Agricultural Credit Bill, 1987: Second Stage.

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

The intention behind this Bill is to make a number of amendments to the Agricultural Credit Act, 1978, which consolidated all previous legislation relating to the ACC and is the principal legislation governing the ACC.

The 1978 Act, which confines the ACC's lending activities to the agricultural, horticultural and fisheries areas, deals with the objects, constitution, functions and financing of the ACC and with the various charges which may be taken, not just by the ACC but by other banks, on land and other property as security for loans. Before proceeding further, I would like to give Senators some background information on the ACC.

The corporation was established as a State-sponsored body in 1927 for the purpose of providing a specialised credit service to agriculture, particularly long term credit. At that time, long term credit was not readily available from the commercial banks and it was intended that the ACC would fill this gap for farmers and farm co-operatives. Until the sixties, the volume of business transacted by the ACC remained small reflecting the general economic climate of those times, the traditional reluctance of farmers to borrow and the uncertainty of market opportunities in farming.

This slow growth in ACC's business is reflected in the fact that, in 1961, ACC's total assests were only £3.7 million while annual lendings were at the modest level of £0.8 million. Growing confidence in the agricultural industry in the latter half of the sixties changed the outlook of farmers and led to an increased willingness to invest. One factor which generated this increase in confidence was the prospect of Ireland's entry into the European Economic Community, with resultant improved market conditions and an increase in agricultural incomes. This change in farming had a major impact on the ACC. Business increased and a network of district offices was established as the corporation developed to meet the new environment.

The level of ACC's annual lending rose from nearly £5 million in 1965 to just over £17 million in 1972. This growth was partly the result of two pieces of legislation. The Agricultural Credit Act, 1961, increased the authorised share capital of the ACC, raised its borrowing limit, allowed it to engage in hire purchase lending and simplified the procedures for taking land as security for loans. The Agricultural Credit Act, 1965, enabled the ACC to take deposits from the public. ACC had up to then been funded by advances and equity from the Exchequer but, as a result of this new source of funding, ACC could expand its lending without drawing on the Exchequer. Thereafter, with the impetus given to farming by EC membership, business expanded with increasing momentum. New lending in the seventies peaked in 1978 at £132 million and total assets had reached £394 million by the end of the decade.

The high interest rates which were a feature of the earlier part of this decade and the restrictions on EC market supports brought about a difficult period for agriculture. Incomes fell and the confidence of farmers was eroded. The ACC, being dependent on agriculture, also suffered. New lending business fell to a low of £85 million in 1983. While it has increased again, reaching £162 million in 1986, this increase has been accounted for by new business in the corporate food processing sector and is not due to a recovery in the demand for credit by farmers. The development of the agri-business side of its activities was the result of a commendable effort to lessen its dependence on farmer lending and to give a better balance to its loans portfolio.

High interest rates and CAP restrictions which had reduced demand for credit by farmers also affected the ability of many farmers to meet their loan repayments. This, in turn, led to a need for increased provisions against bad debts and these provision adversely affected the corporation's profitability. The bad weather of 1985 and 1986 with its serious effect on farm incomes added to the difficulties farmers had in repaying loans. The need for increased profitability for the ACC is indeed the principal reason behind the Bill at present before the House.

As Senators will be aware from the annual reports and accounts which have been laid before the Houses of the Oireachtas, ACC's reported profits in recent years have been modest. The results for 1987 are not yet available as the audit of the accounts is not yet completed. The outcome for 1987 depends on the level of bad debt provisions but preliminary indications suggest that there will be insufficient profits earned by the corporation to absorb these in full. ACC's experience in this area is not unique. Indeed, it is the norm. Banks both in Ireland and abroad have reported in recent years substantial additional provisions against their farmer loan books. Having regard to the experience of other financial institutions it is not surprising that ACC may experience a loss in 1987 bearing in mind the farm income situation, the adverse weather of 1985 and 1986 and the fact that it is a single sector bank.

I would now like to outline the main provisions in the Bill. First, it is proposed that ACC should be empowered to lend to the non-agricultural area. Secondly, it is proposed to increase from £20 million to £35 million the statutory limit on ACC's share capital. Finally, it is proposed to increase from £10 million to £25 million the limit on the amount of loans in respect of which the Minister for Finance may guarantee the corporation against losses. I will now give some more detail on each of these provisions.

Section 2 of the Bill is divided into two parts, the first of which sets out the banking activities in which the ACC may engage on a universal basis. I wish to draw particular attention to the fact that these banking activities must be for such purposes as are determined by the Minister for Finance, after consultation with the Central Bank and are subject to such conditions as the Minister considers appropriate. The provision removes the restriction, contained in section 8 (1) (a) of the 1978 Act, of ACC's lending activities to the agricultural sector. The second part of section 2 limits the amount of non-agricultural lending which the ACC may do to 25 per cent of its business with the agricultural sector, or to such lesser amount as may be determined by the Minister for Finance.

There are a number of reasons for the proposal to permit ACC to engage in non-agricultural lending. New loan business will increase profitability by reducing the corporation's dependence on the agriculture sector and giving it a better spread of business. The corporation should also become more attractive to the general public as a deposit-taking institution. At the moment, while the general public may hold deposit accounts with the corporation, the corporation is precluded from lending outside the agricultural area. The change whereby loans may be granted for non-agricultural purposes should encourage more people to open deposit accounts with the ACC. This, in turn, should have the beneficial effect of reducing ACC's cost of funds and, in time, of reducing ACC's lending rates.

ACC's move into non-agricultural lending is not without precedent. The French bank, Credit Agricole and the Dutch Rabobank provide two outstanding examples of agricultural banks which have diversified while, at the same time, retaining a first-class service to their agricultural clients.

I should emphasise that this proposed new activity by the ACC will take some time to improve profitability. It is fully accepted by all concerned that the ACC should move cautiously until adequate experience has been gained in this new area. My Department will also be monitoring the situation closely. There are, as I indicated earlier, provisions in the Bill designed to ensure that non-agricultural lending by the corporation is strictly controlled. The power of the Minister for Finance to control the amount of non-agricultural lending within the 25 per cent limit specified in this Bill and to lay down such conditions as he considers appropriate will achieve two objectives. First, it will ensure that ACC will remain primarily an agricultural bank and will, therefore, be in a position to meet the demand for agricultural credit. Secondly, it will ensure that the development of non-agricultural business will be approached with due caution.

I should add that the ACC board and management are very conscious of the need to approach the new lending venture with due care and, like them, I am confident that it will prove to be a successful venture. The agriculture sector who are and will remain the corporation's core customers can only benefit from a revitalised and stronger ACC.

