I move:—
That the Land Bond Bill be now read a Second Time.
This Bill makes provision for the creation and issue of further land bonds for the purpose of acquisition of untenanted land under the Land Acts 1923-1933, for the resumption of holdings and for the compulsory acquisition of land for playing fields, sports fields, playgrounds, etc., and for the acquisition of sporting rights in certain cases. The total issue of land bonds to be created and issued under the Act will be limited to £10,000,000. The land bonds will be created as and when required, from time to time, by order of the Minister for Finance. Each order will prescribe the rate of interest to be borne on the bonds created under it, but the rate will not be less than 3 per cent., or more than 4 per cent. per annum. It is considered that the rate of interest on the bonds created by each order should be related to the rate of interest payable on the latest issue of the National Loan at the date of such order, having regard to the figure at which the Loan stands on the Dublin Stock Exchange. A small, fractional increase in the rate of interest payable on the land bonds above that earned on the National Loan might be regarded as permissible owing to the fact that there may be only a limited market in the land bonds of each series as compared with the market in the National Loan. These are the fundamental principles underlying the measure. Deputies no doubt are aware that in sub-section (2) of Section 25 of the Land Act of 1923 it was laid down that in default of agreement the price to be paid for untenanted land shall be such as may be fixed by the Land Commission, other than the judicial commissioner, or by the judicial commissioner, on appeal, from the Land Commission. It is also laid down that regard should be had to the fair value of the land to the Land Commission and the owner respectively. It is obvious that the fair value of the land to the Land Commission is the price that could be obtained on resale to the allottees; it is more difficult to decide what is the fair value of the land to the owner.
The case of tenanted land is perhaps simpler because income from tenanted land is comparatively certain as in the case of holdings subject to a judicial rent fixed for a period of years. In this connection however it is not to be forgotten that landlords were often compelled to forgive altogether arrears even on judicial rents which had accrued during long periods of agricultural depression. Incomes derived from tenanted land were naturally more certain than incomes from untenanted land and to that extent it is more simple to assess the fair value of the land, but, equally, like incomes from untenanted land they vary from year to year. It is obvious that the price of land purchased by the Land Commission will, therefore, vary as it falls into one or other of these categories but, in any event, it will be a fair price; and all that we are concerned with in the Bill is to provide for its payment in an equitable way. It is considered that an equitable price for land can be fixed on a proper basis if the rate of interest on land bonds, representing the purchase money, corresponds to the yield that might be secured from investments in the latest issue of National Loan current at the date of fixing the purchase price. The rate of interest should be such as would enable the land bonds to be sold by the vendor for an amount equal to the cash that a purchaser, other than the Land Commission, would be willing to pay for the land. The interest on the land bonds should also be such that the prospective income to be derived from them if retained by the vendor would be at least equivalent to the income that would be earned from trustee investments if the purchase money were to be paid in cash by a person other than the Land Commission and invested in such investments by the vendor. It is, therefore, clear I believe that the vendor is being treated with the utmost fairness if he receives land bonds at a rate of interest that at the date of issue would ensure them being quoted about par. It is upon these lines that the provisions of the Bill will be given effect to if the Oireachtas makes it law.
As to the sections of the Bill itself, Section 2 provides that the purchase money payable to the vendor in future, shall be payable in land bonds issued under the Act except in cases where the payment of the purchase money is governed by previous Acts. The House will no doubt remember that towards the end of last year, the Land Bonds Act was introduced which authorised the Minister for Finance to issue land bonds to the value of £1,000,000, being the amount which it was estimated would be required to complete pending purchases, and pending purchase agreements arising out of the Land Acts prior to that of 1933. Under this Bill it will not be possible to issue bonds or to compel the vendor to take bonds issued under it in respect of his purchase money under agreements and for transactions made under any other Act than that of the Act of 1923, and such subsequent Acts as experience may indicate, are necessary or desirable. The land bonds are to be accepted by the vendor at their nominal value.
Section 2 further provides that in cases where the purchase money is payable by means of an issue of land bonds created under the Act, the claims against the purchase money shall be discharged by payment in land bonds of the same series. That is to say if we issue land bonds under this Act we shall have to accept, in discharge of any claims against holdings or estates taken over, land bonds of the same identical issue. We cannot compel a person who is paid in 4 per cent. land bonds to discharge his liability in 4½ per cent. land bonds.
