Seanad Éireann debate -
Wednesday, 18 May 1960

Vol. 52 No. 11

Hire-Purchase (Amendment) Bill, 1957—Second Stage.

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

Minister for Industry and Commerce (Mr. J. Lynch)

This is a Bill relating to hire-purchase and it has two main objectives. Firstly, it provides that the Minister for Industry and Commerce shall have the power to make Orders regulating minimum deposits and maximum periods of payment in connection with hire-purchase and credit-sale transactions and prescribing the information to be given in relation to goods advertised or displayed for sale on hire-purchase or credit-sale terms. The second objective of the Bill is to amend in certain respects the provisions of the Hire-Purchase Act, 1946, which deals with the private rights and liabilities of parties to a hire-purchase or credit-sale agreement and the powers of the courts in legal proceedings arising out of hire-purchase transactions.

Hire-purchase benefits the community in a number of ways. It stimulates demand for a wide range of consumer goods and other products and in that way promotes production and employment. It enables persons in the lower income groups to furnish and equip their homes and to acquire many of the conventional necessities of life which they might otherwise have to do without. So long as hire-purchase facilities are utilised sensibly and prudently, there is no doubt but that the system is a useful one and that in normal conditions it can be beneficial to the national economy. This may be particularly true when the facilities are availed of for productive purposes as, for example, the purchase of industrial machinery and plant which will add to the national income and provide employment.

Figures published by the Central Statistics Office show that in 1938 there were 64,000 hire-purchase and credit-sale transactions the total retail value of which amounted to £1.5 million. In 1958, the number of such transactions was 242,000 and their total retail value £15.6 million. Thus, between 1938 and 1958, there was a fourfold increase in the number of transactions and a tenfold increase in their retail value. While part of the increase in retail values as compared with 1938 is due to the change in the value of money in the interval, it is clear, nevertheless, that the use of hire-purchase facilities has increased very considerably. Indeed, hire-purchase has now become such an important economic and social factor in the life of the community that I am sure the House will agree that it is essential that the conduct of this business should continue to be subject to regulation so as to ensure, first, that the economic consequences of hire-purchase spending can be controlled in the national interest and, secondly, that the practical operation of the system as between the owner and the hirer of goods is fair and equitable.

While the growth of hire-purchase plays an important part in the development of the economy, it could give rise to serious problems in certain circumstances. Hire-purchase credit provides spending power and creates a demand for goods and services. To the extent that the demand is for imported goods, it is capable of having an adverse effect on our balance of payments. Furthermore, by encouraging and facilitating expenditure on consumer goods, hire-purchase can affect the volume of national savings available for productive investment.

It is very desirable, therefore, that, if circumstances at any time so require, the Government should have the power to control these undesirable consequences of hire-purchase. Part II of the Bill provides, accordingly, that the Minister for Industry and Commerce may make Orders regulating the volume of business transacted by prescribing minimum deposits and maximum periods of payment. Orders of this kind were previously made in 1956 when excessive consumer spending and other factors had contributed to balance of payments and capital difficulties. The 1956 Orders were made under emergency powers legislation as continued in force by the Supplies and Services (Temporary Provisions) Act, 1946. The Supplies and Services Act expired on 31st December, 1957, and in order that there may be power to exercise controls of a similar kind if the necessity should arise at some future date, the new legislative provisions contained in this Bill are necessary.

The Bill also authorises the Minister for Industry and Commerce to prescribe the information to be given in relation to goods advertised or displayed for hire-purchase or credit-sale. The interests of hirers or buyers in this matter are already protected to some extent by the Hire Purchase Act, 1946, which provides that, before a hire-purchase or credit-sale agreement is entered into, the hirer or buyer must be informed of the cash price of the goods. The agreement itself, which must be in writing, must show the cash price and the hire-purchase price of the goods. However, when advertising and displaying goods for sale on hire-purchase terms, many traders do not show the cash price or the hire-purchase price but merely the amount of the weekly or monthly instalment.

I think it will be agreed that the practice of showing only the amount of the instalment induces a number of people to buy goods without knowing the exact cost or the full extent of the commitments being entered into. I consider, therefore, that it is desirable that at the time goods are displayed or advertised, consumers should be made aware of the price at which the goods may be purchased for cash, the total hire-purchase price and the number, frequency and amount of the instalments payable. The powers contained in Part II of the Bill will enable the Minister for Industry and Commerce to require that information of this kind shall be made available to the public.

The Hire-Purchase Act, 1946, is designed to protect the interests of persons who hire or acquire goods under hire-purchase or credit-sale agreements. As I have mentioned, it establishes and defines private rights and liabilities between owners or sellers and hirers or buyers of goods, and it deals with the powers of the courts in legal proceedings arising out of hire-purchase transactions. A detailed examination has been conducted by my Department of the present state of the law on this subject and of the manner in which the Act of 1946 has been operating. There have been consultations with various interested parties, including the hire-purchase finance companies, and an opportunity has been taken to obtain the views of the Judiciary and Court Officers who have specialised experience in this field. The investigations which have been carried out show that certain changes in the law are desirable and it is with these changes that Parts III and IV of the Bill are concerned.

Under existing law, if a hirer defaults in payment under a hire-purchase agreement and the owner takes legal proceedings for the recovery of the goods, the court may make an Order giving the hirer an opportunity of paying the outstanding balance of the hire-purchase price by instalments. If, due to some misfortune such as illness or unemployment, the hirer falls behind in the payments and fails to apply to the court for a variation of the Order before the default, he may lose the goods, even though by that time he may have paid off practically all his indebtedness.

It is inequitable that the hirer should lose the goods in such circumstances, and provision is, therefore, made in the Bill to enable the court to vary its Order at any time before the goods are actually returned to the owner in accordance with the delivery warrant issued under the Order. The hirer is also being given the right, which he does not at present possess, to pay the outstanding balance of the hire-purchase price instead of handing over the goods in compliance with a delivery warrant. The owner can recover whatever costs and expenses have been awarded to him by the court.

In ordinary civil proceedings, if a defendant admits the plaintiff's claim and makes an offer of payment which the plaintiff accepts, judgment is often entered in the court without any query and without attendance of the parties. This cannot be done in hire-purchase cases, since the Act of 1946 provides that an Order giving relief to a hirer may be made only at the hearing of an action after the courts have had regard to all the relevant circumstances of the case. These precautions are not necessary where the owner has accepted the hirer's offer of payment, and, accordingly, it is being provided in the Bill that in such case the court may enter judgment forthwith. This provision should speed up court procedure and reduce legal expenses, to the benefit of both hirers and owners.

The Act of 1946 renders void any clause in a hire-purchase agreement authorising an owner to enter the hirer's premises for the purpose of seizing the goods which are let under the agreement. The Act furthermore provides that, where one-third of the hire-purchase price has been paid, the owner cannot enforce any right to recover possession of the goods except by action in the courts. It has been represented by the hire-purchase companies that these provisions operate harshly. It has been said that there have been cases in which a hirer acquired a motor vehicle or tractor under a hire-purchase agreement and subsequently abandoned it in a place or in circumstances in which it was subject to serious damage or depreciation.

The hire-purchase companies claim that in such cases they should have the right to recover possession of the vehicle—and, if it is necessary for that purpose, to enter the premises of the hirer—pending legal proceedings under the Act of 1946. The Bill seeks to provide an equitable remedy for owners in cases of this kind. It includes a provision to enable the owner to insert in a hire-purchase agreement a clause permitting him to enter upon any land or premises of the hirer—except a dwelling house or a garage or other similar building attached to a dwelling house—for the purpose of recovering possession of a vehicle let under the agreement.

