Local Loans Fund (Amendment) Bill, 1974 (Certified Money Bill): Committee and Final Stages.

Question proposed: "That section 1 stand part of the Bill."

I have just one brief question to ask the Minister. I am very grateful for his very full reply on Second Stage.

Section 1 is a deceptively simple section. It is an enabling section and the simplest thing about it is the sum mentioned, £1,000 million. Is the Minister really satisfied that the statutory arrangements for transactions of this magnitude between local and central authorities are, at this point in time, adequate? As the Minister pointed out, when the scheme was initiated in 1935, the limit was £5 million.

Although he did not give us the information about the percentage of local government capital expenditure represented by £5 million, it is fairly obvious that at that time the scheme was intended as a sort of deficit financing for local government capital expenditure. We now have the situation that we are told that in 1973-74 the Local Loans Fund met more than 90 per cent of local authority capital expenditure. So we have a situation in which the relationship between the fund and the local authorities has been completely reversed. We have put a 500 horse power engine into a Model T Ford and we are still driving it down the road.

Would the Minister accept that there has been, if only by erosion, a major change in the financial relationship between the central authority and the local authority in matters covered by this Bill? Is he satisfied that the statutory arrangements which were originally devised in 1935 to cover the situation then express the reality of it any longer?

When the fund was established in 1935 a number of those bodies were able themselves to go on the money market to obtain their own finances. Since then the scene has changed considerably. On that account there is certainly a greater need to resort to the Local Loans Fund than previously. The 1961 Act, which I mentioned earlier, improved the working arrangements and removed some of the legal restrictions which were unnecessary. Much simpler procedures have since been adopted. I am not aware that there are any working difficulties now in the operation of the scheme but if there are, we will not hesitate to remedy them. If we were to authorise local authorities to enter the money market in an endeavour to collect money we would have to consider what effect that might have on the capacity of the State to borrow. It would be no great harm if they could do it directly rather than have the State do it and then hand the money out. In the present position of the money market it is obviously an impossible thing to conceive because even the State has considerable difficulty in borrowing.

Getting minimum sums from the Arabs, for instance.

Getting very substantial sums from the oil producers, I am glad to say. When you want money you go to the people who have it. There is no inclination at the moment in any of the European money markets to lend money to local authorities, so for some time to come it is more than probable that the Local Loans Fund will be the only machinery whereby this capital can be provided, other than such small amounts as local authorities themselves directly negotiate with insurance companies and banks.

The question that raised itself in my mind when I made this point was that different countries have different traditions. In Britain, for example, when it comes to the raising of finance by local authorities specifically for education there is a tradition there that a substantially greater proportion of funds is raised locally by means of rates. This is also controlled locally.

This is not the case here, because a ceiling has been put on the amount of money which may be raised by local authorities by way of rates for purposes such as this. While I should hate to be pilloried by the Press for advocating that rates should be raised, I was wondering whether, apart from the money market method of obtaining funds, the Minister might occasionally think in terms of allowing local authorities greater flexibility in this area, transferring some of the taxation from a central basis to a local basis with all the beneficial advantages for autonomy and self-management this implies.

I should not like to answer that without consultation with the Minister for Local Government, but the Senator has sown a seed and one never knows what might grow from it.

Question put and agreed to.
Section 2 agreed to.
Title agreed to.
Bill reported without recommendation, received for final consideration, and ordered to be returned to the Dáil.
Business suspended at 5.50 and resumed at 7 p.m.