Local Loans Fund (Amendment) Bill, 1974 (Certified Money Bill): Second Stage.

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

The Bill is an enabling measure to raise the statutory limit on issues from the Local Loans Fund from £600 million to £1,000 million.

Exchequer loans are made to local authorities, including regional health boards, vocational education committees and harbour authorities, through the Local Loans Fund to finance essential capital services. The statutory limit on issues from the fund was £5 million when it was established in 1935. The limit has been increased periodically by successive enactments and was last set at £600 million in 1972.

This fund has been the main source of capital for local authorities for many years. In carrying out their wide responsibilities for the provision of many vital capital services these authorities have assumed ever-increasing commitments which must be financed almost entirely by loans from the fund. In 1973-74, over 90 per cent of local authority capital expenditure was met in this way. The balance came from the internal resources of the authorities and from banks and insurance companies.

Up to 31st March, 1974, issues from the fund totalled £498 million, of which £383 million, equivalent to 77 per cent, was provided for housing. A total of £245 million was provided for the building of local authority dwellings, £109 million for private house purchase loans and over £28 million for supplementary housing grants. Over £69 million was provided for water supply and sewerage schemes, while the balance of £46 million was spent on hospitals, vocational schools, harbour works, libraries, fire stations, swimming pools and other amenities.

There has been an unprecedented increase in the annual total of issues from the fund since the last Act was passed. Between 1972-73 and 1974-75 the annual amount has risen from £49 million to an estimated £98 million. The most significant increase has occurred in issues for the house purchase loans scheme, under which loans are made by local authorities to persons with modest incomes to enable them to build or purchase their own homes.

Annual issues from the fund for this purpose will have risen in the two-year period mentioned from £8 million to an estimated £34 million. This dramatic jump in the demand for local authority loans may be attributed to the expansion of the national housing programme to meet the Government's target of 25,000 dwellings a year and the increase in the maximum loans and income limits for borrowers which were introduced in 1973 against the background of a contracting supply of mortgage finance from the building societies.

Expenditure from the fund for the building of local authority dwellings has also risen in the two years, that is, from £25 million to £40 million, in line with the increases in output following adoption by the Government of a target of 8,000 local authority dwellings per year. Sanitary services expenditure will have almost doubled in the same period, that is, from £8 million to £15 million, to meet the expanded needs of both housing and industrial development.

By 31st December, 1974, issues from the fund will have exceeded £570 million. The present statutory limit of £600 million should be reached during the early part of next year, so that an increase in the limit is again required to enable the issue of loans to continue after that time. At the present rate of issues from the fund the limit will have to be raised by £400 million to provide for the next three to four years.

Accordingly, a new statutory limit of £1,000 million is proposed in the Bill which, I trust, will be acceptable to the House.

The Bill is a straightforward one. It is an enabling Bill enabling the limits of loan issues from the Local Loans Fund to be raised from £600 million to £1,000 million. This is not due to any expansion in social development mentioned by the Minister. It is largely due to inflation and the sum of £1,000 million is worth about what £600 million was worth in 1972. There is no dramatic increase in expenditure here. There is a legitimate increase in the funds available to keep pace with the decreasing value of money.

The other fact the Minister was frank enough to admit is that the building societies have no funds to advance moneys. There is increased pressure on the Local Loans Fund for that reason. The Minister stated that this measure is being introduced against the background of a contracting supply of mortgage finance from the building societies. A zero supply of mortgage finance from the building societies would be more appropriate. At least the Minister has admitted that this is the factor which led to the situation— a rapidly contracting supply of mortgage finance from the building societies. Unless the Government make a radical reappraisal of the whole question of housing finance they are not facing up to their responsibilities.

This measure is merely a continuing one. It makes do with the present system. It keeps pace with inflation by raising the limit from £600 million to £1,000 million. It is the minimum the Minister for Finance should do in the present situation. Nothing the Minister has said here or in the Dáil indicates that there is any serious Government thinking on the real serious problem of overall housing finance against the background of contracting mortgage finance from building societies. Building societies are not able to cope because they are not getting a supply of money, whereas the banks apparently have a supply of money and have increased profits.

There has been no indication of any radical thought by the Government into establishing a national policy towards housing finance that would include the banks. The banks are included in housing finance in many countries throughout the world. Any radical solution that would enable the banks to come in on housing finance should be looked at. There are problems, I know, but the matter is so serious that they should be driven into a situation where they will fulfil their social obligations in that respect.

It is not enough to have the supply of money drying up for building societies without the Government stepping in and ensuring there is an adequate replacement. Even though, as the Minister stated, the annual issue in the two-year period from the Local Loans Fund for housing purposes has risen from £8 million to £34 million, that is still inadequate to cope with the problem against the background of a contracting supply from the building societies and without help from the banks to deal with the supply of finance formerly dealt with by building societies.

This problem of housing finance lies at the root of the whole housing construction crisis which exists at the present time. There is a serious housing crisis mainly because of the lack of housing finance and because the building societies have no housing finance. There is little in this Bill to deal with that problem. This is merely a continuing measure making allowance for inflation and continuing with the scheme which has been acting in its own modest way in dealing with certain levels of house building.

I will confine my remarks to money dispersed under the Local Loans Fund. In 1973, £2,350 was fixed as the upper income limit and linked with that was the upper limit of loans, at £4,500. Inflation has eroded both figures substantially since 1973. We have publicly made a modest proposal to the Minister under both these headings. We suggested that the least that might be done is to raise the upper income limit of £2,350 to £3,000 and to raise the upper limit of loan from £4,500 to £6,000. These are basic, modest requests which would do very little more than cope with the rate of inflation and the depreciation in the value of money since September, 1973. As those unrealistic limits stand, the large segment of the population over the income limit of £2,350—that is a substantial segment of the population at present—were catered for by building societies. They are now in a very serious position in regard to house building. Funds are not available for the segment of proposed house builders over £2,350 income per year. It is because finance is not available for that category that the housing industry is in its present crisis. It is the private house building industry that is primarily hit by this lack of funds and it is the private housing building industry that would be catering for the people whose incomes are over £2,350.

The Minister has not attempted in this Bill to offer any explanation why this proposal is not being considered. The obvious explanation is lack of funds —that it would place too great a drain on the Local Loans Fund and would divert money from other purposes such as the development of sewerage, water and so on. It would divert money from those requirements to housing. That may be the Minister's answer.

I do not think it is sufficient explanation in the situation that exists at present. The Minister will be making serious pronouncements on the state of the economy within a few hours. The economy is in a very serious state. Nobody takes any joy out of that. It is the duty of the Minister for Finance to inform us fully of the state of the economy and not to produce a document such as was issued recently by his Department in regard to economic development in this country.

It would be better if the Senator kept to his promise to concentrate on the Local Loans Fund.