The Bill provides, moreover, that, even where one-third of the hire-purchase price has already been paid, the owner will in the circumstances mentioned, be entitled to recover possession of the vehicle without a court order pending the making by the court of an interim Order for the custody of the vehicle. Two safeguards are being provided against the abuse of this provision. First, where an owner recovers possession of a vehicle, he will be obliged to make an application to the court within 14 days for an interim order for the custody of the vehicle. If he fails to do so, he will be deemed to have recovered possession in contravention of the Act of 1946, and the hirer will be released from all liability under the agreement and may sue the owner for payments already made. The second safeguard is that if, on the hearing of the action the owner fails to satisfy the court that in all the circumstances of the case he was entitled to seize the vehicle, the court may award damages against him in respect of the recovery and retention of the vehicle.

In an action for the recovery of possession of goods let under a hire-purchase agreement or for payment of instalments due under such an agreement, the existing law allows the plaintiff to bring the proceedings in the court area where the contract is deemed to have been made. Many of the hire-purchase finance companies are situated in Dublin, and it is generally claimed by them that the contracts which they enter into are made in Dublin, irrespective of where the hirer resides. Under this system the defendant does not, in many cases, get a reasonable opportunity to appear in court.

It is hardly necessary to say that, to a defendant resident in a remote part of the country, the prospect of having to come to Dublin for the hearing of a case can be somewhat intimidating. There are valuable reliefs which a defendant is entitled to receive if the court deems fit, and it is very important, therefore, that he should be given every opportunity to appear before the court. Accordingly, I am satisfied that a defendant in a hire-purchase action ought to have the right to have the action heard by the court in the area in which he resides or carries on business and the Bill provides accordingly. This is already the position in regard to actions brought in the District Court for the recovery of possession of goods let under hire-purchase agreements.

As a result of the provision changing the locale for Circuit and District Court hearings, there may be a tendency for owners to bring hire-purchase actions in the High Court in Dublin. In order to ensure that the intentions of the Bill are not frustrated in this manner, it is essential that the High Court should be able, of its own motion, to remit or transfer to the Circuit Court or the District Court proceedings which, in its opinion, ought to have been commenced in those courts. A provision to this effect is included in the Bill.

It is proposed to take advantage of the opportunity afforded by the Bill to revise the limits on the jurisdiction of the Circuit and District Courts in relation to hire-purchase actions. It is now being provided that the Circuit Court shall have jurisdiction in all such actions where the hire-purchase price of the goods involved, or the amount of the claim for arrears of rentals, does not exceed £1,000 and that in the case of the District Court, the limit of jurisdiction shall be raised to £100. The present limits of jurisdiction are £600 in the case of the Circuit Court and £50 in the case of the District Court. The proposed revision of the limits of jurisdiction is justified by the change in money values since 1946.

In hire-purchase actions taken in the High Court and Circuit Court, if the defendant does not enter an appearance or defence the owner is entitled to apply for judgment in the Office of the court. I am informed that, in the majority of cases, defendants do not enter an appearance or defence and that judgment is marked in the office, usually for the recovery of the goods, arrears of rentals and costs. This procedure deprives the defendants of the reliefs to which they may be entitled under the Act of 1946. These reliefs include the making of a "postponed Order" for the return of the goods to the owner or the making of an Order for the transfer to the hirer of title to part of the goods and for the return of the remainder to the owner.

While it may be that if the defendant does not appear in court, the judge is unlikely to grant any of these reliefs, he has discretion to do so and he may be disposed to exercise that discretion if there are any unusual circumstances in the case. Where judgment is marked in the office, the Registrar has no such discretion even if it would manifestly be unjust to allow the plaintiff's claim in full. I am satisfied, therefore, that in undefended actions for the recovery of possession of goods let under a hire-purchase agreement, the law should be altered so as to compel the plaintiff to apply to a judge in court for judgment and the Bill provides accordingly.

Under the Hire-Purchase Act, 1946, if a hirer defaults under a hire-purchase agreement and determines the agreement by returning the goods to the owner, his liability for further payments to the owner is limited to payment of the arrears of rentals due at the time of termination of the agreement and, in addition, payment of such sum, if any, as, when added to the amounts already paid and the arrears due, is necessary to make up one-half of the total hire-purchase price. The Act does not, however, provide for the limitation of the liability of a guarantor. It is only equitable that, where the goods are returned to the owner, the liability of a guarantor should be limited in the same way as that of the hirer and provision to this effect is made in the Bill.

The right conferred on a hirer under the Act of 1946, to terminate an agreement on payment of one-half of the hire-purchase price has created difficulties for some agencies which provide hire-purchase facilities for industrial plant and machinery. In the case of machinery which may become obsolescent quickly, it may be in the hirer's interest to terminate the agreement by paying one-half of the hire-purchase price and returning the machinery to the company rather than to continue a transaction in respect of equipment which has become obsolete. Because of the restricted market for secondhand industrial machinery in this country, it may be difficult for the hire-purchase company to find a buyer, particularly if the machinery is specialised.

Accordingly, I feel that there are good grounds for altering the law in relation to hire-purchase transactions in respect of industrial plant or machinery so that the hirer in such a transaction will no longer have the right to terminate the relevant agreement on payment of one-half of the hire-purchase price. The Bill provides, therefore, for exemption from the scope of the relevant provision of the 1946 Act in respect of transactions involving industrial plant or machinery the cash price of which exceeds £200.

My attention has been drawn to an abuse arising out of the sale by dealers of goods which they have acquired under hire-purchase "stocking" agreements. Cases have occurred in which dealers have sold to the public goods so acquired, without first discharging the "stocking" agreement. The purchaser found afterwards that he was not the legal owner of the goods and in order to acquire title to them, had also to pay the hire-purchase company concerned. It is proposed to amend the law so as to safeguard the purchaser in cases of this kind.

Perhaps I might elaborate on what a "stocking" agreement is. The obvious illustration is a garage displaying certain makes of cars. These cars may be under hire-purchase agreement already with the garage proprietor as the hirer and some finance company as the owner. If a person buys a car from the garage proprietor, his immediate liability is to the garage proprietor for hire-purchase repayments, if it is a hire-purchase agreement between him and the proprietor. However, having paid his liability to the garage proprietor, it has happened that the garage proprietor may not have paid his liability in turn to the hire-purchase company. He may be a man of straw or not be available otherwise. The hire-purchase company could then claim against the bona fide hirer from the garage proprietor who, as far as he knew, had become the purchaser and owner of the car. That person has no answer to the hire-purchase company's claims. It is obvious that such a situation needed to be remedied.

These are the main provisions of the Bill, the need for which will, I feel sure, be generally accepted. In the preparation of the measure, I have tried to hold the balance as evenly as possible between the parties to hire-purchase transactions and I hope that I have succeeded in so doing. I feel sure that the general principles underlying the Bill will commend themselves to the House.

Mr. McGuire

I think this Bill was welcomed on all sides in the Dáil and I expect it will also be welcomed here. The Minister gave us an unusually comprehensive introduction to this Bill today. I had made some notes on my way down here today but I see that the Minister's introductory statement seems to have included all the points I had thought up. It is only right that the statement should be comprehensive because hire-purchase has become a major feature of modern commercial life. That can be judged by the increase both in the number and value of the transactions in this country over a very short period. Indeed, we can see a dramatic increase.

As far as we can see, this extension of hire-purchase is going to continue almost indefinitely. It began with certain types of goods in certain types of businesses but now it would appear that it has extended into almost all forms of commercial transactions. It even goes so far as to embrace selling holidays and travel. We have many people coming to this country this year who have done so through hire-purchase or some similar type of agreement.

