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Seanad Éireann debate -
Wednesday, 9 May 1984

Vol. 103 No. 11

Land Bill, 1984: Second Stage (Resumed).

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

An lá faoi dheireadh bhí mé ag caint ar an mBille seo nuair a chuir mé deireadh leis an díospóireacht. Bhí an chuid is mó de mo óráid tugtha agam ach tá cúpla focal eile le rá agam inniu. In discussing the Bill the last day I had not reached the stage where I wanted to ask the Minister to ensure that this Bill gets off the ground by making sure that the lessors, those who have land to lease, will not suffer any disadvantage when it comes to social welfare benefits. The one snag that hangs over land questions in Ireland is that people are inclined to hold on to what they have in case they do not have an income of some sort or other. Many of these people are the people who are going to be in the category of getting social welfare pensions. I would like to ensure that those who are in the position of leasing their land will feel very confident and will be encouraged to do so not just on a negative line. As well as that, I feel that many of the people who will lease the land will be young farmers, farmers' sons perhaps who will not have working capital and who will have to spend more than the ordinary farmer because much of the land they will be taking over will be land that has been neglected down the years. I would think that it could be a help to them if they were given an incentive, perhaps an income tax incentive if they are at that stage, that would encourage them to take the risk of taking on land that would demand extra expenditure and extra care. They are the two main points that I wish to raise today.

I hope this Bill will help in disadvantaged areas though I am not too sure whether a disadvantaged area is a place to benefit from land-leasing. But I would ask the Minister again to ensure that the whole concept of what constitutes a disadvantaged area is looked at because low incomes and falling population, as I said on the previous day, is not necessarily the real test. People are building houses in areas that are disadvantaged. In my own area, in the plateaux, Castlecomer, which is very high and where, as a result, there is more rain, where the weather is cooler, where growth is later in the year, people are building because they work in industries in Carlow and Kilkenny. If the Minister could get that changed he might help a lot as well to encourage people to even lease land there because there would be better grants there.

In conclusion, one of the Opposition speakers said about our Minister some time ago that he was like a train driver with no train. That was the first lesson I got on why CIE have failed, because obviously since the Minister is the first Minister to change the laws of 1870 and 1881 we must have had no trains and certainly no train drivers since we founded the State. I should like to compliment him at least on taking on the very difficult job of driving a train without having a train and tackling what is a very major problem. I hope that his work will be rewarded. It is very easy to say that the Bill is not as imaginative as people would need but at least we are taking on Bills of 1870 and 1881. I wish the Minister the best of luck in building up a head of steam and doing 60 miles an hour to help the land question in Ireland.

I do not propose to say very much on this Bill. I regard it as one that is heading for a sudden end. I am not blaming the Minister of State for this. The Bill, as it is proposed, will not work for a number of reasons. The first reason is that if you take a farm of land which is leased to somebody, no doubt the owner of that farm will want to get a realistic income from it. Where is there going to be sufficient incentive for a farmer to be able to give a reasonable leasing value for a farm of land to the owner and still have sufficient funds left for the necessary capital investment, to develop that farm and to stock it? This is where the major problem will arise. The Bill itself may have a number of good points but this is the main point — that it will mean that the smaller farmers who have not the capital available to them will not be in a position to take those seven-year leases on other farms. The other side of it is that a farmer who leases and then has to go into the bank and borrow money at 15 per cent to stock the farm or to improve it may find at the end of the seven-year lease that the lessor will no longer renew the lease. What is he to do with the cows that he has bought to put on the land?

Recent developments at European level will act as a disincentive to farmers to engage in this type of expansion. We all see that the Common Agricultural Policy is under threat with regard to the super levy. The fact is that if a farmer who is engaged in dairying takes an adjacent farm of land and increases his milk output by over the limit, he will put himself in a situation where he will be penalised. The Minister will not be in a position to provide any exemption to that farmer to allow him to expand and to make use of land which in many cases is not being used to its full potential. Indeed the 11-month system is totally against good farm management, because what happens is that farmers take the land knowing that if they make any improvement to it they will face the possibility of somebody else coming in and reaping the benefit by putting up the price. The present situation and the present threat to the Common Agricultural Policy means that there will not be any incentive. We hear rumours of threats to beef production for next year. What are the farmers engaged in that activity to do? Farmers will expand to the edge of the guideline but will not go any further. This seems to be the basic problem, and it will be the problem until such time as they are guaranteed that they will get the maximum price for what they produce. We have seen recent happenings with regard to incentives to farmers, for instance, the question of the lime subsidy. The first thing a farmer taking land on a seven-year lease would have to do would be to apply lime and manure to the land. Now we see that the lime subsidy is being withdrawn.