I am diverting a little. Fundamentally, if life is to be injected into our economy the answer lies in the construction industry. It is in this industry, and particularly in the house building sector of it, that the Government should do most to give a lift to the economy in the present situation. That is my advice for what it is worth. One practical way in which this can be done is to raise the upper income limit from the ludicrously low figure of £2,350 to at least £3,000 and raise the upper limit of loan from £4,500 to at least £6,000. It may divert money from other purposes envisaged under the Local Loans Fund, but in the present situation what is needed most is a lift in the construction industry and the house building industry and I consider it is worth diverting money to this area of economic activity. It is worth concentrating on this because of the high employment content which exists, particularly in house building.

I am sure if the Minister analyses the situation he will realise there are many other areas of expenditure under the Local Loans Fund that do not have the same high employment content that exists in house building. In my opinion, in the present situation there is a compelling reason for the Minister to divert funds to house building and the most practical way to do this is under the application and administration of the Local Loans Fund by raising the income and loan levels under the fund in respect of house building. He can by this inject extra finance into the area of house building. He can do something that is socially necessary in regard to providing houses for people who cannot get them due to the collapse of the building societies, and on the economic side provide a much-needed pump-primer for house building which has a high employment content. In that way, he will ensure higher employment in that sector in the next six or nine months during which we will be facing very serious economic difficulties.

This Bill as it stands makes no contribution to solving our economic difficulties. It is merely a continuing Bill. What is needed is something along the lines I suggested to inject money into house building and thereby do something for the social and economic problems that affect us generally.

I join with Senator Lenihan in welcoming this necessary enabling Bill. That is about the only thing I can agree with him on. In regard to his dissertation, as a member of a local authority for the last six months I thought Senator Lenihan might be better informed on exactly what the Government have been doing to assist local authority capital programmes throughout the country.

The point he made about inflation accounting largely for the increased grants and loans from central funds for local authorities will not stand up. If you take the increases between the years 1972-73 and 1974-75, that is just three years, under the three most important headings, finance for local authority dwellings went up from £25 million to £40 million, an increase of approximately 40 per cent; house purchase loans went up from £8 million to £34 million, an increase of more than 300 per cent; and water and sewerage finance went up from £8 million to £15 million, an increase of almost 200 per cent. Any fair-minded person will agree, even allowing for the high rate of inflation in the past two years, that the amount of funds allocated to local authorities during that two-year period far exceeds the rate of inflation, and this indicates the Government's anxiety to increase the capital activities of all local authorities.

I agree with Senator Lenihan that it would be most desirable if the income ceiling and loan ceiling in regard to SDA loans could be raised. We should remember that it is only a little over 12 months since the present limits were fixed, that is, £2,350 for income and £4,500 for the maximum loan. That was a substantial increase at the time. Obviously there is a limit to the amount of capital which the Government can transfer into any capital activity. It must be remembered that money can come from only two sources—either from taxation or from borrowing. In proposing an increase in both limits I think it would be only fair and constructive to suggest where the money might come from.

At the moment interest on local authority loans, as Senator Lenihan and other members of local authorities will know, is heavily subsidised. The going rate for borrowing both inside and outside the country is substantially higher than the interest charged by the Local Loans Fund. Therefore the taxpayer is being called on twice—first of all to provide at least part of the capital for the loans and secondly to subsidise the rate of interest. We should appreciate that there is a limit to which the taxpayer can be called on to bear these burdens. Having regard to incomes generally today and the cost of building, particularly private building, if the Minister can without bearing too heavily on the taxpayer either provide the extra funds or subsidise the rate of interest, certainly I in common with every other public representative would welcome it being put into effect.

The Minister could give consideration —perhaps this does not come strictly within his ambit but possibly the ambit of the Minister for Local Government— to empowering local authorities to purchase second-hand houses for resale or letting to tenants. There are at the moment SDA houses available that might be bought by local authorities if the legal difficulties could be overcome.

A further suggestion which might help to overcome the problem mentioned by Senator Lenihan, and one all local authorities and local representatives are conversant with, is that some joint arrangement would be made between the local authorities and the building societies to fund the purchase of houses. What I have in mind is that local authorities could within their limits lend up to, say, £4,500 and thereafter the building societies could lend the balance of the purchase price of a house. I do not know whether that is practical, but it strikes me it would make available to house purchasers in the income bracket above £2,350 who wanted to buy a house of say £6,000, sufficient to enable them to raise, say, three-quarters of the funds from the local authorities and the balance from the housing societies.

I have to intervene to point out that this is neither a Bill on local government nor on housing generally. I must ask the Senator and those who follow in the debate to keep the discussion to the Local Loans Fund and the effect of the amount in the Local Loans Fund on the operations that are carried out under it.

I should like to endorse Senator Lenihan's plea to maintain at all costs activity in house building of all kinds—local authority and private house building. It has the great advantage that most of the materials used are manufactured at home—cement, steel, and furniture, possibly to a limited extent, paints, sanitary ware, various fittings and so on. Employment would be maintained not only in the building industry but also in the ancillary industries. For this reason I hope the Government will continue to show encouragement and support for a high level of house building. They have already indicated that they have set a target of 25,000 houses a year, of which 8,000 will be local authority and the balance private enterprise houses. I hope that every effort will be made to maintain and possibly increase that programme, particularly in the present difficult times.

House accommodation is vitally necessary for the expansion of industrial development. One of the great needs, particularly in rural areas, in areas apart from the higher urban centres, is houses for executives and skilled and unskilled workers. If we are to pursue our industrial trends effectively and quickly, obviously we must have ample housing available for the operatives who work in these factories. I should like to see the Minister planning ahead to ensure that adequate funds would be available not on a year-to-year basis but possibly on a five-year basis.

I suggest that among the authorities which borrow from the Local Loans Fund, harbour authorities might possibly be dealt with in a different way. At present harbour authorities are lumped in with hospitals, vocational schools, libraries, fire stations, swimming pools and other amenities. In the years to come the cinderella of the transport industry in this country, the port industry, will have to get far more attention from the Government and far more funds if it is to develop as an integral part of our transport system and be what it should be—an important outlet and inlet for international trade between this country and overseas. I would suggest that the time has come when it might be dealt with in the same way as CIE or Aer Lingus, the ESB or other similar Government sponsored services. I appreciate that the ports are not organised in the same way—they are not a single semi-State body—but the time has come when the Minister for Transport and Power and the Minister for Finance will have to take a hard look at the whole port industry and devise a different scheme for funding its operations.

I welcome the Bill as a necessary measure. It is an indication of the Government's interest to maintain housing in this country, both local authority and private enterprise.

I join with the previous speakers in impressing on the Minister the necessity for keeping activity going at full in all those areas of local authority jurisdiction—housing, amenity development and so on. The fund, which began at £5 million in 1935, is now proposed to be a loan fund reaching a maximum of £1,000 million. It would seem, then, that the whole purpose of the fund has changed fairly drastically from its earlier days when it was a loan fund in a real sense and there was some idea about a loan being paid back.

At present, with the sums that are involved and the fact that this is contributing 90 per cent of local authority capital expenditure, there is no hope or expectation that the loans will be repaid in any way. Consequently it would seem that the time has come to have another look at this type of financing and that it should more properly be labelled a local authority grant rather than loan. It is of little use carrying loans on books over years when the only form of repayment is that of another loan. This just emphasises that at the present stage the taxpayer has to foot the bill in any case, whether it is footed by the local authority's rate collection or through central taxation. Therefore at this stage, when the central authority are providing such a large share of the capital expenditure of the local authority, it is no longer right or proper that it should be labelled a loan.

