Committee on Finance. - Local Loans Fund (Amendment) (No. 2) Bill, 1953—Money Resolution.


Go bhfuil sé oiriúnach pé muirir ar an bPríomh-Chiste nó a thoradh fáis agus pé íocaíochta as an gceanna d'údarú is gá chun éifeacht a thabhairt d'aon Acht a rithfear sa tsiosón seo do leasú Acht Ciste na nIasacht Aitiúla, 1935 go 1953.

I take it that that is the Money Resolution?

That is right.

The acting-Minister for Finance seems to be under some illusion. What I am asking for on the purely fiduciary aspect of this legislation is that rates of interest shall be reduced to our own people. I am calling into comparision the fact that while we are charging an individual in the City of Dublin 6¼ per cent.—or is it 6½ per cent.?—for small dwellings acquisition loans, we are lending £62,000,000 sterling at less than 2 per cent. to the British Government. Here is my modest proposal. It ought to be accepted as axiomatic by Oireachtas Eireann that if our people make accessible to the British Government £62,000,000 at less than 2 per cent., ways and means must be found to make money available to our own Government at 2 per cent. Is that an extravagant proposition? I then said that you have taken the decision to spend £20,000,000 over the next four years on what you are pleased to call national development and what I describe as putting whiskers and a red gown on de Valera to make him look like Father Christmas. You defended him on the ground that you were troubled about the staggering increase in unemployment and that that was the reason why you ventured to approach the Oireachtas for authority to spend £5,000,000 of borrowed money without introducing a Supplementary Estimate.

I asked the Minister what method would produce remunerative employment of a permanent character for unemployed men better than to take £1,000,000 out of that £20,000,000 and use it to bring down the rate of interest on loans made to local authorities out of the Local Loans Fund for the purposes of the Small Dwellings (Acquisition) Act at a rate of interest of 1 per cent. on condition that they would charge borrowers no more than the cost of the administration of the loan—¼ per cent. or ½ per cent. If the Government would expend £1,000,000 out of this £20,000,000 that we have authorised over two or three years— not £1,000,000 in one year but £1,000,000 spent over two or three years while the £20,000,000 we have authorised under this new Bill is going out—it would produce more remunerative, permanent and dignified employment for our people building houses for their own neighbours in six months than all the other schemes envisaged by the Government and local authorities. Is that modest proposal one which should drive the acting-Minister for Finance to a frenzy of indignation with me?

The acting-Minister for Finance speaks in derision of the fact that, while we were in Government, the external assets of the Central Bank increased by some £40,000,000.

The financial policy of the Government and the repatriation or otherwise of external assets do not arise on this Money Resolution.

I am answering an express statement made by the acting-Minister for Finance.

I have allowed the Deputy to proceed up to the present but what does arise is whether this amount should be made available.

And at what rate.

There is no rate specified.

No. It is specified by regulation made by the Minister for Finance.

What is relevant is whether that money should be made available.

The rate is also relevant. We were told at one time that we dissipated our assets; now we are being told we accumulated them too fast. Here is the record. In September, 1948, we reduced the rate on local loans for the purposes of the Small Dwellings (Acquisition) Acts from 4¼ per cent. to 3¼ per cent. I ask Deputies to note that. The last year when the rate of 4¼ per cent. operated, there was issued £217,000 over the whole country. We brought it down to 3¼ per cent. and the issue went up to £1,118,000. We held it at 3¼ per cent. and the issue went up to £1,149,000 in 1950; it then went up to £2,791,000. I do not think any issues were made before the end of the financial year 1953 after the rate was changed. The rate was changed on October 10th but there was not a local authority in Ireland that had not a very large balance on hand. I think it is true to say that up to 31st March, 1953 there was not a penny of the new dear money issued to borrowers under the Small Dwellings (Acquisition) Acts. As a result of that the issue went up to £3,041,000.