The Government who had made a provision in their budget have not yet committed themselves to a reduced subsidy for lime and fertilisers. There is, too, the withdrawal of the AI subsidy. That is another disincentive to farmers to expand. What we are heading for here is finding that this scheme with all its good intentions will fail due to the lack of finance available at a reasonable cost to the person who would lease these farms and try to improve them. We are talking about farms that are not capable of generating two incomes. People working an extra farm of land must have the necessary financial incentive if they are to see something reasonable for their work. It is an old Irish saying that one is as well to sit idle as to work idle. That is the sort of situation we are heading for with regard to this Bill.

The Minister has tried to tackle the problem but a more beneficial system would have been to tackle it possibly through adjustment in the Land Commission structure which he proposes. There should have been developed a system whereby these farmers would be given money at reduced interest rates to purchase those farms and develop them in the secure knowledge that they were the owners of those farms and were not going to find themselves outside the gate after seven years. Seven years, while it may seem to some people a long time, is a very short time in regard to farming.

What I would say to the Minister is that in view of the present situation he should go back to the Department and ask them to have another look at the Bill, to see if the necessary finance will be available to provide the incentive that is needed whether by means of prices for produce or by means of subsidy towards the development of these farms. It is obvious from the Bill that the people who will take this land are not the small farmers whom the legislation is designed to help, because they will not be in a position to raise the finance necessary to carry out improvements or to stock the farms. Those people who will take the long-term leases will be the large farmers who will be in a position to move and to carry the necessary capital investment from their own resources.

These are the major problems that face us with regard to land leasing. They are bigger problems than the problems of land ownership, which has been a major bone of contention. What we will see coming from this Bill is a position in which farmers will not take long term leases due to the uncertainty and the unstable situation with regard to agriculture and due to a fear that at the end of the lease, having spent six or seven years developing and improving a farm, it may be taken from them by the lessor who will have a nephew, a niece, a brother or a sister who will come in and say "hold that farm for me" and put the tenant on the road.

I join with other Senators in welcoming this Bill and indeed in welcoming the policy which underlines it — the policy of this Government to ensure that the natural resources of this country are used to the maximum. In great measure that is what points to the difference between the policy of this Government in many areas and the policy of their predecessors. This Government believe that the natural resources of this country must be used to the maximum and that people who have the opportunity of using these natural resources are given every assistance to use those resources properly, whether they be in the area of forestry, of fisheries, peat development or above all, our most important resource, the land. This Government by giving every support possible will continue to ensure that people will use that resource constructively and properly.

Despite what the previous speaker said, I look on this Bill as being one measure along the road in that direction, one measure which is an indication of this Government's commitment to ensure that our most important natural resource, namely our land, can be used and used properly. The word "cobwebs" has been used. We must wipe away the cobwebs from the structures surrounding the land and the use of land. We must make land a little more free to ensure that those who have the ability to use it do so properly. The Taoiseach was reported in The Irish Times on 31 March 1984 as speaking the previous day at the annual conference of the Regional Studies Association in Dublin when he spelled out the position of the Government regarding land. I quote:

"We cannot afford to see it lying idle or under-utilised on any wide scale."

Too much of our land was not being used productively and the first objective of any new land policy must be to promote the most efficient use of land. A greater degree of land mobility was the necessary first step.

That remark from the Taoiseach underlines the policy behind this Bill. The Minister of State must be complimented for the work he has undertaken in 18 months in office, not merely in promoting this Bill but in promoting many other measures which will see legislative form in the months to come and will allow greater mobility in land and reform a land structure badly in need of reform.

It may be no harm to refer to the editorial in The Irish Times of the same day, 31 March, and I quote:

The scheme of medium term land leasing which the Government has introduced should go a considerable way towards achieving this aim. It will encourage a greater mobility — a passing of underused land to active, adventurous men and women, and hopefully it will end the short term pernicious letting of acreage, which leads to ill use and impoverishment of the soil.