The only figure that stands out is £46 million that was spent on hospitals, vocational schools, harbour works, libraries, fire stations, swimming pools and other amenities. I know, of course, there are central contributions to many of those projects as well, but still the £46 million in the context of the £600 million total expenditure seems rather small on this side of the activities. We hope that when the present economic difficulties have been overcome this side of the work of the local authorities will benefit from far greater stress and greater funds and that a measure of our prosperity and our development will be the increase we can make under those headings in local areas. All these swimming pools, libraries and other amenities require a great deal more than we have got at present and when the finance is available I hope that a proper push will be given in this direction.

On the question of trying to relieve the housing burden which is now falling so heavily on the local authorities and aggravated by the contracting supply of mortgage finance available from building societies, we hope that the position with regard to the building societies will improve. The effort of encouraging people to save as their contribution to this has not really been settled in a proper way. I should like to see as a contribution by the young wage-earners before they need a house and before they plan to marry that there would be imaginative schemes by the local authorities and others to encourage them to save and thereby provide their part of this necessary housing finance. The amount of finance that is going on to the State and the taxpayer is not a healthy sign. It is not a sign of a community capable and eager to look after themselves. Allied with the other figure of all that is spent on drink at present, £200 million per year—a good deal of it by that sector that I have suggested should be encouraged to provide for the future by saving—it pinpoints a weakness.

I commend the Bill as it is. I do not want to widen the scope of the debate unduly, but anything that will ease the burden of providing housing finance on the local authorities would be a worthwhile contribution and should be tackled in an imaginative scheme.

Like previous speakers, I welcome the Bill. It has been suggested that our loan ceiling for the erection of council houses would be increased from £4,500 to £6,000. I wonder if this would be in the interest of the people who are building the houses. I had an experience ten years ago when SDA loans were first made available for local authority houses and cottages for sale throughout the country. At that time cottages were being sold for roughly £1,200 to £1,500. Then the loan became available and competition became much keener. As a result, where there was a cottage for sale one found five or six people making application to the same authority seeking loans. Then there was the understandable feature of the engineers from the local authority examining the structure of the house and valuing it. They allowed a certain value, say £3,500. I had one case where five persons were approved for loans of £3,500 and the auctioneer again advertised and called the five together again—of course they were trying to find out from some of the people which of them were sufficiently thrifty to get extra pounds to buy their house. When we speak of £6,000 loans we must ask how somebody with a family and earning £35 per week would repay £60 per month on a loan.

I again have to intervene. The Senator is going very wide of the Local Loans Fund. I appreciate that he is following up a point already made by another Senator but I am afraid he has travelled well beyond the scope of the Bill at this stage.

The general situation now regarding local authority loans is that they are two-and-a-half times the amount of the wages. Over ten months ago this loan ceiling was increased to the present ceiling of £4,500 and, as Senator Russell pointed out, it is appropriate to suggest a further increase. Nevertheless we should ask ourselves. where does the money come from? At present loans are being subsidised at roughly 6½ to 7 per cent. In 1971 they were subsidised only to the extent of only 1 per cent. Now we are borrowing at the rate of 15½ per cent and, at the same time, charging only 10½ to the borrower. However, I am sure it will be gratifying and give a certain amount of confidence to the local authorities to realise that money is available.

The last sentence of Senator O'Brien's speech interests me. He says local authorities would be confident if they knew that money was available. Not alone does it interest me, it surprises me, because despite the fact that the limit issue in this Bill has not been reached and despite the fact that we see today from the Minister's speech that there is still plenty of money in the Local Loans Fund, I know from the local authority I am a member of that there is no money available at the moment to pay supplementary housing grants. There is such a delay in the payment of loans that there is reason to suspect that the Land Registry office has been told to slow up the transfer of titles in order to hold up the payment of loans. If this Bill helps in a small way to relieve the serious housing situation that exists at the moment, then I welcome it wholeheartedly, but increasing the limit to £1,000 million is not going to solve the problem if the money from the loans fund is not paid out.

It is one thing to have a large limit, but it is an entirely different matter to use the money in the fund. In recent times the money has not been paid out from the Local Loans Fund and as a result local authorities are frustrated. Only in the last few days I have received letters from Donegal County Council informing me that supplementary grants would be paid to certain individuals as soon as the money was made available. Failure to provide this money is another example of the disastrous housing policy pursued by the Government. I note that in the course of his speech the Minister told us that the increase in the maximum loans and income limits for borrowers were introduced in 1973 against the background of a contracting supply of mortgage finance from the building societies. This would suggest to me that the Minister is saying that there is a shortage of money in the building societies, and yet it is only a few months since his colleague, the Minister for Local Government, stated clearly and categorically that the building societies had plenty of money for this purpose. It would appear that there is a difference of opinion in this regard between the two Ministers.

The Minister also said in the course of his speech: "This dramatic jump in the demand for local authority loans may be attributed to the expansion of the national housing programme to meet the Government's target of 25,000 dwellings a year." The Minister is telling us that the demand for loans from this fund is such that there has been a dramatic jump to meet the Government's target of 25,000 dwellings a year. We have listened to various members of the Government and particularly to the Minister for Local Government boasting that in their first year of office the Government, through the help of the Local Loans Fund, realised their target of 25,000 dwellings. I remember a few months ago asking the Minister for Local Government if he had on the night that the Coalition Government took office waved a magic wand and that suddenly thousands of houses appeared throughout the land.

When the Government claim that they provided 25,000 houses in a year they are deliberately misleading the people. The figures they produce to back up this argument are wrong; they are cooked. The claim of 25,000 is a falsehood, because, in order to reach that figure, they have included houses vested in that year. They have included all the houses vested by Dublin Corporation, Cork Corporation, the Waterford, Galway and Limerick Corporations. They have included all the cottages vested by county councils throughout the country and all the houses sold by urban councils. In my own town in that year at least 30 houses were sold to the tenants, but the figure of 25,000 for 1973 includes that figure of 30 houses which were built five years ago by a Fianna Fáil Government. I wish to state categorically here today that the official statistics issued by the Department of Local Government stated clearly that the figure of 25,000 included houses vested in the tenants in that year. While I have not at the moment at my disposal the actual number of houses vested, I would say that it would be something in the region of 4,000 houses.

I must again intervene, as I have done continually in this debate, to indicate that Senators should confine themselves to the Local Loans Fund and to the effect of the size of the fund on the operations under it. Details of policies in regard to housing or other aspects of local authority operations is outside the scope of the Bill. I would be glad if the Senator did not go into the amount of detail which he has done in regard to local authority housing.

I would prefer therefore that the Government would make proper use of the Local Loans Fund and provide for us the number of houses which they promised to build. If they fail to keep that promise, they should at least be honest with the people and admit that in the particular year that they did not reach the target which they undertook to reach, instead of cooking the figures and giving false information.

