Seanad Éireann debate -
Wednesday, 12 Mar 1952

Vol. 40 No. 12

Private Business. - Rates on Agricultural Land (Relief) Bill, 1951—Second and Subsequent Stages.

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

Minister for Local Government (Mr. Smith)

This Bill provides for the continuation of the Rates on Agricultural Land (Relief) Act, 1946, for the year ending 31st March, 1953. No new principle is involved. The Bill merely proposes to continue the Agricultural Grant on its present basis for a further year.

As Senators will be aware, the basis of the grant was established by the Act of 1946, as follows:—

(1) A primary allowance at the rate of three-fifths of the general rate on land valuations not exceeding £20, and the first £20 of higher valuations.

(2) A supplementary allowance at the rate of one-fifth of the general rate on the whole of the land valuation above £20.

(3) An employment allowance calculated at the rate of 10/- in the £ on the land valuation above £20, subject to the limitation that the allowance does not exceed £6 10s. in respect of each man at work on the holding.

In the years 1935-36 to 1945-46 the grant was fixed at the figure of £1,870,000. Under the present basis of distribution, however, the amount of the grant varies with changes in the local rates. This has served to shield farmers from the full consequences of the general but unavoidable increases in rates which have taken place in recent years. In the current financial year the grant is estimated to amount to £4,230,000.

As I said in the Dáil, I am having the whole matter of this form of rate relief examined to see if the comparatively large subsidy involved might be used to a greater extent to benefit those landowners who are engaged in the forms of agriculture which afford the maximum employment and who, in present conditions, are best serving the needs of the community in regard to agricultural production.

Pending the completion of this examination I would ask the House to agree to the continuance of the agricultural grant in its present form for a further year.

Professor O'Brien

The Minister, in his closing remarks, to some extent anticipated what I intended to say when he stated that the basis of the distribution of this grant is going to be revised. I cannot help feeling, however, that at a time like this when there is so much discussion in regard to the general financial position of the country, the whole basis of the Grants-in-Aid of agricultural rates should be revised and should be examined afresh.

The present position has been largely the result of a series of compromises which have been drifted into without any very considered long-term policy in mind. I suggest that, as this Bill is purely a temporary measure, for one year only, before the Minister comes to the House next year, he should be prepared to defend the general principle of the Grants-in-Aid. Not merely do I suggest that it should be an examination into the distribution of the grants, but into the whole principle of the grants themselves. It is common knowledge that in the next couple of months this country will encounter a very difficult Budget and that in that Budget the Minister for Finance will be trying to meet greatly increased expenditure. It is therefore a matter of public interest to everybody in the country that every possible source of wasteful expenditure should be very carefully examined between now and the date of the Budget. The only possibility we have of avoiding great increases in taxation, which have an extremely adverse affect on many people in the country, is to cut out every single unnecessary piece of Exchequer expenditure. I suggest that some of the Grants-in-Aid of rates on agricultural land could possibly be reduced or dispensed with without doing any very great harm to any section of the population.

It might be no harm to recall very briefly the origin of the agricultural grant as far as I know it. The Local Government Act of 1898 began the agricultural grant in the form in which we know it to-day. Up to that date the local rates on land were paid, generally speaking, as to one half by the landlord and one half by the tenant. The Local Government Act of 1898 shifted the whole control and patronage of local government from the landlords to the tenants in the country. I have always understood that the agricultural grant which was given under that Act was meant to compensate the landlords for the half share of the rates they used to pay, that it was a consideration for the taking away of the power and the patronage they possessed in local government and that the actual amount of the agricultural grant as defined in the Act of 1898 was the amount which had been contributed by the landlords as their half of the local county rates before that date. In 1925 the agricultural grant was doubled. The reason for this great increase in agricultural grants is, I think, very interesting in view of the situation to-day and the situation which is coming in the near future in the Budget.

In 1925 the worst repercussions of the first world war were gradually dying down and it became possible to reduce income-tax, though the younger generation of the present day may find it impossible to believe that. In 1925 the standard rate of income-tax for this country was reduced to 3/- in the £. At that time the farmers' representatives in the Dáil very properly complained that the reduction in the rate of income-tax conferred no benefit on farmers for the simple reason that farmers paid, as they pay to-day, a very small portion of the total income-tax of this country. It was in order to give the farmers some equivalent relief for the reduction in income-tax that the relief from rates on agricultural land was doubled in that year.

What I suggest is this: if the agricultural grant is raised when the income-tax is lowered then the agricultural grant should be lowered when the income-tax is raised. When other sections of the population derived benefit from the decrease in the rate of income-tax, we gave farmers an equivalent relief by way of increasing the agricultural grant, and it seems to me to be just and logical that, at a time when other sections of the population are called upon to bear the greatly increased income-tax, the farmers should bear their own part of the fiscal burden by being deprived of part of the agricultural grant which goes towards the relief of rates on agricultural land. If the reason which was given by the Minister for Finance for increasing the agricultural grant in 1925 is a good one, I find it difficult to see his argument against reducing the agricultural grant if income-tax is again increased. Remember, that the standard rate of income-tax paid nowadays is more than twice what it was in 1925 and that the agricultural grant, which in 1925 stood, roughly, at £600,000, is now, as the Minister has told us, over £4,000,000, and under the new principle which he outlined to-day is rapidly and automatically increasing with every increase in local expenditure.

I do not wish to stray from the text of the Bill. I have no intention of doing anything so disorderly. I do not propose to discuss on this Bill some of the matters I would have discussed on the motion with regard to income-tax, if it were taken. However, what I am going to say is strictly relevant, and it is this. At the present time, owing to the nature of the assessment under Schedule B in the income-tax code, the farmers enjoy very preferential treatment. Without going further into that question, I feel I can say without any fear of contradiction that, owing to a series of historical developments, owing to the fact that the income-tax code has not been brought up-to-date in the light of modern circumstances, owing to the changes in the value of money, to the rise in agricultural prices and to a whole series of circumstances which I hope, at a later date, to discuss in the Seanad, Schedule B does, in fact, favour the farmers more than other sections of the population. At the present time the only contribution which the farmers make, with the exception, of course, of very large farmers, to the direct taxation in this country is by means of the rates on the land.

