During my contribution to this Bill before the Easter recess I had not concluded my remarks. Down through the years many people involved in farming and in the agri-business generally have been concerned about the amount of land that is under-utilised and have considered ways and means of achieving greater land mobility. Consideration has been given from time to time to the question of how much of this under-utilised land could be put into the possession of younger and better-trained farmers in the future. These are the sort of considerations that have resulted in this Bill being before us, a Bill which deals with removing the legal obstacles to longer-term land leasing while providing safeguards both for the lessor and the lessee.
Because of the traditional and dominant attachment to land in Ireland, leasing has some obvious and very important advantages. It allows for a situation of continued freehold ownership and it provides for longer-term planning and development at relatively low cost. In addition, it would allow the lessee to use for development purposes capital which he might otherwise be obliged to use in purchasing land. It would provide also for reliable and reasonable secure income for the owner of the land.
It is estimated that there may be as much as 3,500,000 acres of land which would fall into the general category of being under-utilised. It is estimated also that close to 1 million acres of land is let each year and that about one-third of this is rented to the same farmers during a period of five years. This must be the target if any land leasing policy is to be successful. If the policy is to succeed, land that is being rented now should be the target from the outset. It is vital that the effort to encourage leasing succeeds. That is why we on this side of the House are prepared generally to support the Bill but as I indicated on the last occasion we are disappointed in that the Bill lacks the kind of teeth we had been expecting the Minister to include in it.
While the Bill removes the legal obstacles and provides for certain safeguards, it does not provide financial back-up or incentives to people who might intend becoming involved in this business. Neither does the Bill address the question of the tax disincentives that are inherent in our income tax code and which will continue to act as a barrier to any significant progress in land leasing.
I am not blaming the Minister of State for this situation. Most of the statements he has made up to now covered a far wider ambit than is covered by this Bill. Obviously, therefore, he has been unable to convince his colleagues of the necessity to provide in this legislation the incentives that would ensure its eventual success. If we are to proceed on the basis of the Bill before us, I regret to say that the much-lauded, highly-publicised and very considerable propaganda that has been thrown about in the past 12 months will not yield the kind of results that most of us wish for.
The fact that so much of our land is under-utilised and that we have such a unique dependence on agriculture make it imperative that all our land is utilised to the full. We should be glad to support measures that would provide the incentives to make this possible in the future.
The original farm retirement scheme was availed of by fewer than 700 farmers. In other words, it was an abject failure. However, the lessons that should have been learned from that failure have not been learned or at least have not been taken into account in the preparation of this Bill. The scheme failed because farmers were afraid of losing the old age pension and ancillary benefits that can be enjoyed in the context of the existing farm retirement scheme. To all intents and purposes the old age pension is index linked. It may be very difficult to provide for a scheme that will incorporate all the various safeguards but in the interest of the success of a land-leasing policy it is fundamental that some cognisance be taken of the anomalies in the tax and social welfare codes which act as disincentives to retirement. We are all at one in wishing these measures success. There would be a fair share of agreement right across the political scene and in the media as well as among people in the co-operative movement and in the farming organisations for any measures taken to encourage farmers to retire. Without the back-up and the necessary incentives, all the initial impetus will be lost. That is now the general feeling.
It is a rare occasion to have before either House legislation dealing with land. It is vital that on this occasion we do our best to take measures to break the traditional attachment to land and to remove the obstacles which up to now have reduced the contribution of our natural resources to the national cake. Perhaps we do not appreciate the momentum and activity on our farms which would be possible if we had better trained and better educated farmers and low interest rates. It might not be feasible to incorporate such developments in a Land Bill but we should try to ensure that all the related aspects are tied up in a way which would make for some progress in the future.
With regard to leasing there are one or two matters to which I would like the Minister to refer. These matters have been put at various meetings around the country because while land leasing may be presented as the panacea for all land mobility ills, most of us are realistic enough to know that it can only operate where an existing unit is operating at its limits and where there is adjacent land available which can be operated as a total unit. To suggest that land leasing will solve the problem of landless young people who want to go into farming is to totally exaggerate its import on the land scene.