A plea has already been made to increase both the limits for SDA loans and the income limits and the amount of money available. Because of the failure of borrowers to get money from the building societies the demand for SDA loans is growing day by day. Under the existing regulations anyone earning more than £2,350 per annum is precluded from availing of this money. That has brought about the most serious housing crisis this country has experienced since the spring of 1957 when the last Coalition Government were in office. We all remember then that a similar situation existed. There was no money for loans or grants and the builders ceased their operations. While the Government, and particularly the Minister for Local Government, spent the summer claiming that there was no housing crisis, as each week went by we learned of yet another builder whose back was to the wall. In my own town, which is a small one, in recent weeks two builders who had purchased a considerable amount of land on which to build houses to sell to the people have announced that they must cease operations because their clients cannot get the money to buy their homes. If this happens in one small town then the situation throughout the land must be very serious indeed. I have no hesitation in saying that this situation has been caused not by the Arabs or the sheiks but by the most incompetent Cabinet this country has ever had. It seems strange to me that Coalition Governments and housing crises go hand in hand.

This Government do not seem to understand how to tackle the problem. When this problem was at its height the Minister for Local Government persisted in his claim that there was no such crisis in existence. If we are to attempt to stimulate our economy we must begin through our housing programmes. The Local Loans Fund, which will now have a borrowing limit of £1,000 million, should be used to the full. Instead of discouraging people from providing their own homes the Government should be doing everything in their power to encourage people in this way. I have often felt that any person in the supplementary grant category should have a loan with an interest maximum of 5 per cent. There are many people who attempt to build their own homes who could sit back in flats and single rooms and wait to be housed by the local authorities.

We all can think of people with initiative who would have come within the ambit of local authority housing. Young men earning around £30 per week are being forced to borrow £4,500. Considering that their repayments are £8.40 per month per £1,000 for 30 years, this means they have to repay £37.80 per month on a loan of £4,500. I see many young men who are about to get married or who got married in the recent past applying for loans of this kind. They are earning £30 per week and committing themselves to a repayment of £37.80 per month. Many of them feel that they are in a financial position to repay this loan. They completely overlook, of course, that in a few short years they will have a number of children and their household expenses will have increased enormously. They could have waited in a single room and eventually the local authority and the State would have had to house them.

I remember speaking on legislation such as this some years ago and expressing the view then that I express now. For people of this category loans should be subsidised by the State to a much greater degree than they are at the moment. These people, after all, are relieving the State of housing. I know that such a suggestion might be very difficult to implement and the cost might be prohibitive. I would like to think that, at least, it is given some consideration.

I welcome this Bill and trust the Government will put it to its proper use.

Like other Senators I detect slight mischief-making on the part of the Opposition to date in this session. An interesting session lies ahead of us. Senator McGlinchey, in accusing the Government of producing houses out of a hat, has produced figures out of his own hat which I am sure the Minister for Local Government will, in his own good time, refute in no uncertain manner—a manner which is all his own.

I am glad that Senator McGlinchey at least welcomed the Bill and the increase in the ceiling from £600 million to £1,000 million. Senator Lenihan has implied that the doubling in the two-year period from 1972-73 to 1974-75 from £49 million to £98 million has been accounted for by inflationary increases. This cannot be accepted by anybody. Senator Lenihan would like people to believe that there has been a 100 per cent rate of inflation over the past two years. He cannot in all honesty and realism believe so. Would he deny that the record number of 25,000 houses built in 1973-74 has accounted in some way for the increase in the figure from £49 million to £98 million? I have no doubt that we can look forward to an increase in the coming years in the number of houses that are to be built.

It is interesting, looking at the figures that the Minister has given us, that provision of both local authority and private housing has more than doubled in the two years. Water and sewerage loans issued have almost doubled. Altogether these figures have risen from £41 million to £89 million in the two years. There does not seem to be the same pro rata increase in respect of the balance of the moneys making up the £49 million and £98 million, respectively. Eight million pounds in 1972-73 has risen to only £9 million in the current year. I would like the Minister to indicate whether there has been a shortfall in the demand under this heading or whether there has been a cut-back in respect of the issue of loans. They cover important fields such as libraries, fire stations, swimming pools and other amenities.

At the present time, the Minister for Finance is extremely anxious to ge value for the money he distributes. He should try to impress on the Department of Local Government and indeed on all local authorities, the necessity for dealing speedily with applications for issues from the Local Loans Fund and the processing by the Department of Local Government of these loan issues. There have always been delays. These delays have occurred not only in the current year, they have been experienced by everyone who has ever served on a local authority. Any delay now, due to the present worldwide inflation, will inevitably lead to increased costs to the Exchequer funds. I would ask the Minister to impress on the Department of Local Government and on all local authorities the necessity for obviating these delays in future.

There is one point which Senator Russell made. He urged that local authorities engage in the purchase of secondhand houses. I do not know if this would be a wise procedure. They would be engaging openly in the market for secondhand houses and this could invite a certain amount of criticism. It might not be wise.

We have no alternative but to welcome this Bill. We accept it knowing that within the figure of £1,000 million there is built in a margin for increased activity in the future. Accordingly, we welcome the Bill.

I, too, should like to commend the Minister for bringing in this Bill. At the same time I wish to draw attention to the fact that it raises a number of fairly important fundamental issues which I would not like to see skimmed over.

The first of these is the critical and ever-present question of decentralisation and local autonomy. Any of us involved in politics or in any structures of administration will be keenly aware of the fact that there is no decentralisation worthy of the name which does not involve control over resources. We are dealing with a Bill which relates to the Local Loans Fund. This Bill empowers the Exchequer to grant moneys to local authorities for various works set out in the Minister's speech. I should like the Minister to tell us something about the mechanism through which this money is made available to the local authorities. I would be grateful for his views on decentralisation in the control of the resources administrated through the Local Loans Fund.

There has been a great deal of pseudodecentralisation here and indeed in all other countries. There has been a great deal more talk about decentralisation than has ever been translated into action. Where action has been taken, very often it has been decentralisation with so many strings attached that nothing ever happened. The control of resources fundamental to decentralisation and the necessary degree of local autonomy are never fulfilled in practice. I accept that the overall shape of the economy and within that overall shape, the pattern of capital expenditure must and should be determined by the Government of the day. I believe equally firmly that there is scope for far greater latitude in spending than any Government here have yet had the courage to adopt. I urge on the Minister the advantages, in democratic terms and in terms of efficiency in the spending of this very important money, of a greater degree of genuine decentralisation.

I am specifically interested in the provision of this money for financing vocational education. This is a simple example of my first point. The Minister states that funds are made available for various things, including vocational schools. We are all aware that the actual decisions on how much money should be provided, to which vocational education committees it should be made available and when it should be given to them, is the subject of a very complex network of relationships involving not only the Minister for Finance and the Local Loans Fund but also the Minister for Education and the vocational education committees themselves. We are not speaking about a one-to-one relationship between the Local Loans Fund and the vocational education committees; we are speaking about some kind of eternal triangle on which a great deal of the sparring is done at departmental level between the Department of Education and the Department of Finance. There is relatively little involvement coming from the local areas. I should like to underline my earlier remarks about autonomy in decentralisation by stressing the need for a greater local input in decision making in determining this expenditure.

