Fund. If, instead of regarding the £500,000 paid from the Emergency Fund to the local authorities as an advance from that fund to those authorities, we regard it as an advance from the Emergency Fund to the Guarantee Fund, made in order to allow an equivalent amount of local taxation grants in that fund to be released therefrom to the local authorities, we find that the Purchase Annuities Fund, as it at present stands, is made up as follows: By land purchase annuities collected, £1,061,275; by advance from the Emergency Fund, £500,000; by advance from the Central Fund, £191,978; by local taxation grants withheld, £924,022. It would be thus seen that approximately only one-third of the money in the Purchase Annuities Fund has been derived directly from the tenant purchasers. Accordingly, therefore, if no other considerations were to arise there is no equitable reason why these moneys should not be appropriated in the first instance for the general purposes of the Central Fund, but in particular to repay the advance to that Fund and the Emergency Fund and to put the Exchequer in the position to disburse to local authorities the grants which in normal circumstances would be due and payable to them.

Some point may be made in regard to the £1,061,275 collected as land purchase annuities. This amount was collected in respect of annuities payable under the pre-1923 Acts. The position of those who bought out under the Act of 1923 and subsequent Acts of the Oireachtas has also to be considered. These purchasers also have received the benefit of the moratoria and are to receive the proposed permanent reduction. At the present moment the total annual cost to the Exchequer of interest and sinking fund on the existing 1923 Land Bonds is approximately £1,100,000 which, it will be noted, is slightly more than the amount collected from the pre-1923 tenant purchasers. It is equitable that the cost to the Exchequer should be set off against the amount collected from the farmers which has found its way into the Purchase Annuities Fund.

To return now to the position of the Purchase Annuities Fund and the Guarantee Fund. So far I have dealt merely with the situation which has been created by the moratoria in respect of the annuities falling due during last year. If the Guarantee Fund arrangement be not suitably modified a similar position will arise out of the moratorium to be granted in respect of the May-June gale of 1933, and the further general reduction of all the purchase annuities and Land Commission rents by 50 per cent. Once more we shall have a deficiency in the Purchase Annuities Fund and the Land Bond Fund, and once more, if the local authorities are not to suffer in consequence, the Exchequer will have to make a special provision to meet the deficiency. This time, however, the position will possibly be somewhat more serious than last year, in so far as the total deficiency on the Purchase Annuities Fund and the Land Bond Fund is not likely to be much less than £2,000,000.

Taking stock of the situation we thus find ourselves in this position, that in respect of the Purchase Annuities Fund there is an actual deficiency of £1,616,000 which has had to be made good in the first instance out of the Guarantee Fund, and subsequently provided for by advances from the Central Fund and the Emergency Fund, and by the withheld grants from the local authorities. There is in addition a considerable deficiency on the Land Bond Fund, which has also to be met in the first instance out of the local taxation grants because the Land Bond Fund is secured in the same way as the Purchase Annuities Fund by the Guarantee Fund. I should like to emphasise the actual position, that, as the law stands at the present moment, local authorities are not entitled to get one penny piece of the £2,198,000 which was voted for them last year in the relief of local taxation. We are bound under existing legislation to impound that money in the Guarantee Fund and to transfer it, not to local authorities for whom it was originally intended, but to the Purchase Annuities Fund, for whom the Dáil at any rate voted it last year and intended it. That is the situation which falls now for final liquidation.

There are four ways in which the position which has arisen and which will arise, as I have described, can be dealt with. (1) We can allow the statutory position to remain as it is and impose additional taxation to provide the local taxation grants twice over, which I think would be unthinkable. Or (2) still allowing the statutory position to remain as it is, we can pay the local taxation grants out of the Guarantee Fund into the Purchase Annuities Fund and withhold them, or the equivalent of them, altogether from the local authorities, which I think, once again the House will agree, would be equally unthinkable. Or (3) we can borrow the money necessary to fill the Purchase Annuities Fund and the Land Bond Fund, but that course would involve additional and wholly unnecessary taxation on the people. I submit none of these courses would be justifiable in present circumstances. There remains only the last and the simplest method of dealing with the problem and that is the method proposed in this Bill, which is to pay the moneys in the Purchase Annuities Fund into the Exchequer to be used for the general purposes thereof.

Some attempt may be made as it was made elsewhere to oppose it on the ground of high policy. It was suggested that if we use these moneys that use will in some way intensify or prolong the dispute between ourselves and Great Britain. So far as that dispute is concerned the essential element in it is that the moneys have been withheld, as we believe justly withheld, and the fact that they have been placed to one account rather than in another, and utilised in one way rather than in another, has not influenced the development of the dispute one way or another. The placing of the moneys in the Suspense Account in the first instance was a gesture which indicated our readiness to submit to fair arbitration all the matters in dispute. It was a gesture which unfortunately met with no response, albeit it was for us a costly one. It has cost us already over £20,000. If we are to continue to hold the moneys in the Suspense Account it will cost us very much more during the coming twelve months.

The question I put to the House is: Can we afford to keep it there doing nothing, and earning nothing? We say the money is ours. We believe we have a right to use it. If we do not use it we shall have to find its equivalent, either by taxing the people or by borrowing, which, again, as I have said, means additional taxation. Should there, as we all hope there speedily will, be found a solution to our difficulties with Great Britain and should, as a result of that solution it be necessary for us to make payment to that country, it will be time enough for us then to go a-borrowing, and I have no doubt when we do go we shall find our credit good and shall have no difficulty in raising on reasonable terms whatever sum may be necessary. For these reasons, and because if it is not passed, local authorities will be inconvenienced, their finances gravely endangered, and additional burdens placed on the people, I would strongly urge the Seanad to expedite the passage of this Bill. I hope the House will see its way to allow it to pass through all stages so that it may become law before the close of the current financial year.

Mr. Toal

Local authorities feel very uncomfortable, especially those which have already struck a rate for the coming year, because portion of the deferred annuities are not going to be paid. It is a very serious matter for county councils that have struck rates. For instance, in County Monaghan, the county council struck the rate because they were led to believe from statements that appeared in the Press that the total deficiency of the land annuities would be paid by the Government during the present year. The county council were a bit alarmed to find last week that that statement might not be correct. The amount in question would represent a considerable reduction in the rates in County Monaghan. I hope the Minister will be able to assure the House that this money will be paid to local bodies.