I suggest some revision of the income-tax laws which will bring farmers more in line than they are at present with other sections of the population for income-tax purposes. Pending that revision, farmers should share in the burden of direct taxation in the only way in which they can share under the existing law, and that is by contributing more to the rates on land. The way that can be done, and this is strictly relevant to this Bill, is by varying the agricultural grant. This grant is an extremely delicate mechanism for the purpose of varying the amount of direct taxation on farmers. It was increased in 1925 when it was desirable to reduce direct taxation on farmers. I suggest that, in the present emergency, the increasing of the direct taxation on farmers is unfortunately desirable. The most convenient means of imposing this taxation is by changing, in the opposite direction, the agricultural grant.

I remember serving on the commission in 1931 which went into the whole question of the derating of Irish agricultural land. The object in setting up that commission was to see if Irish farmers could not get some relief equivalent to what was being enjoyed by British farmers under the derating of agricultural land in Great Britain. I need not weary the Seanad with the arguments of that commission. Suffice it to say that a small majority of the members of the commission were of the opinion that the complete derating of Irish agricultural land was impracticable in the circumstances of the country. Certain recommendations were made for the grading of the agricultural grant in the way in which it is graded at the present time. Certain of the recommendations of the commission have been carried into effect and were mentioned in the Minister's statement this afternoon. Two years later, in 1933, the land annuities were halved.

If reference were made to the Parliamentary Debates of the time I would probably be proved correct, though I am only speaking from memory, when I say that I understood that the halving of the land annuities at that time was meant to give to the farmers what the Derating Commission had found it impossible to give them by way of complete derating. Whether that was the reason or not, the halving of the annuities in 1933 conferred a very great benefit on the farming community of this country. It relieved the people who had purchased land up to that date of 50 per cent. of their contractual obligations. It had precisely the same effect as the halving of a monthly payment on an article bought on the hire-purchase system would have. I always understood the halving of the annuities was meant as a partial consolation for the great difficulties of the time. It is no use harking back on these difficulties such as the economic war. It was not possible to give complete derating to Irish farmers as was given to English farmers but, instead, their annuities were halved.

The reason I am referring to those rather distant events is that it was in those years that the present system of agricultural derating began to take shape. Certain benefits were conferred on farmers in those years for certain well-defined reasons. Like so many other things that happened, those benefits have been almost automatically increased without regard to the background or the circumstances. I suggest that the time has now come to inquire whether this country can afford this great measure of relief given to one section of the population at the expense of others.

There is no doubt at all about it but the agricultural community of this country enjoys a very favourable fiscal position. Owing to the manner in which income-tax is assessed under Schedule B, farmers enjoy a favourable position. That is common knowledge. In addition to that, owing to the operation of the agricultural grant, they pay on their agricultural land lower rates than other people pay on their rateable property. Both in regard to the main national tax and to the main local tax, farmers enjoy a distinctly more favourable position than other members of the community.

It has been said, and I have no doubt it will be said again, that farmers themselves contribute so largely to some of the other taxes in the country that they do not get any practical benefit from derating at all. In 1931 an effort was made by the Derating Commission, of which the result is printed in the report—and I wish some similar investigation could be made to-day—to allocate the revenue and the expenditure of the country as between the farming and the non-farming classes. The result shown in that investigation was that the farmers were deriving a greater percentage of the national expenditure than they were contributing to the national revenue. Those figures are 20 years old, and I would like to see some similar inquiry to-day.

Whatever the result of such an inquiry might be, we find ourselves in this dilemma: If the whole of the amount of the agricultural grant is paid for by the farmers in indirect taxation, then the position is that the farmers are giving with one hand what they receive with the other. If the case made by the farmers that they pay such heavy indirect taxes can be justified, then the whole thing is farcical. If, on the other hand, they do not pay with one hand what they receive with the other—and I do not believe that they do—then the position is that one section of the population is in a position of preference as compared with others. I am not saying that in any country you should not have preference of that kind. It is the essence and basis of the so-called welfare State that the less favoured section of the population should derive certain benefits paid for by the more favoured section, and the whole basis of modern redistribution of taxation on social services is explained on that principle. There are subsidies on food, housing and other services paid for out of taxation.

Many of these subsidies have an overwhelming justification and others have not. In the coming Budget, I have no doubt, the Minister for Finance will search for justification for the retention of some of these subsidies and, I hope, for the abandonment of some of the others. People are waiting with interest to see which of the subsidies will disappear in the Budget, but the point I want to make on this occasion is a point that seems to be overlooked, at least I have not seen any reference to it in public discussion. That is that the increase of the agricultural grant and the halving of these land annuities appear to be subsidisation of the agricultural population. Many of the local services which the farmers enjoy are subsidised by the non-farming population and in the halving of the land annuities the farmer's purchase price for the land of which he is rapidly becoming the fee simple owner is being subsidised.

What I suggest is that, at a time when the financial position is so stringent, when taxation is rising and when everybody is urging that every unnecessary expenditure should be pruned and that every subsidy that has no overwhelming justification should be cut down, this is a type of expenditure which is growing almost continuously from year to year without question. It is almost regarded as unpatriotic to question the agricultural grant and it is argued that this does not fall under the heading of subsidy in the same sense as food, housing and the other subsidies. I hope when all the other subsidies are being considered between now and the Budget that the agricultural grant will also come in for its due measure of consideration.

I just want to make one other small point and it is something which the Minister has already referred to. It is in regard to distribution of the grant. The present grant is distributed on two differentials. With one everybody will agree and with the other they will not agree. The first is an effort made to try and give a greater amount of relief to the small holders. That, I think, is right. It was recommended by the Derating Commission, who considered it was right that they should give some differential treatment to the small man. The other system of gradation is on the basis of the amount of employment given.