The second amendment is contained in section 4 of the Bill. The extension of ACC's lending powers was the original purpose behind this Bill but, because the limit on the corporation's share capital has been reached, the opportunity is being taken to propose an increase in the limit from £20 million to £35 million to take account of growth in the corporation's business since 1978 when the £20 million limit was set.

The question of whether additional share capital will be provided for the corporation is a matter which will be judged in the light of the corporation's needs and the other competing demands for resources.

Section 5 of the Bill provides for an increase from £10 million to £25 million in the amount of loans in respect of which the Minister for Finance may guarantee the corporation against losses. This increase is being proposed because the existing limit has been reached as a result of guarantees of £4 million and £6 million given in respect of the 1984 and 1986 accounts respectively to supplement the corporation's bad debt provisions in those years. The new limit is the present equivalent of the existing limit set in 1978. I should mention that, to date, no Exchequer money has had to be paid on foot of these guarantees given to the ACC despite the fact that the company has been in existence since 1927.

In conclusion I hope I have adequately explained the purposes of this Bill. If Senators have any problems with the Bill, I shall endeavour to deal with these in my reply to the debate. I commend the Bill for the approval of the House.

May I thank the Minister at the outset for the comprehensive detailed speech which he gave in introducing this Bill to the Seanad? Fine Gael support the provisions of the Bill which, as the Minister says, will allow the ACC to engage in lending, subject to certain restrictions, outside the agricultural sector including horticulture and fisheries. I welcome the opportunity to speak on it in the House this morning.

At the outset I would like to pay tribute to the work which has been done by the ACC over the years. Everybody will agree that they have rendered sterling service to the farmers and the farming sector in general. As the Minister outlined in his speech the corporation were established in 1927, specifically to cater for the long term credit needs of agriculture at a time when such credit was not readily forthcoming from the commercial lending sector. For many years the corporation had a modest profile and that, of course, was in line with the virtual stagnation of the agricultural industry and an almost historic reluctance on the part of farmers to borrow in what was a most uncertain climate — both actual climate and commercial climate.

Things changed with our entry into the EC and a general economic improvement changed the situation quite dramatically. Farmers were encouraged to develop and expand, to borrow in order to do so. The services of the ACC were greatly publicised and availed of by progressive farmers. District offices were established all over the country and were staffed with graduates in agriculture, specifically so that they could give specialist advice to those wishing to borrow from the ACC. In that period of time agriculture fared well. Individual farmers prospered and, as a consequent spin-off, the entire economy of the country benefited. We all remember that era with a certain nostalgia because things have changed so dramatically for the worse since then.

In recent years the position has altered considerably. Farming has declined. In particular over the past five years there has been a marked disimprovement. Currently farmers are feeling the squeeze. Many of them bitterly regret the halycon days and the scale and extent of their borrowing as they face a mounting burden of debt and pressure from hitherto benign sources of credit. The ACC and the commercial banks were equally caught on the hop by this downturn in the agricultural scene. Land prices soared and then they plummeted dramatically. The weather for a two year period was particularly bad — indeed it was atrocious — and there was a general economic decline. High interest rates prevailed and the Common Agricultural Policy imposed restrictions which had been undreamt of in earlier years. Many farmers faced receivership and farms which had been in family ownership for generations were put on the market. It was all very sad. Many people lived to regret bitterly the prophecies of bright economic futures which they had bought from over-optimistic advisers.

In saying all this I realise that hindsight is a most exact science and it is very easy for all of us to engage in that sort of review of events. I have had dealings, as I expect most of the Members of this House have, with farmers who have been caught in this plight. One wonders if, in some instances, banks over-reacted and moved too swiftly when it might not have been absolutely necessary to come down on them with such rigour and vigour. One is tempted to ask if it is moral to be flaithiúlach or generous in the good times and to withdraw support and finance peremptorily when the going gets rough.

I suppose that is a subject for another debate and morality in this country does not tend to hinge around financial matters. It is more usually seen in the context of subjects dealing with human sexuality. I question the degree to which the ACC and the other lending agencies exhibit the necessary flexibility and adaptability to cope with the new scenario. Perhaps greater emphasis should be placed on restructuring loans and new interest rates and allowing repayments to be made over a longer period of time.

However, to return to the Bill before us today, I welcome the new proposals to enable the ACC to extend and develop into the non-farming areas. It makes sense that if the agri-sector is not profitable at the moment it should be possible to diversify into more profitable areas — the Minister spelled that out. I also like the fact that the Minister underlined that there will be a certain caution in relation to the non-agricultural areas in which the ACC will involve themselves. I am also pleased to see that the Minister, in consultation with the Central Bank, will retain control over the activities of the ACC. That is as it should be. Perhaps the Minister, when he is replying to the Second Stage of the debate here in the House, would indicate the areas which he feels would be important, in other words where he sees the ACC spreading their wings, into which sectors in particular, what areas would be important and what areas he would envisage would be of prime growth for the ACC.

I cast my eye over the debate in the other House. There was much concentration on the bloodstock industry arising from the Killanin Report on the Commission of Inquiry into the Thoroughbred Horse Breeding Industry. I do not propose to go over that ground again here in the debate this morning. The question was asked as to whether the asset value of bloodstock could be used as collateral against borrowing. I wonder does the Minister envisage that the ACC will pick up the slack in this area and whether they are empowered to do so? Is land the only item that can be used as collateral or can valuable bloodstock — many people who have bloodstock do not have land — be used as collateral? I would welcome the Minister's clarification on this point.

The Minister made the point very well that the principal reason for bringing forward this legislation is the whole question of profitability, the need for increased profitability on the part of the ACC. It is proposed to increase from £20 million to £35 million the statutory limit on ACC's share capital. Finally, it is proposed to increase from £10 million to £25 million the limit on the amount of loans in respect of which the Minister for Finance may guarantee the corporation against losses.

In conclusion, I would like to say that I wish the ACC well in their new fields of activity. I am happy that the Minister will ensure that with a 25 per cent limit in the area of non-agricultural lending the needs of ACC's core customers — the farmers of Ireland — will be met and will in no way be eroded by this measure. Rather, by the increased profitability of the ACC the needs of the core customers will be enhanced and secured.

I welcome the Bill before us. In particular I welcome the provision which will allow the ACC to lend in areas outside of agriculture. The expansion, the range, the size of the lending activities, the new type of personnel and the new type of client the ACC will now be dealing with are to be welcomed. I have no doubt that the ACC will be able to demonstrate not only their commitment to the agriculture sector but also their ability effectively to serve the new developing needs. I wish them well in their endeavours in this new area. For them it will be adjusting to what are really changing circumstances in a very big way. That change, not just of the ACC but for other financial institutions, is likely to continue in the years ahead.

