Seanad Éireann debate -
Thursday, 29 Jun 1978

Vol. 89 No. 13

Land Bond Bill, 1978 (Certified Money Bill): Second and Subsequent Stages.

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

Minister of State at the Department of Agriculture (Mr. Hussey)

The necessity for this short measure arises from the fact that the limit of £60 million on the creation and issue of land bonds, imposed by the Land Bond Act, 1975, has now been reached. Legislative authority for the creation of additional bonds is needed, so that there may be no hold-up in the current acquisition work of the Land Commission. The proposal is to raise the limit by £20 million to £80 million.

Senators may like to know that land bonds are created from time to time by the Minister for Finance under land bond orders, which also fix the rate of interest in respect of each particular series. The current series bear interest at 12½ per cent and are redeemable in 32 years.

The Government have made it clear that they are not committed to continuing present land policy indefinitely. Indeed, they have announced their intention to amend that policy and to establish a land development authority which will be responsible for structural reform. My Department are at present engaged in a full examination of the whole position, taking account of the final report of the Interdepartmental Committee on Land Structure Reform, which was recently presented to the Government. The report is now being printed and is expected to be published within the next week or so.

The Minister has announced that he will be putting to his colleagues in the Government, before the end of this year, a comprehensive set of proposals designed to up-date policy in the light of present-day requirements.

In the meantime, however, the existing system must continue to operate and additional land bonds are needed for this; hence this short enabling Bill, which I commend to the House.

Mr. Butler

There is no objection to this Bill on this side of the House, but it gives us an opportunity to say a few words on the Land Commission and their policies and what we would recommend to the new land development authority which it is proposed to set up in the near future.

Is the increase from £60 million to £80 million just for a period of time, say 12 months, to carry us over until the new authority is set up? When the new authority is set up, will the Minister be back to us again asking for an increased monetary bank? In my opinion £80 million is not sufficient to do what is necessary to create a new land structure. It is an increase of £20 million only and this sum will buy very little land now. As we know, the price of land is reaching over £2,000 an acre and £20 million will have little effect.

In my opinion the Land Commission have never paid the price that land has been valued at. They have purchased land at very much reduced prices. Whether that was fair or not is a matter of opinion. If we read the 1976 annual report of the Irish Land Commission we will see there that land had been purchased at about £670 an acre while land was making well over £1,000 an acre at that time on the open market. It is my opinion that the Land Commission were getting cheap land. Perhaps the land was not of the same quality as that then making £2,000 or £1,500 an acre, but I would like the Minister to assure me that the Land Commission paid the full value for the land acquired.

In my opinion the term of 32 years is much too long because of the type of inflation we have had during the past number of years and the inflation we will have in the future. There is no doubt that there will be inflation, whether it be 5 per cent, 6 per cent or 10 per cent; we are going to have continuing inflation over a number of years. For that reason I would suggest that the term of years be reduced from 32 years to, say, 20 years. This would give people some value when the term of their land bonds is up and the money is paid.

The interest recommended is 12½ per cent, but if we look back we see that there has been interest of 15 per cent and 16 per cent paid on land bonds. In the orders made on 30 January 1976 and on 19 October 1976 land bonds were created at 15 per cent. A further order on 19 October 1976 created 16 per cent land bonds. I cannot understand why there is now a reduction in percentage from 16 or 15 per cent to 12½ per cent. I believe that if 15 per cent or 16 per cent was the correct percentage paid at that time, a reduction to 12½ per cent under the circumstances is not right. It should be increased to 15 per cent or 16 per cent.

I wish to refer to the structure of agriculture and the picture that we get from the report. Since the 1923 Land Act, three million acres have been bought from landlords by the Land Commission. That would be an average of 60,000 acres a year. There seems to be a reduction in the amount of land purchased by the Land Commission in latter years. I think the reason for that is that when the British left the country there was so much derelict land around that it was necessary for the Land Commission to take over that land and redistribute it amongst the Irish farmers. It seems now that the land bank is reducing every year and it will probably reduce further because farmers are better educated now to work their land. There will be very little land available to the Land Commission, unless there are compulsory orders made so that the Land Commission can take over land that is not being used properly. Whether that is a good thing or not is a matter of opinion. We have a good agricultural advisory service and we could in the future have better agricultural education. There would be more interest in the land. For that reason the land bank available to the Land Commission would be very much reduced.