I really think that represents a certain fallacy and muddled thinking which is very common in this country, namely, that the amount of employment given is in itself something to be desired for its own sake. I cannot accept that. I consider the basis of a good agricultural policy is not the number of hands employed in producing the products of the country but the amount of the products produced in relation to the amount of labour employed. Therefore, I suggest that in this matter the present system of distribution is unscientific. If the grant is going to be distributed by any other gradation outside that of the size of the holding, I urge that the volume of produce should be the basis, and not the amount of employment.

The agricultural grant should not be used as a method of giving relief through employment by the farmers. That is retrograde and out of date in these times. I am not suggesting what the system of gradation should be because the Minister said it is going to be investigated, but I agree it should be on a rough and ready measure of the area of the land under tillage. Everybody in the country is agreed that an expansion of tillage is desirable.

I suggest that a gradation of the agricultural grant in relation to the amount of tillage rather than the number of men employed would be more consistent with general agricultural policy. In other words, the agricultural grant is a very delicate mechanism for guiding agriculture, as it gives to the Government an extremely mobile and flexible instrument for helping agriculture in various directions. I suggest that a scientific and rational grading of the grant, not in relation merely to the number of men employed—because that is simply the old relief work mentality and we are back in the days of the Famine— but in relation to the amount of produce of the land, would enable this delicate mechanism to be utilised for the general furtherance of the Government's agricultural policy.

I am sorry for delaying the Seanad so long, but I ask the Minister to give us some assurance before this time next year that the larger items of expenditure of public money will receive some more serious consideration.

Mr. Baxter

I have no intention of attempting to follow the very interesting examination of this whole problem which the House has heard from Senator O'Brien. He has raised a number of interesting and fundamental issues which I have no doubt the Minister will deal with—from the first, income-tax, down to the last—the idea behind the examination of the present plan of distribution of grants through local authorities.

I had the privilege of serving on this same Agricultural Commission to which Senator O'Brien refers, in 1931, with him. It was not at all an invidious position that we representatives of the rural community occupied on that commission. We were up against people with trained minds, the statisticians like Senator O'Brien and a number of his colleagues. I think the majority of them were distinguished graduates of the university, and all were very skilled in putting their point of view across. He refers to the fact that documents were submitted to that commission which purported—I say purported—to give a picture of the benefits the agriculturists received in the distribution of State grants, but it was something which no informed representative of the agricultural community would accept. It was the kind of thing which people looking at Ireland through Dublin eyes would like to present as their view of the situation, but those of us who came from the country did not accept it then and, with greater experience to-day, are not prepared to accept it to-day.

I am not following the Senator, except to say in regard to the point he makes about the farmer not paying his share of income-tax, that he is paying on his valuation. There has been an increase in the incidence of income-tax over the years. I would suggest to Senator O'Brien that it would be a very profitable study for him to examine by how much and by what percentage there has been an increase in contribution made by the farmers and by the ratepayers to the maintenance of local services in the same years. He will find that the farmer is considerably more out of pocket, by the contribution he has to make to meet the ever-rising demand for the maintenance of local services, than the income-tax payer.

I do not suffer from the delusion that Senator O'Brien presents to the House in regard to the benefit of the halving of the annuities to the farmers. My feeling about that then, and my view still is now, that we went through then such a purgatory and paid so much before the land annuities were halved, that it would take a very long time for those wounds to heal up. At the same time, I recognise that when you have very able minds presenting the sort of picture which Senator O'Brien has given to the House, of the ease with which the farmers are able to carry this very light burden, it demands examination, and it is the responsibility of the Minister to give Senator O'Brien his answer.

It is, of course, true, as I am sure Senator O'Brien realises, that there have been vastly increased demands for the maintenance of county and main roads. An immense amount of traffic is going over the main arteries of the country, to the maintenance of which our farmers are making a very considerable contribution. While some of them under £20 valuation are getting certain reliefs, it is important that it should be understood that they must pay full rates on farm buildings, just as the resident pays on a building in an urban district of the city. There is no relief there.

The disturbing point about relief in regard to rates is that while the people benefit where the valuation is under £20 and it is then graduated up to a certain point, there is a very considerable area of the land to-day which is not covered. It is true that that is only in the case of a limited number of people, but the burden which their land is made to bear now with the increasing rates must be a matter of grave concern and it is something which ought to be studied. The Minister has informed the House that there is an examination of this question going on—I gather from him—in his Department. If the problem is as presented to us by Senator O'Brien, it is obviously not in the Department of Local Government that it should be studied at all. It has much wider issue than the issues that have been raised and it is much more vital and fundamental, and I think it must be taken out to a wider field for study. I do not quite know how any officials in the Department here could determine as to what would be the equitable distribution of these grants amongst the ratepaying community if they have to analyse what is the most profitable use to which the land can be put from the national point of view and from the point of view of giving employment.

Perhaps by way of reply to Senator O'Brien I might say that there is no method by which land gives less employment than when it is used for growing corn. In Carlow, Louth, South Kildare and places like that, where a man goes in with tractors and does the ploughing and sowing of corn drills, and goes in with a combined harvester in the autumn, there is very little employment at all. Those who know anything about agriculture know that not only in this country but in every country in the world the greatest density of employment is given where you have animal husbandry. I do not know what the Minister's policy is, but I would like to hear him explain more fully what his views are. You can have a conflict between Governments on this and it is something on which people should find agreement. If you have agreement on the basis of relief of the area under wheat, you find it changed overnight with the change of Government and the distribution of grants goes on to a changed policy. That is something which should be examined and determined outside Party considerations, as it is something on which there should be reasonable understanding one way or another.