In regard to the issue up to March, 1954, the Minister naturally would not have the figure complete but he would have it up to 31st December. However, he was determined not to give it but gave some footling figure about the total number of houses built which amply justified my case that we should provide cheap money. There are plenty of hard-working people in this country who are anxious to build their own houses. The Minister stopped giving me the figures after the financial year ended 31st March, 1953. He started giving me numbers and mixing up municipal housing with Small Dwellings (Acquisition) Acts housing. He then told me that if there had been a reduction in the rate of building it was because the demand for houses was dying down.

If that thought dwells in the acting-Minister for Finance's mind he is mad. I craved from the Dublin Corporation a municipal house for a man who was living with his wife and two children in one room in a tenement house and who was willing and anxious to pay rent for a municipal house. I was told by the officials of the Dublin Corporation, who I am satisfied were doing their best, that they had not yet dealt with the families living six in a room and that they could not consider the case of people living four in a room for at least 18 months. Are we all daft to believe the acting-Minister for Finance when he stands up here and says that one of the reasons the housing industry is declining is that the demand for houses has been largely satisfied? He then adds that there are two areas which may be affected, Dublin and Cork, and that as regards Dublin the reason is that a sewerage scheme is under construction in North Dublin. That is tripe. Ask the builders of this city what is the position. How many people who wanted to build houses of their own abandoned the hope of doing so when the cost of money went up to 6½ per cent. under the Small Dwellings (Acquisition) Acts? Ask any practical builders around the City of Dublin what the demand for houses of the £2,000 class would be if money were readily available to borrowers at 2 per cent. or 2½ per cent.?

It must be remembered that every man who sets about building a house and who is at present resident in Dublin is not living in a nest in a tree. When he builds his own house and moves into it, he vacates other apartments which become available to someone else who is, perhaps, living in one room. A tenement dweller need not necessarily move straight away into a house. It might be well to allow the thing to filter down, to let the tenement dweller move into a modest house which has been vacated by a man who has obtained a Small Dwellings (Acquisition) Acts house, the occupier of which has in turn built his own house. Thus you have people moving up gradually until everyone is living in a modest but adequate house.

I ask those Fianna Fáil Deputies who are listening to me—there are three there, one of whom is asleep—if there is one of them, if he but spoke his honest heart, who would not agree with me that what I said here to-day is relevant and true. Would there be any hope of their taking the acting Minister for Finance aside and telling him that they insisted on his changing his mind, that there was no use trying to hold that line that it is a good thing to lend money to the British Government at 1? per cent. and charge our own people 6½ per cent.?

I happen to know that a large number of the members of the Fianna Fáil Party think this is wrong. I happen to know that a number of them, if they had the courage, would force the Minister for Finance to do something about it. I have put forward a new proposal not only for the adjustment of interest rates but for the allotment of £1,000,000 out of £20,000,000 to house our people and to give employment. Is there a member of Fianna Fáil now who has the spunk to stand up and support me? If so, I will give him an undertaking in advance that I will not call for a division or force him into the wrong Lobby. Is there a man amongst you who has the spunk to say what he believes?

Deputy Dillon is completely wrong in stating here to-night that people are paying 6½ per cent. for money under the Small Dwellings (Acquisition) Acts in Dublin City.

No. You have the rump of £350,000 we left you which you have now used up.

There is nobody in Dublin paying 6½ per cent. for money to-day for houses under the Small Dwellings (Acquisition) Acts.

Because the Dublin Corporation is using money we gave them at 3¼ per cent.

Dublin Corporation borrow from the public to meet their. housing requirements. If they borrow at 5 per cent., they lend at 5½ per cent. To-day, all we charge in respect of loans under the Small Dwellings (Acquisition) Acts is 5½ per cent.

Mr. A. Byrne

It used to be 3¾ per cent.

It used to be 6¾ per cent. under Fine Gael.

That was in 1929.

Deputy Dillon may be mixing up the Dublin County Council with the Dublin Corporation. I take it that they charge approximately 5¾ per cent. under the Small Dwellings (Acquisition) Acts: it may be slightly less than that. Dublin Corporation charge 10/10 per cent. where the Dublin County Council charge 11/2 per cent. That is not 6½ per cent. Unlike Deputy Dillon, I do not claim to have an overflow of intelligence. Dublin Corporation are more than satisfied with the generous grants we are getting from the Government to deal with our municipal housing.