Some people say that there should be a limit of 200 acres or so on the size of land holdings, and the Minister believes that is so. In my opinion it is something that should be considered but it is not something that should be rushed into. Freedom is very important. Any interference with freedom can create many great difficulties, so I would give the question of limiting landholdings more thought before we rush into the idea. It is a very important subject.

The Land Commission are the holders of thousands and thousands of acres of land for long periods of time and I would suggest that they would look into their holdings and divide them more quickly. I would suggest that the Land Commission should not have any land longer than three or four years without having it divided. There may be an occassion where the title may not be clear and that might take a longer time. The amount of land that would be in doubt would be small. The Land Commission would have land in their possession to which there is clear title, but still the division of that land takes so long. I am not condemning the Land Commission for this because I know there are problems, even in congested areas. At the same time the opinion is that the Land Commission are too slow in dividing this land and that they let the land to get back the moneys they paid for it. If that is the case it is wrong. The land should be divided as quickly as possible amongst the farmers.

There are also a few matters in this annual report to which I should like to refer. First, I would like to congratulate the holders of land given by the Land Commission on the payment of their annuities. I see that only .07 per cent of the annuities due last year were not paid. This is a credit to those people who have got land from the Land Commission and who realise that the onus is on them to pay back the rent. I do not think any great improvement can be made on that. Great credit is due to those people who have obtained land for the Land Commission in that they are paying back their rent.

Land bonds are not as good as Government stock. I believe they should be, because the financial institutions are not interested in purchasing them. That is proof that the land bonds must not be as good as Government stock. At one time they were and there was a great demand for the purchase of those land bonds. Recently there seems to be no interest among financial institutions in the purchase of them and I would like to know why this is so. There must be a reason, for it.

Page 24 of the 1976 annual report deals with the farmers' voluntary retirement scheme. It is a topic close to all our hearts. Only 805 applicants have been adjudged eligible out of 1,624 applications from farmers. That is only 50 per cent; and 314 have been refused or have withdrawn their applications. We would like to get some idea why that is so. I believe that the pension paid for the married person is only £15 a week. Are those people entitled to the old age pension on top of that, if they qualify for the old age pension? If they are not, then £15 per week is a very small amount to give to any married couple who have retired from farming and given over their land to be put to better use.

Something should be done to increase the amount paid to farmers in the voluntary retirement scheme. Farmers should be encouraged by advice, if the monetary fee payable to them is also a sufficient encouragement, to hand over their land. It has been suggested that socio-economic advisers should be trained to advise people on how they would benefit by handing over their land to the Land Commission. That is necessary because there are parcels of land throughout the country which are being put to very bad use and producing very little.

About 31,000 acres were acquired in 1976 and about the same amount was distributed among the farming community during the year. It seems the Land Commission try to hold on to the land banks they have from year to year for distribution. That is not good business. The Land Commission would like to have 60,000 acres — I do not know how much the land bank is. Land should be divided amongst the farmers as soon as possible, and three of four years is the maximum time the Land Commission should have any holding, unless there is a difficulty in title. The Land Commission rent land on the 11 month system and we all decry that system because it is a system whereby farmers, the big combines, go in and take the value out of the land and put back very little into it; the land is all the poorer for it. Management of land is all important in this country. The land Commission must mangage their business properly, and I believe they do, but I cannot understand the reason for the delay in dividing this land amongst the farmers.

I see here that 92 acres were given to four ex-employees on that land. This is a good thing. The number of ex-employees who got land seems to be very small. The division of 92 acres by four would give 23 acres per employee, which is an uneconomic holding. The Land Commission are not in favour of giving anybody uneconomic holdings but, if that is the case, the division of 92 acres between four ex-employees created four uneconomic holdings. At the same time I believe that something should be done for people who have given service to the landlord or the owner of the land which has been taken over by the Land Commission. They are giving a service to agriculture and they should be entitled to a division of the spoils.

I also see that 295 acres have been provided as 149 accommodation and amenity plots. This is very good and it is something of which the Land Commission should be proud. Amenity plots are very important, not alone to create an atmosphere in towns and villages but also to create a greater interest in visitors to this country when they enjoy these areas.