Hire purchase, as the Minister said in his statement, is a mixed blessing. It is something that can confer immense benefits on the individual and on the community and on business generally in that it has stimulating effects by creating and expanding the demand for all sorts of commodities. On the other hand, there is the other side of the picture. It can also create many evils in that it can entice commercial and industrial concerns to resort to some of the less desirable methods we have seen in operation. People are sometimes enticed to purchase goods which it is not really advisable for them to buy. Transactions are conducted which may be economically unsound both for the individuals and for the community.

All these things were apparently borne in mind in the preparation of this Bill. The State, quite rightly, is taking power to have its hand on the wheel, so to speak, in regulating and controlling the operation of hire-purchase. Naturally, when the State takes powers such as these, there is always the danger that the powers may be abused or used in the wrong way. That applies both as regards the hirer and also the owner. It is very important that the rights of both people should be balanced and respected.

As regards the hirer, it seems that in this Bill he is getting an extended protection. That is quite right because the giving of extended privileges to the buyer really imposes upon the seller a greater wariness. It will impose a greater necessity on the owner to see that the people who are pressed to buy articles will, in fact, be able to pay for them ultimately. Up to now, because of the powers the owner had to recover goods, the door was rather left open to high pressure salesmanship, without regard to the ability of the customer to pay.

This Bill also gives certain powers to the State to invade the premises of individuals and companies in order to secure certain information. We all agree that a reasonable degree of power must be given to ascertain the facts lying behind these hire-purchase transactions, but we must always be jealous of the rights of the individual to a reasonable amount of privacy, both in his individual and his business life. Of course, these rights can be stretched too far either way. It is to be hoped that the balance will be maintained in favour of keeping individual privacy and business privacy as far as possible. I should hope that in the operation of this Bill that point will be safeguarded.

The Minister also mentioned the necessity for seeing that the true price of goods will always be made known in relation to the presentation of the goods. Also it should be ensured that the purchaser will know what he is paying for the goods. Very often people, if they find goods attractively presented for, say, 2/6d. or 5/- a week, are inclined to think only of the 2/6d. or 5/- without having regard to the ultimate obligation on them and what total sum they will have to pay ultimately. That is a very important point which should be stressed.

Another important point is the necessity for a reasonable down payment in the first instance, because I think that many people would be deferred from entering into undesirable arrangements if they had to pay a comparatively substantial sum in the first instance. I know in my own business that we have always found that people of straw will buy if they can get an article very quickly with a very small deposit, whereas if such people had to pay a reasonably decent-size deposit at the beginning, the story would be different. The payment of a reasonable deposit is desirable and the most creditworthy people are attracted by insisting upon one. You will thus get hirers who will not be letting themselves in for difficulties.

There is another point about hire-purchase. You still hear people say that hire-purchase is a bad thing and should be frowned upon, but actually hire-purchase and the ability to be able to buy goods on the hire-purchase system is, in fact, a development that was inevitable in modern life where we live in times of constant inflation. In the old days, we all remember what our fathers told us in regard to saving and buying. We were not allowed to buy anything unless we saved up the money first and then when we had the money saved we made our purchase. That was a very good rule in the old days when money had a definite value.

Nowadays, if one had to wait to save up the money to buy an article such as an essential household commodity, it would mean that at the end of five, six or seven years which it took us to save, the value of the money saved would have depreciated, whereas under the present system people can buy the necessary household articles first and pay afterwards. They are thus enabled to set up a house at an earlier age than would be possible if they had to wait until the money was saved. It enables people to get married younger and start a family at a much younger age and to enjoy a more comfortable way of life.

Used properly, hire-purchase is of great benefit to the community. Purchasing the articles first and paying for them later means that in our inflationary world, those who purchase articles are, in fact, paying for their goods in cheaper money. That is an advantage to families and to people who invest properly and wisely. The danger in hire-purchase is that of overstretching one's commitments or buying things which are, perhaps, luxuries and cannot really be afforded. Another advantage of hire-purchase is that people are able to have luxuries which they otherwise would never be able to afford. The ideal arrangement in any family would be to buy the essentials first and when they have been paid off to move on to the luxuries in a gradual process. Unfortunately there are many cases where people mix up the essential needs of the home with the luxury articles at the same time, sometimes with very disastrous results.

Generally speaking then, I think we shall all agree that it is right that this Bill, which amends the 1946 Act and which is the result of experience gained in the meantime and in which improvements are introduced, should be before us today. I suppose it will not be the last Bill we shall have on hire-purchase in our lifetime but it is a step further and I think we all agree that it is a necessary one and we hope it will work.

Professor O'Brien

I propose to address myself to a very narrow part of the Bill, namely Section 6. The legal aspect of the Bill can be dealt with by the legal people in the Seanad. The business aspect has already been dealt with by Senator McGuire and no doubt will be dealt with by other members.

I should like to draw attention to Section 6 which is concerned with the general monetary situation and the balance of payments. The Minister and Senator McGuire said that hire-purchase has grown materially in recent times and I agree entirely with what Senator McGuire said, that it has an effect on raising the standard of living. The fact that people have to pay instalments on durable consumer goods makes them economise on other things and makes them save. It is really an extension of the old building society method of buying a house. It enables people to get possession of the object and to pay for it over a period of time. It is also used in the purchase of industrial plant. Business people who are not able to buy plant with their own capital have found the system a very useful one in modern society.

As against that, of course, there is the danger of over-indebtedness, over-expansion and over-commitments. From the national point of view, there is the danger that, if too much is spent on consumer goods, there may be pressure on the balance of payments. Practically all countries in the world today have taken power, either through their Governments or through their Central Banks, to regulate hire-purchase from the point of view of its effect on the balance of payments.

From that point of view, I propose to deal with the Bill. The Banking Commission, which reported in 1938, referred to the growth of hire-purchase in Ireland. It made the point that one effect of the growth of hire-purchase is to increase the instability of our economic system because, when there are fluctuations in the national economy, the fact that large parts of the national income are already pledged for repayments in hire-purchase means that less will be spent on other things. Therefore the instability of other types of spending tends to be increased.

The Banking Commission recommended that the Central Bank should have power to collect statistics about hire-purchase. It did not recommend that the Central Bank should have power to control the volume or the terms of hire-purchase. It recommended that the Bank should have power to collect and publish statistics. That power was in fact given to the Central Bank by the Central Bank Act, 1942, and people who read the Central Bank Report are aware that every year there is a section of the Report dealing with the volume of hire-purchase. The Central Bank has no power to control the volume or the terms of hire-purchase. The great growth that has taken place since the Central Bank Act, 1942, has made some power of that kind necessary. This Bill proposes to give power not to the Central Bank but to the Minister for Industry and Commerce, following the British precedent. The power to regulate hire-purchase in Great Britain is in the hands of the Board of Trade and not of the Central Bank.

In recent years, many of the Irish banks have entered into hire-purchase business by taking shares in hire-purchase companies and another company of that kind is now about to be formed. Therefore, when the banks begin to take part in hire-purchase, hire-purchase becomes part of the general credit mechanism of the country. In modern times, it is generally recognised that the Central Bank or the Government, or the two together, should have some power to regulate the volume of credit. Therefore, this Bill is really bringing us into line with other countries. It is giving the Government—in this case, the Minister for Industry and Commerce—power to regulate to some extent hire-purchase from the point of view of preventing an undue expansion of credit and therefore undue pressure in the balance of payments.

There has been much discussion in modern times in this country about how the Central Bank can deal with deficits in the balance of payments. One of the difficulties has been that it is extremely difficult for the Central Bank to regulate the Irish rate of interest independently of the British rate. This is a matter into which I need not go now. The regulation of hire-purchase is a method of control, an anti-inflationary measure that would help the balance of payments, which can be operated independently of any outside influence. There is no reason why the regulations regarding hire-purchase in other countries should in any way hamper the Irish Minister for Industry and Commerce in making the appropriate hire-purchase regulations. From the point of view of monetary control, the volume of credit and the balance of payments, this Bill can play a very useful part.

