asked the Minister for Finance whether, following the procedure adopted in the purchase of Kildare Street offices for the Department of Agriculture and Fisheries, it is now Government policy to purchase office accommodation in Dublin; and whether any financial consideration has been given to the feasibility of purchase rather than rent in the case of existing nearby accommodation.
Ceisteanna — Questions. Oral Answers. - Government Office Accommodation.
69.
Now office blocks are generally offered for renting only. The proposed block in Kildare Street has a number of unusual features in regard to location, planning and terms of lease and the arrangement made in this case does not imply any general decision in favour of purchase rather than renting.
Consideration has not been given to the feasibility of purchasing any other large new office building.
Would it be true to say that in some cases developers have been assured before any building commenced that the Government would be interested in renting certain offices from them? Has this been so in previous cases?
I do not think so.
Would the Minister agree that it is not a healthy situation, to say the least, that, for instance, in 1967 the annual rental charge for Government offices in the city of Dublin was in the region of £250,194, that in 1968 it had risen to £343,260, and that in the current year it is £347,506? Does the Minister not think that the Government should purchase these blocks rather than be involved in an annually increasing rental charge?
I am sure the Deputy will appreciate that if we purchase them we still have to finance every year the capital involved in the purchase. It does not matter a great deal whether we pay interest on capital for purchase or rent. This is something to which we have given a great deal of thought. Capital is scarce and in view of all the demands for capital for housing, sanitary services, education and so on, it probably suits us to avoid a heavy outlay of capital for buildings and to rent them instead. However, it is something we review from time to time.
On an eight-year purchase calculation, to be conservative, the capital value of what developers now possess in the city of Dublin would be in the region of £3 million a year, and we are involved in financing that operation by our annual rental. Would the Minister say whether the property owning interests who have these office blocks have a seven-year lease operation or a longer lease operation in each case? In other words, can these rents be changed after seven years?
We would normally have a seven-year break.
Therefore, all these rents can be increased drastically when the seven-year period is up?
Or we can get out.
Yes, but then it would appear that we would, in the case of 1968, have said goodbye to £343,260.
No, it means we have taken on more office accommodation.
On a similar renting basis again?
By and large we pay roughly the same for all our accommodation.
The Government would want to give serious consideration to changing the renting system in regard to office accommodation.
When capital is scarce and we need capital for hospitals, schools and houses, it may be better to rent. We do not like locking up capital in office blocks.