Mr. Wilson

The cause of the deficiency is due to the fact that farmers have not paid their annuities. That is due to the propaganda that was carried on in this country for the past couple of years, when they were told that the money was not to be paid to Great Britain. Naturally the farmers availed of the excuse for not paying anybody. As a result we find ourselves where we are to-day. It is plain that the local authorities cannot carry on if they do not get the money. There is no possibility of this House agreeing to the levy of fresh taxation for the £2,000,000 involved. The only source, of course, is the money which has been withheld from Great Britain. I am not going to take exception to the payment but, there is this to be said, that two years ago the present Government, by propaganda, maintained that while their policy was to withhold the land annuities and to derate farmers in toto, we find a different position to-day.

The proposal is to allow a rebate of half the land annuities, which is not the same thing. I dare say the fact is that the money is not there, that there is no chance of getting it, that times are bad, and that that accounts for the Government's change of attitude. Notwithstanding that fact, and that prices are bad, the amount of money which in future will be given to local authorities for the relief of taxation will be diminished to the extent of close on half a million pounds. While the farmer will receive a remission of half of his land annuities in the future, he will be faced with a debit on his local rates of £440,000 a year, or something like that. The trouble between this country and Great Britain has arisen over this thing and the farmer will be at a loss whether the money is held or not. In addition, we are faced with a loss at a time when we have not an opportunity of selling our stock even at the prices to be obtained.

Mr. Milroy

I should like to ask for a ruling on a particular point. This Bill is described on the Orders of the Day as a Certified Money Bill. In the Constitution, a Money Bill is defined in Article 35. Article 35 says:—

"A Money Bill means a Bill which contains only provisions dealing with all or any of the following subjects, namely, the imposition, repeal, remission, alteration or regulation of taxation;"

I take it that this Bill is not one of those.

"the imposition for the payment of debt or other financial purposes of charges on public moneys or the variation or repeal of any such charges;"

This Bill deals with none of those.

"supply; the appropriation, receipt, custody, issue or audit of accounts of public money;"

"Public Money"—I emphasise that. This is not Public Money.

"the raising or guarantee of any loan or the repayment thereof;"

I take it that this Bill is not for that purpose.

"subordinate matters incidental to those subjects or any of them. In this definition the expressions ‘taxation,'‘public money' and ‘loan' respectively, do not include any taxation, money or loan raised by local authorities or bodies for local purposes."

I submit that this Bill does not come within the terms of that definition and cannot be regarded as a Money Bill. I should like to have a ruling from the Chair on that.

Cathaoirleach

It is not for me to rule on what is a Money Bill. The matter is not in my hands at all. This Bill has come to us, certified as a Money Bill, from the Ceann Comhairle. I would point out to the Senator his Standing Orders which give him a certain manner of dealing with the particular matter which he now raises. The Senator should study his Standing Orders. It is not for me. The Bill is before us as a Money Bill and I have nothing to say to it. The House has certain powers of questioning Money Bills if they so desire; but that is for the House and not for me.

Mr. Jameson

We must act on the certificate, but the House has certain rights and there are certain steps to be taken when this House disagrees that it is a Money Bill.

Cathaoirleach

Quite.

Mr. Jameson

I do not know whether Senator Milroy wishes now to make any further arguments on the subject of whether the House should take action on this particular aspect or not?

Mr. Milroy

All I desire is simply to know whether this is a Money Bill or not.

Mr. Jameson

It is not for me to raise the matter if the Senator does not wish to go forward. It is quite evident that the Senator cannot appeal to you, sir?

Cathaoirleach

No.

Mr. Jameson

But it is a question which I think the House should give some mind to. This is a Bill which involves, as we listened to the Minister and heard his statement, a sum of £900,000 or thereabouts, now immediately payable to the local authorities, and which, if we proceed to take any time for the debate of this Bill, will mean that there is going to be serious financial trouble to these local bodies. I take it that this is what is before the House to-day. We are asked to give up a good many things in a case of what apparently seems to be a national necessity. I think that anyone who heard what the Minister has just told us—the figures he has produced, and the reasons he has given, as to why this state of affairs exists to-day and could not have been foreseen a year ago when this Budget which gave us this £2,000,000, which are now gone west and cannot now be paid over to the local authorities, was introduced and which this measure is to provide—can see that there is a very considerable reason for debate on these subjects. Now, my brain certainly will not enable me to absorb the figures which the Minister has given to us nor to follow out the implications and the reasons why we are in this position to-day, as compared with the position in which we were a year ago, and why we need go outside the resources of the Free State—the legal, as we say, resources of the Free State—to get moneys to pull us out of a position which, from the financial point of view, is extremely dangerous.

Senator Wilson has stated how it is going to affect the farmers in regard to their rates. There are many other things to be considered, and I should not like at all at this time to debate even the Minister's speech after merely listening to it. I could not do it and I doubt very much if any Senator here could do it. Yet there is the necessity in front of us. I do not think that it is the slightest use in a Bill of this kind —and I certainly will not do it—to discuss the question of whether our Government was right or wrong in withholding these annuities. Anyhow, the fact is there and we are seeing the consequences of it.

It is with the consequences of it that we are now dealing and I imagine that the Government, when they entered into this state of economic war, or whatever it was, could not then have foreseen that the Minister for Finance would have to go to the House at this time or could have foreseen the present state of affairs at all; because it makes ducks and drakes of the Budget which was put before us and of the uses for which we voted the money. There is not a vestage of a doubt about it. And as to the reasons why all these things were done, I do not think we have had anything to say to them at any rate. We are now hearing for the first time of a lot of things that have been done with moneys which were voted for totally different purposes and which necessitates a Bill to enable us to take from a fund, which at that time did not exist, money to try to keep our local authorities going at all. That is the state of affairs that is before us. I do not think that we have time to debate it properly or to think it out and get at all the real effects. With such time as we have got and with such a necessity in front of us, I do not think anyone is prepared to debate it as it should be debated. I am really afraid that, at this time at any rate, we have got nothing to do except to meet the case and keep the local authorities in funds. It will be a very great tragedy in this country if the local authorities are not supplied with this money. We all know the need. There is no doubt about it. As far as I, individually, am concerned, I should propose to say no more about it and to reserve any criticism which we have got for some other occasion, possibly towards the Budget time, when we shall really begin to know what our proper money position is, what liabilities we have got to face, and what future lies before us.

Senator Wilson says that we would not allow for any more taxation, but I think the Senator knows fairly well the amount of check the Seanad has on taxation and on Money Bills as such, and that we have to submit. I hold that this is only another case of submitting to the inevitable this time, but the disclosures we have had to-day, I think, will require that every Senator will seriously consider what we have heard to-day and the speeches which were made to us last February, and see what the difference is. Then, we will be able to form some estimate of what has happened in the past year and what have been the causes of it, and we will also be able to form some idea of what the financial future of this country is going to be if this sort of thing continues. These are the kind of thoughts that occur to one, when one listens to the sort of speech which the Minister has made; but I think we ought more or less to follow his example and not go into much else but the financial needs of the present situation.