In the past it has been acknowledged generally that the ACC have had difficulties. That is common knowledge. As a corporation they found it difficult to adapt to the changing conditions of the past ten to 20 years. They were operating a very narrow base in the main dealing with the buying of land and taking deposits from a particular one type client, mostly the farming people. Certainly, it is my belief that the next decade will bring, as I said earlier, further change. It is common knowledge to all of us who understand and know the financial sector of today that it is being heralded already in the building society sector and in other financial sectors. The whole situation of banks, building societies and financial services institutions in this country has changed and will continue to change over the next few years. It would be very wrong indeed, and almost inconceivable, if the ACC were left behind in this now changing financial world we live in. For example, in the building society movement the greatest demand from the building society customers — that is once the industry is deregulated under the forthcoming building society legislation — will be to get books, money transmission and foreign exchange services. ACC cannot afford to be left behind. They must restructure and come in line with the other financial institutions.

Like the previous speaker I would very much like to congratulate the indoor and outdoor staff and the directors of the ACC. The Minister has given us an excellent background to the ACC and I certainly would like to pay tribute to them for the work they have done over the years. The reality is that when it was impossible for farmers to get credit from the main lending agencies the ACC clearly filled that gap in the financial markets and provided the credit which allowed farmings to expand.

This was necessary at the time and it clearly benefited not only the individual farmers but agriculture in general and in time, or course, the whole economy of this country. In the meantime, as other speakers I am sure will also mention, I appreciate that as a result of what has happened and the difficulties that have occurred, farming is no longer — and the Minister has touched on this — the profitable activitity it was in the late seventies and the early eighties. There has clearly been a downturn in profitability. As the Minister again pointed out, 1985 and 1986 were two years of extreme bad weather. There is clearly a decline in land values. You have this combination of the items I have referred to, bad weather and lack of profitability and perhaps a lack of confidence also, and this has given rise to problems of arrears and problems of bad debts.

In the late seventies when land prices rocketed — and indeed there is no doubt that they did rocket because at that time agricultural land was selling for £3,000 or more per acre — the motto clearly seemed to be "Buy land at any price". Money was freely available. Whether it was from the ACC, or from the banks, or from other financial institutions, it was there. The availability of money, if you like, has probably caused some of the problems of today. In the meantime, land values have declined drastically and of course this has added to the problems of arrears and problems of bad debts and the problems generally ACC find themselves faced with today. It is not just ACC. The same problem extends to other banking institutions in so far as they too, as I mentioned earlier, provided money for land purchases at prices which in retrospect seem to be exorbitant and now we have the problem of bad debts.

This question — it was touched on by Senator Bulbulia — of arrears and bad debts generally meant that the ACC had to adopt tough measures, no tougher I believe than those of any other financial institution. They certainly were prepared to meet the customer and to iron out his problems and, indeed, it is generally accepted that in this difficult time there is a tightening up on payment of arrears all over whether it be in banking or financial institutions, taxation or whatever. The whole matter of bad debts is probably the biggest source of problems for the financial institutions of today. Certainly it will continue for a few years.

Going back to the Bill and to the provisions of the Bill, I am totally in favour of the fact that this very important farmers' bank, ACC, should be allowed to expand and to extend their activities. I am not against investment in the agri-business. I am not against the ACC extending their activities as they see fit in this changing financial world. I am amazed that there should be any suggested dilution, if you like, of their activities and that other political parties should in any way oppose what is being suggested in this Bill. On the contrary we should give them every encouragement, every help to allow them to proceed and to take their rightful place in the financial market of this country.

Like Senator Bulbulia I, too, would not like to see the ACC withdrawing from farming and going purely into the other aspects of their activities, forgetting that they are first and foremost the farmers' bank. That is what they were set up as: that is what they should remain as. At the same time, they should be allowed the opportunity to move into other areas, and, as the Minister said, there is evidence in other parts of the world to suggest that agricultural banks have diversified, at the same time retaining a first-class service to their farming clients. That is the way it should be.

The main thrust of the Bill has been to allow the ACC to lend in other non-agricultural areas. The Minister has set it out quite clearly. First, he has proposed that the ACC should be empowered to lend to non-agricultural areas. It is proposed to increase from £20 million to £35 million the statutory limit on ACC share capital. Finally, it is proposed to increase from £10 million to £25 million the limit on the amount of loans in respect of which the Minister for Finance may guarantee the corporation against losses.

To me they are all admirable and all very appropriate aspirations at this point of time in the history of the company. This extension which the ACC are now getting has long been sought by the staff of ACC — and very understandably — so as to allow them to compete with other financial institutions for deposits and for loans. The fact of life in this country, and I am sure in other countries, is that people tend to open share accounts or deposit accounts with institutions which might eventually be of benefit to them, which might eventually get then a mortgage, if that is what they want. With the land sales market very quiet over the past few years for reasons that we all know, ACC have suffered on the accounts that I have referred to, the deposits and the loans. They have suffered in comparison with other institutions. Now they are brought on to more level ground and hopefully for them matters will improve.

The Bill is very welcome. It is right and proper that what is proposed in the Bill should be passed by both Houses of the Oireachtas. Again I congratulate the staff and directors of the ACC on the work they have done over the years and I wish then well in their new ventures.

I listened with interest to the fairly unanimous approval which has been given to this Bill. I understand the reasons why both the Government and the Opposition are happy to see it go through fairly quickly and, indeed, I shall not delay it. I do not think it is a good Bill. What is contains is far too little and far too late. It seems obvious to me that this Bill is a result of the performance of the ACC in 1987. Although we have not got the audited accounts for 1987, the Minister has given us a fair indication that the ACC will come up with a loss in 1987. How substantial that loss will be I do not know. As a result of their seeing that a loss is coming, they have to do something about it. It would have been far preferable if this Government or the previous one had some sort of philosophy for ACC and had decided that this Bill was to be introduced but in a far more magnified form in terms of vision, one year, two years or three years ago.

This Bill says that lending to farmers is not making money; we had better do something about it so we will let them lend to somebody else and see if they make money that way. It is really quite simple. It might have been wiser two or three years ago to have noticed and taken account of the moves, of the trend in the financial world, and said that ACC are not going to be able to live in isolation either; they should be able to compete on reasonable and fair, equal terms with other banks in the private and public sector and should be allowed to go ahead on this basis. In effect, unfortunately, what this Bill does is react to what looks like turning out to have been a disastrous year last year. It reacts in a very small way and in a very cautious way. I expect that we will see many more ACC Bills in the years to come as we begin to respond to the very small and minor effects of this one.