Of the farmers who are in financial difficulties at present, it is estimated that over 20 per cent purchased land. Therefore, a very considerable number of farmers who did not actually purchase land are in serious financial difficulty. How then could a young person go into farming when he would have to provide the capital to lease and to develop the land, to purchase the stock, to meet his repayments and to have some sort of a reasonable standard of living? A cursory glance at that situation will indicate that that is not on, that it is another and a wider question. Land leasing will work only if there is a fully committed operation and if land becomes available adjacent to that farm which can be harnessed to the total development. Will lending institutions regard land which is leased in that way as security for additional capital that would be required by a farmer to purchase additional stock or even retain stock which he would otherwise be disposing of?
When a seven-year term lease expires it may not be possible for the lessee to renew the lease. How will he be affected in relation to income tax laws when, at the end of his lease, he may have to dispose of his additional stock, may not have the land available to him although he would be anxious to continue farming? The owner will also want to know what his position is at that time. There are other questions relating to all this with which I am not going to bore the House. It is understandable that we want to think this whole scheme through, look at the final position in circumstances like that and to remove the kind of fears which people, unquestionably, will have. We will not succeed in getting this scheme off the ground unless we attempt to do that in a fairly detailed way.
We have to have a simplified way of determining a fair rent and there must be provision for a review of these rents. The Bill must be able to give adequate security of tenure for the duration of the lease and reach agreement on the improvements that can be undertaken. We must also have agreed compensation for the improvements on the expiry of the lease where these improvements have enhanced the value of the holdings, and there must be an agreed system of arbitration to deal effectively with any disputes that arise. One can envisage situations where arguments can arise in all these areas and it is important that we have them fully teased out with all interested organisations, the co-ops and others who are involved. I am glad that there is a fairly keen interest in this but it is vital that these questions are dealt with in a detailed way and that we do not have the kind of scramble that could emerge in a few years if we do not properly tease out the difficulties that could arise between the lessor and lessee.
The immediate target is the land under the 11 months system. Many of the farmers who operate this system and who rent their land are happy enough with the situation. Many of them qualify for reduced old age pensions and have other benefits. We have to encourage these people to look positively at the question of longer-term leasing. We have to remove the fears, justified or otherwise, which they have in relation to these lands. In my earlier contribution I referred to the number of farmers who do not have any direct heirs but I subsequently learned that even many farmers who have no direct heirs considered leaving their land or possessions to some individual. They have already considered what they might do with this land in a few years or a year from now. If they have matters like that to consider it is difficult to see how, in the intervening period, they can be encouraged to release this land and make it available for land leasing. They will be afraid also of the impact that it can have on their old age pensions in relation to income tax or other difficulties that they might encounter. All these barriers have to be overcome by the lessee who might prefer to purchase land. If he has any available capital he might prefer to purchase outright. For him the attachment, the need, the want to own the land outright is paramount. He has to be encouraged to consider land leasing and to use the money which he would normally require to purchase the land to increase his stock and to develop the land available to him.
For all of these reasons we will need an attractive scheme, backed up by the Government, by ACOT and the co-operatives, before any real impact will be made in this vital area. The Minister has taken the first step, but it is a pity that he could not get agreement from his colleagues to introduce a more wide-ranging Land Bill which would tackle the land question in a more meaningful way. We would have been very happy to support measures to eliminate speculation in land purchase, to limit the area of land which any farmer can own, and to support group purchase of land by smaller farmers. A start has been made in this area and the Minister and the Land Commission are to be congratulated.
For this scheme to be more effective we need to have available to farmers, and particularly farmers in the smaller and medium sized range, funds at lower and static interest rates. We would have been happy to support a Bill which extended and revamped the EEC farm retirement scheme. We would be especially interested in supporting a Bill which would help to extend that scheme to family transfers. In the main we are disappointed with this Bill. It is a first step but it could well be a damp squib unless the kind of inbuilt incentives we have referred to are introduced. I was glad to hear one Senator from the Government side supporting this view. All those involved in this area are genuinely interested in trying to ensure that the measures taken now will make available the many acres of land that are under-utilised today. For that reason the Minister will have the support of the Fianna Fáil Party. We will be bringing forward amendments and new sections on the Committee Stage.