The whole question of the effect of hire-purchase on the credit situation was considered at length by the Radcliffe Committee on the Working of the Monetary System which reported last year. This Committee reported that in the 1950's the regulation of hire-purchase by the Board of Trade had played a very important and effective part in controlling the monetary system in Great Britain. It went so far as to say that the control of hire-purchase was more effective than either changes in bank rate or the credit squeeze.

The benefit of hire-purchase control, according to the Radcliffe Committee, is that it operates quickly, whereas changes in bank rate and the volume of credit take a considerable period to permeate through the whole society. By hire-purchase control the volume of expenditure on durable goods is quite rapidly reduced. They pointed out that while in the long run it is not so effective because the percentage of people's incomes which they devote to payment of hire-purchase commitments probably remains the same, in the short period, restrictions on hire-purchase, the raising of the deposit and a reduction in the period of repayments, which really amounts to raising the amount of the monthly instalments, can have a very rapid effect on the monetary situation. It is an extremely important measure for correcting inflation in the short period.

In spite of that, the Radcliffe Committee did not favour hire-purchase controls as a normal method of monetary management in Great Britain. The reason for that was that they regarded hire-purchase controls as qualitative rather than quantitative, dealing with particular aspects of business rather than with the business situation as a whole and as being possibly discriminatory against certain types of trade. The Committee said that hire-purchase regulation makes certain industries, the durable consumer goods industries, the residuary legatees of anti-inflationary action. It was in respect of that difficulty that they made the following remark which has been very widely quoted by people writing about the Radcliffe Committee:

The regulation of hire-purchase is far removed from the smooth and widespread adjustment sometimes claimed as the virtue of monetary action. This is no gentle hand on the steering wheel that keeps a well driven car in its right place on the road.

The Radcliffe Committee recommended that hire-purchase regulation should be used only when something in the nature of an emergency begins to appear, that it should not be one of the normal methods of correcting disequilibrium in the balance of payments. It should be one of the measures resorted to when an inflationary condition began to appear serious. They further recommended that any regulation of hire-purchase made in those circumstances should be the subject of Parliamentary debate.

The reason why they recommended that was perfectly sound, that Government expenditure itself can be very inflationary and that it is no use restricting private consumer expenditure if the Government's own financial policy on the expenditure side is of an inflationary kind. Therefore, the Radcliffe Committee recommended that, whenever hire-purchase controls were proposed, they should be debated in Parliament in order to give the members of Parliament an opportunity of debating and discussing the Government's own financial policy in relation to inflation.

The conditions in England and in Ireland are so different that I do not think that what the Radcliffe Committee said about the undesirability of hire-purchase controls in normal times applies in this country. The reason for that is that it is one of the few anti-inflationary measures which are independent of outside influences. In Great Britain, the Bank of England and the Treasury between them have considerable influence on the bank rate, on the volume of credit, on Government expenditure and on hire-purchase. The measures which can be taken in relation to the price and the volume of credit, the control of Government expenditure, and so on, must all operate together. If they are all operated in the same direction, none of them need be operated very severely. It is a combined operation. They are mutually helpful and complementary.

Of course, on the other hand, there is the danger that they may neutralise each other, the measures taken in one field being neutralised by measures in another field, thereby subjecting the system to interruption and to interference without producing any positive result. An example of that is that some years ago, when during the period of high bank rate, the Government were increasing the floating debt by the issue of a large volume of Treasury bills. The result was that the monetary policy of the Bank of England was frustrated by the inflationary policy of the Treasury.

Monetary policy requires a large admixture of suitable measures combined in the right proportions. In Ireland, a bank rate policy is very difficult to apply. Even if the Central Bank could affect rates of interest in Ireland, the Irish system is insensitive to changes. Changes in bank rate depend on the presence of a very sensitive and responsive type of borrower whose borrowing is in terms of a very small margin of profit in which small changes in bank rate make a considerable difference. In Ireland, the Central Bank is not able to control the rates in the commercial banking system, except perhaps to a very limited degree. But, even if it were able to do so, the effect of commercial bank rate changes in Ireland would be quite unimportant in correcting over-expansion.

We must therefore rely on other weapons of Budgetary control and hire-purchase control. They must not pull in opposite directions. It is no use for the Department of Industry and Commerce to put on controls on hire-purchase, if the Minister for Finance is pursuing an inflationary policy in his Budget, if he is borrowing and spending in an inflationary manner. That is why I suggest that the amendments put down by some members of the Dáil in this matter should receive the serious attention of the Minister. The amendments in the Dáil were to the effect that these hire-purchase Orders, which, under Section 4 of the Bill, are to lie on the Table of the House, should be debated. That would be completely in agreement with the proposals of the Radcliffe Committee in England. The Radcliffe Committee recommended that any hire-purchase controls should be the subject of Parliamentary debate. I suggest that these Orders, instead of being just laid on the Table of the House, should be debated in the House and should be the subject of a positive motion by the Minister before they come into effect. In that case, the Dáil and Seanad would have the opportunity of considering how far these Orders were necessary and how far they could be reduced in severity by suitable changes in Government policy.

As I have said already, the chief villain in modern times in regard to inflation is often the Government itself. There is no use in the Government imposing measures designed to curtail expenditure when they are pursuing an inflationary policy themselves. There is a great deal to be said for debating these Orders, as suggested in the amendments put down in the Dáil.

It is provided in subsection (5) of Section 6 of the Bill that the Minister for Industry and Commerce must consult the Minister for Finance before making an Order. I would suggest that the body to consult is the Central Bank. The primary purpose of the Central Bank is to deal with the whole monetary and credit situation and to take whatever anti-inflationary measures are available. Consequently before any Order of this kind is made, the Central Bank should be consulted regarding its effect on the whole credit situation in the country.

It has been suggested recently that hire-purchase controls could be helped by a variable purchase tax on durable consumer goods. If the Minister for Finance had power to vary a purchase tax, within certain limits, on durable consumer goods, it would be a valuable additional weapon for regulating the volume of expenditure on those goods. The Minister might consider that suggestion, because, as I said, there are a number of weapons, so to speak, in the Government armoury for dealing with inflation, and if each weapon is used a little bit, none of them will need to be used very much and, therefore, they will help each other. I suggest if the Minister for Finance had power to vary a purchase tax on durable consumer goods within narrowly defined limits, the necessity for drastic action in relation to hire-purchase might be reduced. I also suggest that any variations of that kind, and any variations in Orders in relation to hire-purchase, should be debated in Parliament in order that the members of Parliament who represent the public will be in a position to investigate whether the inflation and the disequilibrium in the balance of payments was caused by the public or by the Government.

Éamon Ó Ciosáin

Fé mar adúirt Seanadóirí eile, cuirim fáilte roimh an mBille seo mar is doigh liom gur rud maith é go dtuigfeadh na daoine a bheidh páirteach i gnothaí fruilcheannaigh cad tá á dhéanamh acu. Rud tábhachtach é seo mar uaireannta, ní thuigeann daoine i gceart cad tá a dhéanamh acu i gcásanna mar seo.

Go dtí seo, ní raibh an iomad gnoithe den tsórt seo ar súil ach anois tá sé ag leathnú ar fud na tíre agus ar an ábhar sin, caithfidh an Rialtas súil a choimeád ar gnothaí fruilcheannagh ó lá go lá mar atá luaite sa mBille, ar eagla go rachfadh siad ro-fhada sa ghnó. Ach is ó thaobh eacnamuíochta na tíre is mó is ceart an Bille seo do mheas agus mar gheall ar sin is cóir na comhachtaí atá luaite sa Bhille seo a thabhairt don Aire Tionscail agus Trachtála.