Whatever may be said by Senator O'Brien and people who are income-tax payers to a greater extent than some others—for reasons that one might say are obvious and perhaps understandable—the fact is that agriculturists in every county to-day are considerably perturbed at the rising cost of local administration. Those of us on either side of the House who have had to sit for hours studying Estimates presented to us by county executive officers are aware of that. There have been demands in some counties for as high as £2 in the £. In my own county the demand was for 31/10, but after hours of consideration we succeeded in reducing it to 27/3. All of us in every county have reached the stage when the burden of local taxation is such on the ratepaying community that unless things are radically altered we will find that we have planned a scheme of expenditure which we will not be able to sustain. I think you will find a spirit of rebellion developing among the agricultural community. It will not be quelled by the views expressed by Senator O'Brien or anyone elaborating on the position or examining it, however interesting that examination may be.

The fact remains that the rural community feel that the amounts given in grants by way of relief of rates are not sufficient and feel also that they are paying for services which are, in the main, national rather than local services. Far from any reduction in the amount given and due to the local ratepayers by way of relief from the Central Fund being made, their feeling to-day is that the rising demands of local expenditure are such that further relief by way of increased grants to assist local ratepayers is necessary, if local administration is to be reasonably efficient at all.

Mr. P. O'Reilly

When Senator O'Brien was giving expression to his viewpoint in regard to the relief of rates on agricultural land, I could not help thinking that I had heard that viewpoint expressed before. It occurred to me then that I had read that viewpoint expressed in certain newspapers some time ago. It struck me that perhaps Senator O'Brien's mind was made up by the expression of that viewpoint in those newspapers, but it then struck me that perhaps he had made up the minds of these newspapers. The latter might be the more correct way of putting it. Senator O'Brien quoted the Minister as having said that the basis of distribution of the grant was going to be revised. If I understood the Minister, he said it was going to be examined, which, to me, means something different.

Senator O'Brien, without giving the premises on which he based his argument, tried to prove that there should be an inverse proportion between income-tax and the agricultural grant, but I fail to see on what basis it can be argued that there should be such a proportion between the two. He said that when income-tax was reduced was the time when the agricultural grant was increased and hence, since income-tax has increased, the agricultural grant should be reduced. That is not the premises on which to build the argument that there should be an inverse proportion between income-tax and the agricultural grant. It is a grand thing to hear Senator O'Brien say that the halving of the land annuities conferred a great benefit on the farming community. Agreed, it did, and perhaps if his statement had been made at the time that matter was of serious political import it might have had some effect, because quite a lot of people at that time argued that it did not.

Since I come from a rural area and am a member of the farming community, I feel that there is an onus on me to try to put a viewpoint different from that put by Senator O'Brien. He suggests that there is not equity in the distribution of the agricultural grant and because of that suggests that there should be a reduction in the grant.

It is scarcely possible in any human scheme of things to have absolute equity and it may be argued that even in the system of taxation on the basis of poor law valuation there is not equity. There is, however, this to be said for it, that it is very hard for anybody to devise a better system which will collect the same amount of money and cause less hardship. It is not a great argument in favour of the system of taxation on poor law valuation.

In relation to this matter of the agricultural grant, I am not at all prepared to accept that there should be an inverse proportion between the volume of the grant and the scale of income-tax, but I am prepared to argue that that grant is given to the under-privileged people of the country and is intended primarily for people on the lower valuations. The people who benefit most by this derating grant are the people with poor law valuations under £20 and perhaps in respect of the second and third headings of the distribution of the grant, there might be need for some adjustments, unless there is to be a radical change in the system of distribution. Senator O'Brien did not suggest any change in the system of distribution, apart from his criticism of it in its present form, and Senator Baxter did not suggest any change either.

I think we will all agree that the purpose of this grant is to help local authorities to give a standard of service in different counties on the basis of some equality and to have reasonable equity in the taxation of these counties. I am prepared to say that at present it is scarcely achieving the purpose for which it was intended, and, if there is to be any change in the system of distribution, I am prepared to argue that there should be some scheme of a basic rate, the same rate in all counties in the country, and that the grants should be distributed to the different local authorities having regard to their position with a view to ensuring equality in the standard of their services.

Anybody will agree that as long as a penny in the £ will give £2,400,000 in Meath and £600,000 in Leitrim it is quite impossible to have an equal standard of roads, hospitals and the other services maintained by local authorities. Any sensible person will maintain that. Therefore, if there is to be a change in the distribution of this grant, I argue that there should be a radical change so as to ensure the same rate in Donegal, Leitrim, Kerry and Galway as in Dublin, Kildare, Wexford, Waterford and the richer counties. The grant should be distributed so as to ensure as good services in these counties of hospitals, roads, sewerage, water, housing and everything else which local authorities provide. Only then would there be equality in the distribution of the grant. That, in my opinion, would be a better line upon which to work than that suggested by Senator O'Brien, who held that the grant should be reduced, because the main purpose of the grant is to give the services and to ensure some equality as between the various counties. I am convinced that unless something like that is done there will not be equality in services between the congested areas and the counties along the eastern seaboard. The people in Donegal, Sligo, Leitrim, Mayo, Galway, Clare and Kerry are entitled to the same standard of services as the people anywhere else, and it is because those standards are not available to them that you have a marked drop in the population of those counties.

Mr. S.T. Ruane

The assurance given by the Minister in his brief statement introducing the Bill that the whole question of rate relief will be examined is a statement I was glad to hear. The whole question of local administration should be examined. Like my friend Senator Baxter I am a member of a local body. We spent two long days recently trying to effect a reduction of rate from 42/- to 35/- in the £.

My experience during those days is that the question of local administration at the present time is one that few local representatives have time to handle. They are presented with files of correspondence which need time for analysis, and the business of studying a manager's estimate invariably falls to a section of the council. Their suggestions are invariably approved by a majority of the council when as a result of their investigation their recommendation is made known.

The whole system of local government has, from the point of view of the ratepayers, gone from bad to worse for years. I happened to meet a citizen of an urban area very recently who commented on the time when industry in the town in which he lives was in a flourishing condition, when the spending capacity of the people was far better than it is now and when the local urban council spent a considerable time one evening discussing the advisability of accepting a suggestion that the rate should be raised from 5d. to 5½d. in the £; the rate at the present time is 40/- in the £.

