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.