Mr. Milroy

The Minister began his speech by saying that this was a simple and straightforward measure. It is about as simple and straightforward as the whole policy of the present Ministry. Senator Jameson, after my request to the Chair for guidance on the matter of whether this was a Money Bill or not, asked whether I was prepared to proceed further with the powers which the Seanad has. On investigating those powers, I find, by consulting the Standing Order dealing with them, that the time which would be involved in dealing with this matter would make it impossible for the Minister to meet the requirements of the local authorities within a proper period. And so the circumstances which have brought about the Ministry have deprived us of utilising such limited powers as this House has in this particular matter, and it has also curbed very seriously and very vitally our opportunities for discussing this question.

I do not propose to speak at any great length, but this is the Second Reading of this Bill. Similar measures of very dubious rectitude, sponsored by the present Government, having been allowed a Second Reading, have been followed by a declaration from supporters of the Minister that they had got agreement to the principle of the Bill because, for various reasons connected with the principle of the Bill, we allowed a Second Reading.

Lest by any chance it should be said, if this Bill gets a Second Reading to-day, that, therefore, the House has unanimously given its consent to the principle of it, I for one want to express my emphatic and deep-rooted dissent from the principle that underlies it. That principle is bad in more ways than one. It means the taking of moneys that are not the fruits of taxation but that have been paid by private citizens to meet their lawful debts and of transferring them to the general Exchequer. That is a vicious and dangerous principle that should never be countenanced by any responsible assembly. The other principle, that of deliberately creating serious and grave embarrassments for the local authorities and harnessing these to the other principle to which I have already referred, and then, by reason of such embarrassments, appealing to the House to assent to the passage of the Bill, is a piece of—I find it difficult to find a word to describe it—sleight of hand, which by no means answers to the Minister's definition of the Bill as being simple and straightforward.

This Bill has come before the House certified as a Money Bill. Speaking as a layman, and as one who has carefully studied the Standing Orders and the Article of the Constitution dealing with Money Bills I cannot conceive how this Bill comes within that definition. If it had not been so certified I should have been inclined to discuss at very considerable length what is involved in the Bill, but as it has been certified as a Money Bill and as apparently that certificate will be upheld, it seems to be of little use for this House either to make recommendations which will be ignored, or to challenge a division. If Senators did challenge a division, and the Bill was refused a Second Reading, then those who had brought about that situation would be charged with having paralysed the operation of the machinery of Local Government. I say that if such a thing did happen the responsibility would not be ours but that of the Ministry. For that reason I content myself with marking in the most emphatic way that I can my entire disagreement with and abhorrence of the principles embodied in the Bill, as well as my entire disagreement with the Minister's declaration to the House to-day.

Colonel Moore

I do not think it is necessary to discuss this Bill at any length. In reply to Senator Milroy, who is so indignant at the principles and the ideas embodied in this Bill, I have only to remind him of the many and various parties the Senator has joined at various times in this House. There was one in which I stood behind him on many a platform advocating the retention of the annuities.

Mr. Milroy

For the purposes of the record, may I say in reply that Senator Moore gratuitously imposed himself upon me and expounded views which I utterly disagreed with.

Mr. Counihan

Senator Milroy has raised what, in my opinion, is a very important question for this House and one that should not be passed over. Considering the circumstances, and the explanation we have had from the Minister, I think that perhaps on this occasion the House might accept this Bill as a Money Bill, but at the same time, I think, it should go on the records that the action of the House to-day in so accepting it should not be taken as a precedent. Practically every Bill that comes before the House involves the spending of money, so that if our action to-day in connection with this Bill was to be accepted as a precedent, then practically every Bill could be so certified. On the present occasion we might, I think, agree to accept this as a Money Bill, at the same time making it clear that our action to-day is not to be regarded as a precedent.

The farmers of the country and the members of the cattle trade—the people I represent in this House—are not very much concerned with the legality or otherwise of withholding the land annuities, but they are deeply concerned as to the effect which this Bill may have on our relations and our export trade with England. We were hoping for a settlement of this question. We were entitled to do so because, during the general election campaign, the supporters and canvassers of the Government assured the farmers that if the Government were returned to power this dispute with England and the economic war would be settled within a fortnight. Two months practically have elapsed since the return of the Government to power, and yet we seem to be drifting farther and farther away from a settlement and from an ending of the economic war, a settlement which the country so much needs and desires.

I should like to put this question to the Minister: is this Bill a banging of the door on a settlement of the question? It would be well if we had a definite statement on the situation because we are all most anxious to know where we stand. The Government were warned when introducing their recent legislation dealing with the removal of the Oath, the withholding of the land annuities, and our complete separation from the British Commonwealth of Nations, what the result would be to the country. They took no heed of the warnings given, but continued to carry out their policy with results that are now patent to all. The Government themselves can realise the situation they have brought about when they see the position in which the public authorities and our farmers are placed.

Previous to the starting of this economic war thousands of our farmers were comparatively well off. They were able to meet their liabilities and demands, but now the big majority of them are in a position of hopeless insolvency. I cannot see that the withholding of the land annuities and the other moneys from England has enriched this country to any extent. I think that policy has made it very poor indeed. It is difficult to see how the country can continue to carry on. Eighty per cent. of the wealth of the country is derived from agriculture. We have no export trade. Where is the money to come from to pay for our social services, to meet all the demands which will be made on the Government for the unemployed?

We were told the other day by the Minister for Industry and Commerce that there were 150 factories about to be started in the country. I am perfectly certain that if the present policy is continued for another 12 months the number of agricultural labourers that will be put out of employment will be twice as large as the number of people likely to find employment in the new factories. For that reason I think it is time the Government called a halt. It should look around and see what is happening in the country.

I saw in the Press the other day a report of the meeting of the Galway County Council. A terrible rumpus was kicked up at the council meeting on behalf of some applicant for roadwork. The council, on investigating the charges made, found that the applicant was a farmer with 50 acres of land. He was looking for employment on the roads. That shows that a man with 50 acres of land was of opinion that he would be better off earning 24/- a week at roadwork than working his farm. That case reflects the position of many farmers who, at the present time, think they would be better off at any little job, no matter how small the pay, than in working their land. At the present time land is more a liability, an incumbrance than an asset to farmers, and that has been their position since the economic war started.

Mr. Johnson

Transfer some of yours.

Mr. Counihan

You can have these 50 acres of the Galway farmer. He was of opinion that he would be better off earning 24/- a week on the roads than in working his land.