In his speech the Minister said:

Over £69 million was provided for water supply and sewerage schemes, while the balance of £46 million was spent on hospitals, vocational schools, harbour works, libraries, fire stations, swimming pools and other amenities.

To the ordinary man in the street, £46 million seems a great deal of money. When we consider the number of areas in which this sum is being spent—six specific areas and "other amenities," which could cover a great deal—we realise that £46 million is not such a great deal of money. Sharing out this money obviously does not satisfy fully the needs of any area, although it does help to alleviate some pressing problems.

I should like to draw the Minister's attention to a very strong feeling which exists in the vocational education sector. This sector has been hard done by in the matter of capital finance. I know, from visiting these schools and from speaking to people involved in this sector of the educational system, that many of them work under extraordinarily bad conditions, conditions which would never be tolerated under the Factory Acts, conditions which would certainly never be tolerated by the average civil servant. While the exact accuracy of the charge that they are being discriminated against must, to a certain extent, depend on figures which presumably will be supplied by the Department of Education in their forthcoming Estimate, I can safely draw the Minister's attention to the cry for help from one important sector of the educational system.

This cry must be listened to because it comes from a sector of the educational system which traditionally has underwritten the social and economic aims which formed such a large part of the pre-election programme of this Government. This sector has also had a traditional concern for the underprivileged and those who are handicapped socially and economically. This sector has taken, not to put too fine a tooth on it, the rejects of other parts of the educational system and has done its level best to cherish these children as equally as children from other parts of the system. It has done so in a situation in which, its teachers and administrators would tell you, it has been severely starved of desperately important capital expenditure.

I should like to make one final point. Of the six specific areas which are involved in the spending of the £46 million, three at least can be said to be related to some degree—vocational schools, libraries and swimming pools. I urge the Minister that, when spending this money and making it available for these very important works, he insists on the maximum possible degree of co-ordination between the various authorities involved. The haphazard planning of important amenities like schools, libraries and swimming pools has often resulted in a severe waste of money—the kind of money this Bill is designed to raise. Furthermore, the failure to reach agreement between the various authorities concerned has often resulted in local communities being unfairly deprived of these amenities for many years while departmental rivalries and other factors combine to ensure that there is the maximum of talk and the minimum of action.

I should like to refer the Minister to the very admirable scheme which is under way in the area at present served by the County Cork Vocational Education Committee. New schools erected by this committee are being made the centre of amenity activities. The chief executive officer should be commended for his far-sightedness in seeing that if amenity provisions are not carried out on an integrated basis they will probably never be carried out at all. I urge the Minister to put the gun to the heads of these people when they come looking for money for amenities. He should tell them to plan their amenities in a co-ordinated and integrated way.

There is a very serious delay in the provision of swimming pools and similar facilities for community schools, which do not come under this heading, because of departmental rivalries. While it may not be the Minister's immediate function to knock other Departments' heads together, I urge strongly on him that it is at least a proximate function in the exercise of his responsibilities towards the economy and the expenditure of the money he is giving them.

While commending this Bill to the House, I ask the Minister to investigate seriously the possibility of greater resource control by local authorities which justify such control by the manner in which they co-ordinate and integrate their activities. I urge him to look seriously at the provision of capital funds in the vocational education sector, the lack of which is felt by the people involved to be severely militating against their work.

I should like to follow the other speakers in complimenting the Minister on providing this extra money. At one time if somebody mentioned £1,000 million there would be consternation. Today it appears that £1,000 million is very little in the context of what has to be done to expand all the various services mentioned in the Minister's speech and other services not mentioned.

While we admit that the housing situation is not all it should be, perhaps it is time that there was some rationalisation of that industry. Perhaps the shortage of money today might lead to this. We all know that people in the building trade were vieing with each other to buy land at inflated prices because there was a market for houses. Now that the market has slowed down we might find that rationalisation of the price of building land was necessary.

If there is a slow-down in housing, there are many areas which have been mentioned already where the money can be and should be spent. The Minister has an ample field for the expenditure of even more money from the Local Loans Fund. Educational needs and vocational schools in particular, have been mentioned. If the traditional builders are short of work in housing, they might decide that permanent construction should be utilised for school extensions rather than building wooden pre-fabs. They are a disgrace from every point of view, and particularly because of the amount of money that has to be spent on their upkeep and maintenance. This is a field where the construction industry could change over to what was known as the ordinary block and concrete construction.

Money will be spent on harbour works, libraries, fire stations and so forth. Our hospital building programme is being held up through lack of finance. In the Western Health Board area we have capital expenditure of almost £10 million envisaged over the next five years. I am pointing this out to show that there should be no lack of work in the construction area, provided the finance comes from the Local Loans Fund.

Perhaps some other method of finance is needed to provide the necessary infrastructure for expanding industry, such as we hope to have in north Mayo in the not-too-distant future. According to a survey made by the county manager and a team, an amount in the region of £18 million will be necessary to provide sufficient infrastructure. This includes housing, communications of all kinds— rail and road—the provision of power and energy supplies, harbour works and also the amenities needed for a population expected to explode by some thousands in the not-too-distant future.

The local authorities are unable to find money for this at rates level. Considering Mayo has the highest rate in Ireland, we would not be able to find that kind of money. To get a loan from the Local Loans Fund would be impossible. Some new structure should be set up by the Minister. The banks should be utilised in some way. The banks keep their own interest to the fore. They are interested in commercial propositions and because of their shareholders, they find it necessary to invest only in sound investments. The banks owe something to the nation. It is time they were forced into a situation where they would have to provide the necessary capital infrastructure if our nation is to expand at all.

From the Minister's point of view expenditure on housing brings its own return after a certain time. Expenditure on infrastructure—in education, on the provision of schools and in health on the provision of hospitals—would not give an immediate return and, perhaps, never a monetary return. A balance must be kept by any Finance Minister between the two. Wherever it is necessary for money to be spent, it should never be held in the Exchequer and carried over to another year. If the local authorities and the education authorities get the money, they are prepared to spend it. I thank the Minister for having increased the amount to the extent he has.

As the Leader of this side of the House pointed out in his opening remarks, we support this measure mainly on the basis of its enabling and continuing capacity. The fact that the Minister is looking for an extra £400 million to finance the loan funds signifies the present inflation and, indeed, future inflation in this country. When one considers that 75 per cent of the loans fund is devoted to housing requirements of some sort, I hope that the Leas-Chathaoirleach will bear with me if I dwell on the housing aspect of this Bill. As I said, 75 per cent of the loans fund is devoted towards housing requirements of some description. When we take into consideration that water and sewerage facilities all over the country can be very closely aligned with housing, we realise that perhaps 80 per cent of the loans fund could be devoted to housing requirements.