I see that 42 acres were used for 8 sports fields and school playgrounds. The more interest the Land Commission have in the distribution of land in that way the better for everybody concerned. There is an example in my own area in Cahir where the Land Commission gave a holding to the people of the town for a golf course. That is a credit to the Land Commission, a credit to the Minister of the time. On behalf of the people of Cahir I would like to thank all those concerned for that amenity. It is an excellent one and there are hundreds of people playing golf and getting exercise because of it. It is a good thing for the town of Cahir, and other parts of the country have the same thing. An area of 1,299 acres was provided for forestry purposes. I am sure the land for forestry purposes was either close to a forest or land that was not good enough for the growing of crops or grass but was ideal for forestry purposes.

I congratulate the Land Commission on their interest in all those fields and on their interest in respect of buildings and construction and the renovation of dwellinghouses. Land is very little good to people unless they have the comfort of living on that land. I have seen the houses built by the Land Commission. They are ideal for the set up in farming. I could not find fault with them and I congratulate the Land Commission in that respect.

This Bill is welcome. I would like to hear why the interest rate is 12½ per cent, why the terms of years is as long as 32 years and why only an extra £20 million is asked for here. The annuities bring in about £3½ million a year, but the expenses amount to £1½ million so therefore there is very little left, about £2 million, to help in the purchase of land. I welcome the Bill and I do not think anybody will have any objection to passing it today.

Mr. Mulcahy

I have one or two points I would like to raise in welcoming this Bill. The whole question of the value of land is central to our society and our economic and social development. The Second Stage of this Bill gives me a chance to mention one or two points. I wonder has it struck people that land may be very under-valued. While we worry about the price of land going up, we should get things into perspective. There are 40,000 square feet in an acre and if one works it out at £2,000 per acre, as has been mentioned already, that is worth 5p for a square foot. Think about how much it costs for a piece of carpet to cover a square foot. When God made land he only made a certain amount of it. I wonder if there is something about this underlying growth in the price of land. I would just make that point to the House.

Of course, when one looks at the value of land developed for building purposes we are getting up to the figure of £30,000 and now one is getting close to a £1 a square foot so maybe it is all part of the economic development of a country that this natural resource is coming towards reaching its real value. It is possible that tomorrow all land will be valued at £2 a square foot. A bit of perspective might be brought into this.

On the question of land being sold for £30,000 an acre, this is a very difficult point, and agricultural land is being bought out by some people in the hope that at some stage it will reach that value and of course this affects the market for land and the value of land. It really frightens me to see that in an area like the inner city of Dublin where unemployment is so high the value of land has been inhibiting the development of industry because people were trying to get industries going and cannot get the finance and this is obviously a source of great concern to me because I operate in that area. I welcome, therefore, the fact that the Minister is telling us that he will be putting to his colleagues in the Government before the end of this year a comprehensive set of proposals designed to up-date policy. I would point out that there are suggestions being made by various people which might make it possible to get land released more quickly from the coils of planning permissions and servicing delays. I am sure — and I have discussed this with some people in the construction business — that developers of housing would be quite happy to provide the money for servicing land in order to increase its availability. Governments were always short of money for servicing land and as a result of that the amount of land in the market was insufficient and therefore cost more. It might be possible to persuade the bigger developers in the urban areas to finance an effective servicing of land and that would make more land available. If more land is available then it would help to keep down the price of agricultural land.

The question of the use of agricultural land has been raised. If people are sitting on a natural resource and not using it and not getting it up to the productive level as measured by comparison with other countries' use of land then something will have to be done about it. Some policies have got to be put into action which will move it into a productive mode. I recognise in this Bill that what the Minister wants to do is to increase the limit and get on with the job, and we are not going to stop him doing that. We encouraged him to go ahead, but the real encouragement is to see that this new comprehensive set of proposals that he mentions here is implemented.

Mr. Howard

I welcome the opportunity of saying a few words on the Second Stage of the Land Bond Bill 1978. I am interested in the Minister's speech. He pointed out to us that the purpose of the Bill is to create an extra £20 million worth of land bonds. He stated that the Government are not committed to continuing the present land policy indefinitely. He referred to the decision by the Government to set up a land development authority. He spoke out on the structural reforms that are necessary in farm land and he said that he will be putting certain proposals before the Government by the end of the year and that the purpose of the £20 million is to tide over the Land Commission between now and the time when the proposals that the Minister will be putting before the Government will become effective.