Mr. Johnson

That is not the Senator's land. Will the Senator give me some of his?

Mr. Counihan

So far as the last 12 months are concerned I will stand in with the Senator as regards the profit I have received on all the land I have. I appeal to the Minister and the Government to try and settle this dispute. I have pointed out time and again what the result of its continuance will be to the farming community and to the live-stock trade which is the most important branch of farming. What I said was listened to, but nothing was done. We have at the head of the British Government at the present time a man who is admittedly a man of peace. Can nothing be done to bring this dispute to a final settlement? What is the use of all this procrastination, of waiting until every farmer in the country is wiped out? Since this dispute started we have lost more than the capital sum on which interest was paid to the British Government. During the past six months the prices farmers have been receiving for their cattle have been only half what they would get in normal times. Their land is valueless, and as to the banks they will not advance as much as a shilling on the security of land. It is time that the Government should realise the position in which farmers are. If they have any consideration for the farmers then they should make some effort to try and settle this dispute.

Miss Browne

Contrary to what Senator Counihan has said, I represent a very large number of people in the country who are very much concerned about the legality and the morality of the course which the Government have taken and which has led us into the deplorable morass that we find ourselves in to-day. I do not believe there is any Parliament in the world that has ever found itself in such a humiliating position as that in which we now find ourselves. For years, while all this dangerous propaganda was being preached through the country we protested. We pointed out to the people what it would mean to them if they acted on, or adopted, the policies enunciated. Now, when it is too late, the people find themselves in their present terrible position, and it will be very difficult for any Government to pull them out of it. It is on behalf of those people in the country who stand for national honour, for honest dealing in public and private life, and for keeping honourably international engagements and agreements that I rise to make my protest. I dissent with all the vehemence I can command against the proposals in this Bill. I take no responsibility for them. We disassociate ourselves from having any agreement whatever with the principle of this Bill. Throughout the world we have got the name of being a defaulting and dishonest nation. Every foreigner expresses that feeling. That is the appearance we cut before the world at the present moment. But despite all that, and contrary to all that, there are large numbers of honest people here in this country, hard-working and industrious, and as we represent that large class, we consider it our duty to protest against this Bill and to disassociate ourselves from it.

Countess of Desart

I want to put a point before this debate closes; it worries me a good deal. There is no use trying to defeat this Bill and so I want to ask the Minister a question. Will the Minister tell us, if the annuities are not paid to the British Government, will that in any way invalidate the right of the tenants when they have got to the end of the term during which the annuities should have been paid, to the fee simple of their holdings? Many of the annuitants asked me that question, and so I ask the Minister will these people, in any way, be endangered in their right to secure title in their holdings at the end of the annuities' period?

Sir John Keane

I did not have the opportunity of hearing the Minister's opening statement, and there are one or two questions that I want to put to him. If they have already been put and answered, I hope the Minister will excuse me. Will he tell us whether, when this Bill passes, he will be in a position to pay to the local authorities all the grants-in-aid. A certain amount is now withheld owing to the non-payment of the annuities. I ask whether that will be wiped out altogether when this money is available. I also want to ask a question in regard to the Guarantee Fund in the future. I understand that in the future half of the annuities are to be payable. Assuming there is any default there, is that default to be placed upon the local authorities or is the law to be altered so that the Guarantee Fund in future will cease to operate?

I would like to make one remark, which I think was not made from any quarter, and that is on the unfairness of the arrangement by which the reduction of the grant-in-aid is held to be set off by a reduction in the annuities. In fact it is argued that the farmers are no worse off, and that they are better off; that while the grant-in-aid is reduced by half a million, the annuities are reduced by a much larger sum. But the Minister must know that quite a large percentage of farmers do not pay annuities and will not get any benefit. When I am investigating title I come across people who hold their land in fee-simple, and who will get no benefit and they are as hard hit as any of the annuitants. Will the Minister compensate them?

Like Senator Jameson, and others, I do not want to indulge in any general debate upon this question. I content myself by supporting what was said by Senators Milroy and Miss Browne in protesting against what I advisedly say is the barefaced dishonesty of this entire transaction. I feel certain none of us, in our private capacity, would ever consent to the methods employed by the Government. I consider this five million in material value has been set off, many times, by the loss of moral value and moral value which counts for far more than material value. I feel the honour of our country is involved and that there is a blot placed upon our national escutcheon which up to a time can be wiped out but now is to be made indelible, and I shall vote and protest against this Bill.

Mr. Comyn

Notwithstanding the terms of vituperation and abuse that have been indulged in by Senators of the opposite side, I think this Bill is a straightforward measure. By the Act of 1920 it is enacted that the purchase annuities payable in respect of the lands situated in Southern and Northern Ireland, including any arrears thereof due, or accruing due, on the appointed day, shall be collected by the Government of Southern Ireland and Northern Ireland and the amounts so collected shall be paid into their respective Exchequers. There was legal authority for the collection of these annuities and their payment into the various Exchequers. But there was no legal authority, certainly no measure which was intended as a permanent measure, for the appropriation of the moneys and, therefore, we have this section of the new Bill which says: "The moneys which are, at the passing of this Act or shall from time to time thereafter be, standing to the credit of the Purchase Annuities Fund shall be paid into or disposed of for the benefit of the Exchequer at such times and in such manner as the Minister for Finance shall direct." Now, as a permanent method of dealing with the proceeds of the land annuities, that part of the section of the Bill which I have read, was necessary; and until it was passed there was not, in my opinion, any practical legal authority for the appropriation of the money. Of course, it was a good thing to have these moneys standing in a Suspense Account as a proof of bona fides. It is our desire to arrive at a fair and friendly settlement with Great Britain and to live on friendly terms with Great Britain as neighbours ought to live.

When I say that there was no permanent method of dealing with the proceeds of the land annuities, I do not want the Seanad to misunderstand me. In the Act of 1923, Section 12, there is a provision for the payment of these moneys to the Land Purchase Fund, and the Land Purchase Account, which was a British Account kept in the British Treasury. But what I do say is that that section of the Act of 1923 was intended only as a temporary measure to implement the agreement made by Mr. Cosgrave in February, 1923, which was merely temporary. When the final adjustment of the accounts between the nations took place, in 1925, I think, there was no further need for the operation of Section 12 of the Act of 1923, which provides for the payment of these moneys to the English Account. Now, very, very extreme terms of abuse in this country have been indulged in by Senator Milroy, who began by referring to the dubious nature of the transaction. Then he became more vigorous and referred to sleight of hand, and ended up in true Cromwellian phrase of utter abhorrence. That is not argument, even if it is supported in a more courteous strain by Senator Miss Browne. But I was surprised to find it supported in general terms by Senator Sir John Keane.