Deputies of the Fianna Fáil Party have on numerous occasions pressed the Minister to increase the upper income limit from £2,350 to £3,000 and the upper loan limit from £4,500 to £6,000. As a member of a local authority, I naturally meet many young people in my own area——

An Leas-Chathaoirleach

The Senator is straying into an area which is more relevant to the Minister for Local Government.

As I pointed out, 75 per cent of the loans fund is devoted towards housing. I should like to stress that there is a real necessity for the upper income limit to be increased. I know of many people in my own area who may be only £10 above the upper income limit of £2,350. They find themselves very frustrated because at present a loan of any description is not available to them. I know of many who have made application to building societies and have not been successful in their application. It is on that basis that there is this vacuum to be filled.

There are many people who cannot at the present time obtain a housing loan. This is why I stress that the Minister, in collaboration with the Minister for Local Government, should see that the upper income limit is increased to at least £3,000 and that the upper loan limit is increased to £6,000.

If what Senator Russell and Senator Markey state is correct regarding the percentage increases given for capital expenditure towards local authority housing, sewerage and water, there is no reason why the Minister cannot increase the upper income and loan limits. If it is not all devoured by inflation, considering the amount of the increase for which the Minister is asking—a sum of £400 million—there must be money available to increase the upper income and loan limits. We, on this side of the House, support this measure mainly on the basis of its enabling and continuing capacity. I would stress on the Minister the desirability of increasing those limits.

I welcome the measure introduced by the Minister. The necessity for raising the limit from £600 million to £1,000 million has been brought about by the inflationary situation in which we find ourselves. It is unfortunate that we have such a situation, but we must face realities. We must plan on the basis of continued inflationary trends here.

The building industry, which is serviced in the main by the Local Loans Fund, is our life blood so far as planning, building and providing housing for the future is concerned. For that reason every effort should be made by the Minister for Finance to ensure that the maximum use is made of the money allocated. This is a fund which pays for itself in the long run. It is not a liability on the taxpayer. It is not a liability on the community. The people who avail of the loan services pay for the use of the money. They are building up our national wealth by their efforts. We have never fully realised the efforts of private enterprise in this country. When we look at the allocation itself— £109 million for private house-building alone irrespective of supplementary housing grants—that should indicate the efforts being made by private enterprise to provide their own homes.

I am convinced we do not go far enough in assisting those people. They are enterprising; they make their own savings and then set about purchasing sites which are very hard to come by and are becoming dearer as time goes by. Those people, should receive greater recognition from the State for their special efforts by getting greater incentives. The only way their special efforts can be recognised is by giving them greater incentives, by providing the money at the lowest possible rate of interest, by providing the maximum rate of loans and by providing the maximum rates of supplementary grants.

It is unfortunate that we have not an adequate allocation for water and sewerage schemes. Without water and sewerage schemes we cannot hope to continue with both local authority and private housing development. There is a great need for increased allocations to be made available to local authorities for water and sewerage extensions. There are many towns and villages still without sewerage supplies. Most areas have water supplies. That factor militates against the decentralisation programme envisaged by Governments in the past. I think it is also the policy of this Government to continue decentralisation. We would have greater decentralisation of industry if all the services were available at local authority level in our smaller towns and villages. I feel that the allocation of £69 million is not adequate if we are to make any real impact on the problem of providing sewerage schemes for our smaller towns and villages, without even planning for extensions in our larger towns. Housing has suffered to a certain extent in the past because industry always seemed to get preference when it came to the expansion of water and sewerage.

Another area in which I was disappointed with the allocation is hospitals. In every county and in every health board area there is a hue and cry for hospital extension. In my own county we are awaiting sanction of a children's ward. I am afraid that sanction will not be given in the near future because such a small amount has been earmarked for hospitals and schools. I would prefer if the Minister set aside a specific sum for hospitals and hospital extensions. When one sees the sum of £46 million spread over hospitals, vocational schools, harbour works, libraries, fire stations and so on, one realises that one or two major harbour schemes in the whole country could devour that entire £46 million. I would prefer if the Minister would be more specific in regard to the allocation being made available for hospital extensions. As I said before, most health boards have been making plans over the years for hospital extensions and all those schemes are held up awaiting ministerial sanction.

We have a similar situation in regard to vocational schools. I regard vocational education as a necessity. The possibility of all our children entering university is limited. Again a specific sum should have been allocated for vocational schools. We know that the prefabs which have been erected throughout the country are not the answer. They are small; the ventilation is not adequate; the air conditioning is non-existent. We have overcrowded classes packed into small prefabricated buildings with the result that the teacher cannot do his job effectively and the children cannot obtain the maximum benefits from education in those vocational schools.

Fire stations are a necessity. An adequate fire service, especially in this day and age, is something which deserves serious consideration.

With regard to swimming pools, I regret to say that local authorities have embarked on providing swimming pools and that all of them are working at a loss and therefore are a liability on the local authority and a liability on the Local Loans Fund because in the long run the loan repayments have to be met.

I want to refer now to the high cost of borrowing. This is a service for which the people pay. The Minister should spare no effort in trying to make money available at the lowest possible rate because we are investing in the future when we provide money for building. The more private building we can encourage the better for the economy. Therefore the Minister should do everything possible to ensure that we have the maximum amount of private development.

I was a bit worried about Senator McGlinchey's statement that the Land Registry have been told to slow up the transfer of housing sites. I ask the Minister to tell us whether that is true or not. I would be very disappointed if I thought that any Government Department endeavoured to deliberately slow down the rate of building by asking another Government Department to hold up the sanction of transfer of sites. As we all know, when a private individual sets about building his house the first thing he has to have is a site. Then, in order to avail of the loans, he has to have a clear title to that site, and the local authority in turn place a mortgage on the site. It is all very involved and delays can occur of up to 18 months and, in some cases two years. I would be disappointed if I thought any Minister or any Department deliberately instructed another Department to slow down the sanction of the transfer of sites.

With regard to the housing targets there is one factor which has been completely overlooked, that it is the people themselves who achieve the targets, not the Government. The people who set about building their own homes and providing their own houses are the people who set the pace. They deserve the praise and not any Minister. It is the people who decide to build and furnish their own homes who deserve the credit because of their enterprising ability and determination to provide for themselves and their future and leave a house as security for their wives or families.

Again, I would like the Minister to clarify the situation in regard to the Land Registry. I would also ask that a specific sum be made available for the improvement and extension of hospitals.

It is only right that we should view the Minister's request for more money in the light of the circumstances in which we find ourselves. I say this because within the next few hours the Minister will be making a statement on the economy. He has already made statements indicating that in the next two years our economic future will not be rosy. It is not the fault of anybody in this country and it is certainly not the fault of the Government. It is because inflationary tendencies in the countries with which we trade. We all know our near neighbour is in an economic condition that demands the application of the most stringent remedies, which apparently are being applied.