I am talking about the Small Dwellings (Acquisition) Acts.

You dealt with both. You dealt with municipal housing as well as with housing under the Small Dwellings (Acquisition) Acts earlier this afternoon.

On a point of order. May I suggest that neither I nor Deputy Gallagher nor the Minister is relevant in discussing Dublin Corporation municipal housing on a Local Loans Bill? Dublin Corporation cannot borrow money——

Were you not blathering there for an hour on Dublin Corporation?

Deputy Gallagher is in possession.

I am talking about housing under the Small Dwellings (Acquisition) Acts.

You were talking about what Deputy Gallagher is now talking about.

This Money Resolution is in respect of the Local Loans Fund (Amendment) (No. 2) Bill, 1953.

Yes, and Dublin Corporation cannot borrow for municipal housing from the Local Loans Fund.

I simply rose to clear the point that Deputy Dillon made— that Dublin Corporation were charging 6½ per cent. in respect of loans under the Small Dwellings (Acquisition) Acts. I think he made a mistake there. I do not want to attack anybody but I feel it is important that the actual facts of the case should be stated clearly—especially by a Deputy like Deputy Dillon who is a former Minister. If an insignificant Deputy such as myself made wild statements, people would not pay a great deal of attention to them: I do not know whether or not people pay a great deal of attention to Deputy Dillon. However, the rate of interest for Dublin Corporation loans under the Small Dwellings (Acquisition) Acts is 5½ per cent.—a ½ per cent. more than it costs Dublin Corporation.

I feel I would not be in order now in going into questions on municipal housing. The Dublin Corporation are more than satisfied with the generous grants we get from the Government. Some of this money will go to Dublin Corporation for housing purposes in the way of grants. If we house a person who is ordinarily due for housing we get one-third of the interest charges. If we clear a slum district we get two-thirds of the interest charges and, in addition, substantial grants. We would get as much as £1,000 for an ordinary weekly rented house: I am subject to correction there but I think the figure is close on £1,000, if not more. If we house a person under the tenant purchase scheme, we get £275. All this money which comes our way for housing is doing a good job of work. We are more than satisfied with the generous grants which we have been getting to meet the interest charges and for slum clearance. I rose mainly for the purpose of clearing up that point. I do not think it is right for anybody to say that it is a question of 6½ per cent. when the correct figure is 5½ per cent. I should like to meet Deputy Dillon anywhere on a good housing debate. I am sure I could satisfy him that we are doing a good job of work in Dublin and that he should not be criticising the position.

In 1947, the housing needs of the local authorities outside Dublin and Cork were found to be, on survey, about 40,000 houses. By the 31st March of this year, 24,000 of those 40,000 houses will have been completed. Already, ten county councils have either finished or almost finished their programme and then there are a large number of other local authorities that are in course of meeting the demand for houses and, within a year or two, they will have built all the houses for which there is a demand. That is not to say, as Deputy Dillon tried to make the House believe, that I regard the housing condition of the country as a whole as satisfactory. There are still a large number of houses to be built in Dublin.

As Deputy Gallagher said, the provision which the Government is making for public authority housing is very generous indeed. The provision that we are making for people who can build houses for themselves—people who have some money and who get the balance out of the Local Loans Fund— is very generous. The amount of money they can get has been increased very considerably. It used to be a few hundred pounds. Now it is up almost to £2,000. I think that that is what they can now get out of the Local Loans Fund. Further, it is at a reasonable rate of interest, having regard to what the Government pay for money and, indeed, having regard to what is paid for money in other countries in Europe.

I do not want to follow Deputy Dillon into technical points. If we wanted to have a system here whereby the Government would lend money free of interest, we could have that system. However, we have a system whereby we induce our people to save and we give them a rate of interest to induce them to do so. We have to get back from the people who borrow from the Government a rate of interest something like that which we give to the people from whom we borrow. The rates of interest at which people are getting money for building houses here are very reasonable indeed. I do not know of any other country in which a person can get 80 per cent. or 90 per cent. of the total money that he requires to build a house. In many countries they have to have at least 50 per cent. of the money themselves before they can get a loan even at a much higher rate of interest than people have to pay here.