Sir John Keane

Why surprised?

Mr. Comyn

Because I thought Senator Sir John Keane had a little sense and was not exactly as extreme a politician as Senator Milroy. We are all anxious that there should be an agreement of the differences between the two countries, and that there should be a settlement. In order to arrive at a settlement, it is necessary to know exactly what is the question in dispute. I have paid considerable attention to the speeches made by English statesmen and English lawyers upon this question, and, so far as I can see, the dispute can be summarised in the following way: We have put forward a legal claim to the proceeds of the annuities based upon Statutes, some of which were passed by the British Parliament, and one of which Statutes confirming the final settlement was passed by this Parliament.

Now we have put forward a strictly legal case. I think the cogency of that case, and all the arguments we put forward, have been admitted on the other side of the Irish Sea, and what they say is this: "True, these Statutes are in existence. It is quite true that upon the plea of strictness of the various sections of the various Acts of Parliament you have a legal case, but your case is based upon the fact that you are a Dominion" and they ask us do we accept Dominion status. Now so far as I can see—I am not a Minister but a person who is considering the question carefully, I know no Ministerial secrets—but so far as I can see that is the sole question in controversy between the two countries now. "If you freely accept Dominion status for the Twenty-six Counties you are clearly entitled in law to the sums you claim." We cannot and will not freely accept Dominion status for the Twenty-six Counties. No man in Ireland would say, for a moment, we are satisfied with Dominion status for the Twenty-six Counties. So long as Ireland is partitioned, so long will Ireland be unquiet, and no man would take the responsibility to say that we quietly or freely accept Dominion status for any divided part of this country and we say, again, that is quite immaterial to our legal position. As the law stands we are entitled to the proceeds of these annuities. We are anxious, of course, for a settlement, but no man in Ireland, I think, would have the hardihood to say that he is satisfied with the partition of his country or with Dominion status for part only of his country.

The point has been made by Senator Milroy that this is not a Money Bill. I think he raised that question simply for the purpose of creating argument here. He says that it is not a Money Bill because it does not deal with public money. May I ask the Senator what is it if it is not public money? Was this money not the proceeds of the land annuities which by law was put into a certain fund and, as we say, by law was bound to be appropriated for the general purposes of this country?

Miss Browne

This is a different transaction.

Mr. Comyn

I will not repeat again the section of the Act of Parliament which I have already quoted and which I think is a sufficient answer to Senator Miss Browne. The money that was collected was, by British statute, which had force in Ireland, expressly declared to be payable into the Exchequer for public purposes.

Miss Browne

For a purpose.

Mr. Comyn

"Shall be collected by the Governments of Southern Ireland and of Northern Ireland and the amount so collected shall be paid into their respective Exchequers" for the general purposes of the Exchequer.

Cathaoirleach

Is that the Act of 1923?

Mr. Comyn

I read the Act of 1920. That was still the law when the Treaty was passed. Southern Ireland was entitled to the proceeds of these Annuities payable into her Exchequer as part of her revenue. There is no use in any person trying to dispute, by merely contradicting it, a proposition of that kind. I say that this is a reasonable Bill and that it is a necessary Bill, because if this Bill is not passed there will be no legal authority for the appropriation of the money. Senator Sir John Keane was very anxious about the Guarantee Fund. I say that a section of the Bill provides for the proper functioning of the Guarantee Fund.

What surprises me is that the Bill was not passed in the last year, or that it has not been brought before the House much sooner. I do not see that there is any real grievance in bringing it forward now. The Government need money for the purpose of financing various matters to which the Minister for Finance has referred. It is needed at the present moment for lawful legitimate purposes and of course any Government would act in a very foolish way if it borrowed money on the one hand when it had reserves idle on the other hand. The Minister has said that £20,000 has been lost already by keeping this money in the Suspense Account and that if it is kept in the Suspense Account much longer a great deal more will be lost. If he did not bring forward this Bill and if we did not pass it, you would be in the position of the country farmer, the backward country farmer as some people might call him, who while having money in a deposit account at 1 per cent. interest will borrow money in the same bank at 6 per cent. interest.

Several Senators on the other side have arrogated to themselves the high function of representing the farmers of Ireland, Senator Counihan and Senator Miss Browne in particular. There are other people besides them who have an interest in the farmers of Ireland who are themselves farmers. Perhaps they may not have as much land under grass as Senator Counihan, and perhaps they may not be so skilful in the management of their agriculture as Senator Miss Browne. Still, there are many people besides them who represent the farmers of Ireland—in interest and goodwill, at least. I shall say this further. Since this controversy began, the farmers of Ireland have spoken and have spoken with no uncertain voice. If I would venture into the realms of prophecy, I would say this: Whatever Ministry or whatever Minister is in power no money will ever again be paid in respect of these annuities to Great Britain or anybody else, because no man will get authority from the people of Ireland to do it. No man on coming into power would have the temerity to do any such thing.

Senator Sir John Keane and Senator Miss Browne say that we are held up amongst the nations of the world as defaulters and as dishonest people. Senator Miss Browne must not have been reading the newspapers for a considerable time, because I can tell her that even if we were defaulters, which we are not, we would be in a very numerous company at the present time, because there is no country on the Continent of Europe, I think, that has not defaulted in respect of War Debts.

Sir John Keane

But not in respect of commercial debts.

Mr. Comyn

This is not a commercial debt.

Sir John Keane

What is it?

Mr. Comyn

I shall tell you what it represents. It represents the money which the British Government paid to its agents and its adventurers to whom it gave the land of this country when it was no longer possible for these people to hold the land when the Irish people conquered them and took back their land.

Mr. Fanning

So that war must endure! There is no room for arbitration or possibility of it.

Mr. Comyn

I thought I had explained to the Seanad, and that Senator Fanning was listening when I made the explanation, that the matter in dispute at the present time had nothing to do with the proceeds of the annuities and that in point of law it is admitted that we are entitled to them, that it is a political question that is at issue—to get us to accept Dominion status for Twenty-six Counties, a status which no man in Ireland dare to accept.

Mr. Dowdall

I was rather surprised to hear Senator Sir John Keane assenting to the statement of Senator Miss Browne that we were regarded by all foreigners as defaulters, as dishonest. The question of the validity of the payment of the annuities has been discussed in this country, publicly, openly and widely for at least four years.

Colonel Moore

Four years! For eight years.