I am interested in the Minister's speech for another reason, and that is that it is shorter than the speech that was made by him on the Second Stage in the other House and it is not quite as thought-provoking. For example, there is no reference, as there was in the speech in the other House, to handicaps, to the necessity of having agricultural qualifications on the part of the people who are buying land or to the question of giving priority to developing farms. But nevertheless the speech is interesting because of the points that I mentioned. I recognise that the application to obtain an extra £20 million worth of land bonds is an attempt to expand the land pool that is available to the Land Commission. I have been trying to estimate the amount of land that this figure of £20 million is likely to provide. If my estimation is correct, the maximum is about 10,000 acres. If one measures that again in relation to the question of what is a viable farm, and we take it that a viable farm today is not less than 100 acres, we are talking about accommodating 100 farmers, creating 100 new viable units. I know that it is very likely that that is not how the land acquired will be distributed. It is very likely that most of it will be distributed by way of addition to existing farms. When that 10,000 acres is tied in with the 76,000 acres that I understand is in the Land Commission pool at the moment, we are saying that, were all this to be divided and used for the purpose of creating viable farm units, we are talking in terms of about 700 of these.

The Minister said that the land structure report of the inter-departmental committee is available to the Government and will be available to the public in a week or two. I regret that it is not available to us today as it would be useful and could assist us in putting our views on this matter. I know that there has been criticism of the policy and the work of the Land Commission, particularly in regard to their obtaining land and their distribution of it.

There is also the criticism in regard to the enormous length of time it takes, from the time the land is acquired until it is distributed, and in regard to the people who eventually obtain it. While I accept that a lot of that criticism is justified, as indeed is the criticism of the activities of the Land Commission as being outdated and not entirely relevant to the conditions prevailing today and likely to prevail in the future, nevertheless, it would be unfair to let this occasion pass without putting it on record that the Land Commission, over the years, have made a valuable contribution to assisting many people who today are obtaining a satisfactory standard of living from their land and who could not do so were it not for the work and assistance of the Land Commission.

I recognise that times are changing and that new structures are required for today and for the conditions that will obtain in the future. For that reason I am glad to hear the proposal that a development authority is to be created. I am sure that when that proposal arrives before us we will have an opportunity of discussing in detail how it can most effectively assist land structure reform here.

A viable farm today is at least 200 adjusted acres. I know that in the Minister's constituency, in my own constituency and in a number of other constituencies a man could have 100 acres and still be eligible to draw the dole. When we talk in terms of 100 adjusted acres we must realise that the man who is below that level and who is attempting to reach it requires assistance from the Land Commission or from some similar agency to get up to that point because the competition is very intense for any land that becomes available. Without the assistance of some agency such as the Land Commission it will be impossible for people who are below that desirable level to attain it.

When we talk of land structure reform it is necessary to look at the sources from which additional land may become available. I was interested in a few points that Senator Mulcahy raised. He said that the current value of land was 5p a square foot. He felt it was under-valued. Perhaps it is, but it all depends on how one measures it. There is only one satisfactory way in which the value of land can be measured and that is the return per acre that one can obtain from it and that is to be related to the price that one pays for it.

Senator Mulcahy referred to what I would describe as the dormant acres. He referred to land in the hands of people who are not making a genuine attempt to bring it up to a reasonable standard of productivity. While I do not entirely agree with his suggestion as to what should be done, nevertheless the time is fast approaching when those who are responsible for land reform here will have to look at these dormant acres and see what steps are necessary to ensure that this land is brought into full and satisfactory productivity. It can be a very depressing sight in any part of the country, as one drives along, when one sees a farm of limited acreage very effectively worked by the owner and by its side a stretch of land of perhaps even greater acreage almost dormant.

The question of land bonds has been referred to earlier today. In relation to this, the experience over the years has shown clearly that land bonds have been, to a very great degree, unacceptable to the sellers of land. They have been a problem for the Land Commission in obtaining additional land and they do not appeal to land owners who are on the market to sell their properties. I have never understood why the Land Commission were not enabled to pay cash for land rather than land bonds. Had they been enabled to pay cash rather than land bonds, I am satisfied that the difficulties they have encountered in obtaining additional land would not have existed to the same degree.

I will refer now to suggestions made by the Minister in the other House, to the question of the handicap, the agricultural qualifications, future owners, the priority of developing farms. There could be merit in all of this but I would prefer to see them spelled out in greater detail, certainly in relation to priority for developing farms. That idea is deserving of very thorough consideration in the immediate future.

