Dáil Éireann díospóireacht -
Wednesday, 6 Mar 1935

Vol. 55 No. 3

Committee on Finance. - Vote No. 72.—Advance to the Guarantee Fund.

Mr. O Ceallaigh

I move:—

Go ndeontar suim Bhreise ná raghaidh thar £250,000 chun íoctha an Mhuirir a thiocfaidh chun bheith iníoctha i rith na bliana dar críoch an 31adh Márta, 1935, chun Roimhíoc do dhéanamh leis an gCiste Urraíochta.

That a Supplementary sum not exceeding £250,000 be granted to defray the Charge which will come in course of payment during the year ending 31st March, 1935, for an advance to the Guarantee Fund.

This Supplementary Estimate will enable a further payment to be made to local authorities on foot of local taxation grants absorbed in the Guarantee Fund in meeting arrears of land purchase annuities since funded under the provisions of the Land Act, 1933. The original Estimate for this service for 1934-35 was a sum of £300,000. Taking account of the £300,000 voted in this year's original Estimate, the Exchequer has already paid out in respect of funded arrears a sum of £1,916,000 which, with the sum of £250,000 that the Dáil is now being asked to vote, makes a total of £2,166,000. The Land Act, 1933, provided for the funding of all arrears of annuities in respect of the period of three years ended with the May-June gales of 1933. The arrears under the Act of 1891, and subsequent Land Acts, so funded total £4,218,000 approximately. Of this amount £1,844,847 6s. 10d. relates to arrears on foot of the May-June, 1933, gales, which were made good from the Vote for 1933-34 for the Land Commission. The balance, £2,373,253 2s. 1d., represents the funded arrears already made good by means of local taxation grants absorbed in the Guarantee Fund. In respect of these funded arrears amounting to £2,373,253 2s. 1d. a sum of £1,916,000 as indicated above has already been advanced from the Exchequer, leaving a balance of £457,253 2s. 1d.

Prior to the funding operations, these arrears have been made good at the expense of the local authorities by means of draws on the Guarantee Fund and during the progress through the Oireachtas of the Land Bill of 1933, the Minister in charge indicated that recoupment would be made to the local authorities from time to time. No specific provision for such recoupments was made in the Act, but as mentioned in June last year, it has been the intention of the Department of Finance that payment would be made as and when the finances of the local authorities appeared to require it, and the Exchequer's position permitted it. Such recoupment is in fact the reason why funding annuities are payable to the State to be appropriated as public revenue. It is common knowledge that the finances of many county councils continue in an unhealthy condition due to the large volume of uncollected rates and the absorption of local taxation grants in the Guarantee Fund on account of land annuities in arrear this year. It is in these circumstances that the present Estimate for £250,000 is being brought before the House.

Mr. Brennan

The Minister says that in regard to funded arrears of land annuities, there has been already made good to local authorities a sum of £1,900,000. Is that right?

Mr. O Ceallaigh

Yes.

Mr. Brennan

I think that we should like to have that further explained. My recollection of the matter was that there was a sum of £300,000 made available last year and that, in so far as funded arrears and remitted debts of annuities were concerned, a sum of £1,900,000 has been made good to the county councils under that heading. There is the further sum of £250,000 at the present time which will fill only a very small portion of a very big gap. I understand that the loss to county councils generally will be round about 35 per cent. of their grants—from 30 to 37 per cent. —and this will only go a very small way to meet it. I think if the Minister really considers that there is such a large sum of money due to local authorities as he has mentioned just now by way of the funded arrears of the remitted annuities, now would be the time to make that good to some extent. I do not at all anticipate— if the county councils continue to lose, at the rate at which we are officially informed they are losing—they will be enabled to continue their administration by the distribution of this £250,000. In a question which I put down to-day I asked the Minister to state upon what basis this distribution was to be made and I asked him also on what basis the distribution of £300,000 was made last year. The Minister did not tell me on what basis they were made. He said that a statement of the amounts paid to each county council was being prepared and that

"Subject to adjustments that were necessary in connection with draws upon the Guarantee Fund, at March, 1934, regard was had to the amount of the annuities funded in each county."

There was a rumour abroad part of the time—I do not know how correct it was and I hope it was not correct —that the county councils were really considered on their overdrafts. I know there was an intimation from the Local Government Department that these allocations could not be used for overdraft accommodation, and I certainly would not hold with giving money according to overdrafts because it would be putting a premium on inefficiency. With regard to this present vote of £250,000, if the Minister allocated £300,000 last year on a proper basis, he should be able to tell us what the basis of allocation this year is to be.