Mr. Dowdall

Among the select few, it had been a question at issue prior to that but in general, it has been a matter of discussion for a period of at least four years. For a period during which two general elections were held, this was a burning question. At best, putting it at its highest, this is a disputed debt between Great Britain and this country. We are not defaulters. When Senator Counihan read from the Act of 1920 somebody on the opposite benches mentioned the agreement of 1923. It would be really worth while if Senators who quote the Act of 1923 would go downstairs to the Library and look up the report of a debate in the British House of Lords in December, 1926, on a motion by Lord Danesfort. They will find that Lord Camperdown who was then Under-Secretary for the Colonies or for the Dominions—I cannot say which —said to Lord Danesfort, that it did not matter, that that Act had been superseded by a subsequent Act. What is the use of talking of this Act when an accredited British Statesman in the House of Lords said that? This is a disputed debt. We are defaulters! We are dishonest! All foreign people point the finger of scorn at us as reneging on our debt! Can Senator Miss Browne say that any accredited foreign representative has said anything of the kind? If we are to be morally and nationally degraded for standing up for our side on a disputed debt, what can be said of France who blatantly turned down the United States the last time the war debts became due and said: "We will not pay"?

Mr. Fanning

Bad example.

Mr. Dowdall

What did the French Foreign Minister say to Mr. Snowden last year when he paid off debts of 10d. francs with 2d. francs? We heard nothing of defaulting then. Why do Irishmen so persistently take the other people's side on matters which are in dispute and on which we have been offered arbitration?

Mr. Johnson

I do not want to deal with the merits of this Bill to any extent but I think it is desirable to deal with the simulated indignation of one or two Senators regarding the character of this Bill and whether it is justly described or certified as a Money Bill. Senator Milroy and Senator Counihan and to a lesser degree, Senator Jameson, seemed to be very much concerned that this should have been certified as a Money Bill and they want to be recorded as protesting. I suggest to them that that protest is simulated and that they were not really concerned with that aspect of the matter. When the Cathaoirleach announced last week that a Bill had been received from the Dáil entitled the Land (Purchase Annuities Fund) Bill he also announced in very definite and positive terms and rather emphatically, that this had been certified as a Money Bill. That was an intimation to Senators Milroy, Counihan and others that if they had any doubts on the matter, there was a procedure laid down in the Constitution and Standing Orders, as to the manner of disputing that certificate but though they professed to have given very careful study to the Standing Orders and the Constitution, dealing with the question of Money Bills, in their speeches to-day it is quite apparent that they had taken no notice of the question at all until they had come into the House to-day.

The Bill, really, I suggest, does not deal with the disputed question of the policy of the Government regarding the disposal of the land purchase annuities, that is to say, it does not deal with the general policy, but deals with the disposal of the money which they at present hold. It strikes me as being like the action of a certain widow lady friend of my acquaintance who had a dispute with her landlord and said that she would not pay any rent until he carried out certain repairs and renovations to her house. She put her weekly rent aside into a drawer, but found that she owed some other moneys, and the question arose as to whether she should go to a moneylender and borrow this money to pay her other debts. She said: "Why should I put myself in debt to a moneylender? I can always do that at any time, but why should I go to the trouble of approaching a moneylender and putting myself under a liability of paying him a stiff rate of interest when I have this other money in my drawer which I can pay my debt with? At some future time, I can raise the money to pay my landlord." That is the case that appears to be raised in this Bill. It is a perfect parallel, I think, and it seems to me to be quite a desirable transaction.

On the general merits, I want to draw special attention to the words the Minister uttered to-day, the same words that were uttered on two occasions, I think, within the last fortnight, once here and once in the Dáil, and which are very significant to me. They show that even now, in the matter of the disputes between Great Britain and this country, the Government still contemplates arbitration and are prepared to abide by the decision of an international arbitral authority.

Sir John Keane

Be careful that you do not get there.

Mr. Johnson

That is the responsibility of the Government. That is a challenge to the British Government and I suggest to the Senator that if he has so deeply at heart the cause he has espoused here to-day he might use his influence to secure that an international court should be invoked to decide the question at issue.

Mr. Jameson

That is surely the business of the Government and not of private individuals.

Mr. Johnson

It is not the business of this Government but the business of the other Government concerned, and it is because they have refused to invoke the assistance of an international court that this dispute has lasted so long as it has. The onus of calling into operation that authority lies upon the British Government. They have refused to approach an arbitration court unless it is confined in the manner which has been so often referred to—to persons who are citizens of the British Empire. Presumably, they would be quite prepared to invoke the assistance of such an authority if it came from citizens within the Empire, but as that has been ruled out, both by the Government under Mr. Cosgrave and the Government under Mr. de Valera, the only alternative, and the right and proper alternative, is an international court. But the importance lies not in the constitution of the court but in the fact that the Government is prepared to let this matter be decided by an international court. That having been stated, and having been reiterated even within the last week or two, it seems to me that the Government is thoroughly well entitled to do what they propose to do with regard to this money and leave the responsibility on the persons who refused to accept the proposition that an international court should decide this issue.

Mr. Quirke

I do not want to delay the House further than is necessary, but I could not let the statements made by Senator Wilson and Senator Counihan concerning the farmers of this country pass unchallenged. In my opinion, the statement of Senator Wilson that the farmers took advantage of the situation created and would not pay anybody, is a direct libel on that section of the community to which I have the honour to belong.

Mr. Wilson

Where is the money?

Mr. Quirke

I say it is a direct libel.

Mr. Wilson

Why is there a shortage, then?

Mr. Quirke

If the Senator will take the trouble to find out the figures and if he had been reading the official statements on that question within the past few months, he would not make such a serious mistake as to charge the farmers as a whole with what might be termed daylight robbery. I know as well as Senator Wilson knows that certain people were persuaded not to pay their land annuities, but I hold that the vast majority of the farmers of this country did their level best and succeeded in paying a very considerable amount of land annuities despite organised opposition.

Mr. Wilson

Might I point out that the Minister explained that 35 per cent. of the money was collected and that 65 per cent. was not collected.

Mr. Quirke

That is scarcely justification for anybody else to come along and charge the farmers as a whole with taking advantage of the situation, created by what Senator Wilson described as propaganda, and refusing to pay anybody. He is apparently in favour of full de-rating as against what is proposed to be done by the Government in connection with this question of the land annuities. He is, of course, backed up in his opinion by some other representatives of the farmers in this House, but I am sure that Senator Wilson will agree—at least, if he looks up the figures as in the other case— that, under full de-rating, 8 per cent. of the people, who are the large landholders, would benefit most if that policy were adopted by the Government and that for every pound applied to full de-rating, 10/- would go to that 8 per cent. of the population, while the other 10/- would go to the remaining 92 per cent. who are the small farmers and, in reality, the backbone of this country.

