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Dáil Éireann díospóireacht -
Wednesday, 7 Aug 1940

Vol. 80 No. 17

In Committee on Finance. - Local Loans Fund (Amendment) Bill, 1940—Second and Subsequent Stages.

I move: That the Bill be now read a Second Time. The primary purpose of this Bill is to authorise the provision of an additional £6,000,000 for issue as local loans. The Local Loans Fund was established on a statutory basis on the 1st May, 1935, pursuant to the Local Loans Fund Act, 1935. Section 4 (3) of that Act limited the issues that might be made out of the Fund by way of loans to a total of £5,000,000. Section 2 of the Local Loans Fund (Amendment) Act, 1937, authorised an additional £6,000,000. Authority is sought in the present Bill to raise the limit to £17,000,000.

The aggregate of loans issued from the fund from its establishment in 1935 to the 30th June, 1940, was £10,319,309, made up as follows:—housing—urban, £2,877,009; rural, £4,387,548; small dwellings acquisition, £658,718; Gaeltacht, £65,857—a total of £7,989,132; Public Health, £941,865; hospitals and county homes, £736,382; vocational education, £452,711; drainage, £149,593 and other services, £49,626, making a grand total of £10,319,309. The total commitments of the fund over the same period, including the carryover of loans sanctioned but not issued before the 1st May, 1935, amounted to £13,246,487. As the full amount of a loan is sanctioned before any issue is made on foot of it, and as loans are ordinarily paid out in instalments, the aggregate of loans sanctioned up to a given date will always be substantially in excess of the aggregate of the issues up to that date. The existing statutory limitation of £11,000,000 applies only to issues of loans.

The issues, aggregating £10,319,309 up to 30th June, 1940, left a balance of less than £700,000 available for subsequent issue. This should not last beyond about the end of next month. The additional £6,000,000, for which the authority of the Oireachtas is now being sought in Section 2 of the Bill, should suffice for about three years, or up to about the summer of 1943, when fresh legislation will be required.

A few subsidiary matters are also included in the Bill. Section 3 extends to all borrowers in arrear with payments in respect of local loans the provision in the existing law in the case of local authorities, which enables such arrears to be recovered out of any Government moneys payable to the borrower. Section 4 applies to borrowers, like harbour boards and public utility societies, the provisions of Section 2 of the Local Authorities (Miscellaneous Provisions) Act, 1936, which gives protection to the Local Loans Fund against evasion of repayment of a loan on the ground that the borrowing body was not properly constituted or exceeded its powers. Section 5 regulates the making of local loans by the Minister for Finance through an intermediate body like the Commissioners of Public Works. Section 6 is designed to remove doubts that have arisen as to the powers of the Commissioners of Public Works in relation to the making of harbour and other loans. Sections 7 and 8 are designed to clarify the position as regards the disposal of money received in repayment of loans made before the establishment of the Local Loans Fund.

A danger is apparent in Section 4, that, in the administration of the Local Loans Fund, care which an institution of State like the Local Loans Fund should take, might be omitted. In the normal course, one would expect that part of the duty of a body in charge of a fund like the Local Loans Fund would be to ensure that the constitution of bodies with which they were doing business, and such matters, would be the subject of special investigation. There have been cases in which the authority of local authorities was defective by reason of their constitution or for some other cause. Bodies which were not legally constituted got advances from the fund. If this provision is inserted, the grip, from the Ministerial point of view, on the money is secured. However, it ought not to be taken by the Ministry that it is no business of theirs to inquire into the constitution of each body which makes application for these loans or to ensure that the bodies concerned are legally performing their duties.

In my own experience in connection with local government many years ago, there were cases in which members of local authorities put up the objection that their predecessors had not been acting according to law and that the Local Government Board had responsibility for this position. The ratepayer, it was argued, should not be saddled with responsibility for burdens illegally incurred by persons who were, for a time, in apparent control of these local authorities. If the Minister will give an undertaking to the House that there will be no relaxation of vigilance on the part of those responsible for distributing these local loans and that care will be taken to ensure that the bodies are properly constituted and are acting legally, there will not be so much objection to those other clauses, which are, however, very extensive. They are all on one side—designed to secure the fund against loss. After all, somebody must pay, and it is scarcely fair to ratepayers in any part of the country that they should be saddled with responsibility for laxity on the part of the central authority when persons in temporary control of local authorities abuse their powers without suitable action being taken by the central body.

I think that there should be more care in the lending of money under the Local Loans Fund. In Cork, a group of men, numbering five, was able to get a £10,000 loan from the Board of Works, and it might surprise the Minister to learn that their capital amounted to £7.

Their credit must have been good.

Their credit was so good that the corporation had to come to the rescue. We had very strong strictures to pass on the Department which allowed them to get that money without adequate inquiry. The Board of Works gave £10,000 to them and the local authority gave them £3,500. When about £20,000 had been expended on the houses, the corporation had to come to the rescue. If they had not done so, somebody might have got the whole property for £5,000 or £6,000. It shows a lamentable lack of attention when men with capital amounting to £7 could get loans of £10,000 and £3,500. Like Deputy Cosgrave, I hope that, in future, when people look for this money, more inquiries will be made as to their credit and their financial status.

I am entirely at one with Deputy Cosgrave and Deputy Hickey, that the fullest possible examination should be made by those responsible—the Ministry of Finance and the Board of Works—into the bona fides and legal position of every applicant for a loan, whether an individual or a local authority.

I must say that I was rather surprised to hear that there has been any such liberality and want of due investigation in the case of public authorities, such as in the cases Deputy Cosgrave referred to and in the case that Deputy Hickey referred to. Since I came into the Dáil, and particularly since I became a Minister, only one case came under my notice where a local authority, or persons acting on behalf of a local authority, claimed that their predecessors, who had got a loan from the fund that was there before the Local Loans Fund was set up in a statutory way, had exceeded their powers or had not acted legally. I heard of one case; only one case came under my notice. No doubt Deputy Cosgrave has heard of others. I am surprised to know there was a number of cases, but I take it that Deputy Cosgrave, who has an intimate connection with local government, does know of cases. I was under the impression that there was always the very strictest scrutiny and the closest examination of the legal position and the bona fides of every individual and local authority. I thought that was so, and I am sorry to hear from Deputies that there have been cases where there was not that strict examination that should have been carried out. All I will say is that I will see to it, as far as I, as Minister for Finance, can, that it will not occur in future.

Question—"That the Bill be now read a Second Time"—put and agreed to.
Ordered: That the Committee and Final Stages be taken to-day.
Bill passed through Committee without amendment and reported.
Question proposed: "That the Bill be received for final consideration."

Is there any possibility of reducing the rate of interest to what it was pre-war? The rate as it exists, coupled with the fact that there have been considerable increases in the prices of materials, is militating very much against the building of houses. Perhaps the Minister could give an indication whether there is a possibility of reducing the existing rate?

Not immediately.

But the Minister will keep the matter in mind?

Is there any reason why we should not get money as cheaply from local loans as elsewhere? Local authorities can get money more cheaply than from the Local Loans Fund and is there any explanation?

I have encouraged them to do so. I am all out to encourage them to get money anywhere they can as cheaply as they can.

They are not allowed in certain circumstances.

Loans have been offered from certain scources across the Channel, but there were conditions attached to those loans which we could not accept.

Question agreed to.

Question—"That the Bill do now pass"—put and agreed to.
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