I know very little about agriculture or farming but I wonder if it is necessary to have a farmers' bank at all. I cannot see why we need an ACC, why we need a specialist farmers' bank, as such. It seems that this is tying the hands of the bankers to a specific project, which is unfair. The major commercial banks lend to the farming sector anyway. Every bank I know of will lend to farmers if it is a commercial proposition. They are competing with the ACC in their own territory, whereas the ACC cannot compete with the other commercial banks in their territory. That seems to be unfair. It seems that it is not a commercial proposition and it also seems to me that just by extending non-agricultural lending to 20 per cent, you are not doing enough for the ACC.

This Bill recognises the trend in financial institutions but I think it contains more hope than actual prophecy or prediction in that it hopes that, by allowing the ACC to go into 20 per cent elsewhere, in the non-agricultural sector, they will somehow make a profit.

I would also like the Minister in his reply to give us more fundamental reasons why the ACC have not been running at a profit, certainly in the past year. If you say that the farmers cannot pay the money back because of high interest rates, to me that means it is a very bad loan, it is a very bad commercial decision on behalf of the person who lends them the money. Every banker has to take into account the possibility that interest rates will go up when he is lending money. Were the ACC in the past in some way under pressure to give money to farmers who could not borrow money elsewhere? In other words, were the ACC being run under special commercial criteria which do not apply elsewhere?

Were they being kinder and softer to the farmers or were they not? If so, they were doing them no favours because what has happened — it is quite obvious from the Minister's speech and from the accounts — is that they were lending money on projects and propositions which were not commercial and the individual farmers could not pay that money back. That has landed the Government in trouble, the ACC in trouble and the farmers themselves in trouble. It has done no favours. What I would like to know is whether in the future there will be any guidelines given to the ACC for lending to farmers, whether the ACC are constantly under pressure to make loans to farmers willy-nilly, regardless of commercial terms, or whether there will be lending guidelines set for them.

Finally, the extent of the ACC's new lending activities apparently is to be decided by the Minister for Finance and the Central Bank. This seems an absolutely appalling idea. We are saying: "You can lend to the non-agricultural sector but you have no freedom in that particular lending. Every time you want to make a loan"— I do not know if this applies to every specific loan —"every time you want to branch into a new sector, you will have to consult with the Minister and the Central Bank". The Minister and the Central Bank in this case can be nothing but an obstruction because they would not be there in the Bill unless they were to be an obstruction. It appears that this 20 per cent will be very limited. It will be subject to bureaucratic, ministerial and Central Bank scrutiny and therefore obstruction and so the ACC, once again, will be lending to another sector but only with the approval of these two people or institutions and, once again, will be lending and competing on unfair terms with the other banks.

The logic of this Bill should have been to open the ACC out totally wide. Senator Fallon touched on it when he said we are going to have a Bill for the building societies to deregulate them, to allow them to move into the banking sector later this year, probably to go into insurance and into all sorts of other financial areas. It would appear to me that if we are going to do this with other institutions the logic is not just to say, we will try 20 per cent and see if that works, because we are not making any money. What we have got to do is make an ideological and philosophical and serious decision that these types of semi-State banks will be allowed to compete in the private sector on equal terms. This Bill does not do this. This is purely a piecemeal measure and will be an ineffective Bill because no decisions are being made in it. It is purely a Bill which rests upon hope to plug a hole that exists at the moment. Unfortunately I cannot approve of it because I think the Minister will be back with a similar Bill in the very near future.

First, I would like to welcome this Bill before us today. It is a new departure and it will certainly be of benefit to the borrowing public and, indeed, to the ACC also. The Agriculture Credit Act of 1978 is the principal legislation governing the operations of the ACC. It deals, amongst other things, with the various charges which may be made not just by the ACC but by other banks on land and other property as security for loans. Under this Act, the ACC are limited to lending for the benefit of agriculture, horticulture and fisheries. The legislation now before the House will empower the ACC to lend in the non-agricultural area and so broaden the scope of their activities. This is good for the ACC themselves and it will also create competition between the lending institutions who are competing in this area. This can only be good for the people who are borrowing.

Since the corporation were established in 1927 they have provided a specialised credit service for agriculture. Their advice and services have been sought by countless farmers who could not have developed their enterprise without the assistance of the ACC. In the early years there was, of course, a reluctance on the part of farmers to borrow mainly because of the poor profit in agriculture. However, as the years rolled on and the agricultural economy began to improve, farmers began to realise that, if they were to avail of the improved prospects now appearing on the horizon, they had to borrow to develop their farms, to improve their stocking rate, to provide housing for cattle, to carry out drainage etc and in many cases to buy those extra few acres of land to ensure viability in the years ahead.

During all tht time the farmers of Ireland found the ACC most helpful and sympathetic to their cause. Our entry into the EC opened up tremendous opportunities for Irish agriculture. For the first time ever farmers did not have to depend on the British market. They could sell their produce to mainland Europe and compete favourably with their European counterparts. In the meantime the ACC were promoting themselves successfully as a lending agency and opened up a network of offices throughout the country. The Agricultural Credit Act of 1965 enabled them to take deposits from the public. This new source of funding enabled them to expand their lending without drawing on the Exchequer. As a result, annual lending grew from £4.5 million in 1965 to £17.5 million in 1972. This came to £132 million in 1978. That year also the ACC's total assets stood at £394 million having increased from £3.7 million in 1961 — a remarkable success story by any standards.

Of course, it has not been all plain sailing for the ACC and, like all lending institutions, they have had their problems in the eighties. The decline of income and confidence within the agriculture sector resulted in a decline in demand for credit by farmers and also created difficulties with loan repayments. This, in turn, meant that the corporation had to make increased provision against bad debts which in turn affected their profitability. In spite of that, their sympathy for and understanding of farmers who found themselves in difficulties because of over-borrowing must be acknowledged and commended. They made every effort, by restructuring loans etc., to tide farmers over a very difficult period. There are still many farmers in serious trouble but I do not think it can ever be said that the Agricultural Credit Corporation used bully-boy tactics to force farmers to repay loans.

The Bill now before the House increases from £10 million to £25 million the limit on the amount of loans in respect of which the Minister for Finance may guarantee the corporation against losses. This gives some indication of the difficulties the ACC have been experiencing. The other important change introduced in the Bill is the provision allowing the ACC to move into the non-agricultural area. This is opening up a whole new area to the corporation and is, of course, keeping in line with other European lending agencies. It will not, as the Minister rightly states, transform the ACC's profitability overnight. It will in time make them more competitive and they should be more attractive to investors. However, I want to express a note of caution.