I have not very much to say on this measure. I realise, of course, that this is a highly technical Bill and that one would need to have a specialised knowledge to deal adequately with it. Like other speakers who have already addressed themselves to it, I welcome the Bill for a few reasons, but I welcome it especially because I realise it is necessary for any responsible Government, or the Minister answerable to the Government, to keep a very strict eye on these hire-purchase transactions all over the country. As the Minister has stated, these transactions have very much increased in numbers over the years. A few years ago, there, were many people in the country who did not pay any attention at all to these transactions because they were not at that time commonplace. Now they have become a permanent feature of our commercial life and, for that reason, it is necessary for the Government and the Minister to be watchful of these transactions.

The difficulty about many matters like this is that there can be two sides to them, a good side and a bad. These hire-purchase transactions can be very good, if, as the Minister said, they are kept within sensible and reasonable bounds. If they are allowed to go beyond that, if there is indiscriminate indulgence in them, they can be very injurious to the overall economy of the country in the end, as well as to the individuals participating in them. That has been the experience in other countries already, and even across the Border, we have seen it, because they found themselves up against inflation and they had to take the necessary steps to curb that inflation. We do not want any situation of that kind to develop here, and that is why it is necessary to have a Bill of this type enacted.

I regard Part II of the Bill as the most important part, because it gives the Minister power to make Orders dealing with these transactions to which I have referred. Senator O'Brien referred to those Orders and intimated that they should be open to Parliamentary debate. I am very doubtful about that myself. In the first place, it is the Government and the responsible Minister who have to watch these trends from day to day. That is their responsibility, and it is hardly likely that any Order will ever be made unless circumstances arise in connection with hire-purchase transactions which justify the Order and make it necessary.

In any event, if there is any desire to have a Parliamentary discussion on these Orders, it could be done in another way. A motion could be brought before either of the Houses of the Oireachtas to have the Order anulled and that, in itself, would give rise to a Parliamentary debate. It is entirely too much to expect that there should be a Parliamentary discussion on every Order made by the Minister to deal with the matters envisaged in this Bill for the regulation of these hire-purchase transactions. I would not be in favour of that.

As I said at the outset, this is a highly technical measure and it does not lend itself to a long discussion on Second Reading. It is an amendment of the Act of 1946 and if these hire-purchase transactions go on at the rate they have been going on over the past 20 years, I can envisage the necessity for amending legislation later on, maybe, according as the system grows.

Mr. Barry

It is a measure of the important place hire-purchase has come to occupy in our society that Senator O'Brien found it necessary to devote a serious contribution to this debate. Of course, hire-purchase is only an extension of the facilities which were enjoyed heretofore by people in good standing, and it has now become so respectable that I feel we should accept it as being a necessary enlargement of our way of living.

I shall be very brief. I want to refer to one particular kind of hire-purchase: I think the last speaker had it in mind. I refer to the supply of certain kinds of domestic goods, sometimes of poor quality, meritricious in appearance, probably in wear and endurance and, in the end, very expensive for the purchaser.

The Minister is taking power to insist that the cash price is placed on any advertisement or illustration of articles either in newspapers or shop windows. The hire-purchase price should also be indicated clearly. By "hire-purchase price" I mean the sum of all the hire-purchase payments that will be made. Then nobody could make a decision to buy on hire-purchase without fully realising the cost. That would be a desirable development.

Mr. Murphy

This is an amending Bill. I think we are all indebted to the Minister for giving us a comprehensive statement when opening this Second Reading debate. We are also privileged to hear Senator O'Brien deal with the importance of the measure in relation to the whole national economy. This is an important Bill but I want to deal with a smaller aspect of it which was already touched upon by Senator Barry.

I am concerned with the effect of hire-purchase on the lower income group of the community who have availed and who continue to avail of the benefits of hire-purchase. However, hire-purchase is a mixed blessing in some cases. I think it is right that the Minister should take power to come to the protection of the consumer in this instance.

In hire-purchase, that relationship which formally applied between the seller of the goods and the purchaser disappears very quickly and in place of the seller, the impersonal finance company steps in and continues to be the owner of the goods until the purchaser has paid the final instalment. The finance company does not enter into the sale of the goods. It is not concerned as to the quality or price of the goods or the creditworthiness of the purchaser. I think it is right that the Minister should come in and take power in Part II to make Orders for, I hope, the protection of the consumer —the consumer in the lower income group. These people have and will continue to purchase the necessaries for setting up homes—for furnishing their homes through hire-purchase.

I have seen these goods for sale. I have seen them advertised. The shops selling them have a very glib way of putting it across to the consumer. You see something labelled at 5/- deposit, maybe, and 2/6d. a week for 2 years. The Minister has explained that it will be compulsory, on the same advertisement or illustration, to quote the cash price. But that is not a complete and I do not think a very satisfactory picture for the people in the lower income group who would contemplate the purchase of these goods.

Like Senator Barry, I think the final price they have to pay in hire-purchase as well as the cash price should be clearly shown to these people. I shall take an easy illustration of, say, 5/- deposit and 2/6d. a week for two years. The price the purchaser would eventually have to pay would be £13 5s. It is not a complete answer or picture to him to have shown on that advertisement or illustration "Cash Price, £7 0s. 0d." It would be to his benefit and a service to him if, at the same time, he was shown that the total amount he will have to pay on hire-purchase, plus the deposit, was £13 5s. and that he would be able to make a ready comparison of the price for which he could get the article if he were able or prepared to pay for it on the spot.

Another aspect arises and again it is in relation to the lower income group. I know, and the Minister has underlined this, that hire-purchase has become respectable. That is as it should be when it is a second class form of saving. It is now used for industrial goods, for capital goods. In many instances, I think these people availing of these services have an alternative—maybe not in all cases but in some cases. They can compare the price and the facilities they would get under hire-purchase with that of borrowing the money by way of overdraft in the bank or some other method. However, the lower income group who have to purchase these consumer goods by hire-purchase have not that alternative. It is necessary that there should be some protection for them in relation to the interest they have to pay when availing of hire-purchase.

The Minister mentioned the various forms of control and what he could do under these Orders. He did not mention the question of interest which is of importance. These people —I would say maybe unfortunately in many cases—have no alternative but to avail of the facilities of hire-purchase. I do not think there is any real competition between various finance companies by way of giving cheaper interest rates and better facilities. I do not think there is. I think the Minister should have power to come in for the protection of the consumer and to provide that there should be a maximum rate of interest allowed for the calculation of the instalments to be paid under hire-purchase. The Minister has not said in his statement that he will avail of the Order to control that aspect. I hope that when he comes to reply he will assure us that he does intend to take power to control the rate of interest and will fix a maximum rate of interest which will be of some service and some protection to the lower income group of the country who have to avail of the arrangements.

Mr. Cole

I should like to raise a point in regard to the statistics of hire-purchase. Would the Central Bank or the Minister have any figures of the amount of extra capital which is exported, as it were, and of which we would not have any account here? Suppose an article is imported at a cash price of £30 and is later sold, on hire-purchase agreement, for a total price of, say, £40 over a number of years. Assuming that that transaction is financed by foreign capital, has the Minister any figures to show what amount such transactions would come to in a year? On the basis of £15½ million hire-purchase agreements, it would be a considerable figure. Nowhere in our balance of payments figures have we that figure. Would it be possible for the Minister to ascertain what it is?

Partly arising out of that comes the suggestion that if he has not power under Section 6 to authorise a lesser deposit on goods manufactured in Ireland, one would hope he had that power. I am not quite sure whether under that section it would be possible to do that. The regulation made would have to be a general regulation.