I would agree with Senator O'Brien that rate relief for the farming community should be related not so much to the amount of labour employed on the farm but to the amount of production issuing therefrom. I would like the Minister to try to take into consideration the towns where there is no rate remission and where the excessive demands in the matter of rates are very high. If these people improve their premises their valuation is increased and their rates go up. The question of rates at the present time in this country is one of considerable worry to those who must meet demands for rates which, as I have already said, are far in excess of what they used to be when those concerned were in a better position to pay them.

Mr. P.F. O'Reilly

Of course, Senator O'Brien was very interesting. He always is. He said a number of interesting things in his speech to-day, but a number of them were interesting only in theory and were not to a very great extent at all practical. He referred to the gain which accrued to farmers following the halving, or virtual halving, of their annuities, but that was not a real gain to farmers. The circumstances which made that grant necessary cost them considerably more than they will ever make by this alleged halving of the annuities. Any farmer, given a choice between the halving of his annuity and the position which obtained before that became necessary, would opt, not to have his annuity halved, but to go back to the pre-economic war position. The halving of the annuity meant to the farmer whose annuity was £5, £2 10s. Od. a year or, with an annuity of £20, a saving of £10, and that, I suggest, was no great gain to any farmer. I do not agree with Senator O'Brien at all. I am practically in entire disagreement with what he said except, perhaps, in so far as the Minister might consider the question of production and apply it to some large degree as a test for an abatement. That, I think, is the only part of Senator O'Brien's speech with which I could agree.

He spoke of the favourable position of farmers with regard to income-tax. Of course, they are in a favourable position. They may, if they wish, prepare accounts for the farm, but there would not appear to be any liability for a tax on the accounts of a number of farmers in this country. Because of that position they are not being treated any more favourably than any other citizen. The £4,000,000 which this grant will require is a very small sum compared with all the other grants which must be met from the national Exchequer. Grants to aviation amount to over £540,000, and food subsidies cost over £11,682,000. There are many other grants where farmers do not get full value but where in the main town dwellers get the benefit.

Grants are also made towards housing, and there, again, I suggest that the urban dweller derives greater benefits from these grants than do the agricultural community. The Minister has suggested, and Senator O'Brien has agreed, that an examination should be made of the entire system, but that we should let it go out from this House that there should be a substantial reduction in the agricultural grant because more income-tax has to be paid, would be entirely wrong. There is no reason why, if higher income-tax must be levied on people who have taxable income, this grant or any part of it should be withdrawn from the farmer. The farmer pays by way of rates a larger amount than the people in the towns and cities, and he must, because of his economic circumstances, get the benefit of this agricultural grant.

It has been suggested, or rather we might be entitled to conclude, that the farmer who gets the main benefit from this agricultural grant is a man who, were it not for the income-tax laws as at present constituted, should be paying income-tax on, perhaps, £1,000 or £500 per annum. There are very few such farmers living in this country, at least to my knowledge, and I feel that that is the opinion of most of the people here. The grant which is sought by virtue of this Bill is one which is eminently necessary and essential for a particular economic state. I suggest that, if the people in the cities and big towns were given the option of going to live on farms and given the advantage of the great boon, as has been suggested, that the agricultural grant confers on farmers, they would decline the offer. I feel that for the reasons I have mentioned there should be no falling off in the amount of the grant. Undoubtedly, as the Minister has told us, there would appear to be a case for an examination of the system by which the grant is allocated.

There is one matter with which I feel the Minister might concern himself in that examination. I suggest that he should employ some production test with a view to giving to the bigger producers a larger share of the grant. Probably he would be met with administrative difficulties there. In conclusion, I would like to say that I feel that there is no reason why the amount of this grant should be criticised.

Mr. Burke

It was suggested some years ago that it would not be very long until the rates levied on agricultural land would be greater than the rack rent. I know of a case where the amount of rates paid on land is now approaching something in the neighbourhood of £4 per acre. If I may be slightly dramatic, I think I am right in saying that landlords have been shot for less.

It is not true to say that the farmer does not pay income-tax. The farmer is liable for most of the Schedule A tax. If he happens to be a man with a large holding and has no dependents, he is also liable for Schedule B tax on the assumed profit that he derives from the working of that holding. It has also been mentioned that he is receiving subsidies. These subsidies are for the purpose of reducing the price of the commodity which the farmer produces and they are meant not to benefit the farmer but the townspeople. If the price that the farmer could charge for his commodities were free, these subsidies would be a definite boon. However, that is not the case, because his subsidies are used to enable the townsmen to buy at a cheap rate. I feel it will be time enough to do away with these subsidies when the countryman, be he the farmer or the farm worker, is in receipt of a higher income, or when his average income is higher than that of the town worker. Let us consider for a moment an ordinary country town. Let us take one street in such a town. A tradesman lives there, a shop assistant and many other workers, but between them they would not be paying £100 in rates. Two or three small farmers would be paying that much. The farming community contribute more in rates towards the maintainence of hospitals and social services generally than does any other section of the community.

Being men of substance, most of them, they cannot get any free treatment in the hospitals, but have to pay in full. It shows a lack of knowledge of the situation to say that the farmer is not paying a vast amount in taxation. If the farmer were deriving all these economic benefits that we were told about, nobody would be living in the towns, but would be pursuing agricultural vocations.

Every census shows that a large number of people are leaving the land for the softer way of life of the towns. The tariff walls which are built up are meant to protect the people in the towns, both industrialists and workers, in many cases to the disadvantage of their brothers and sisters on the land.

One thing which I would like the Minister to do, if he does set up a commission to inquire into the system of rating and local government in general, is to drop the county-at-large charge. This charge is encouraged under local administration as a sort of log-rolling. If there is a water scheme introduced into one village in a county, every other small village must have the same sort of water scheme, whether the people want it or not, because there is a grant for it. Some people think that it will be to their advantage and that they will be considered progressive if they can put more on the rates and get more out of the Central Fund when it is going to cost their particular area little or nothing. If the several charge system were reverted to, at least in part, it would have the effect of stopping a certain type of person competing with other sections of their county in order to get State grants and county-at-large charges, which are for the benefit of their locality. There is no real benefit in spending money for the sake of spending money. It is a very short-term benefit.