The ACC are now entering a whole new scenario. There are many quagmires out there, financial quagmires. Businesses are coming and going overnight and the ACC will be competing with other more experienced banking agencies. However, the fact that the Minister for Finance will have power not only to control the amount of non-agricultural lending within the 25 per cent limit specified in the Bill, but also to lay down such conditions as he considers appropriate, will provide an adequate safeguard to ensure that ACC will always be in a position to meet the demands of agricultural credit. It is very important that they should be always there to give their help and services to the agricultural sector because they are the people, more than any other lending institution, who understand the problems faced by the agricultural sector.

All the other financial institutions have changed over the years to meet the demands of the borrowing public. It would be wrong to keep the ACC in a strait jacket and not give them the opportunity to compete in the non-agricultural area. For that reason this Bill before us today is very appropriate. I see it as a great challenge to the Agricultural Credit Corporation and I feel they will meet that challenge head on. It will create better morale within the staff of the ACC themselves, a staff who, over the past few years in particular in line with all the other institutions, have seen many of their members made redundant because of the contraction in the lending market. This is opening up a whole new area to them. I feel they will meet that challenge head on and that it will be good for them and for the general public who will be using their services also.

I welcome the concept of this Bill. It is taking the opportunity to address the problem of the corporation's existing share capital target having been reached and it offers the opportunity to increase from £20 million £35 million the limitation placed on it by previous Acts. It also raises from £10 million to £25 million the amount of loans that will be guaranteed by the Minister for Finance in the event of difficult decisions having to be reached in the future. That is why I fail to understand Senator Ross's reservations. He is an expert in the area of financial institutions but he is also to the right of most of my thinking in economic areas. It amazes me that he has reservations about the Minister for Finance having overall regard to the national Exchequer when it comes to competition in private financing institutions. In other words, he has forgotten that the ACC are a State bank, or a bank with State guarantee, set up under an Act of Parliament for a specific purpose which, from all our knowledge and experience, has been to a large extent successful in the past.

Because the ACC are State sponsored and because the State considered in their wisdom in the older days that there should be a State banking system specifically for agriculture, there is nothing wrong with the Houses of the Oireachtas, and indeed the Minister, having access to information on their accounts and their books and also having an overall view. I fail to understand why Senator Ross has a reservation in that area because he usually expresses the view that we should be extremely careful about State funds going to anybody and that all funding should come from the private sector. He is almost contradictory in his attitude to the Bill today and I am surprised at that.

Maybe he got out of the bed on the wrong side today.

Maybe he has other financial knowledge at his disposal of which we are unaware. The Bill represents a reverse procedure from what has happened in the Department of the Environment, which up to now had been a lending agency for specific categories of people for house purchase, house reconstruction and a whole lot of other areas benefiting people in a certain income category. Up to now the Department of the Environment, the Minister, county councils and corporations were in a position to make decisions about lending to people. The Minister decided with the financial istitutions before Christmas that, before councils could get into this area, the applicant would have to go through the private institutions — banks and building societies — and be rejected and have the trauma of rejection in writing. This Bill is a step in the opposite direction. It liberalises lending by the State to a particular sector and I hope the Minister for the Environment will take a lesson from the Minister for Finance and the Minister of State at the Department of Finance who today is doing the reverse and I wish them success.

The reason we decided to have a lending institution which dealt specifically with farming was the importance of the farming sector's contribution to the overall national economy, the amounts of money they generate through our export into the European Community, the employment factor and the contribution they make in the area of milk assembly. The State assisted farmers at producer level and at farm gate level because they were special. They were special in their contribution to the State but they were also special in their risks because, unlike other financial institutions, or other enterprises, farming is subjected to the most extraordinary risks over and above the normal risks in any industry.

One of the greatest risks that cannot be controlled or determined in advance is the weather. It is important that the farming sector should have access to credit with risks like that which cannot be underwritten easily, which cannot be insured against and cannot be predetermined. The disastrous summers of 1985 and 1986 are an example of how family farms can be wiped out as a result of weather which by its very nature brought people into difficulties not only with the commercial banks but with the ACC.

I am surprised that Senator Hussey said there were no cases of strong arm tactics used by the ACC. There were cases and it is public knowledge that they went through the courts and procedures where by the ACC — by the restrictions we placed on them in the Houses of the Oireachtas — were forced to make farmers redeem their loans. Difficult and unpopular decisions were taken because the land of Ireland was always considered to be a treasure that could not be acquired, distributed or disposed of by cheque books. It is a very important commodity. When you start putting people under pressure to dispose of their land for economic reasons the people of an area get disturbed, upset and distressed and they picket to show solidarity with one another in rural Ireland. It is a good thing that people rally round others when in difficulty.

The ACC were not exempt from putting people under pressure and we probably wrote the regulations and the rules for them to be strict in cases where there was non-repayment of loans. From that point of view they have tried to act within the regulations laid down on a commercial basis. It has not always been easy for them because of the risk factor involved in the area they were designed to assist. If we could eliminate the weather factor — which all of us say is the greatest risk in farming — and if the farmers had good weather all the time there would be no problem with farm production because, above all sectors in this country, they work the hardest. They work the longest hours. They get the least return on their capital investment. They get the least return in credit or in credence from any other sector of the community. Many of us are very quick to criticise them without realising the difficulties and the conditions under which they work. If you add those difficulties to the difficulties of the EC, what its future has to offer to farming, the restrictions it has now put on the areas of production, whether it is in milk, meat or cereals, you realise that this sector will be contracting because they will be unable to produce the commodities which traditionally they have been able to produce more efficiently than people in most other countries. Because people in other countries were able to evade taxes and use imported cereals in increasing their production, the Irish farmers were at a distinct disadvantage over the past four or five years.

I hope that, following the EC submission on the future price structure, the MCAs and the border taxes, the Minister will be successful in his negotiations. If not, farming will take another backward step. One of the reasons this country joined the European Community was to enjoy the benefits that were to accrue to agriculture. Considerable credits have accrued to agriculture but they are becoming more difficult to obtain. The gravy train has been derailed by the major net contributors to the Community.

Agriculture is a special area of risk but it is important for us to realise its economic contribution to the country. We should have a special place for farmers in the area of State lending. That is why I welcome what the Minister is trying to do, to increase their limit of the corporation's share capital.

The other fundamental part of the Bill, which is the innovative part, is that the ACC are now extending their lending to other areas. I think this is a good idea. I see nothing wrong with a bank which is national in its outlook — it is agriculturally biased if you like, which we all welcome — making itself available to other borrowers. If the private sector financial institutions are worried about that, then so be it. The financial banking institutions make colossal profits in this country the more competition, particularly from the State sector, is to be welcomed. I have reservations as to why there was a limit of 20 per cent imposed by the Minister on making available the funds invested in Ireland for use by people in Ireland. Obviously they would not have access to it unless it was for productive purposes in some area or another.