Section 3 provides that advances made to tenants and others for the purchase of holdings or allotments shall be made by an issue of land bonds created under this Act. Sub-section (2) applies the provision of earlier Land Acts to the repayment of these advances. Under these provisions as so applied, the advances will be repaid by means of purchase annuities or other annual sums until the advance is redeemed. But power is given to redeem advances in whole or in part during the currency of the annuity.
Sub-section (1) of Section 4 empowers the Minister for Finance, from time to time by order, to create a series of land bonds of such total amount and such denominations as he shall think proper. The rate of interest payable on each series of bonds will be specified in the Order, but it is not to be less than 3 or more than 4 per cent. per annum. The bonds in each series are to be subject to such conditions as the Minister shall specify, but such conditions cannot, of course, override the conditions set out in Section 7 of the Bill. Sub-section (2) is intended to provide that the Minister may, if necessary, direct that bonds of a certain series may be used for making advances, having regard not to the date of the advance but to the date of the agreement to purchase. For instance, if an agreement to purchase be made during the period when an issue of bonds then current carries interest at the rate of 4 per cent. and if for some reason or another the transaction is not completed until a new issue of bonds has been made at a lower rate, then the bonds handed over in completion of the transaction would bear interest at the higher rate: that is, the rate of interest current upon the date on which the agreement to purchase was made.
Sub-section (3) empowers the Minister to consolidate different series of land bonds when the rate of interest on such series is the same. Sub-section (4) provides that each Order shall specify the sums to be set aside half-yearly in the Land Bond Fund. These sums will, of course, depend on the rate of interest and the sinking fund to be paid on advances. Sub-section (5) provides that every Order made by the Minister shall fix the rate of the purchase annuities, or other annual sums payable for the repayment of the purchase money advanced, by means of an issue of land bonds created under the Order. Sub-section (6) provides that every Order made under the section shall lie on the Table of the Oireachtas.
Section 5 is not exactly the same as Section 4. It provides for the issue of land bonds as distinct from their creation. Section 6 limits the amount of the land bonds to be created and issued under the Act to £10,000,000. The Land Commission has calculated, I may say, that about £4,500,000 will be required for the purchase of untenanted land and about £4,500,000 for resumed holdings and other lands compulsorily acquired for the relief of congestion, the provision of sports fields, and the other purposes to which I referred at the beginning of my speech. Sub-section (2) of this section also provides that the land bonds advanced for the purchase of lands in respect to agreements entered into on or before the 31st December, 1935, shall bear interest at the rate of 4 per cent. per annum. Section 7 contains provisions similar to those contained in the Land Bond Acts of 1925 and 1933 with regard to the payment of interest on, and the redemption of, land bonds. The interest is to be paid half-yearly and the bonds are to be redeemed by means of periodical drawings. Bonds transferred by the judicial commissioner in redemption of purchase annuities are to be subject to immediate redemption after the expiration of 30 years from the date of the passing of the Act. Any bonds then outstanding may be redeemed at par by the Minister for Finance. In the event of the Land Bond Fund being unable to pay the interest on the bonds, or the money required for redemption, liability for the payments is made a charge upon the Central Fund. If it is necessary to make payments out of the Central Fund the amount so paid will be refunded out of the Guarantee Fund, but only to the extent of the revised annuities in arrear.
It will thus be seen that the land bonds under this issue are secured in three ways: first, upon the land for the purchase of which they have been issued; secondly, upon the Guarantee Fund, and ultimately upon the Central Fund of the State. Section 8 applies the provisions of Section 5 of the Land Act of 1923 relating to the costs fund of the bonds issued under this Bill. Section 9 directs that in the accounts kept of the Land Bond Fund the Minister shall distinguish between transactions financed by the issue of land bonds under previous Acts and between transactions financed by the issue of each series of land bonds under the present Bill. Section 10 gives the usual power to the Minister for Finance to make regulations for carrying the provisions of the Bill into effect, and to adapt, for the purposes of the Bill, any provision relating to land purchase finance contained in any previous Act.
I think I have given a fairly full explanation of the principles which underlie this Bill and of the manner in which it is proposed to operate it. I have only to say in regard to it that it is a Bill of extreme urgency: that many important transactions are held up awaiting its passage into law. I trust that the House will see its way to facilitate me, if possible, by permitting me to take all the stages to-day so that the Bill may be in the Seanad next week and may become law before the close of the financial year.