If the Minister sets up this commission I think he will have to see how local government, the manager and the council can co-operate to get efficiency. I believe at the moment they are out of step. The information that local government have in regard to efficiency and in regard to any schemes that are being carried out by our local authority rarely ever comes into the possession of the councillors who have the responsibility of providing money for these schemes, in whole or in part, in their own counties. I believe that the managerial system——

An Leas-Chathaoirleach

I am afraid the managerial system does not come in under this.

Mr. Burke

I am only dealing with it in the sense that it appears not to be devised in order to encourage cooperation between the three sections responsible for the administration of local government in order to give us that efficiency which would produce a reduction in the rates and thereby cause less demand on the central authority for the relief of rates.

With those few remarks I will conclude and I ask the Minister to bear these things in mind. I would also ask him to remember one thing particularly, and that is, the farmer is in his own way probably the most heavily taxed person in this community—if he were not we would all be living on the land.

Mr. Hawkins

Senator O'Brien at the outset expressed the view that the sum of £4,500,000 provided as subsidy to the farmer by way of these agricultural grants was a huge sum and that the time had come when serious consideration should be given to the payment of these and other subsidies. We all agree that £4,500,000 is rather a large sum of money and I think a discussion on a subject of this kind at this particular time should be very welcome because it brings before this House and before the public much of the moneys that have been provided, of which little or no regard is being held by the people who are in receipt of the various subsidies. When I say that, I do not refer only to the farming community but also to the consuming public who are benefiting to a great extent from these subsidies.

When we regard the sum of £4,500,000 as being a large sum we must also have regard to the fact that the relief of a burden of £5,000,000 per annum from the backs of the farmers through the halving of the annuities must have been some consideration. While Senator O'Brien considers £4,500,000 a considerable sum, Senator O'Reilly considers that there was little or no benefit to the farmers by the relief of £5,000,000 in the halving of the annuities.

Mr. Baxter

There is no £5,000,000.

Mr. Hawkins

He could also have stated in regard to the payment of this grant the benefit that may accrue from it to the person who is paying £5 per annum in rates. I think that, as the Minister has informed us that consideration will be given to the system of distribution of these grants, we should take the matter seriously. Senator O'Brien and other Senators who have spoken have suggested that, rather than pay a part of the grant on the basis of employment, the new system should be on the basis of production. With such a suggestion I do not at all agree. Each and every one of us knows that there is no farmer in this country who is going to employ persons throughout the whole year at the present rate of agricultural wages and under present conditions for the purpose of availing of the small benefit that may accrue from this Bill.

On the other hand, there is no farmer in this country who is worthy of the name of farmer who will have a person employed unless he is employed on useful production or what leads to production in the long run. I do not think it would be an inducement to the farmers if we were to adopt the suggestions made by Senator O'Brien and others, to revert or change over as an experiment to allocating these grants on a basis of production of a particular crop.

I think that would be unjust because you would be benefiting particular farmers who would have the land suitable for the production of that particular crop. Therefore, no matter how we view the position, we will come to the conclusion that, whatever can be said against, certainly the weight is in favour of the present system.

Some Senators have spoken of the advantages farmers have in regard to income-tax, but I suggest that the agricultural grant was first introduced as a recognition of the contribution made by the ratepayers in providing social services that were not their function when the system of levying rates was first introduced. We know that farmers are the largest body of ratepayers and that they are in the greater part providing the social services for our people in the towns and villages throughout the country. It is only just, therefore, that whatever contributions could be made to relieve the burden of the rate being placed upon them should be made, and I would press that the present system be continued.

Professor Stanford

I would like to agree with what Senator O'Brien said, that, on the whole, in this debate, we must take the wide view in a matter of this kind and see this relief of rates in the setting of the whole financial system of the country. I especially agree with him in regard to the matter of relating the income-tax with those reliefs in rates, because I do feel, in some respects, farmers are a favoured community, and I think we must be careful not to indulge them too much. Senator Baxter does not like the sound of that. We realise that the farmers in this country are our life blood, but sometimes blood can get high pressure as well as low pressure, and there is a danger, if it is over-fed, it may develop a high pressure which would be dangerous to the body politic. That, I think, seems to be what Senator O'Brien is warning us against.

There is another aspect of this Bill, and I hope you will allow me, Sir, a little latitude in this matter. You have allowed latitude with regard to the Budget, income-tax, the managerial system and various other things. I would say that, in the Seanad, we suffer a little from opportunities of taking the broader view of matters of this kind. We do not meet very often, and I think you will agree with me, Sir, that an amount of latitude in taking the broader view will be permissible.

Mr. Smith

Better take it.

Professor Stanford

That is good advice from an experienced parliamentarian. I suggest, in this matter, taking the wider view, that the farmers are in need more of workers than of financial relief.

No matter how the farmers are favoured with favourable financial legislation, unless the rural population is maintained and if possible increased, these reliefs will not serve their purpose. I visited West Cork last week and I was disturbed by some of the things I saw and heard there. I heard of farms that were no longer being worked, even derelict farms. We have all heard these things but they become more serious when you hear them from the people themselves. It has been emphasised again and again in this House that there must be an improvement in the social amenities of the countryside—mere financial relief is not enough. I am sure the Minister has this very seriously in mind but I would like to draw his attention to one special rumour which I heard in West Cork at the week-end. I take this opportunity of drawing his attention to it in case he may not have heard it himself. It was mentioned to me by some of the more enterprising citizens there. Apparently, there is some risk that the State intends to rob Peter to pay Paul in the rural areas. Let me explain what I mean by that. The farmers say just when this legislation is going through the Oireachtas that valuation officers were going around the country studying the parochial halls, old and new and the suggestion is that they are going to levy rates on these halls.