I welcome the fact that we are extending the Agricultural Credit Corporation's remit not only in investments but in lending. Over the past number of years, through a difficult period, when all financial institutions were trying to come to grips with inflation and lending rates and were trying to compete with the European Investment Bank and other institutions, often at a disadvantageous level, they convinced the ordinary investor that the ACC had as much to offer as any other private institution, and at times had much better terms to offer. I think that was appropriate. In the Bill before us today, the Minister is ensuring that not alone will awareness be heightened in people's minds that they can invest with the ACC, with additional financial backing from the State, but that they also can borrow from the ACC. That is why I am surprised the Minister in bringing in this innovation did not decide that the ACC was no longer the proper name for this new corporation.

Why did the Minister not suggest, or had he or his advisers not considered, defining what is, a national and agricultural credit corporation so that it would be available to other sections of the community. That would possibly do more to convince people that what the Minister is doing today is the right thing and it would also convince people who have money to invest that that was the right thing to do if we could convince them that it is no longer specifically designed for agriculture. I would like to retain the word "agriculture" in any new name the Minister might consider. It is important for the farming sector to know they have a place to which to turn.

Basically, farmers are conservative and have not borrowed in the past unless they got advice to do so; much of that advice was given by the national agencies. It is unfortunate, because of the changing times, that the advice given in all good faith, which was correct at the time, transpired to be disastrous afterwards. Farmers believed in the advice they got and borrowed on the information and advice given to them. That was submitted to the ACC as evidence of their efforts to increase production, to improve the status of their herd or to capitalise on buildings or other assembly units on farms. Farmers are so conservative that at times even when they had money invested — because they like to have a nest egg for the rainy day — they borrowed and actually lost money in the process because of their conservative outlook.

We cannot change that philosophy overnight. They borrowed while they had money invested and the banks and other institutions made money out of this conservatism. Perhaps it was a good thing, and if everybody was conservative in their attitudes some of the problems we have today, about which the Government keeps reminding me, might not be there. God only knows. We can only do our best each day. I hope we will work our way through this economic crisis, that all of us, at all times, will have regard to the correct priorities and that we will not forget the people who are unable to help themselves in this whole process.

I see nothing ideologically wrong with this Bill. There is nothing politically wrong with it; there is nothing legislatively wrong with it. The Minister is being a little over-careful if anything. Nevertheles, I would like if he would consider the possibility of changing the name so that people can understand that what we are doing is opening up the ACC not only to investors but to lenders as well. On behalf of my party I welcome the Bill.

I, too, welcome the Agricultural Credit Bill, 1987. I want to take the opportunity to give some views on where I think the focus of attention of lending from the ACC should be operating for the benefit of farming and the benefit of our economy in the years ahead. I support the move to give powers to the ACC to lend in other areas rather than being a single sector bank as it has been since its formation. It is important for the ACC and its financial strength that it do so because we are all aware of the decline in the margins of income in the farming community over the past seven or eight years. The exposure of the ACC in its portfolio and in its financial operations has been difficult.

The Minister stated the background against which the improvement in investment took place in the seventies. With our entry into the European Community we had the ability to take up extra financial aids given to the farming community and the guaranteed prices that were available to them through the intervention pricing system in the EC. This allowed many farmers, for the first time ever in the history of our young State, to carry out much needed improvements in their land, in their farm buildings, in their farm structure and indeed in their living conditions. The enormous hardship the farming community experienced down through the years, since our independence, in coming to grips with difficult markets for agricultural produce, differences in the emphasis by the State in respect of changing from one variety of enterprise to another is not well known or appreciated. It was only in the seventies with the guaranteed markets and floor prices for our products that the first decent level of existence was given to the agricultural community to bring about higher living standards.

I know many farmers took advantage of the improved economic climate and the improved confidence in agriculture, in the middle and late seventies. The ACC and other financial institutions felt — and the farmers themselves felt — there would never be a poor day again. The euphoria that permeated through rural Ireland at that time often meant that when land sales were taking place in the local community farmers went to the ACC and to the banks for money to acquire greater amounts of property or to make their holdings more viable and, in their eyes, more economical.

In the late seventies and early eighties land values escalated out of all economic proportion and out of proportion to the direct income the agricultural community was likely to have to repay those loans. It was a bitter experience for many farmers and a lesson they will find very difficult to forget when they seek to draw up plans and new proposals for the development of their farms in the years ahead. It will take many years — perhaps a generation — for the agricultural community, who are basically a very conservative community when it comes to finance, to forget the experiences they went through in that difficult time.

Unfortunately, there are still many farmers today who are caught in a tremendous grip by the financial institutions and who find that the light at the end of the tunnel may not be visible to enable them to get out of the existing difficulty in which they find themselves. The problems which they are now experiencing are due to factors outside their control and which were not foreseen at the time they obtained their loans from the ACC. Interest rates went through the roof. They doubled in two years with the result that repayments on those loans, also doubled. Farmers who had budgeted to make their loan repayments at a particular level of interest were not able to meet the interest on the interest a few years afterwards.

I am glad that in recent times all the financial institutions, including the ACC, have recognised that there is no merit in pursuing the strong arm tactics that were used, as Senator Hussey is well aware but he did not think it appropriate to mention it in this debate. We should recognise that all financial institutions who, in their day to day operation have to retrieve the outstanding loans made to any sector of the community, and the ACC in particular because of their exposure to one sector of the community, were in a very difficult position in trying to retrieve the money they lent.

I noticed very little improvement in the provision for bad debts in the ACC's reports in recent times. In the 1987 report — and the Minister referred to this — there is very little joy for the ACC in relation to the amount of money provided for bad debts caused by bad weather conditions in 1985 and 1986 and the limits on agricultural production imposed by the EC particularly in the dairy sector. All of these factors will lead to a difficult time for the ACC in the immediate years ahead. The ACC need the extra exposure to non-farming activity to balance the portfolio of loans and financial dispositions over the next few years.

There are one or two areas I would like to refer to in particular. Senator Ferris referred to the image of the ACC. The image of the ACC is a financial institution and catering only for the agricultural community. A large scale advertising campaign has been undertaken by the ACC to correct this image that the ACC are unfairly not seen by non-farming people as a place in which to place their money on deposit. Senator Ferris is correct in stating that there is a need for a change in the name of this organisation so that it will be seen by the general public as an institution that can cater for non-farming activities and non-agricultural communities. The ACC are a State organisation and it is in the best interests of the State to consider whatever changes are necessary to protect their image on a wider scale.