Listening to the last speaker I understood that he approved of the 11-month system. I come from the same part of the country as he comes from and I regard the 11-month system as one which leads to nothing but damage to our land. People enter lands on the 11-month system and they do nothing to fertilise those lands or to maintain them in any way, because their tenure there is so short and their aim is simply to get the maximum advantage out of the lands which they occupy. This measure is important in that it facilitates the leasing of land for agricultural purposes for a reasonable period. That is to the advantage of the tenant and the owner of the land in that the land which is occupied is not damaged in any great way. I also welcome the amendments to other legislation contained in this Bill which streamline procedures and remove certain statutory inhibitions from the letting of land.

Particularly in the west in many circumstances it is not convenient for the owner of land actively to farm that land, especially in a part of the country where we have a high proportion of farmers who are not active because they are elderly and perhaps unmarried and have not had the benefit of up-to-date agricultural education. In many of these circumstances there is a genuine fear that if the land is let on anything other than an 11-month system the owner of the land may never regain possession of it. There is a fear of the creeping Land Commission official — I mean simply the Land Commission official who cannot be seen. There is a fear that a notice of inspection will be served and that somebody who lets his land may ultimately lose ownership of the land.

The great benefit of this Bill is that if the powers which it introduces are properly understood people in the west and other parts of the country where we have this type of land owner will appreciate that that danger is no longer present. That must be accepted, bearing in mind the whole history of land in this country. All of us are aware of the importance that the Land Acts played in our history, particularly in the 19th century. We are all aware of the tremendous grá which most people in this country have for the land. We are all aware of the desire that people have to hold on to land which they have and not to lose it under any circumstances. That gradh and historical background must be understood by any Government trying to reform our land structures. If we try to reform without understanding that and the history of Irish land, then we will get nowhere. It is no harm to remember that it is only 110 years since Michael Davitt and Charles Stewart Parnell were coming together to fight for independent ownership of Irish land, and that is a very short time ago. We all know and still meet people who have very definite memories of the land war period.

The proposals contained in this Bill are good when, to be realistic about it, the Land Commission at the moment have not very much money to acquire land. Last year we passed a measure in this House to make more funds available to the Land Commission, but I think that that measure was academic because the money is not there to allow it to be implemented.

Reference was made by Senator Ellis to the fact that young farmers at the end of the seven-year period would be more or less on the road. I do not accept that. If we develop the concept of land leasing and if the market for land leasing increases — and it should increase — then there would be more land for leasing on the market. Any young farmer who would lease land for a period, make use of it and gain by his experience would then be in a position either to buy land for himself from the money he has made during his lease period or to lease other land.

The role of the Land Commission in this is important. The Land Commission are a body who have come in for a great deal of criticism, some of it justified and some of it unjustified. The Land Commission must make people aware of what is behind this idea and ensure that there is an adequate supply of land on the leasing market. It is extremely important that the Land Commission, as the relevant agency, go to the farmers, the landholders who have land available, explain to them what is behind this measure and encourage them to put their land on the market so that the owner of the land is aware that at the end of the day he will not be losing what he and his forefathers fought so hard to achieve and to maintain. Perhaps the ACC could play a role here to ensure that funding is available, and the Government and the Minister could negotiate with them to ensure that a suitable package is made available to tie in with this scheme. Reference has been made by other speakers to the financing of this scheme. The scheme of land leasing will work but money must be made available to finance it.

I have made reference earlier to the question of elderly farmers. One of the problems that this scheme will face is the danger that elderly farmers may feel that by leasing their land and obtaining a substantial rental income from it they may lose out on social welfare benefits. That is one of the reasons why the farm retirement scheme which was introduced about ten years ago did not prove as successful as it should have proved. Some steps must be taken to ensure, on a trial basis at least, that income from land leased for a certain period would not in any way damage certain categories of land owners' social welfare entitlement. If it debars them from social welfare entitlement then I can see this scheme running into certain difficulties and it will not be successful.

Senator Ellis said that large farmers would be the people who would lease land and that the young farmer would not have the opportunity to do so. From the reading of the Bill it seems to me that the power of the Land Commission under section 12 of the 1965 Land Act still exists. I would like the Minister to clarify this. Will every lease still be subject to Land Commission consent? If every lease is subject to Land Commission consent I would like to see the Minister establishing pretty general criteria which the Land Commission would adhere to in giving their consent for land leases. I would certainly be worried if the very big farmers were involving themselves in leasing and the provisions of this Bill were not being made available for the younger and less well off farmer. If the power contained in section 12 remains then I would like to see criteria being established by which consent would be given.