Section 6 should be amended to allow a lesser deposit to be deemed necessary on goods of Irish manufacture. It would help the internal trade and it would also stop the unknown leakage of capital from the country.

Dr. Sheehy Skeffington

I should like to add my praise to the praise already given by other Senators. I think the Minister and the Department ought to be complimented on what is a very thoughtful and a very carefully-framed Bill. Anyone reading it clause by clause and section by section will recognise that all kinds of contingencies are foreseen and carefully dealt with. The intention of the Bill is quite clearly good but I think the implementation matches the intention. As well as that, I am particularly glad to see that there are several sections the main purpose of which is to safeguard the rights of the ordinary citizen on either side of these hire-purchase agreements.

For instance, in Section 8, having allowed for the fact that authorised officers may have certain powers of investigation and so on, it is specifically laid down that the authorised officer "shall be furnished with a warrant of his appointment ... and shall produce the warrant to the person in charge of the premises". That is the kind of thing which one might take for granted and yet all too often it is left out of a Bill. We are asked to assume that, of course, he will have a certificate authorising him and, of course, will have to produce it. I prefer, as I think all of us in this House would prefer, that it be quite simply included in the Bill, as it is here.

Section 9, subsection (2) of the Bill deals with a matter that has concerned us in the past in regard to other Bills. Section 9, subsection (2), provides that "No one shall be required ...to answer any question or to give any evidence tending to criminate himself." I think that is very important. It has been argued before that you do not have to say that because you can legitimately assume it. Here, I am glad to say, the Minister has included it.

There are also laid down in Section 10—Senator McGuire referred to it— (a) that the information so acquired shall not be disclosed and (b) the exceptions which must be made for the purpose of usefully using that information. That is to say, it may, of course, be disclosed to his superiors or in court, should the occasion arise. Similarly, too, the Bill contains what I think are most valuable provisions, provisions about the jurisdiction of the various courts and the power that is here given to the High Court to transfer or remit cases to the lower court. That seems to me to be the mark of a very carefully thought measure which does a great deal to anticipate the kind of loopholes that might otherwise be there and to stop them up.

Something has been said already about hire-purchase in general. Senator Murphy spoke about interest rates I think what he says is very important. One of the things that, perhaps, very few people advert to fully is the true amount of interest they are paying. When they buy goods on hire-purchase, they assume that the amount of interest they are paying is simply the difference between the cash price and the hire-purchase price, forgetting that from the very time they pay their first deposit and month after month as they pay instalment after instalment, they are still, in fact, paying interest upon money which, originally borrowed, has in large measure been paid back. The calculation of the interest would often appear to be made as if a month before the total sum is paid back, one owes the total sum, which, of course, is very far from being the case.

I would support Senator Murphy consequently in his suggestion that the interest rates are higher than is justified. I should like to see the Minister take powers to make provisions or even Orders to control the interest rates. A good deal will depend upon how the Minister uses the powers to make Orders under this Bill. I have every confidence that he will use them well.

The point made by Senator McGuire is certainly one that will appeal to the Minister and to all of us, that it should be possible to insist by law that in the case of many goods bought on hire-purchase, there shall be a reasonable down payment. It has been met across the water quite recently in many cases by an insistence upon the down payment being a considerable percentage of the final sum. I think any discouragement of the sort of thing referred to by Senator McGuire of seeing goods advertised at 2/- a month without any reference to the deposit, is to be welcomed. I hope the Minister will use his power to discourage it. In other words, a person reasonably requiring certain goods should be in a position, before entering into such an agreement, to make a reasonable down payment. I think we should insist that should be so.

We have all accepted the notion, I think, pretty well, of hire-purchase and its necessity. I think we are right in doing so. In one sense, it constitutes the poor man's overdraft. The better-off sections of the community borrow from the bank and the less wealthy borrow from the finance corporation through the medium of the shopkeeper. I was a little startled to hear a suggestion that this is a form of saving. I have never been very clear in my mind on these matters of credit and money and so on. It is a kind of magic, as far as I am concerned. It is odd to say that if I am putting away money to pay off my debts with it, this constitutes a form of saving. It is a very odd form of saving. I do not think, except in a very esoteric sense, it could be regarded as saving. When you are paying out money to pay for money you borrowed in the past, that seems to me not to constitute saving in the sense in which I understand it.

A point was made by several Senators, and, I think, by Senator Murphy in particular, about the form of the agreement that people sign in order to get goods on hire-purchase. The Minister takes power to make Orders relating to the form of agreements under Section 6, subsection (2), paragraph (a). I think it very important that considerable thought be given to that. I should almost be inclined to ask the Minister to take power to insist upon a certain minimum size of type being used in these agreements. I have seen agreements extending over two full foolscap pages in which the most vital clause was a tiny clause right at the bottom of the second page and in minute print which might be quite difficult for many people to read. That tiny and apparently harmless clause which the signer does not read could, in certain circumstances, be quite vital to him. It might mean the loss of the goods. In thinking about the form of the agreement, one should think about its clearness to the purchaser and even think about such things as the size of the type. Important clauses committing one to certain penalties should not be concealed by the smallness of the type in which they are printed.

One point which I should like to ask the Minister is in relation to Section 6 and the type of Orders which he can make, and also in relation to the definitions in Section 3. Subsection (1) of Section 6 gives the Minister power to do certain things by Order—the regulation and control of the hire-purchase, the selling by credit sales agreements of goods or any class or description of goods. Is the Minister satisfied that "goods" is a sufficiently comprehensive term? Can it be taken to mean, in the absence of any definition to that effect, goods or services? We have already heard that you can take a holiday or go on a journey by hire-purchase. The hope is that soon you will be able to get a University degree by hire-purchase. I do not know whether the hire-purchase would come under the goods or the holiday or the aeroplane trip. You can even buy your own funeral by hire-purchase now, I understand. Does that come under the heading of "goods"? There are, in other words a number of services for which hire-purchase agreement methods are being used. Is the Minister satisfied that his phrasing is sufficiently comprehensive or should it be amended here in Section 6 to read "goods and services" or else give an extended definition, in Section 3, of the word "goods" as used in subsection (1) of Section 6?

I should also like to put the point that the principle of hire-purchase appears to me to be most valid and to be most justifiable in relation to durable goods, goods enjoyed not only during the period of payment for them but afterwards also. I would put forward the view that hire-purchase on things of considerably less durability, in the case of goods or services which are rapidly consumed, may well be bad in its effects. Having said that, I shall conclude by adding that I think this a good Bill under which the Minister is given wide powers and I should like to express the hope that those powers will be used broadly and well.

Mr. O'Quigley

A good deal of what I had intended to say has already been said by previous Senators. There is no doubt at all that many of the amendments, particularly those contained in Part 3, were highly necessary and long overdue, particularly in the interests of the hirers of goods under the Hire-Purchase Acts. I am particularly pleased that the Minister has made provision in the Bill with regard to the entry of judgment in default of defence and appearance and that he is providing in particular for the situation in which the hirer of the goods will be able to dispute his liability with the owner in the court area in which the hirer lives. I am aware of a number of cases where people have not, as the Minister said, come to Dublin to dispute their liability or availed themselves of the reliefs which they are entitled to under the Act because of the fact that it involved travelling to Dublin and perhaps a lot of unnecessary expenditure on their part.

In regard to that, I am not quite satisfied whether the power which the High Court will have under Section 26 to remit of its own motion an action to the appropriate court can be availed of at the instance of a defendant in an action. I think that is so at the moment, that a defendant in an action which has been instituted in the High Court can apply to the High Court to have it remitted to the Circuit Court. I have not had an opportunity of looking up the relevant sections in the Courts of Justice Acts, to see if the power which the defendant has at the present time is taken away or merely reserved to the High Court in hire-purchase proceedings, to remit to the appropriate Circuit Court. The Minister may be able to clarify that in his reply.