I am very disappointed at the attitude of the ACC and other financial institutions and the Department of Agriculture and Food and strong arm tactics being used in relation to the clawback from the rescue package scheme of 1982. As the Minister is aware, a number of farmers got into financial difficulties and were the beneficiaries of a scheme operated by the Department of Agriculture and Food and the Department of Finance between 1982 and 1986. This formed the basis of a low interest subsidy over a period of years which gave farmers an opportunity to get back on the rails and to make their repayments to their financial institutions.

I understand that approximately 600 farmers have been deemed by the Department of Agriculture and Food as ineligible for the 1982-86 scheme. After the benefits have accrued to the farmers and the ACC or the banks, the Department now wish to recoup that money at this late stage when it was their officials, and the financial institutions involved, who sanctioned the application for the reduced interest scheme in 1982. I ask the Minister to use his influence with the Department of Agriculture and Food and come up with a reasonable solution to this problem which is causing great anxiety to a small number of progressive farmers at present. It is not fair to ask the agricultural community, the beneficiaries of this scheme — which was essential for their viability; otherwise they might have gone into receivership or liquidation — to pay up to £20,000 or £30,000 to the ACC or to the Department of Agriculture and Food.

The Minister should look at the operation of the Euro currency loans which have been in existence since September 1986. This was an important development for this country in that the Department of Finance sought the benefit of some of the low interest Euro currency loans in the European Community. They borrowed through international currencies to benefit the agricultural community. I want to assure the Minister that this has made an enormous impact and has given tremendous confidence to the farming community because they have now a cheap source of finance for working capital at a lower rate of interest for many of the important developments they wish to proceed with.

If a farmer has a loan with the ACC and has another loan with the Bank of Ireland, or any other bank, he will not be in a position to benefit from a Euro currency loan from both financial institutions. In other words, he can only get the benefit of the Euro currency low interest loan up to £50,000 maximum from either the ACC or a commercial bank. It would give a great service to many farmers and solve many of their financial difficulties if they were in a position to get the maximum Euro currency loans from both the ACC and the commercial banks rather than with either one only as is the case at present.

The Minister will be aware that the greatest crisis facing the country in relation to agriculture in particular is the enormous depletion of our national herd. Over the past three years the country has suffered a reduction in the herd because of the superlevy, as a result of which 100,000 female animals have been slaughtered. It is projected by ACOT and other reputable bodies that over the next three years we will lose 200,000 more female animals. This is going to sap the necessary energy out of the agricultural community, the raw material essential to meat processing, that is essential for employment and, above all, which is essential to maintain families on the land.

Radical measures are now needed in order to boost the national herd. Whatever is necessary should be done in order to ensure that we plan now for an increase in the national herd, rather than pumping money into meat factories which already have over-capacity in terms of the available raw materials. It does not make economic sense for the State or for the Exchequer to put money, in the form of grants or favourable loans, into the meat processing sector at a time when the meat factories cannot get the necessary animals to fill their requirements on a daily or weekly basis. Farmers are unable to supply the markets. From speaking to a number of purchasing agents for meat factories in the south east, I can assure you that cattle are so scarce, the factories will have to close for most of the year. They are, unfortunately, put in the position of having to use the social welfare system on a three-day week basis to prop up the wage bill for these factories. This is also something I find disturbing.

The Agricultural Credit Corporation, by the extension of the powers we are giving them here today, are a vehicle for the farming community and all interested groups in agriculture who are interested in the future development of our agricultural industry. The ACC should be to the forefront in providing the necessary loans in order to get the national herd boosted once more, which would provide extra exports, extra family farm incomes and extra employment in the agricultural industry. I ask the Minister, Deputy Treacy to lend his support to whatever measures the Minister for Agriculture and Food might bring into operation, so that the ACC will be seen to assist in whatever way possible to fulfil the obligations and the objectives set out by the Minister. It is a scandal that we have reached the stage where we have to consider the importation of calves. Whether it is a revamped more liberal suckler herd scheme that is required it is essential that we do whatever is necessary and that we plan immediately at the eleventh hour to boost the objectives I spoke about.

I commend the Minister's intentions in relation to this Bill. The Agricultural Credit Corporation have served the agriculture community by and large fairly well. While one could eulogise about the difficulties that the ACC experienced with their portfolio in the late seventies and early eighties, and are still experiencing, to a lesser degree by and large the ACC have certainly given good service to the farming community. The ACC can resolve the bad debts if they just treat the farmer client with a bit of sensitivity, with some co-operation between the financial institution and the farmer, these difficulties which we now see can be overcome. I support the Bill.

I sincerely thank the Senators who have contributed very positively to the Bill before the House. It is indicative of the attitude here that people can see the merits and the reason a Bill like this should be brought before this House.

Senator Bulbulia opened the debate and referred to the need for the restructuring of loans by the Agricultural Credit Corporation. This is being done on a continuous basis by the ACC, where the customer can make the case for it and where the ACC and their executives are satisfied that the person will be able to respond to the new restructured situation. The Senator also wished to ascertain the sectors to which the ACC would lend in the future. The intention is that the ACC will concentrate initially on the personal lending sector. By liberalising the opportunities for the ACC, we would expect that people from all sectors of the community, right across the board, would invest their money with the ACC, particularly in view of the great security that prevails due to the State equity. By investing there they would then be in a position to avail of personal loans for their own personal needs in a variety of areas. This will provide a new area of profitability for the ACC, it will also provide for new sources of deposits and further diversification by the ACC.

Lending will depend on the ACC's new corporate plan which is currently being prepared. Thereafter the housing finance area could be considered, and I am sure that the board, the executives and managers of the ACC will monitor the situation and be able to come up with proposals within that corporate plan and extend that corporate plan to avail of whatever opportunities are in the market place and to fill any niches to which they think the corporation could respond.

Senator Bulbulia also spoke about the bloodstock industry and said that consideration should be given to having bloodstock taken as security for loan purposes. The Senator also referred to the Killanin commission report. The recommendations in that report relating to the use of bloodstock as security for loans raise complex, legal and administrative issues. For example, who would be responsible in the event of error in the register which would record ownership and charges against the ownership? In view of the high values of bloodstock this is a significant issue. Another issue is how to establish a watertight system of identification of horses on the register. The suitability of the existing passport system used by the Turf Club for the purpose of the register would have to be established and the need to give that system legal status would have to be clarified. Yet another issue is what arrangements should be made at bloodstock auctions to avoid the sale of an animal which is subject to charges. These and other issues are being examined inter-departmentally. When this examination is completed the Government will consider sympathetically bringing forward any necessary legislative amendments to provide the opportunity for all financial institutions to consider bloodstock as security.