It is important that the role of the Land Commission in this be carefully stated. There is a fear that if land is leased or is used by anybody other than the registered owner, the Land Commission will serve an inspection notice and take steps to acquire the lands. I would like the Minister's view on this and his assurance that in the event of anybody leasing land, at the end of the lease period the Land Commission will not be coming around threatening the registered owner with a notice of inspection or a take-over of the land in question.

If we are to encourage the passing of land—perhaps this is slightly outside the scope of the Bill — and earlier transfer of land from one generation to another, certain areas of policy also need to be looked at. The Government have taken certain steps which might not have been helpful in that direction. I am referring in particular to certain stamp duty reliefs which have been effected by recent Finance Acts and budgets. The Minister, as the person responsible for restructuring of land and reform of land occupation, should take steps to ensure that certain provisions existing in the area of stamp duty, which are not encouraging to people to transfer in their lifetime should be looked at once again.

It is important that the Land Commission procedures in so far as the compulsory acquisition of lands is concerned should be reformed. They are the most archaic, unworkable and ridiculous procedures existing. I say that as a solicitor who has had many dealings with the Land Commission examiners branch dealing with matters of this nature. Recently I had the opportunity of attending a meeting of the law society with other Oireachtas solicitors. Dealing with this Bill, that point was raised very trenchantly. Totally outmoded procedures which exist in the Examiners Branch of the Land Commission should be changed. Many people whose lands have been acquired by the Land Commission complain that they have been held up for years, not getting their land bonds. The reason for delays frequently lies with legal people, but these delays in turn lie with unworkable procedures. Everybody would be well served if these procedures were reexamined.

I am a little curious about section 4 of the Bill which relates to land purchase annuities and gives the Minister for Finance and the Minister for Agriculture power to waive annuities of less than £2 in any one year. My understanding was that annuities of less than £2 had been abolished by the Land Commission approximately two years ago and that everybody with an annuity of less than £2 received a letter from the Land Commission informing him that he had received automatic redemption without paying anything. Why is this provision now contained in the Bill when something of that nature has been operational? Secondly, I wonder why the £2 figure is contained in the Bill. The Minister might consider an amendment on Committee Stage which would increase the £2 to another figure which would give future Ministers in a few years time, with increasing inflation, the power to consider the abolition of annuities which at that time would be of a very small amount.

The payment of an annuity by a landholder creates a feeling that is less than a fee simple owner and that the Land Commission have a power which they do not have. It would be no harm if the Minister or the Land Commission could have a circular sent to all occupiers of land in the country indicating the redemption value of their annuities at present and encouraging people to purchase out these annuities. A substantial section of the Land Commission in Michael Davitt House in Castlebar is concerned purely with dealing with the collection of annuities. The sooner these things are cleaned up the better.

I welcome section 7 which deals with the dissolution of the Irish Church Temporalities Fund. I understand that when the Government of Ireland Act was passed in 1920 the fund existing at that time was apportioned as between the Irish Free State, as it then was, and the Six Counties. I am wondering as a matter of curiosity if the fund still exists in Northern Ireland. This seems to be another area where our laws are now changing and I wonder if the laws there have changed in the same direction.

I welcome the Bill as one of the measures the Minister is taking to reform the whole land structure. He must be complimented for introducing it and for the steps he has taken in relation to the division of commonages which will also make land available and ensure that land as a natural resource is more properly used.

I welcome the opportunity to make a brief contribution to the debate on the Bill. The explanatory memorandum which was circulated with the Bill states:

As part of its overall land policy the Government has launched an intensive programme to promote and encourage leasing so as to get under-utilised land into the management of those who will use it to optimum advantage.

I must say at the outset that I am disappointed that the Bill does not contain any incentive which will promote and encourage leasing. The main purpose of the Bill is to remove from the Statute Book or to amend certain provisions of previous Land Acts which could be regarded as obstacles to leasing. It is also proposed in the Bill to streamline some Land Commission procedures, thereby facilitating re-vesting and the exchange of land. The Bill further provides for the modification of section 80 of the Building Societies Act, 1976 by providing that the existence of charges on land in favour of the Land Commission should not debar a building society from advancing a mortgage on a property so charged. All the proposals contained in the Bill are desirable and worthy of support, but it is disappointing and to be regretted that the Bill does not contain a single positive incentive to promote or encourage land leasing as a standard land management practice. The Bill could be considerably strengthened by the inclusion of positive incentives which would encourage leasing.