I hope you will agree with me that this bears directly on the wider problems of the agricultural communities because if social amenities are diminished or taken away you will not keep the workers on the land and you will not keep the young people in the rural areas of the country. These parochial halls are provided as social centres and if they are taxed new halls will not be built and some of the old ones will be sold. In that way the social life of the rural areas will suffer. I know this is not a matter within the jurisdiction of the Minister but he could bear it in mind when taking part in Cabinet discussions and express his view against putting rates on these parochial halls. Some of the enterprising citizens in West Cork have assured me that this is a matter causing grave concern and I hope the Minister, if it is a fact, will do what he can to prevent it.

Mr. Hartney

In view of the statements which have been made here in regard to the very favourable position in which the farmer is supposed to be, I am rather surprised that there has not been a flight to the land instead of a flight from the land, of which we have heard so much. At the same time, I think that if some of the people who hold that the farmer is in a favourable position in getting everything change places with him for a while, they will soon be flying from the land again. It is only fair and right that the present rate of relief should be given to the rural ratepayers; otherwise a very serious situation would arise because with the great increases there have been in everything it would be almost impossible to carry on. Since pre-1914 rates have gone up ten times. In one rural district in my own county the rate was 2/2 in the £ in 1914 and it is now 23/3, and that would be a fair average to work on. You have many social services which have to be taken into consideration and paid for in the national interest and it is only fair that the national resources should be called on to pay a reasonable share.

We have reached a stage when roads, and particularly main roads, have become a serious problem. The time has come when they must be regarded as national highways. This problem was discussed by my county council recently and the general feeling was that much of the traffic now using the main roads should be diverted to the railways, which are subsidised by taxation. Housing is another matter which must go on.

An Leas-Chathaoirleach

On this Bill the Senator can hardly discuss item by item what the rates are for.

Mr. Hartney

It will be agreed that housing is a national problem and for that reason there is every case for the charges in respect of it. It is fair and right that a certain amount of relief should be based on the employment given on the farm. I think it was Senator Baxter who said that if you sowed a crop of wheat, you would not have to give much employment with the present state of modern equipment. The best employment is given in dairy farming and the work is given all the year round. It would be hard to work out a basis of distribution of the grant on the area tilled. The amount of employment given seems to be the most reasonable way of deciding on the distribution of the grant.

People in the towns have a grievance that valuations are being increased because of all the sanitary services which are being provided for them. It is, however, the rural taxpayer who is bearing the bulk of these charges even though he is getting no direct benefit. Even if there is a small increase in the town valuations, they are getting the services for it.

The question of the estimate of valuation is another thing which caused a difficulty because it changes from year to year. The claim of the agricultural community is that they are receiving in the agricultural grant not too much but too little, and if the Minister is making any case with the Minister for Finance it should be one for an increase in the present grants, and his efforts in making that case would be very much appreciated.

Mr. O'Grady

I listened with considerable attention to the speech made by Senator O'Brien, who, no doubt, was expressing the city mentality. Later I had the pleasure of listening to his colleague, Senator Stanford, and it occurred to me that when Senator Stanford was visiting West Cork it was a pity he did not take Senator O'Brien with him. Had Senator O'Brien visited the seaboard counties along the West or South, he would not have made the type of speech we have heard this evening. He is anxious that some of the surplus wealth which has been showered on the farming community should be taken from them, by having the grant in aid of rates reduced considerably, to the benefit of the general taxpayer, the inference being that the farmer is getting too much. It is a pity Senator O'Brien did not develop the argument further and tell us the proportion of income which the said wealthy farmer in the South and West is deriving from his labour, by comparison with those more fortunate people who live in the cities and towns.

Over 50 per cent. of the population are engaged in agriculture and, as a reward, they get approximately one-third of the total national income. Less than 50 per cent. live in the cities and towns, and they get the remaining two-thirds. Now Senator O'Brien calmly suggests that those who get only half the reward of the others should have their incomes cut to benefit those who get £2 to their £1. Is it not an amazing thing for Senator O'Brien to go back to the year 1925, when the relief of rates was introduced, to find that, year by year ever since, and despite changes of Government meanwhile, there has been an exodus from the land and you have the people fleeing from that prosperity?

Senator Stanford referred to small farms in West Cork being left derelict and unworked. That is not confined to West Cork. There are other areas I know very well, where small holdings have been abandoned and people have locked up their houses because the small income they were deriving from the land would not enable them to live and they have gone elsewhere to seek more remunerative employment. It is time some protest was made, to inform those people in cities and towns of the conditions obtaining amongst the very small-holders in the South and West of Ireland. I do not propose to detain the House this evening by referring in detail to the Bill before us. The Minister has already said he does not propose to introduce any changes and, knowing him as I do, as a man of considerable common sense who knows the conditions in rural Ireland, I know that these interests are safe in his hands.

Senator O'Brien also referred to the halving of the annuities. This is the first time I have heard any admission from those who think with him that that has been a benefit to the community. Undoubtedly it was, but it was a benefit that was very much needed, and I hope it is being appreciated.

Decreasing the burden—whether paid in rates or in income-tax—on the shoulders of those who are in the happy position of having to pay super tax, so as to relieve them from paying super tax, and having that amount collected, either by rates or by income-tax, from the small-holders in the West and South, will not improve conditions. Whether we like it or not, the people of this island depend exclusively for their prosperity directly or indirectly on the produce of the land and any act we may do here or elsewhere that would help to reduce the income they derive from the land will not benefit even the people in the cities and towns. It is a pity that more people in the cities would not act like Senator Stanford and take an occasional run to the South and West to see the conditions there and how the people have to live and work hard—no eight hour day for them—to drag out a poor existence. The transferring from the very wealthy of the burdens which they naturally have to bear, not merely in this but in every other community, on to the shoulders of these poor people is an appalling idea.

