I move: "That the Bill be now read a Second Time."
The explanatory memorandum which was circulated with the Bill outlines the content of the Decimal Currency Act, 1969 and describes in detail the further provisions now contained in this Bill. When the 1969 legislation was before the House it was explained that this second Bill would be needed to deal with various matters of detail in connection with the changeover and that the Decimal Currency Board were studying the matters which would need to be included. The Bill now before the House is based on the board's recommendations.
The board's bulletins and other publications are supplied to Deputies as they are issued and copies are available in the Library. Many Deputies will therefore be already aware of the general background to this legislation and of what is involved in the introduction of decimal currency on 15th February, 1971. It may help, however, if I mention some salient points about the changeover.
Our decimal system will be the £— new penny system. The Irish £ remains unaffected, of course, by the change of currency system and it will be the major unit in the new system as it was in the old. On decimal day, 15th February, 1971 the banks, Government Departments, CIE and a large number of business firms will switch to the use of decimal currency for all their transactions. Decimal day will also see the issue into general circulation of the three bronze decimal coins:
the 2 new pence—value 4.8d.
the 1 new penny—value 2.4d.
the ½ new penny—value1.2d.
The three cupro-nickel decimal coins are already in circulation and are being used as their £sd equivalents in value. These coins are:—
the 50 new pence—value 10/-
the 10 new pence—value 2/-
the 5 new pence—value 1/-
From decimal day these three coins will begin to be used in their decimal denominations.
An overnight switch from £sd to decimal currency working by all shops and businesses in the country is not possible. Up to decimal day all transactions between firms and between individuals must be in pounds, shillings and pence. To enable businesses to change to decimal currency working cash registers and other machines throughout the country must be converted or replaced. This machine task has to be spread over a period since the capacity of machine suppliers is not unlimited.
There must therefore be a changeover period beginning on decimal day. During that period both currency systems will be legal—except that cheques must be written in decimal currency—and the old 1d, 3d and 6d coins will continue to circulate for the purpose of £sd cash transactions. It is not possible at this stage to forecast precisely what length of changeover period will be needed by businesses; but it seems likely that the switch to decimal currency will be completed in all sectors within a year or so following decimal day. In the interest of efficiency it is desirable that the changeover period should be as short as possible.
I now turn to the Bill itself, the purpose of which is to establish the legislative framework for effecting the changeover. It does not attempt to legislate for every decimalisation problem. Statutory arrangements are required only for cases where serious inequity or large-scale administrative difficulties could otherwise arise.
Section 1 deals with the interpretation of the Bill. The effect of section 2 is that cheques must be written in the new currency on and from decimal day. Section 3 is intended to facilitate the banks in the days preceding decimal day, when they will have the massive task of converting all their customers' balances to decimal terms. Section 4 provides for the conversion to decimal terms of £sd amounts written on cheques and similar instruments drawn before decimal day but not paid in until on or after that date. Section 5 prescribes the method of conversion as from decimal day of references to shillings or pence in bank balances.
This conversion will be done on the basis of the Whole New Penny Conversion Table given in the Schedule to the Bill. The banks will account only in whole new pence. This Table therefore gives the amounts in whole new pence which are nearest in value to £sd penny amounts up to 2s. Some individual debtors or creditors may gain or lose marginally through use of the Table. However, the maximum loss or gain will be 1 1/5d and this will usually be negligible in relation to the total due. In the overall the Table will give equitable results because it is designed so that increases and decreases due to rounding, balance out.
I now turn to the question of money transactions in general. During the changeover period it will be possible to make in cash an exact settlement of every £sd debt because the £sd system will still be legal and the old coins will be in circulation. If an amount to be paid includes old pence, however, it will not be possible to write a valid cheque which settles the debt exactly. Section 6 of the Bill therefore provides that £sd amounts paid by cheque during the changeover period will be converted to decimal currency on the basis of the Whole New Penny Table, so that a valid cheque can be written for the resultant amount. Under section 13 of the Bill the Whole New Penny Table is also prescribed as a basis for settling in the new currency —whether in cash or by cheque—any £sd amounts that have to be paid after the changeover period. At that stage the decimal system will be the only legal currency system and the £sd coins will have been withdrawn.