Generally, I should like to know from the Minister if a distribution of £1,900,000 has been made by way of meeting the funded arrears, or, generally, where it has gone, or when it has been allocated, and in what way, unless the Minister means that the additions to the Agricultural Grant in the ordinary way have been made in respect of that. If that is so, I do not think that there is any credit to the Minister for it, or any credit to his Government, because, as a matter of fact, they lessened the Agricultural Grant when they came into office. Accordingly, I do not think that there is any credit to them for anything they have done at the present time by way of funded annuities or paying back to the county councils in that way, and I think that something more ought to be done.

Mr. Cosgrave

It is a rather misleading statement for the Minister to speak of this sum of £1,900,000 being voted to local councils. All that the county councils have got in respect of arrears of annuities, which the Ministry, in the Bill that was introduced here, either funded or wiped out, is the sum of £550,000— £300,000 last year and £250,000 now. That is all the hard cash they have got. The arrears amounted, probably, to £100,000 more than that. The Ministry, when they came along and said, "We are going to wipe out arrears over a certain period," must have remembered that they were wiping out a debt that was due to another person than themselves; and this is tardy recognition of the fact. If the funded arrears represent an asset—and apparently, in the minds of the Ministry, they do— they have got no right to hold that asset while people who have contributed towards its making up are left without the money. At least £660,000 has been deducted from the Agricultural Grant over a period, and now all that has been returned is £300,000 last year and £250,000 now.

The Minister stated, in the course of his remarks that the money would be distributed according as the county councils required it or as the Exchequer position permitted it. The Exchequer position does permit it at the moment, and certainly, from all one can read or hear of, the county councils require the money. It seems very strange that, at a time when they are in much need of money, two separate distributions of this money should take place, and it is difficult to follow what the policy of the Ministry is when they tell the county councils that this money is to be utilised in the reduction of overdrafts. The word "overdraft" is capable of a great many explanations and a great many variations in the way in which it can be described. If a county council requires £20,000, or gets £20,000 in the reduction of its overdraft, and if it has to increase the overdraft in the following week by that amount of money in order to keep the social services going, is it not a joke to describe it in the way it has been described here?

Mr. Belton

It is a joke.

Mr. Cosgrave

I presume that county councils, in making up their estimates and striking the rates, take into account all matters, including the overdraft. Was it intended that this sum of money should not be taken into account when making up the estimates or striking the rates? From the way we have heard it described here—that it was to go in the reduction of the overdraft—it would appear as a kind of asset that was not to be taken into account in the general balance sheet of the local authorities. The Minister referred to the fact that £448,000 was deducted from the Agricultural Grant last year. Now, that money was for a particular purpose. It was to have been utilised in connection with unemployment insurance, and it was stated that it would relieve local authorities by reason of the fact that their home assistance charges would not be so great. Now, it was not used during the year. Consequently, it came in as a sort of credit to the Exchequer. Surely, the time when local authorities find it difficult to collect rates is the time when some consideration ought to be given by the Ministry in helping them. The rate position, at the present moment, is not satisfactory in any part of the country, and the county councils have not at their disposal what the Ministry has. The Ministry must have found some difficulty in collecting land annuities even with all the forces and resources at their disposal. Certainly, they cannot blame rate collectors for not being able to do any better than they did themselves, and it is quite possible that the rate collectors have done better. At any rate, this sum is not a sufficient sum. It does not make it what the Government or what the Exchequer hope to gain from the funding of those annuities, plus the amount that was wiped out, and the Minister ought to consider getting a Vote of the full amount that was either funded or wiped out so as to leave these county councils no cause for complaint.

Mr. Brennan

Would the Minister, before he finishes, tell us how it is proposed to administer this £250,000 this year? Would he tell us if it is applicable to the rate year ending the 31st March next? I should like him to tell us that, because it is certainly a puzzle to me how it is going to be administered.

Mr. Belton

Would the Minister tell us what is the difference between paying this into county councils to reduce their overdraft——

Mr. O Ceallaigh

I said nothing about overdraft.

Mr. Belton

Well, is this part of the funded arrears? The Minister nods assent? Well, I distinctly remember when the Minister was giving a slice before—I do not know whether it was here or in a circular issued by the Local Government Department.

Mr. Brennan

It was in a circular.