I do not propose to reply to Senator Milroy. He has been replied to pretty well by my friend Senator Comyn, but I do say that his speech was nothing more nor less than a direct insult on the people of Ireland as a whole. Perhaps, it is because he was away from this country during the last election; perhaps he does not know what has happened within the past few months, but whatever else he may have forgotten in his trip to warmer climes, he certainly did not forget the bitterness of the past. In every word uttered by Senator Milroy that bitterness was evident and it is time for Senator Milroy and people like him to accept what they have talked for so long about—the will of the people—and give up that kind of criticism.

Senator Counihan says the farmers and the cattle dealers are not concerned with the legality of holding the land annuities. As I say, I am a farmer and I have been a cattle dealer and I am still in touch with a considerable number of cattle dealers and I say very emphatically that that statement is absolutely wrong. Senator Counihan says that he represents the farmers and the cattle dealers, but I hope that there are two kinds of cattle dealers just as there are two kinds of farmers and it is very doubtful if even the majority of one section would agree with Senator Counihan's statement that they were not concerned with the legality of retaining the land annuities in this country. Senator Miss Browne started off at full speed and I was agreeably surprised at her opening statements. In fact, I thought that, at long last, Senator Miss Browne and myself had found something on which we could agree. She spoke contrary to what Senator Counihan had said and I thought that the thing was settled but, when she got along a bit further, I was completely disillusioned, and I found that she went even further than Senator Counihan or Senator Milroy or the rest of them, but as she has already been replied to, and the law quoted more ably than I could hope to do so, I do not propose to go any further into that question.

Six months ago there may have been some justification for the speeches made against this Bill but, at the present time, when England has refused or, rather, neglected to avail of the opportunity offered her of an impartial tribunal, I say that these statements made in support of England's claim are absolutely unjustifiable. The fact that she has neglected to avail of the opportunity offered is, in itself, sufficient proof of the weakness of England's case and, if we were to retain these moneys in the Suspense Account, it would in my opinion be an indication of weakness on our part, an indication that even we ourselves were not convinced of the legality and justice of our claim to the moneys in the Suspense Account. Senator Comyn likened the situation to a farmer borrowing money at 6 per cent. while his own money was on deposit at 1 per cent., but I would go a little further than that and say that, if we were to retain these moneys in the Suspense Account while they were needed in the country, it would be like the case of the unfortunate man who was found dead from starvation with £100. When the Government first intimated its definite intention to retain the land annuities in the Suspense Account, and when it proceeded to implement the people's mandate, voices were raised all over the country and the people were threatened with terrible disasters. Despite all the threats of impending disasters, when given another chance the people more emphatically than ever testified to their faith in the policy of Fianna Fáil and in the leadership of President de Valera. In definite terms they answered those who said that they were cowed down by the threat of economic war.

The tariffs, according to a certain section, came along, and the people were given to understand that unless there was an immediate surrender on their behalf, they, as a whole, would be reduced to famine conditions. Certain members of this House made desperate speeches to that effect. Perhaps some of them really believed that such a condition might eventually arise, but the sensible people in the country districts realised that the state of dependency to which this country was reduced, and in which it was found by the present administration, was the result of human effort— or rather ineffort—and that with proper human effort that state of dependency could be got rid of. Even in a few months there is evidence of considerable advance in that direction. Mr. Thomas was very generous. He promised not to collect a penny more than was due in connection with the land annuities. Has he collected the amount concerned in the dispute? I say that he has not.

Mr. Counihan

Why?

Mr. Quirke

Because he was not able.

Mr. Counihan

Because exports are reduced.

Cathaoirleach

I would ask Senators not to introduce the tariff policy now. The debate has taken a very wide field.

Mr. Quirke

I will not mention tariffs again. I think it is right that we should express our gratitude to Mr. Thomas. He has certainly helped this country considerably by his attitude, though I am sure he did not intend it in that way. He has helped to make this country, as nearly as possible, self-supporting, and he has hit British trade. He has done considerable harm to his own country, and considerable benefit to our country. Certainly we have profited by his stupidity, and all I say is that he deserves our thanks. It would be ridiculous for our Government to hold on indefinitely to the moneys in the Suspense Account. Time and again we are being told that we are at war. If a country is at war it is the duty of the Government to utilise all the resources of the country. The moneys in the Suspense Account are absolutely the undisputed property of the people, and I say it is the duty of the Government to withdraw these moneys and to make them available for whatever purposes for which they may be required.

It is unnecessary to refer to questions of law. There are enough people to argue the legal questions but it is obvious that the annuities were not even mentioned in the Treaty. Under the Act of 1920 North and South were given the land annuities. If they did not come under the heading of "Public Debt" they were not due to England at all. If they came under the heading of "Public Debt" then they were forgiven by the Agreement of 1925. The only conclusion one can come to is that instead of owing any money to England, England should, in justice, return to us the money paid since the acceptance of the so-called Treaty. I recommend the House to give this Bill a Second Reading.

Minister for Finance (Mr. MacEntee)

I do not desire to traverse the legal questions which have been raised in the course of this debate but mainly to confine myself to the practical issues which the Bill creates. Whether we are to utilise the moneys which are at the present moment lying in the Suspense Account, first of all, to relieve local authorities, and then to relieve the Exchequer and the taxpayers, or whether we are to continue to keep them in the Suspense Account, earning nothing and doing nothing. It would seem to me that between these two courses there can be only one course that practical men would take, and that is one which they may take, without any advertence whatever to the issues of moral rectitude or turpitude that Senator Sir John Keane and Senator Milroy have endeavoured to raise. This Bill does not ask the Seanad to condone an act of barefaced dishonesty. The Government is not embarking on a policy of barefaced dishonesty. The Government believes that we are legally entitled to retain these annuities. It is quite clear from the debate which has taken place here that that opinion can be validly held. It is clear also that some Senators hold the contrary view. But the Government believes the former view is right and the people have endorsed the action of the Government, founded upon that belief. I think so far as this Bill is concerned that issue must be taken as closed, and that the only thing which remains for us is to determine how, in in the present circumstances, we may best meet the situation which has been created by the attitude of the Government, as endorsed by the people.

Obviously, believing that the moneys are ours, the sensible thing is to use them for general purposes. If we do not do that we have, as I have stated, either to tax or to borrow. Either way means imposing an unnecessary burden on the people, a burden which none of us could contemplate with equanimity. At the risk of being wearisome in reiteration I must repeat that only one course remains and that is the course adumbrated in the Bill, to utilise these moneys in the Suspense Account for the general purposes of the Exchequer.