The position of regular weekly or monthly payments such as mortgage repayments, ordinary life assurance premiums and hire purchase instalments is dealt with by section 7 of the Bill. As in the case of any other £sd debt, a person making such a payment will retain the right to pay the existing £sd amount in cash during the changeover period. If he prefers to pay in decimal currency during the changeover period he will be free to convert the shillings and pence on the basis of the Whole New Penny Conversion Table and to pay that amount. After the end of the changeover period the payment must be made according to the whole New Penny Table.
A special arrangement is however necessary in regard to premiums payable under industrial life assurance policies or friendly society contracts. A large number of such contracts involve very small weekly cash payments and many of these do not convert exactly into decimal currency terms. Application of a conversion table individually to such small payments would in some cases cause a relatively appreciable change in the amount of the payment. Section 8 of the Bill will enable the Minister for Industry and Commerce to make regulations prescribing an equitable solution to come into effect as from decimal day. It is intended that these regulations will prescribe that the total £sd amount payable over a period of four weeks will be converted into the nearest equivalent in decimal coins that is, to the nearest nearest half new penny. For example, a premium of 1d a week—that is 4d for a four weekly period—will become 1½ new pence payable over four weeks, that is to say nothing in the first week and a new halfpenny in each of the following three weeks. In this example the policy holder would be paying slightly less than before but in another case he might have to pay a fraction more. Benefits payable under policies will not change.
Sections 9 and 10 contain an important group of provisions concerned with conversion of statutory references to amounts of money which include shillings or pence. The bulk of statutory references to £sd will not give rise to any difficulty as they will convert exactly to decimal currency terms. In some cases, however, it may be necessary to make some slight adjustment if the amount does not convert exactly. Section 10 of the Bill gives the necessary powers to enable this to be done. The powers in this section will not be used to make any changes that are not required for decimalisation.
The provisions of section 14 of the Bill will ensure that the changeover to decimal currency does not invalidate any contracts or other formal documents which contain references to amounts of money in £sd. For example, if after the changeover a person makes a will which mentions an amount in £sd. For example, if after the changeover a person makes a will which mentions an amount in £sd, it will not be invalid. However, all payments under £sd contracts and other legal documents will fall to be made in decimal currency under section 13 of the Bill after the changeover period. The Bill does not say how all £sd references mentioned in contracts or other legal documents are to be converted to decimal terms. There is no need for it to do so. References to £sd in these documents need be altered only at the instance and with the agreement of the parties concerned. Different methods of conversion may be appropriate depending on the type of reference involved. Many £sd references in contracts and agreements are not payable sums but merely items in a calculation—perhaps, a unit price in a contract for the purchase of thousands of units. Where it is decided to convert these references exact conversion rather than application of a conversion table will be appropriate in order to minimise the differences between final amounts for payment.
It is sometimes suggested that the changeover to decimal currency will give rise to an overall increase in price levels. There is no foundation for this. Many prices will not be affected at all by the changeover to decimal currency. There will be no reason to alter the prices of articles costing £1, £2, £3 and so on because the £ will not change. Similarly, the prices of articles costing 6d or any multiple of 6d will be exactly convertible because sixpence is worth exactly 2½ new pence. For other prices the use of a new halfpenny conversion table is being promoted. This table gives to the nearest half new penny the decimal currency amounts corresponding to £sd amounts involving odd pence and is so constructed that over the whole range of prices up to one shilling increases and decreases cancel out. The use of the new halfpenny table, the good sense of traders, the force of competition and the public alertness which will result from the activities of the Decimal Currency Board, will all combine to ensure that decimalisation as such will not result in an overall increase in the level of prices. Furthermore, any apparently unjustified price increases coming to notice will be investigated by the Department of Industry and Commerce.
During the changeover period those who sell goods or services will offer them at a decimal price or at an £sd price. Once a shop has gone decimal, their prices will be decimal prices only and it will not normally be open to the customer to decide that he prefers to pay an £sd price. There will not be two prices. This does not mean that people will have to make a point of carrying both currencies.
Notice taken that 20 Members were not present; House counted and 20 Members being present,