Mr. Belton

In a circular? Very well, but the sum the Minister was giving them was to go, not to the rates position immediately, but to the reduction of overdrafts. I do not see any difference between them, because if a man gets a sum of money in ordinary business, and if he is unfortunate enough to have an overdraft that goes to the reduction of the overdraft. It helps him with his credit, if he wants another overdraft, when he has paid off so much. This is some of the funded money.

Mr. O Ceallaigh

Yes.

Mr. Belton

Does it complete it?

Mr. O Ceallaigh

No.

Mr. Belton

Will there be much short—£50,000?

Mr. O Ceallaigh

There would be more. Deputy Cosgrave knows as well as I do the difficulties of a Minister for Local Government or any Minister with the Exchequer. I realise the position of local authorities and county councils, and I have tried this year to get as much as I could of these funded annuities arrears for them. In this financial year we will have £300,000, plus £250,000, that is £550,000, and that will liquidate, I believe, about 75 per cent. of the amounts that will have to be deducted from these county councils as a result of the non-payment of land annuities.

Mr. Belton

It also represents land annuities unpaid in the past?

Mr. O Ceallaigh

Yes.

Mr. Cosgrave

So far as the Exchequer is concerned, the only sum at issue is the amount wiped out, and so far as the funded arrears are concerned that is an asset. There is no doubt about that. The arrears wiped out did not amount to £250,000.

Mr. O Ceallaigh

A good deal more.

Mr. Belton

The amount of arrears wiped out was not a loss to the Exchequer, but to the county councils.

Mr. Cosgrave

It is now.

Mr. Belton

I understand these were funded arrears.

Mr. Cosgrave

Both.

Mr. O Ceallaigh

With regard to overdrafts, which are causing a heavy load of additional expenditure on local authorities, and on which very heavy interest has to be paid, it is a counsel of perfection to say that if county councils could do without overdrafts they could reduce the rates. As they have to provide for the payment of interest, they should try, as far as they can, to avoid overdrafts. The reduction of overdrafts means reduction of expenditure. I suppose it is a sign of the credit or good standing of a body when they are able to get overdrafts. Many people in business think it good business to work on overdrafts. I do not regard it as good business on the part of local authorities. They should provide, as far as they can humanly do so, for expenditure during the current year out of revenue, and make provision accordingly. I know that in times like the present, when rates are not being paid as promptly as they should be, and when land annuities are not being paid, it is particularly difficult for county councils to foresee what their actual financial position is going to be. As to land annuities, they cannot know the actual sum affected. This year some of them have been badly hit, but they are getting back from the Exchequer assistance which amounts to 75 per cent., at any rate, of what landholders in each county have failed to pay. The distribution of the £300,000 was made on the basis of the payments to the credit of county councils in the way of land annuities in previous years. The same basis will be used in the distribution of the £250,000.

Mr. Brennan

How does the Minister propose to have this £250,000 administered? Is the amount to go to the reduction of overdrafts, or is it to go to the ratepayers in their accounts? The £300,000 paid last year really went to the relief of the rating position, but not during the current year.

Mr. O Ceallaigh

It is paid within the financial year.

Mr. Brennan

The difficulty is that the financial year of county councils does not coincide with the usual financial year. In the case of county councils it runs to May, June and July.

Mr. Belton

This sum gives relief in the current financial year?

Mr. O Ceallaigh

Yes.

Mr. Belton

Is it a kind of set-off to the disappointment caused by the withholding of settlement of the Agricultural Grants in lieu of unpaid land annuities?

Mr. O Ceallaigh

To help over that situation.

Mr. Belton

It will be given on the basis of valuations.

Mr. Cosgrave

The position is getting serious. County councils make out their accounts and estimate that they will get certain money, and by reason of something they cannot control this money does not come in. It is an impossible position.

Mr. Belton

Will the Minister consider the question of speaking to his colleagues, or telling the Minister for Lands to do his own job and to leave local government and county councils out of the collection of land annuities?

Mr. Brennan

The Minister has not stated the way in which he proposes county councils should administer this money. Is it to go to their credit or is it to go to the ratepayers in the form of further credit notes?

Mr. O Ceallaigh

Credit notes and annuities were the subject of a discussion to-day between the secretaries of county councils to consider the best way of administering them, but we could not get any accepted way.

Mr. Brennan

I do not wonder.

Mr. O Ceallaigh

We will have to consider the matter in the Department again to see how to do it.

Mr. Brennan

Do I understand that the £300,000 voted last year was to be regarded as meeting, not the annuity question, but the reductions made in the Agricultural Grants?

Mr. O Ceallaigh

No.

Question put and agreed to.