A number of other matters which, I think, were to some extent irrelevant to the issue were raised in the debate. The question was raised by Senator Toal, and also by Senator Sir John Keane as to whether all the Local Taxation Grants would be paid out to the local authorities. On that question the attitude of the Government is that all the local taxation grants which have properly accrued to local authorities in this year will be paid out to them. This course will put local authorities in a much more favourable position than they have been in heretofore. For the first time since these grants were given local authorities will receive in one year the whole amount which under the best circumstances could properly accrue to them.

Sir John Keane

Do I understand from the Minister that there will be no deduction on account of outstanding annuities?

Mr. MacEntee

There will be no deduction on account of arrears which accrued in this year. The arrears which accrued in previous years, and in respect of which deductions have already been made—over a period of ten years now, I may say roughly— those will remain in the Guarantee Fund, but as the arrears of the annuities come in they will be released to the local authorities. That is to say in respect to the arrears prior to 1932, of May and June of last year, which are now being funded, as those come in they will be paid out to the local authorities, but not before they come to the Exchequer and to the Purchase Annuities Fund in instalments. I think the Exchequer and the Government are perfectly justified in taking up that attitude. The position which developed in regard to annuities which were in arrear prior to 1932 was this, in my judgment, that they had already become bad debts, and there was very little likelihood that they would be ever collected, or that the local authorities would ever receive them.

There is some considerable ground for that opinion, as will be seen from the figures I am going to lay before the House. The total amount of land purchase annuities in arrear on the 31st of July, 1930, was £514,467; on the 31st January, 1931, £546,281; on the 31st July of the same year, £624,148. On the 31st January, 1932, before the change of Government, the amount had increased to £808,275. It rapidly increased to £1,257,135 on 31st July, 1932, and on 31st January this year was £2,602,498. But the fact that there had been a continuous and rapid increase over the period from July, 1930, to January, 1932, and the fact that that increase continued, very strongly supports the view that a large part of these annuities had become permanently non-collectable and would have to be written off by the local authorities as a bad debt.

What is the position now? First of all, the Government have funded those annuities and made them payable over an extended period of 50 years. Secondly, they have reduced the present burden of the annuities by 50 per cent., and, therefore, they have put those who owe arrears in a better position to liquidate them. They have made it easy for them to liquidate their arrears because they have given them a greatly extended term to do so. We believe, therefore, that this bad debt has been converted into a good asset for the local authorities and that the local authorities should be prepared, in all the circumstances, to wait for the arrears as they begin to come in. Because they will be receiving something which they never dreamt or thought they would have received, at least when the position became so grave as it had become on the 31st January, 1932.

Senator Sir John Keane also asked what was the position of the Guarantee Fund in future. The Guarantee Fund, so far as the present intentions of the Government go, will be retained as a feature of the land purchase finance. Naturally, the contingent liability of that fund will be greatly reduced by the fact that the total amount of the annuities to be collected will be reduced; but it will be retained, as I have said, as a permanent feature of land purchase finance and the local authorities, to some extent at least, in the future as in the past, will be made responsible for any arrears in the land annuities which may arise.

The question of whether greater advantage lies in de-rating or reduction of the land annuities has been raised by Senator Sir John Keane in regard to quite a large percentage of farmers, who, he says, own land in fee simple and pay neither rents nor annuities. That matter has not yet engaged the close attention of the Government. It was brought to their notice during the past three or four weeks, but I am not in a position to indicate that any definite policy has been formulated or is likely to be formulated in regard to it. I believe that, while in comparison with the number of those who hold land in that way is comparatively small, I am not sure that their position would be greatly worsened by the fact that the Government has decided to readjust the basis upon which any grants in relief of rates on agricultural land would be given in future. I will say, moreover, in that connection, that as the present intentions of the Government go, there is a possibility that ultimately a larger amount may be given in relief of rates on agricultural land even than was given last year. I say that there is a possibility. I do not want to put it any further than that. But I should also like to safeguard myself and to say that I do not see that there will be that possibility in the immediate future. Even with the reduction—I do not know, sir, whether this is properly in order on this Bill, but I should like to deal with the point as it has been raised—I should like to point out to Senators Toal and Sir John Keane that even with the reduction which has been indicated already in the Agricultural Grant for next year, the local authorities will be better off next year than they were in the year 1931. The gross amount of the grant in the year 1931 was, I think, £1,848,000. But from that there were deducted very considerable sums. There were withheld in the Guarantee Fund out of that grant sums amounting to, I think, almost £300,000 in respect of arrears which accrued during the year 1931-32, leaving the position better than even in the year 1931. The total amount disbursed to the local authorities was £1,230,000. We propose to allocate for the purposes of relieving rates on agricultural land next year a sum of approximately £1,750,000. So that, next year, they would be at least £100,000 better off than in 1932.

At the same time, the consequence on the local finances of the fact that in the present year the local authorities are going to receive their full £2,198,000 cannot be overlooked. Normally, as I have already indicated, owing to the operation of the Guarantee Fund, a considerable sum of money would be withheld from local authorities every year. That is not being done this year. This year they are getting the full amount of the grant, and consequently, in framing their estimates, the Government took into consideration that they are going to close this financial year in a very much better position, all things considered, than they were in last year.

I should like to deal with the point which Senator the Countess of Desart has raised. The Senator asked whether this Bill would in any way endanger or invalidate the tenant's title. I can give the assurance that I do not believe it will. This Bill has got nothing to do with the tenant's title. It is founded, so far as I can see, on the Land Acts and this Bill has got nothing to do with the Land Acts any more than Section 12 of the 1923 Bill had anything to do with the Land Purchase Acts. That Bill merely provided that the land purchase annuities would be paid into the purchase annuities fund, a fund which was not contemplated when the Land Purchase Acts were being passed by the British Parliament. It was merely set up for the convenience of the Exchequer as a clearance account. How that account is cleared is another matter. We may clear it into the Exchequer, and if by any chance any arbitration or settlement of this dispute went against us to the extent that a payment would have to be made in respect of land annuities, that payment could be made just as well, and much more conveniently, directly out of the Central Fund than out of this Land Purchase Annuities Fund, which was an ad hoc device set up to meet the situation in 1923 and the retention of which, I think, is not essential and, I think, undesirable.

Countess of Desart

The reason I asked the question was that people's minds were disturbed by the fact that as the purposes of the annuities were altered their consequences might also be altered and that as the annuities are not being paid to those who lent the money, there is no term in which it will be liquidated. I wanted to know whether there was any chance of that altera tion being made.

Question put and agreed to.

Committee Stage ordered for Wednesday, 29th March, 1933.

Cathaoirleach

Senator Robinson has given notice of motion to take the remaining stages of the Bill on that day.