Senator Sheehy Skeffington has very rightly paid tribute to the Minister for the safeguards for individuals on both sides of the hire-purchase agreement contained in the Bill and I want to add my appreciation to that of Senator Sheehy Skeffington in that respect. I was particularly pleased when I read the Bill to note that the Minister had again included in a Bill which he was piloting through the House the section that nobody shall be obliged to answer any question or to give any answer tending to criminate him. I can only hope that if the Prices Bill of 1957 ever comes up for amendment during the Minister's term of office, it will be amended to incorporate this subsection in the appropriate section in that Act as it stands.

Section 6 is the section which will regulate the mechanism and procedure for hire-purchase transactions. As I mentioned before, I am not all satisfied that in this Parliament we should relieve ourselves of the responsibility of challenging or examining Orders which by various statutes are required to be laid before each House of Parliament. I notice on today's Order Paper that there are 35 of what are called Statutory Presentations and 24 Non-Statutory Presentations. Of the 35 Statutory Presentations, 13 comprise Orders all of which I am sure can be annulled or revoked within the period of 21 days from today. There are 40 other Orders which apparently do not fall into that category.

It is all very well to say, as Senator Ó Ciosáin said, that Section 4 of this Bill provides power to annul any regulation which may be made by the Minister under Section 6. If the facility were provided for members of the Oireachtas of sending them each of these Orders which are required to be laid before the Houses, so that they might have an opportunity of examining them, there might be something to be said for a provision such as Section 4, but the fact of the matter is that all these Orders which are required to be laid before the Houses of Parliament are never examined. I doubt if Deputies or Senators would have time to examine each of these regulations, so that, in effect, what we are doing in this Bill is giving power to the Minister for Industry and Commerce to make what legislation or regulations he thinks proper and which are never afterwards likely to be subjected to scrutiny by either House of Parliament.

The stage has been reached where so much power has been vested in various Ministers of State to make regulations that Parliament, or at least this House will have to take note of the position and establish some kind of machinery as a House of the Oireachtas for the examination of the various regulations and Orders which are laid before it with a view to seeing whether in fact these regulations conform with what it conceives to be the spirit and intention of the legislation under which the regulations are made.

We have a Statutory Instruments Committee but its powers are restricted and its terms of reference do not extend to requiring it to examine the desirability of the regulations which it examines from time to time. If Parliamentary control is to be retained and if Parliament, and not Departments of State, is to be supreme, then the Oireachtas must provide itself with the machinery for examining the various regulations which it decides should be laid before it and examining them with a view to seeing whether they should be annulled or not.

The Minister, in his comprehensive review of the Bill, said that he thought that everybody would agree that the conduct of hire-purchase transactions should continue to be subject to regulation. If by "regulation," the Minister means regulation by legislation, we certainly agree with him but if it is to be regulation merely by an Order made by the Minister, we must part company with him in that view.

Senator Murphy and Senator Sheehy Skeffington have referred to interest rates and I myself, when I read subsection (6), wondered whether in fact the Minister proposed to take the power, subject to Parliament, to regulate rates of interest. I have seen various calculations of the rate of interest paid by the hirers of goods and it can vary upwards of 100 per cent. That is getting back to the old days of usury. It is a thing I do not like and which I am sure nobody else likes, that the necessity of the poorer section and the relatively better-off section of the community should be availed of or exploited in order to provide finance houses and hire-purchase firms with a usurious rate of interest. I strongly support the plea which has been made for some regulation and control of the rate of interest.

From what I have heard, hire-purchase is so profitable that if a person goes into a shop with the intention of buying for cash certain commodities, the last thing certain shopkeepers want the person to do is to pay for the goods in cash. That person will always be advised to use the cash to pay deposits on a variety of goods, some of which he or she does not want. It is well known that people at auctions particularly the weaker sex, get a bit flustered and are always out for a bargain. Many a woman has gone into a shop with the intention of buying only a particular article and has gone home with many more articles than she had intended buying, simply because of the facilities of hire-purchase and because of the strong inducements held out by shopkeepers to buy these articles on hire-purchase. That is a fair indication of the profit that is to be obtained under the hire-purchase system, and that arises mainly from the extraordinary high rates of interest available.

Senator Cole has referred to another point which I had intended to mention and in which I support him, that is, that there should be a differential rate of deposit between Irish-manufactured or Irish-assembled goods and imported goods. The document we received in the post this morning urging us to buy Irish is not half as effective as would be a lower percentage of the total purchase price by way of deposit for Irish manufactured goods. That is the best way to direct people's attention to, and to make attractive, Irish manufactured goods.

Quite an amount of the interest earned in hire-purchase transactions flows out of this country to Great Britain where, to my own knowledge, some of the hire-purchase credit companies—I do not know how many— have their headquarters. I have seen hire-purchase agreements which were deemed to be made in Dublin and in such cases many difficulties arise because these companies operating here, in whatever way they manage to operate, do not seem to have any registered office which would enable a hirer to serve them in this country with a civil bill or with a civil process. A large amount of the profit from hire-purchase transactions is flowing out of this country to Great Britain, and for that reason, if for no other, the rate of interest should be controlled by legislation and as it appears to be possible to do so only by regulation under this Bill, by regulation.

The Minister has given us some very interesting information about "stocking" agreements, and shown the perils to which the unfortunate purchaser can be exposed when he goes into some concerns. I must confess I had never heard of the "stocking" agreements to which the Minister referred but I am very pleased that power has been taken under this Bill to protect a bona fide purchaser.

In this Bill, the Minister has certainly held the balance between the hire-purchase companies and the citizen. If anything, the balance tilts in favour of the hirer or the purchaser, and for these reasons, I welcome and support this measure.

Minister for Industry and Commerce (Mr. J. Lynch)

First of all, I wish to express my gratitude to the Senators who have spoken in favour of the Bill. I was really confident that it would get such a reception in the Seanad because it was based largely on experience and on a desire to effect improvements where such could be effected. As the last speaker has pointed out, endorsing my own remarks made earlier, it seeks also to preserve a fair balance between the hirer and the owner of goods or between the purchaser and the hire-purchase company.

The points made were points which I might well have expected to be made during the course of the debate. They are points which, perhaps, most people would consider worth making to have them examined home. In some respects, I am sure that even the Senators who made the suggestions will agree that there are at least certain difficulties in the way and, from my point of view, they would not be practical solutions to the difficulties they envisage.

If I may I shall go through the different contributions and pick out the points as they arise. The first one I might refer to was made by Senator O'Brien. In his contribution Senator O'Brien dealt largely with the dangers that hire-purchase transactions have in inflationary conditions, and in conditions in which there might be an adverse balance of payments. I do not know whether or not he seemed to suggest that the Central Bank ought to have the power of control on these transactions which it is proposed here to give to the Minister for Industry and Commerce, but he certainly made the point that the Minister for Industry and Commerce should consult the Central Bank as well as the Minister for Finance before taking certain remedial action, in the event of inflationary trends or imbalance trends coming round.

In the Bill, the consultation is limited to the Minister for Finance because it is assumed that he will have direct access to and advice from the Central Bank. While the advice of the Central Bank will always be valuable, the ultimate responsibility, as well as the statutory responsibility, rests on the Minister for Finance so to order and control the finances of the State as to ensure that no damage will be done to the country's economy, at least, in so far as his powers can effect a remedy. Therefore, I think the form of solution provided, of the Minister for Industry and Commerce consulting with the Minister for Finance, is adequate before certain regulations are required to be made.