Mr. Smith

I must be grateful to the members who have spoken inasmuch as I cannot complain that they did not open up this field sufficiently wide to permit of my speaking almost as long as I should like and talking about anything and everything under the sun. I am very appreciative of their good intentions, but I do not propose to make use of all the freedom they have presented me with this evening: I do not propose either to deal in any comprehensive way with the speech which seems to have aroused a good deal of interest, because, to tell the truth, I have not had much experience of the members of this House since it was constituted on the occasion of the last election.

I know very little of my friend, Senator O'Brien, but I know enough to know that these trained economists are magnificent at raising hares, and to know that they raise them in an assembly of this kind for many reasons. They love to have people run after them and they like to demonstrate their independence of thought. They think that, because—and we get tired listening to it, because it is so true that it does not need to be repeated as often as it is repeated by public men—this is an agricultural country, public men dare not say the things to which Senator O'Brien has given expression. I am quite sure I could think of a whole lot of other reasons why people of the trained type of mind that Senator O'Brien has take the greatest possible pleasure in provoking this sort of shadow-boxing which we have had here for the past hour or so. I do not take exception to it—I must say I enjoyed it—but I am not going to get in any way frothy because of some of the statements he has made with regard to the matter we are discussing and considering.

I had a very harmless intention when I mentioned in the Dáil that I was going to consider, in the course of the next 12 months, the distribution of what I described here as a large sum of money. That was my intention in the other House, and it was my intention in briefly referring to it here also. I will try to give the Seanad as briefly as I can the thoughts that were running through my mind when I was confronted with the responsibility of introducing this simple measure. Simple as it was, it was, to me, a measure dealing with a large sum of money, and, without throwing my mind over the wider field which we have been invited to traverse, without thinking of the responsibilities of the Minister for Finance in these times, without thinking of the problems that the Senator set himself of income-tax going down in 1925 being used as an argument in favour of the agricultural grant going up, and then considering whether or not it was a proof that when income-tax went up in the years that followed, the agricultural grant should come down—without conjuring in my mind all these highly delightful little problems which I will leave to the trained economists—I was asking myself, when I saw this figure of £4,300,000, if these amounts which were being collected from the taxpayer were being distributed in a manner which would secure for the community the best possible return, and especially were they being distributed so as to secure the best possible return, having regard to the circumstances in which we find ourselves to-day and may find ourselves to-morrow.

I know that it is the duty of a Minister to have regard to the problems of his colleague, the Minister for Finance, at a time like this. I am afraid that, instead of showing sympathy and understanding for him, many of us are amongst his worst problems, but however that may be, I say that it was not my intention to have regard to the size of the sum and not my intention to have the size of the sum examined in regard to the problems that affect the Minister for Finance and the Government. It was purely and simply an announcement by me to the Dáil and Seanad to make the public aware that, in 12 months' time, there might be introduced a new system of distribution of this sum of money designed to achieve objectives from the farming community which would contribute in the largest possible way to the general interests of the whole community making these sums available out of taxation.

I knew that the making of this brief reference to my intention would provoke discussion even though I was not proposing to make any change this year. I admit that if I had had time to have the matter examined thoroughly, the chances are that changes would have been made this year, because, however much we may say here or outside in defence of the agricultural community as against the people of the towns and built-up areas, however strongly we may hold a point of view with regard to the section of the community receiving the best treatment, I know—I hope I have been properly described—as a practical countryman that the farmers in these times and for some time past—and judging by the tendencies we see around us, it would appear that the same will apply in the future—who are engaged in the production of the commodities so vital to us now are the people who find it hard to get labour.

They are in competition with a lot of other interests for that labour. There are other attractions which are serving as inducements to labour to seek employment in other fields, and, when Senator O'Brien talks of the giving of employment on land and the undesirability of regarding employment on land as a sort of relief scheme, I entirely, completely and absolutely disagree with his approach, because I take it that by and large the farmer who gives employment is the farmer who is engaged in the form of production which is most suitable to us now and perhaps at all times. Senator O'Brien could, of course, with his modern mind and modern notions, say that the modern farmer may, by purchasing machinery such as milking machines, eliminate labour, but I know farmers who have considered these matters, for example, the installation of a milking machine.

I know farmers who have gone to other farmers with milking machines and said: "What do you think of this machine?" The query addressed by the farmer who had them to the farmer who had not always was "Can you get men to milk your cows?" and, if the other said "yes," the owner of the machine replied: "As long as you can get men to milk by hand never mind milking machines."

Senator O'Brien entreated me to treat these sums of money on the basis of the employment they give but I absolutely dispute that and refuse to accept that advice, whether it comes from Senator O'Brien or all the economists in the world, because his approach comes from a different experience and from a complete and absolute lack of the knowledge which belongs to the man on the spot, the man who is charged with carrying on the job. We want the wheat to convert into bread——

An Leas-Chathaoirleach

It would be better if the Minister would not discuss these matters. They have been discussed at length and it would be better if he went on to rates on agricultural land.

Mr. Smith

I will, of course, bow to your ruling, but I am showing, I hope, that the purpose behind these sums of money was a much narrower one than that with which I have been credited by those who have spoken here in the Seanad. At this time when farmers who are owners of land are claiming freedom to do as they choose, freedom to grow or not to grow, the freedom described in the Dáil and outside it, I have no hesitation in saying that if the taxpayers are asked to provide a sum of £4,300,000 for the relief of the rates of those who own land, the Government responsible for the taxation to make that available and I, as a Minister of that Government, are entitled to ask whether the community will get the services as a result of that provision to which the community is entitled. It is not, therefore, with the end in view to which Senator O'Brien has given expression, the end of securing some relief from the point of view of the Minister for Finance for the problems which confront him now and in the future, that I have decided to examine the matter over the next 12 months, but rather to ensure that those who work the land for the benefit of the community which is most difficult and trying in these days will, if we can secure it, reap the richest possible harvest.

Question put and agreed to.

Agreed: to take the remaining stages now.

Bill passed through Committee, reported without amendment, received for final consideration and passed.