It has been said many times during the course of the debate that land is the greatest natural resource we have and that agriculture is of fundamental importance to the economy. It is estimated that 3½ million acres is under-utilised and that of that 3½ million acres approximately 1 million acreas are let on the 11-months system and the remainder is being farmed at a very low level of efficiency, mainly by elderly farmers who in most cases are unmarried or without direct heirs. On the other side of the coin we have a considerable number of trained, energetic young farmers who are anxious to start up in farming and who, because of the very rigid land tenure system, have very little opportunity to do so. I agree that it is very difficult at present for young, trained farmers to get an opportunity to start in farming, particularly if they are landless at the moment. The only opportunity that such a young person has to get land for farming is through inheritance, purchase or leasing.

We must have a land policy which will encourage the greatest possible degree of land mobility through each of those three sources. Incentives could be provided which would generate greater mobility of land through inheritance. The most effective incentive that could be provided which would generate greater mobility of land through inheritance. The most effective incentive that could be provided would be an effective or attractive farm retirement scheme. The farm retirement scheme that we had was an absolute failure. First of all, the fixed sum which was paid lost its value through inflation as the pension which the retired farmers received lost its value. The farmers, of course, lost their entitlement to social welfare and health benefits, medical cards and so on, with the result that farmers who retired under that farm retirement scheme very soon saw that their neighbours who had held on to their land, had qualified for the old age pension and were qualified to hold medical cards, were better off than they were. The farm retirement scheme we had was a total failure, but an attractive farm retirement scheme could be a great incentive to making more land available.

An attractive farm retirement scheme could encourage the phased transfer of ownership and management from elderly owners to prospective heirs, and the earlier transfer of lands, particularly if it were linked to some sort of establishment grant for the young farmer setting up in farming. If the farm retirement scheme were attractive enough and if an attractive establishment grant were available to a young farmer many present owners would be prepared to release their land either immediately or on a phased basis to their prospective heirs.

The chances of a young, landless farmer being able to start up in farming through acquiring land by purchase on the open market is very remote in that the return from land is low in relation to the cost of land. Even though land prices have dropped somewhat in the last few years they are still very high in relation to the income that farming can generate. However many progressive small and medium farmers need additional land to carry out their development plan. For farmers who have already achieved a high level of performance on their existing holdings, the best opportunity to get extra land is either through purchase or through leasing. Aid should be made available to enable or assist such farmers to compete on the open market for the very small volume of land which becomes available in that way. A land purchase subsidy should be devised which would enable them to be competitive for land which might become available adjacent to their existing holdings.

I welcome the encouragement that the Minister has given to the idea of group purchasing although I feel that, particularly in the west, the opportunities for group purchase may not be very many. However, where such an opportunity presents itself every assistance should be given to the group of farmers involved, particularly when, through the group purchase of land which comes on the market, fragmentation of existing holdings can be eliminated. Fragmentation is a very great inhibiting factor of development, particularly where the amount of land in the farmer's possession is limited.

I agree with the Minister that leasing offers the best prospect for young, energetic farmers to start up in farming. Leasing has definite advantages for both lessor and lessee. The lessor is assured of a fixed income which will, to some degree, keep pace with inflation and for him leasing has very definite advantages vis-à-vis the 11-months system. As far as the lessee is concerned, a much smaller investment is involved than if he becomes involved in purchase of land: the investment is phased over a number of years and he has a certain fixity of tenure for the term of the lease.

I welcome the assurance that the Land Commission will not become involved in the acquisition of land which is made available for leasing. In this regard I suggest that the Land Commission might keep a register of lands which would be available for leasing in the respective Land Commission office areas, and that an assurance would be given to the people involved that if this land was on the Land Commission register of land available for leasing there would be no question of acquisition proceedings being instituted in respect of that land. Some of the land which might in favourable circumstances become available for leasing will be owned by people such as widows with young families. That land will be available for leasing for only a certain number of years and subsequent to that period a member of the owner's family may then return to farming it. Therefore, it would be in everybody's interest if the Land Commission were to be the body charged with keeping up to date a register of land available for leasing, but I emphasise that very positive assurances must be given that there would be no question of acquisition proceedings being instituted in the case of such land.