Last October, we heard the rates for advances in various countries. It is interesting to hear what the position is in a few European countries. The rate here was about 5¾ per cent. In Holland it was 4 to 4½ per cent. In England it was 4½ to 6½ per cent. In Belgium it was 5 to 6½ per cent. In France it was 6 to 8 per cent. In Italy in was 7 to 9 per cent., and in Western Germany it was from 6 to 10 per cent. As I have said, the rate here was about 5¾ per cent. In lots of those countries a person who wanted to build a house for himself and who had very little money could not get anything like 50 per cent. of the money he required: he could not get 25 per cent. of it. In many of those countries the people could not get 5 per cent. of the money they required. If they had not the complete amount of money, no one would advance them money to build their own houses.

So what?

We have here a system whereby people who have a couple of hundred pounds can get the balance on loan from us to build a house—and, by and large, we give it to them at a reasonable rate of interest and under conditions of repayment that they are very glad to avail of. The Government borrow money from people at a certain rate of interest and administer loans at some expense. Are the Government to subsidise that rate of interest by lending it at less than it costs the Government? If the local authority borrows money from the Government at 4¾ per cent. will the local authority lend the money to the private individual at less than 4¾ per cent.? The usual thing is for the local authorities to put on about ½ or ¾ per cent. to the charges for this house purchase scheme over and above the rate at which it gets the money or, as Deputy Gallagher pointed out, in the case of the Dublin Corporation, over the rate at which the corporation borrows from the public.

The people who have built houses for themselves out of their earnings or savings are all contributing to the pool out of which these funds are granted and large subsidies paid. Is it right that we should give a higher subsidy than we are giving at the present time? The subsidies here are very high indeed and the terms and conditions of these Small Dwellings Act loans are very good, having regard to our circumstances.

I, for one, do not trust Deputy Dillon's wild promises of what he would do if he got into government again. The experience of our community, the last time the Coalition group got into power, was that when they became the Government they did exactly what they promised the people not to do and failed to do the things they promised. One matter in which they did exactly the opposite to what they had promised was in relation to the cost of money for local loans.

On 13th June, 1946, I was Minister for Finance and I reduced the rate which local authorities had to pay for local loans from 4¼ to 2½ per cent. and from 16th June, 1946, until the next Government came in——

Until when?

Wait now for a second. I am coming to the "when". From 13th June, 1946, when the rate for local loans was reduced to 2½ per cent. until the Coalition Government came in, night, noon and morning, Deputy Dillon, Deputy McGilligan and all the rest of them were prating about the waste paper in which we had our money invested in England and why were we charging 2½ per cent. to the unfortunate people of this country, why would not we realise some of this waste paper and give it to them to build houses at less than 2½ per cent. What do you think happened when they came in? They were not in a week—that is a slight exaggeration— they came in on the 18th February and on 5th May they changed the rate for the Local Loans Fund from 2½ per cent., at which it had stood for a couple of years. Did they change it to this 1 per cent. that Deputy Dillon is talking about? No. They changed it from 2½ per cent. up to 3¼ per cent. If this country had the misfortune to have Deputy Dillon and the Government that he would collect in power in the morning, instead of having a decrease in the rate of interest on local loans, we might have an increase and it might come up to what people in other parts of the world have to pay for money for this purpose.

If you gave it at 2½ per cent. in 1946, why are you charging 5½ per cent. now?

That is a long and technical discussion and I do not want to go into it.

That is a perfectly simple question.

The question has been answered by me, exactly, with great care, in the speeches I made on the Appropriation Bill last November and I recommend the Deputy to read them. It was also dealt with by me in the Seanad on the 26th November, 1953. I do not want to go into that matter in any great detail, even if the Ceann Comhairle would allow it. Sometimes people get tired repeating an obvious truth and I am not prepared to go over all the technical explanations of the financial situation that I went to the trouble to outline in the speeches to which I have referred.

Resolution put and agreed to.
Resolution reported and agreed to.