The final point I want to make is in relation to the leasing of land. For farmers who are keen to expand and develop their enterprise and to obtain for themselves a better standard of living, the long-term leasing of land is a system that has tremendous potential but for some reason we never succeeded in getting it to work here. I believe our failure to get it to work has been due largely to the fact that there existed in the minds of the owners of the land a fear that they would lose their rights to recover that land. That fact has been the main reason why long-term leasing has never succeeded. The 11 months' letting system has a disadvantage for everybody involved and also for the land in question.

Senator Butler complimented the Land Commission on the manner in which they had made land adjacent to rural villages and rural parishes available for use as football or hurling pitches and for community activity of one kind or another. It took a long time for that to materialise but it was a most welcome development. I hope that it will continue and that in the future when the administration of land allocation and land structure and development is changed, that that is something that provision will be made for, because I am aware of certain communities and parishes who have no facilities. They could not, without the assistance of the Land Commission, provide these from their own resources.

I welcome the Bill because it provides additional money and additional acres. I welcome it and will assist its passage through the House.

Minister of State at the Department of Agriculture (Mr. Hussey)

I want to thank the Senators who have contributed to this debate. The scope of the debate was far greater than I had intended or expected. As I said at the outset, this is an enabling Bill, to provide £20 million extra for the Land Commission to enable them to carry on their programme of acquisition over the next few years. Last year the Land Commission paid £6.7 million, approximately, for land purchased under this scheme. The provision made here today should enable the Land Commission to carry on their programme for another 2½ to three years. There are approximately 60,000 acres at present in the pipeline, at various stages of negotiation, and hopefully this money will enable them to purchase this land.

Over the years there has been severe criticism of land bonds and this is probably justified in many respects but, nevertheless, it is a very necessary part of the whole land purchase deal the Land Commission have to undertake and last year, under this scheme, they purchased something in the region of 15,000 acres which were paid for in land bonds. Possibly if they did not have the land bonds available to them they would not have this pool of 15,000 acres which they have at present and which they bought last year under the land bonds system.

Senator Butler raised the question of the Land Commission paying the market value of the land. The Land Commission have to pay the market value of the land because this is fixed by the Land Act of 1950. If the owner is not satisfied with the price he is getting from the Land Commission he can appeal to the appeal tribunal.

Senator Butler was also critical of the Land Commission holding on to land for a long time. There are various reasons for this and some of them have been mentioned by Senator Howard in his contribution. Very often the Land Commission hold on to land in the hope that other land might become available in the area and, by getting that additional land, they would be able to prepare a better scheme. This is very desirable because, particularly in the west, farms are very fragmented and if the Land Commission get a good pool of land in one area it helps them to eliminate that fragmentation and give farmers the greater portion of their land in one piece. This is desirable because it makes it easier to work, less expensive for fencing and travelling to and from and so on.

It has also been said that the land bonds are not as good as Government stock. In fixing the interest rate of bonds the Minister for Finance must have regard to the prices at which the latest issue of national loan and previous issue of land bonds are quoted on the stock exchange so that the new issue will be at or near par and the interest rate of a new issue of land bonds is invariably pitched at a point or two above the current rate of national loan.

Senator Mulcahy raised the question of the value of land and made certain comparisons. We all realise that the price of land has increased in recent years and there are various reasons for this. One of the reasons is that credit is more readily available to farmers now to buy land and we have a position where there are lending institutions, such as the banks and the Agricultural Credit Corporation and all the other people who are prepared to lend money, competing with one another. They realise that farmers are good clients and are prepared to lend them this money but, in the long term, what really fixes the price of land are the prices obtaining for the farmer in the market place. If the farmer is able to get a good price for what he produces then he is prepared to go out and invest, whether it be in the purchase of land or in reclaiming land that he already has. It is very important before any farmer goes out into the market to buy land that he should first look at the land that he has and ensure that it is up to its full productive capacity. It is essential that every acre should be utilised and the best value got out of it.

The Bill has taken on a new dimension here today and I am sure that Senators will get a full opportunity of discussing the problems that they have raised later on in the year when we hope that legislation will be brought in to set up a new land authority. The fact that the Minister has given an undertaking that this legislation will be brought in is an indication of the Government's concern over the present position and, hopefully, this legislation will be before both Houses before the end of the year and Senators will have an opportunity at that stage of debating the many issues that have been raised here today.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without recommendation, received for final consideration and ordered to be returned to the Dáil.

Business suspended at 1.30 p.m. and resumed at 2.30 p.m.