I do not believe that a climate of confidence exists which would encourage leasing at the moment. We hear and read every day of the number of farmers who are in financial difficulties. I believe that most of the land which will become available for leasing will be in a very low state of fertility and will require fairly big investment of capital in order to bring its fertility up to what it should be. Therefore, a certain amount, probably a considerable amount, of borrowing will be involved by the young farmer who is leasing the land. With all the talk of farmers in financial difficulties there is a reluctance on the part of even the most energetic young farmers to become involved in borrowing.

We have problems with the disease eradication schemes because when an outbreak of disease occurs the level of compensation is so low that great financial problems are created for that farmer. It would be an incentive to leasing and an incentive to the restoration of confidence in farming generally if the level of compensation for reactor animals under the disease eradication scheme were brought up to what it should be.

There is a lot of uncertainty surrounding the operation of the Common Agricultural Policy, and farmers, particularly those in dairying, are not at all confident or certain as to what the future holds. Then there are tax disincentives in operation too, and in the past few weeks we have seen the withdrawal of the lime and the AI subsidies. All these factors have created a lack of confidence in farming, and while that lack of confidence exists I cannot see leasing taking off.

I believe the Minister is in earnest and genuinely wants to encourage leasing. I have heard him speak on this matter on a number of occasions and I know he has a very genuine interest in seeing every acre of land utilised to its maximum potential and every genuine young farmer being given the opportunity to put his skills to work. However, much more will have to be done to encourage leasing than is being done in this Bill.

A realistic farm retirement scheme will have to be introduced and social welfare and tax incentives will have to be provided for both lessor and lessee. In the case of lessees an establishment grant would be a major incentive. Finance for development at realistic interest rates is absolutely essential, and there should also be tax incentives to encourage young people to become involved in leasing. If the right incentives were provided — I accept that in order to provide these incentives finance would have to be made available — greater land mobility would be encouraged through leasing and land would come into the hands of people who would farm it more efficiently and productively than it is being farmed at present. If that were to happen there would be a considerable increase in agricultural output, with consequential benefits for the economy.

Whereas everything that the Bill contains is desirable and worthy of support, I am disappointed that incentives which we were expecting are not contained in the Bill.

As a rural representative I have taken a keen interest in this whole subject of land leasing ever since it was introduced and mooted some time ago. I compliment the Minister on his initiative and I am sure that a lot of this initiative stems from that fact that he is a rural TD himself and is very much aware that so much of our land is lying idle. This is probably one of the main reasons for the introduction of this Bill, and there is a general awareness among all of us that if we are to reach our potential as a nation, all our natural resources will have to be utilised.

Having looked at the concept of leasing for the past four weeks, I am very struck by the fact that our EEC partners have a very comprehensive system of land leasing, especially in France where the percentage of owner-occupied land is just 51.8 per cent and the percentage of tenant-occupied land is 45.9 per cent. In Belgium the percentage of owner-occupied land is 28.6 per cent and the percentage of tenant-occupied land is 71.4 per cent. It is worth noting from the figures of the other EEC countries that Ireland has the slowest rate of change in the number of farm holdings and that the rate of change is five times greater for countries where long-term leasing is established than in Ireland. Most of the 8 per cent of tenancy in this country is under the conacre system, and this is probably the least satisfactory form of land tenure.

The law which governs the relationship between the owner and the tenant is quite complex in its nature. In reading the Dáil debate on land leasing when the then Minister for Lands, Mr. Childers, made a genuine effort to introduce a concept of land leasing, I was very much taken by the fact that James Dillon, the Opposition spokesman on agriculture, pointed out that this could bring back landlordism in some form. Some people here today expressed similar sentiments. This was a very genuine fear. Any man giving a long-term letting of his land was thereby putting the security of his farm into jeopardy, and people were quite genuine about this fear. Farmers were fearful that in parting with their land the tenant might try to take control of the land, and in some cases farmers who leased land on a long-term basis had this experience.

Since the 1936 Land Act, a tenant taking a letting of land by law could not establish ownership according to that Act, but as we know he could avail of other tenant rights hidden away in the Land Acts of the late 19th century, and these are set out in the explanatory pamphlet. For example, a tenant could claim for compensation for improvements or disturbance and he could demand the right to sell his tenancy. One of the reasons this Bill was introduced was to remove these inhibiting forces. Of course these laws were meant to protect the right of the tenant, but now that most of the land is owner-occupied they are no longer needed. These laws defeated a legitimate scheme to release the land that is now frozen.