In the light of these circumstances I feel the Minister is taking a prudent step in making this additional provision. Local authorities, of which many of us are members, will understand the increased demands on the Local Loans Fund. Borrowers in rural areas may have varying costs but they all face the general increase in the cost of providing electricity in rural areas. While I agree with Senator Keegan that water and sewerage services need to be supplemented by local authority and State grants, I think the greatest drain on a rural borrower endeavouring to provide himself with a home is the heavy cost of obtaining an electricity supply. I can tell the Minister of a small farmer who is entitled to a State and local authority grant but who is having to pay £950 for an electricity supply. The Local Loans Fund could be utilised to lessen the burden of providing electricity for new homes. When I say "new homes" I mean new houses subsidised by the State and local authorities. This would help people in rural areas to obtain electricity, the cost of obtaining which is a prime problem.

Local authorities utilise the Local Loans Fund to provide grants for a wide range of amenities and for the provision of opportunities for young people to have a place to meet in order to take them away from enticements not in their best interests. Local authorities should be provided by the Minister with money to expand. These are the things that would make it easier and more enticing for the younger people to stay in the country and to stay in their own locality. The youth from the rural areas have been enticed by the opportunities provided by public moneys in the cities and in the towns, particularly in Dublin. These should be balanced by similar advancements in rural Ireland. The sooner the decentralisation of State services, for which the Minister is providing money, is implemented, the better it will be for the country. I am sure the Minister will ensure that moneys are made available for rural planning, to ensure that there is a continuation of employment opportunities and that old peoples' homes are provided not only in the cities but in the rural areas also.

I should like again to impress on the Minister the necessity of easing the burden of heavy electricity installation costs.

I welcome the Bill and I should like to assure the Minister that it has my full support.

I am grateful to the House for the manner in which they received the Bill. There was universal welcome for the increase in the limit on the size of the fund because of the social objectives for which the money in the fund is used.

We heard a number of statements from the Opposition which were, to say the least, misleading. I would like to think that it was simply due to innocence or ignorance on their part, but I suspect that some of the statements were not truthful and rather were due to an ill disposition. The suggestion that the Land Registry had been asked to slow up registration of titles is about the silliest of all the statements made, because any person who knows anything about land registration knows that the Land Registry do not become involved until such time as the cash has passed and the deed completed. When the deed is signed, sealed and delivered then the Land Registry come into the process. It is only the registration of the deal that has already taken place which concerns the Land Registry. The fact that that mischievous statement was made is an indication that, as I say, some of us were not well disposed towards having the true position revealed. There have been delays for years in the Land Registry due, I am sorry to say, to serious neglect in the provision of accommodation and equipment required there. That legacy, which we are trying to correct, is a legacy left to us by the last administration. No delay in the Land Registry today however would in any way hold up the issuing of money from the Local Loans Fund. Therefore they will want to dream up some better excuse than that. That one certainly will not wash.

The suggestion has been made by several Senators, including Senator Lenihan, that the increase which we are seeking in the statutory limit of the Local Loans Fund is attributable to inflation. That of course is not so. The increase in the cost of living since the Local Loans Fund was fixed at £600 million is less than 30 per cent. The increase which we are now seeking in the statutory limit is 66 and two-thirds. The reasons are because of the massive increases that we have paid out of the Local Loans Fund for housing, for sanitary services—all the services allied to the house building industry and the several other capital expenditures financed from the Local Loans Fund.

Once again today we had the most outrageous, irresponsible and unfair statements being made about the building societies. The building society situation is very healthy indeed and they are paying out more money and giving more approvals this year than were given last year. For the April-June period, 1973, building society approvals were £6.7 million. This year, 1974, they are £10.7 million. In July-September, 1973, building society approvals were £8.8 million and in 1974 that was increased to £10.5 million.

What has happened is that there has been such a massive growth in the number of houses being provided that the building societies share has slipped back because the main injection of money for this massive housing drive has come from the Exchequer. Consequently, the building societies' share is reduced but the moneys they are paying out are, I am glad to say, increasing.

In 1972-73, for instance, building societies carried 73 per cent of the loans approved. The local authority schemes at that time represented only 18 per cent and insurance companies 9 per cent. In 1974 the situation was changed, in that building societies are now carrying only 41 per cent of the cost of housing, the Exchequer is carrying 50 per cent, instead of the 18 per cent which was being paid two years ago, and the insurance companies situation has remained in or about the same. There is, I am glad to say, some slight improvement in the share being carried by insurance companies and we are hopeful that this will be further increased. The loan payments in the 1972-73 financial year were £61.2 million. Last year they were £77.8 million and this year, on an annualised basis, it will be £87 million, all of which shows the most significant and remarkable growth of money for housing purposes.

The use to which that money has been put is reflected in the large number of houses being provided. The output of houses is now 9,000 per annum more than it was two years ago and, as is common knowledge, there has been a most significant increase in the provision of local authority houses in particular.

This has not been easy. We never pretended in Government that money is easy to come by. Nobody but a fool thinks that money is plentiful or cheap, particularly at present. Notwithstanding these immense difficulties that we have had, we have provided the money and it is because of that we are now in a position that the Local Loans Fund will be exhausted in the first quarter of 1975. That is why we must get this additional limit, so that the level at which we have provided the money may be maintained in the years to come.

Several Senators asked for an increase in the loan limits and also for an increase in the income limits of persons applying for SDA loans. Of course, the granting of either of those would cost more money but when resources are insufficient to meet the demands upon them, the Government consider that those with the first claim are the people with the smallest incomes. Until their wants are satisfied we would not be justified in raising the limits of loans or incomes. It is interesting that the average loan sought is well below the present limit which indicates that while it might not satisfy the wishes of all house applicants who may have standards of housing in mind higher than the average person, the fact that the loans issued are below the limits is an indication that the limits are not unfair and are not tailored to the market.

Some figures may be of interest here. In 1972 the average wage was £29.88 per week. At that time the SDA income limit was £34.50 per week. Now the average wage is £38.56 per week and the SDA income limit is £45 per week. So that the income limit for SDA purposes is well above the average wage. What is particularly important to remember is that the certificates of income are based upon the applicant's earnings in the previous 12 months so that, although the limit is at a particular figure, that does not relate to what the person is currently earning. It is what the person earned over the last year. When, as in this year, incomes have risen considerably, 25 per cent and more, we are in a situation in which people now qualify for loans for SDA purposes based upon what their incomes were a year ago. That is something which is often overlooked when people are applying pressures for increases in the income limits.

I want, having said that, to assure the House that the Government are very concerned about maintaining realistic limits and we will not permit a situation to develop, such as developed under our predecessors, where the income limits get out of line with current wages. We want the scheme to operate in a realistic fashion. The substantial increases which we have given, both in income limits and in the loan limits, is an indication of how we have met this requirement.

Two years ago the capital programme of expenditure on SDA loans was £9.2 million which was even less than was paid out in 1970-71. It was £9.53 million in 1970-71, £8.63 million in 1971-72 and it was £9.20 million in 1972-73. In our first year of Government we jumped it up to £20.74 million and currently it is at £35.20 million, indicating a very massive increase in the SDA fund. That has been done at a time when the building societies situation has not shown the same growth as it did in earlier periods. I want to emphasise again that there is no contraction of the building societies fund except that it has not kept pace with the increased demand which is being made for housing finance because of the very substantial increase in the housing output.