The regulations to which Senator O'Brien and other Senators referred were largely those concerning minimum deposits and maximum periods of repayment. I want to be quite clear at this stage, and I should like to say that the intention is that such regulations will be made only in circumstances of national economic difficulties, in circumstances where inflationary trends have displayed themselves, or where the import of consumer goods has produced an imbalance in our international payments position.

So far as the other Orders are concerned, those providing for the form of agreement, the information to be given in visual advertisements, it is my intention to make those Orders very quickly, certainly as quickly as will give all those concerned reasonable time to adjust themselves to the new forms of agreement and forms of visual advertisement. That, I think, brings me to the other point which was made, that there might, by statute or by regulation, be a certain maximum on the rate of interest to be charged.

I should like to suggest that that would import into this Bill the concept of price control, the idea of putting upper limits on all forms of interest charges. Hire-purchase is only one form of the credit business and the rates of interest chargeable in connection with hire-purchase cannot, in my opinion, be disassociated from interest rates charged by banks, building societies and other credit agencies. As well as that, there are certain difficulties of a practical nature in imposing maximum rates of interest. In the first instance, if one suggests 12 per cent. as a maximum rate of interest, one can readily appreciate that the effective rate over a period would depend on the length of the period.

I shall give a practical example. If there is a transaction for goods worth £100 and if there is a deposit of, say, £20 and if the rate of interest is fixed at 12 per cent., if the transaction is to be completed in a year, the effective rate of interest would be 27.7 per cent. In the same case, where the transaction is to operate over a period of three years—in other words, if there were 36 monthly instalments—the effective rate would be 9.7 per cent. So there is that difficulty in saying simply that the maximum rate of interest should be so and so.

To come back to the point I was making, I suggest that Section 6 would amply cover it, if it were properly utilised. Let us take this visual advertisement first of all. In the regulations being made to provide for it— and that will be done at an early date—these advertisements will be required to show the hire-purchase price: in other words, the total of the payments to be made by the purchaser including the deposit and the total of the weekly or monthly payments, as the case may be. They will also show the cash price—the price for which the goods could be bought for cash. Therefore, it would be a very easy matter if a simple deduction were made and regard had to the number of instalments to——

Mr. Murphy

Would it be easier to show it?

Mr. Barry

I was saying that a rather thoughtless buyer might have a minimum picture of what it was costing.

Mr. J. Lynch

I may not have explained myself clearly. I am trying to answer the suggestion that the rates of interest may be exorbitant and that the purchaser may not have an opportunity of realising exactly what the rates of interest are. The advertisement which I propose to prescribe will contain the cash price for which the goods could be bought and the total hire-purchase price.

Mr. Barry

Every payment?

Mr. J. Lynch

Every payment, including the deposit, if such is required, the number of instalments and the period of the instalments.

Mr. Barry

That is satisfactory.

Mr. J. Lynch

The purchaser will have a complete picture of his liability, whether it is a hire-purchase agreement or a cash price arrangement.

Mr. Barry

That is satisfactory.

Mr. O'Quigley

The Minister might consider putting in the effective rates of interest being charged.

Mr. J. Lynch

That could be considered.

Eamon Ó Cíosáin

They would change from time to time.

Mr. O'Quigley

Prices change, too.

Mr. J. Lynch

Senator Cole made the point, which was supported by Senator O'Quigley, that it might be possible to give preferential rates on amounts of deposit in the case of Irish goods as against imported goods. As I have said already, the intention with regard to minimum deposits is that these will be required only in the event of certain difficulties in our balance of payments, or inflationary trends. It will be possible, within the powers given under Section 6, to give a preferential rate in the minimum deposit as between Irish and imported goods. There will be some difficulty if that happens in the case of goods which contain Irish and foreign material. That would create a certain problem for whoever would have to make an Order but the power is there. I should not like to say, offhand, that I could use it but it can be examined and it would, as Senator O'Quigley suggests, be an added incentive in the drive for the promotion of Irish goods.

Senator Sheehy Skeffington's point is covered already in the 1946 Act. In the first instance, services, as such, are not provided for in this Bill. Therefore, one may procure his holidays under hire-purchase but it is not the intention to control such a transaction by this Bill. "Goods" are defined in Section 1 of the 1946 Act as "goods within the meaning of the Sale of Goods Act." There can be no doubt as to what the word "goods" means in this Bill.

Senator O'Quigley made a complaint against Section 4 and other Senators mentioned it as well. That is the section which requires regulations under Section 6 to be laid before each House of the Oireachtas. Senator O'Brien mentioned it in a different context. His point was that when there are inflationary trends, the Government are not always blameless in bringing about such a state of affairs. Senator O'Quigley's point was the desirability of making the Legislature the effective controlling authority in the State rather than a Minister or his advisers. I can answer both points.

I suggest to Senator O'Brien that Section 4 is adequate to meet the point of view he expresses. If circumstances are such that any member of the Oireachtas requires that an Order made under Section 6 shall be discussed in the House, to bring home to the Government or to the country that certain circumstances exist that ought to be watched, he may initiate a debate by bringing the appropriate motion before the House of which he is a member, I do not think there is any difficulty about that.

That brings me to Senator O'Quigley's suggestion that so many of these Orders are made from time to time that it would be difficult for an individual Senator or Deputy to keep on top of all the Orders as they are made. One can use that argument in another way and ask one to visualise the condition, of the Order Paper of each House of the Oireachtas if all these Orders had to be debated in turn.

I am satisfied with the provisions of Section 4, requiring the Order, when made, to be laid before each House of the Oireachtas and enabling a resolution to be discussed within 21 sitting days of the making of the Order and annulled, if necessary. The powers of veto of the Oireachtas are well safeguarded. The point made by Senator O'Brien is, I think, reasonably met.

I should like to say to Senator O'Quigley that the making of these Orders in advance of putting them on the Table of each House of the Oireachtas is not new, but I do not think he suggested it was new. I think he suggested it is time we had another look at this practice. In the special circumstances of the conditions which are to be met in the regulations made under this Bill, I think the necessity for speed of action would often arise, especially in the case of inflationary trends. If either House of the Oireachtas were not meeting at a particular time—say, during the summer vacation—first of all, it would be perhaps difficult to convene a meeting of each House of the Oireachtas in that period and it might in some circumstances practically amount to closing the stable door after the horse had gone.

I am not suggesting that that would happen in all cases or that it is very likely, but, in general, I think it would be necessary to act reasonably quickly in the event of certain financial difficulties arising within the country. In 1956, the inter-Party Government had to act fairly quickly. They had to take advantage of emergency legislation to make one of these Orders. I think nobody denied that a certain expedition was necessary. I think nobody suggested at the time that the inter-Party Government acted without due regard for the public interest or without due regard for the powers of each House of the Oireachtas.

The other point I should answer was one raised by Senator Cole. I am afraid I can give the Senator no information at the moment about the amount of capital leaving the country as a result of hire-purchase transactions. It would require a very prolonged and detailed survey of each transaction, probably going down to an examination of each individual case. It is possible from the returns of these companies, that we may get such information and if it is, I hope to have it available for the Senator on the next occasion.

The other point was that too much of this capital was leaving the country. The fact now that Irish banks and Irish hire-purchase companies, as such, have been going into this business is, I think, an answer to such a complaint and the only effective answer. I think nobody will complain if Irish companies go into this business, and, if there is a profit to be made out of it, make a reasonable profit and retain as much of the profits at home for use in this country as is possible.

I think I have mentioned most, if not all, of the points raised in the course of the debate. Again, I would to thank the Seanad for the manner in which it accepted the Bill.

Question put and agreed to.

Committee Stage ordered for next sitting day.