One of the main reasons why the 1958 initiative failed was that these old provisions could be invoked by the tenant to the discrimination of the lessor. The removal of these inhibitory forces will lead to the success of the present system.

Somebody has already mentioned that if this initiative is to be successful then incentives such as a good farm retirement scheme will have to be provided. Up to now attempts which were made to induce farmers to give over their land were relatively unsuccessful because the farm retirement scheme did not provide a good enough incentive. Two feeble efforts — and I must say they were mostly unsuccessful — were made in the 1965 Land Act and under the EEC Directive 160 in 1974. We can learn a lot from their failure.

Senator Mullooly mentioned that we will have to give the farmer proper incentive if he is to part with his land. The annuities should be far greater and should be indexed to the old age pension. Part of the income from the leasing should be tax free. There should be more flexibility in the qualifying age. If necessary, the pension should be given to retiring farmers at 55 years of age rather than giving dole to younger or small farmers. All acreages should be eligible to allow more land to be released. The present limit is 45 adjusted acres. As five million acres of our 12 million acres of land are owned by farmers over 55 years, we need to provide every incentive to promote the mobility of this land, thus improving both the holding structure and the age structure.

With reference to the whole concept of long-term leasing, I have first-hand experience of this myself as my mother has leased land on a long-term basis. While it benefits her it benefits the farmer even more. He had it on the conacre system originally. He is now inclined to invest more in the land by way of fertiliser and he has more respect for the land because he realises he has ten years in which to make it pay. That is the kernel of the problem. Up to now within the conacre system — we must remember that about 7.5 per cent, or almost one million acres, is in this system — land was run down due to the minimal use of lime and fertiliser. Also, generally speaking, all rotations were ignored and it discouraged the use of winter cereals. There was little long-term planning for the future development of that land because the farmer knew that he could be displaced at any time. With long-term leasing we could overcome many defects in the conacre system. Some of the main advantages would be, for example, that freehold ownership would be retained and it would encourage long-term development and planning.

Senators have mentioned capital already. More working capital would be available. The tying-up of capital is one of the worst aspects of land purchase. The young farmer would not have to lay out as much capital initially and he could spread the investment over a period of time. It would allow more flexible sizes within farms and it would help the whole transaction of buying and selling. It could also provide a secure annual income to the owner as in the whole concept of long-term leasing rent review clauses would be included. In long-term leasing any financial arrangements and obligations should be tied to the agricultural price index and consumer price index, and they should be easier to meet than mortgage payments. Long-term leasing favours the young and ambitious farmer who may not have sufficient reserves to compete with more established farmers for the purchase of holdings on the open market.

This whole concept of long-term leasing must initially compete with conacre. Farmers will be very slow to change over from the system of conacre unless adequate incentives are given to them. Whereas these incentives are not included in the Bill, I cannot see why they should not be given as time goes on. Conacre rent is treated as non-farm income. I am glad that the Minister has stated that in the social welfare code people on long-term leases will not be penalised, in other words the capital value of the investment will not be taken into consideration.

Senator Mullooly pointed out that financial institutions should encourage the setting up of a fund, enjoying tax concessions similar to those of the building societies, which would make relatively cheap credit available to young farmers leasing land, or else interest subsidies. This is a very important consideration, because one of the main inhibitory forces at the moment in land mobility is the lack of finance. The restriction of capital allowances to 30 per cent and the clawback of stock relief would also have to be reviewed.

If some of those measures I mentioned are not implemented the whole system of long-term leasing will probably not get off the ground. I am sure the Minister will look at the possibility of giving greater incentives now that he has removed one of the major obstacles, the legal obstacle.

The master lease, produced by the IFA and the AIB, would cover most of the framework for a good leasing system. Financial institutions and we, as politicians, must provide the correct environment in order to allow the system to take root and grow. I would advocate the setting up of some form of land tribunal, properly structured to deal with leasing agreements. This would be a positive step, and I would advocate that the country be divided into various regions in order to organise this. Many farmers could be better off, in monetary terms, if they either leased their land or sold it and invested the proceeds. That implies that there are social as well as monetary considerations, and we must consider this also.