Senator Russell made a plea for additional money for harbours. I would not wish to debate with him the correct procedures for financing harbour works nor indeed would I think it appropriate to discuss on this Bill the general policy and administrative measures necessary to improve our harbours but for his information I should like to record that the amount of money allocated for harbour work in the current period, 1974-75, is £500,000. Out of the total money allocated already from the Local Loans Fund a mere 0.6 per cent of the total amount was spent on harbours so I can understand Senator Russell's disappointment that it has not been more.

Members may find the percentages of interest. The Local Loans Fund resources have been allocated in the following percentages since the fund was created: local authority housing 49.2; house purchase loans 21.9; local authority supplementary grants 5.7; Gaeltacht housing, a very small fraction, I have not got the exact figure; total for housing 76.8; sanitary services 13.9; vocational schools 3.9; health services 3.8; harbours 0.6 and other services 1.0. I will return in a moment to the question Senator Horgan posed about vocational schools and also the question posed by others about hospitals.

Senator Quinlan referred to the subsidies which the State pays. He is quite right to remind people of the tremendous subsidies which the State provides against interest charges, because at a time when the State has to borrow at 12½ to 16 per cent the State is providing an extremely generous subsidy by making money available from the Local Loans Fund at 10 per cent. It is almost a giveaway to be providing funds at that rate. On top of that, we have to bear in mind that a very large number of people who receive loans through the mechanism of the Local Loans Fund are themselves income tax payers and they receive a further subsidy by reason of being able to set off the interest paid against their tax liability. So the real rate of borrowing from the Local Loans Fund is 7 per cent or even less at a time when the normal lending rate could vary from 15 to 20 per cent. The person who is borrowing for housing today is really enjoying a bargain.

This is not to make light of the burden it is on any family who recently acquired a house to meet the housing outgoings which can, of course, represent a very considerable portion of the family income. In the long run, house purchasers are very fortunate indeed because they are borrowing at a mere fraction of the current rate of interest; they are investing in an asset which is increasing in value at a rate much faster than the rate of inflation. At the time of enduring pain, it is not easy to look forward to comfort and pleasure.

On the complaint about the inadequacy of money for hospitals and vocational schools, I should like to point out that the Local Loans Fund is only one of the sources of providing money for these services. In the case of hospitals, only £2.8 million out of £10 million expenditure on hospitals this year came from the Local Loans Fund. The remainder of the money came from the Hospitals Trust Fund and from voted capital moneys—moneys which are voted direct rather than being processed through the Local Loans Fund. Of the £20 million being spent this year on schools and university buildings, only £1 million of the capital involved is being paid out of the Local Loans Fund.

It is only one of the mechanisms and it would be wrong for anybody to think that the figures I reported here today represented the total of the State's investment in these most important fields. I support entirely the views expressed by Senators about the importance of money for schools and hospitals. They may be assured that these will get the Government's priority consideration at all times—even in times when money is hard to come by and is extremely costly.

I was asked by Senators McGlinchey and Horgan to explain how the fund works. It is important to remember that 76 per cent of the total fund is in respect of housing. A great deal of that is in respect of house purchase loans and supplementary grants. The process is a very simple one because the money is made available in a block grant to the local authorities, and they administer the schemes.

In relation to other activities, the consideration of applications for and the approval of loans from the fund is the function of the Minister for Finance. The fund is actually administered by the Office of Public Works which control the issue of moneys from the fund within the limits which are set down by the Minister for Finance. At the beginning of each year the Department of Finance notify the Office of Public Works of the amounts which can be drawn from the fund during the year for each service. Then the Office of Public Works ensure that the guidelines are respected and that no drawing exceeds the authorised amount.

The local authorities do not themselves apply directly to the fund for loans. Instead, any local authority, education authority and so on which require loan finance for a scheme approach the appropriate Department. The procedures are handled by the Departments down the line and not by the Department of Finance as such. Unfortunately this can be time consuming. It is the most time consuming stage of the whole process because the average time taken by the Department of Finance and the Office of Public Works to handle applications for loans is about a fortnight. In many cases it is less. The detailed work has been done long before the application for the global sum reaches the Department of Finance.

I am sure Senators will appreciate how long it may take to agree in principle to a loan and then to all the details like planning, the preparation of contract documents, the issuing of tenders, the examination of tenders and so on. All that is done before it ever reaches the Department of Finance.

I will bring to the attention of the Ministers concerned the complaints that have been made here about delays in the processing of applications for money which ultimately comes from this fund. We would not wish any unnecessary delays to arise.

I assure Senator Horgan that the Government greatly value the idea of decentralisation, of conferring on local authorities greater autonomy than they had previously enjoyed. In fact the Minister for Local Government is taking a number of steps in this field to cut out the duplication of work which previously was necessary. In so far as that can be done without offending against good financial control, it will be done. There have been occasions in the past where the exercise of good financial control has often meant that the cost of administration has increased because the costs are greater than when the good idea was first conceived. I would prefer to see a good idea carried through to fruition rather than have it spoiled because costs arose during the handling of details which unfortunately are necessary, but sometimes you cao save money by cutting corners. If duplication can be avoided, Senatsur can be assured that it will be the Government's objective.

At one time it was necessary for local authorities to enter into a mortgage with the State for any moneys received from the Local Loans Fund. I am glad to say that all these complex procedures were removed by the Local Loans Fund (Amendment) Act, 1961. Nowadays there is a fairly simple undertaking drafted by the Office of Public Works in consultation with the applicant. It is on the basis of such an undertaking that the money is issued.

Senator McGlinchey asked that the maximum rate of interest charged by the State on loans from the fund should be no more than 5 per cent. For reasons I pointed out earlier, this would be most unreasonable. It would mean an Exchequer subsidy of 10 to 12 per cent on all moneys advanced. I do not think one could in conscience support an Exchequer subsidy of that dimension. There is a great deal to be said for charging the full cost of money at any particular time. While the Minister for Finance might regard that as desirable, it would not be regarded in that light by the payers. It is something which controls the supply of money. If the going cost is not paid by the beneficiaries of loans, it must be paid for by somebody else. The Exchequer is no more than what exists in the common pool. If there is not enough in that pool it is not possible to provide the kind of bonanza that would be given to people if the interest rate was 5 per cent.

Senator Markey asked for increased expenditure on what he regarded as useful services such as fire stations and so on. The Government realise the need for more expenditure in these neglected fields and this is reflected in the fact that we have increased by 70 per cent the amount expended on these items in a two year period. The amount has risen from £0.66 million in 1972-73 to £1.12 million in 1974-75.

I trust I have dealt with most of the points raised in the debate. If there has been any significant omission on my part, I assure Senators that I will communicate with them directly. The fund needs to be increased so that we can maintain the pace of public capital expenditure, which is a desirable thing at any time. At a time when there are passing difficulties in the private sector we see a great need to maintain an adequate level of expenditure in the public sector. The facilities sought in this Bill will ensure that this is done and I am grateful to the House for the way in which it has been received.

Question put and agreed to.
Agreed to take remaining Stages today.