I agree with Senator Sean Fallon when he says that the ACC should not withdraw from being a farmers' bank. The purpose of the 25 per cent limit — this was referred to also by Senator Ferris — is to prevent the ACC moving away from agriculture. The Government want to create the flexibility and the versatility and the diversification opportunities for the corporation, but they still want them to have a primary role in agricultural lending and in developing the agricultural industry and further enhancing the opportunities for farmers throughout the country.

Senator Ross, in a wide ranging speech, said that this was too little, too late and questioned the reasons for having a farmers' bank at all. The fact that we have brought in the Bill shows that the Government's attitude is that no institution should be curtailed in their activities and that rather then being purely a farmers' bank and a bamk or a corporation that enjoy State equity, with that type of security they should be able to attract investment right across the board and in return should be able to consider lending the invested money in a variety of areas.

I would like to remind the House and in particular Senator Ross that this Bill was introduced in the Dáil five months ago, long before it could be known the exact position of the accounts of the Agricultural Credit Corporation for 1987. It was with the parliamentary draftsman for some time prior to that, so this confirms the period the Bill was under consideration by Government. There is less need for a farmers' bank now than in the past. Other banks were most reluctant to lend to agriculture 60 years ago. That is no longer the case. It is for this reason, among others, that we are proposing that the Agricultural Credit Corporation should be allowed to lend outside of agriculture. The ACC's profitability is modest because of factors which I have already outlined in my introductory speech; high interest rates, Common Agricultural Policy restrictions and other difficulties in the agricultural environment.

The other banks were affected by these factors also but they had non-agricultural and business options to offset the difficulties in agriculture. Consequently, they were able to maintain their profitability despite the fact that they encountered the same difficulties in the same areas of financial lending as the ACC. Senator Ross also asked whether there were guidelines for the ACC lending to farmers. I would like to inform the House that loan assessment criteria is a matter for the board of the Agricultural Credit Corporation. From time to time the Minister for Finance provides broad guidelines for lending to agriculture in line with Government policy for the sector and in line with the needs of the agricultural sector, which Senator Hogan referred to. I will be responding to that later. However, there is no question of the ACC being told by the Minister for Finance or by the Government that they must lend where credit-worthiness is in doubt. That has never been the situation and never could be the situation.

Senator Ross also questioned why there should be ministerial and Central Bank supervision. I think all financial legislation right across the board in every area of activity has either ministerial and Central Bank supervision or operates under directions from the Minister for Finance or regulations controlled by the Central Bank. The ACC are a financial institution and, as a State-sponsored body, would have to be under similar type control. The Minister for Finance is the shareholder on behalf of the State and as shareholder, he is entitled to decide how in general terms the ACC should carry out their business. It is wise for the Minister to consult with the Central Bank because of the expertise which the Central Bank have in supervising the banking system and the desirability of co-ordinating ACC activities with those of the banking system as a whole, to ensure that there is no conflict in the financial marketplace.

My colleague, Senator Tom Hussey, spoke in a wide-ranging way about the activities of the ACC and I thank him for his contribution. He referred to the rationalisation in the Agricultural Credit Corporation over the past few years. I wish to reaffirm to the House that all redundancies in the ACC over the past few years were purely on a voluntary basis.

Senator Ferris in a very wide-ranging contribution, as usual, referred to the strong-arm tactics by the ACC and Senator Hogan referred to that also. I do not think the ACC have used strong-arm tactics; they have used the law where necessary when they were not getting co-operation. I want to assure the House that the ACC are most willing to accommodate a farmer or farmers in genuine difficulties and they have restructured several loans over longer periods for such farmers and generally have treated farmers sympathetically. However, where a farmer seems able to meet his repayments but simply refuses to do so the ACC would be failing in their duty to the taxpayer and also to the farmers who pay their debts if they did not take appropriate steps to recover loans in such cases.

Senator Ferris made a comparison between the policy of the Minister for the Environment and the decision of the Minister for Finance to bring this Bill forward. I would like to clarify the former while we are still debating the latter. The State, for years through the Department of the Environment, has borrowed vast sums of money for a particular segment of our population and re-lent this money to this segment of our population over long periods at a fixed interest rate. To make this facility available, the State has competed with the ordinary consumer in borrowing these vast amounts of money and has helped to increase interest rates by being the main borrower.

The Minister for the Environment has persuaded the lending institutions to provide money for this special market segment, but where the institutions cannot accommodate people in this segment of the market the Minister for the Environment, through the local authorities, will continue to provide the loans for both house purchase, house building and home improvements. For too long the State has over-competed with the private sector to the detriment of the consumer. As a result of this new policy, interest rates have dropped from around 15 per cent one year ago to around 9 per cent today. I am sure Senator Ferris's constituents with fixed home loans at 14 per cent at 12.75 per cent respectively, would love to be able to avail of lower interest rates and benefit from the efforts of the Minister for Finance and Minister for the Environment in reducing interest rates to the flexible figure they are at today.

Senator Hogan in a wide-ranging contribution spoke about the strong-arm tactics of the ACC. I have dealt with that already. It is true to say that the ACC have dealt very humanely, compassionately and sympathetically with the difficulties that farmers have encountered right across the board. If farmers are prepared to come into ACC offices to discuss their problems, to put their cards on the table, they will get a sympathetic ear and, where possible, loans will be restructured. However, where there is a total negative response, then the ACC have a duty to the board, to their shareholder and to their good creditors, to ensure that equity and equality of treatment prevails right across the board.

The Senator also spoke about the need for the State and the Government to provide an opportunity to increase our beef cow herd. I want to assure the House that very positive and active consideration is being given to this at present by the Minister for Agriculture and Food. With the co-operation of the financial institutions and the various meat processing outlets and the agricultural organisations, I am confident that before too long a suitable new beef cow incentive scheme can be brought about in the interests of all farmers of improving the cattle numbers and of increasing our economic activity. This would make a major contribution to the development of our economy over the next year.

This Bill is an acknowledgement by the Government of the need to allow the ACC to be more flexible in their lending portfolio, to allow them to diversify and indeed to be more attractive to investors and borrowers alike, particularly in view of State equity and security being available to the corporation and their investors. This Bill is only one of a series of measures being taken by the Government to create more equality of opportunity for all the financial institutions in order that they can compete on a more level plane. The Government have other Bills of a financial nature under consideration at this time, in particular the liberalisation of both the building societies and the Trustee Savings Banks is currently under consideration. The end result of all of this is more credit options for the consumer, keen competition by the institutions to attract customers and, ultimately, better services and lower interest rates for the consumer. I am sure this House would wish to facilitate this type of policy by the passage of this Bill.

Question put and agreed to.
Agreed to take remaining Stages today.