To achieve the full potential of our land resources will require a tremendous transformation in the way land is used. Inevitably this must affect those who use it. Land acquisition should be thought of in terms of control of our land and not necessarily the ownership of it. Ownership is one thing but the Government or a State agency must have some say in the control of the land that people have. While not disputing the right of people to own land, there must be some onus on them to work their land and to use it for the good of the country. Control could be achieved by leasing. This legislation on leasing can satisfy the three Fs, and it will give a whole lease of life to the agricultural scene.

I welcome the opportunity to speak on this Bill. The purpose of this Land Bill is to promote and encourage leasing so as to get under-utilised land into the management of those who will use it to the optimum advantage. There is no doubt that there are vast amounts of under-utilised agricultural land, and the introduction of legislation to get this under-utilised land into proper management so as to achieve its full potential is most desirable. Does this legislation go the full way to ensuring that all our under-utilised land will from now on be managed by young progressive farmers? Will the proposals set out in this legislation build up a momentum of demand for leaseholds? The proposed legislation does something to remove legal obstacles to land leasing. It will prevent squatters' rights claims and will protect ownership.

Over 20 per cent of the land is working far below potential. It is in the hands of ageing farmers with no incentive or desire to push production to the maximum. At the same time we have a growing number of young people, competently trained in farming, willing to apply their knowledge but without the resources to run a farm. Therefore, to get land working to its full potential the objective must be to encourage owners, who are not working their land due to age or for some other reason, to lease their land on suitable terms. The Government must also establish conditions which will allow young people to enter acceptable leasing arrangements and remain economically viable. There must be incentives for the landowner to lease his land on long-term leases and there should be special tax exemptions for landowners to encourage such leasing. Support is also necessary for the young farmer entering a leasing arrangement, that is, establishment grants and interest subsidies which are generally available to young farmers in other EEC countries should be introduced here.

Senator Hourigan mentioned that interest rates for lessees of land should be in the region of 10 per cent. They should be much lower than this figure. A figure of around 5 per cent would be a better incentive to young farmers who have to rent land and attractive borrowing rates would be an incentive for them to develop it. When I suggest a 5 per cent interest rate, I mean 5 per cent for the duration of the loan. The borrower, especially if he is a lessee borrowing money to develop his enterprise, should get every encouragement to utilise the land he has leased to its full potential by way of an attractive interest rate that would not vary from time to time. The interest rate would remain steady for the duration of the loan. He would know exactly how much his repayments would be and they would not keep on increasing, as has happened heretofore.

There should be more land mobility in order that land would get into the hands of young progressive farmers who could farm it to its full potential. Young farmers, whether they be farming their father's farm or their uncle's farm or farming leased land, should get every encouragement to ownership. Lessees of land who are farming that land to its full potential should be grant-aided to buy land if land offers in their own vicinity which would be suitable. There should be a fund set up to provide a land purchase subsidy. Other Senators have promoted this idea. This fund would help the young progressive farmer to acquire land and would ensure that the mobility of land would be so effective that all the land in future would be in the hands of this type of farmer.

There should also be incentives for the farmer who is leasing his land, or the ageing farmer working with the help of his son or nephew to retire and transfer it to his son, or sell in the case of a lessee. There should be incentives for such farmers, who should have no fears of retiring. Retirement from farming should be made more attractive than at present.

The EEC retirement scheme introduced some years ago has been a failure. Under that scheme a farmer over 66 years of age has very little incentive to opt out of farming. I would suggest that retirement from farming should be made as attractive as staying in farming. The retirement benefit should be aimed at the relinquishment of management control rather than ownership of the land occupied, that is if the owner is anxious to retain ownership. While other EEC countries have contributory pension schemes for farmers, there is no such scheme in Ireland. Ireland is the only EEC country without such a pension scheme for farmers.

Most contributory pension schemes aim at retirement from work rather than from ownership. In view of the traditional Irish attitudes to land ownership this could be very important. Contributory pension schemes tend to be substantially higher than non-contributory schemes and therefore more likely to encourage retirement and thus stimulate land mobility. Where farmers are willing to transfer, the Minister and his Department should examine the introduction of some contributory pension scheme that would make retirement more attractive to farmers, especially farmers who are not utilising their land to its full potential and who would be encouraged to transfer the management of it to young trained farmers.

Debate adjourned.
Sitting suspended at 5.30 p.m. and resumed at 6.30 p.m.
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