Dáil Éireann díospóireacht -
Wednesday, 19 Mar 1975

Vol. 279 No. 5

Land Bond Bill, 1975: Second Stage.

Minister for Lands (Mr. T. J. Fitzpatrick,

Cavan): I move: “That the Bill be now read a Second Time.”

The purpose of this very short and simple measure is to raise the limit on the amount of land bonds which may be created and issued to make advances and pay the purchase moneys of properties taken over by the Land Commission in the course of their land settlement operations.

Section 6 (1) of the Land Bond Act, 1934, imposed a limit of £10 million on the amount of land bonds which could be created and issued. The limit was raised to £15 million by section 7 of the Land Act, 1953; to £25 million by section 2 of the Land Bond Act, 1964; and to £40 million by section 1 of the Land Bond Act, 1969. I may say that the foregoing amending measures proved non-contentious and got speedy passage through both Houses.

Land bonds are created by the Minister for Finance periodically, to meet the requirements of the Land Commission, usually by way of an annual order. The most recent such order was made on 22nd January, 1975, for an amount of one million bonds, bringing the amount created to date under all land bond orders since 1934 to £40 million, which is the total authorised under existing legislation. It is necessary, therefore, to provide statutory authority for the supply of further land bonds, so that the work of the Land Commission may proceed. On the basis of the current level of operations and taking into account the prevailing price of land, a sum of £20 million should be sufficient for five years and this is the amount proposed in the Bill.

Land bonds as a medium of payment for lands acquired by the Land Commission were first introduced in 1923 and since then some 1,316,000 acres have been acquired.

In recent times, in common with other fixed interest securities, land bonds have not fared too well on the stock market, but I would hope that the latest series of bonds created— which bear interest at the rate of 16 per cent—will prove very acceptable to landowners.

The concept of the voluntary purchase of land for cash on the open market by the Land Commission was introduced by the Inter-Party Government in the 1950 Land Act. Since then successive Ministers for Lands have, each in turn, sought to obtain as big an allocation of money as possible for this purpose when the annual Estimates for their Department were being finalised. While the Exchequer position, however, has always acted as an effective brake on ambitions in that direction, nevertheless in the 21-month period 1st April, 1973, to 31st December, 1974, the Government provided the Land Commission with an amount of £3.25 million for the purchase of lands for cash. In the current year the sum provided is £2.625 million, which does not include the additional amount of £490,000 being made available to pay premiums and pensions to farmers who avail of the new retirement scheme. Since the introduction of the system of cash purchases in 1950 to 31st December last, 57,500 acres had been purchased for £5,072,000. The round figures for the 12 months ended 31st December last were 5,700 acres and £1,092,000.

As Deputies are aware, all lands purchased under the retirement scheme—which I initiated in May last —will be paid for in cash. In launching the scheme I drew attention to the fact that the incentives which it offered were very generous, indeed liberal in relation to our national resources, much higher than the EEC guideline amounts and up to the highest level on offer in any member state. I expressed confidence that there would be a substantial response to the scheme which was designed to enable a farmer, if he so desired, to retire with dignity and financial security after a lifetime of hard work. Nor was my confidence unfounded, for the scheme has been very well received and in the ten months to the end of February, 1975, almost 1,200 applications for participation were received. The applications are being dealt with as rapidly as possible and in the cases considered to date nearly 300 farmers have been adjudged eligible to take part in the scheme. In fact, some approved cases have been fully completed and the farmers concerned are already enjoying the undoubted benefit.

It may appear to Deputies that I have digressed somewhat in referring to the purchase of lands for cash and to the retirement scheme, but it was necessary that I should do so if the importance of land bonds in relation to the land settlement programme is to be fully appreciated. With the retirement scheme taking up so much of the cash available, it is inevitable that a large proportion of the general land acquisition should fall to be financed by land bonds.

During the debate on the Estimate for Lands in October and November last, and on other occasions also, Deputies on both sides of the House expressed the view that the system of payment of purchase moneys in land bonds should be done away with altogether. While that is a view with which I would not find it hard to sympathise we have to be realistic and recognise that until the Exchequer is in a position to provide sufficient funds to enable all purchases by the Land Commission to be for cash, land bonds will continue to play a part in the land settlement programme.

During the year ended 31st December last, the total issues of land bonds amounted to around £4.5 million which was the highest ever figure for any period of 12 months, and represented an intake of some 13,000 acres. At the same date proceedings were in progress in respect of a further 60,000 acres, the purchase money of which would be payable in land bonds. These figures illustrate, far more eloquently than anything I could say, the necessity for the present Bill. This measure will ensure that sufficient bonds will be available to enable the Land Commission to press on with the vital task of helping small farmers to get enough land to guarantee them a decent living for themselves and their families and it is on this basis that I commend it to the House.

Mr. Tunney

I am at a loss to know what exactly was in the Minister's introductory speech. I thought it was customary on an occasion such as this that the Opposition were provided with a copy of the Minister's speech. However, that does not change my approach to the Bill. The Minister said this is a relatively simple Bill, but to me it is nothing of the kind. It is a fundamental Bill which is concerned with the whole land question in Ireland and, for the past century, that has been a burning question. It is more than 100 years since the 1870 Land Act was introduced. Since then through one means or another—principally through agitation and the foundation of the Land League in the latter part of the century—there has been perpetual concern on the part of what might be described as the peasantry of Ireland to have restored to them the land which had been removed from them by confiscation and settlement and plantation. An enlightened British Government and the native Government assisted the peasantry towards such restoration. The concern then was for the restoration of the land to the people of Ireland and the destruction of the tyrannical landlordism which then existed.

In earlier Acts there was an acceptance of the principle of land bonds for the purchase of land and that principle was fortified in the 1923 Act. In the subsequent 1923 Act, provision for the creation of bonds up to the sum of £1 million was introduced. In 1934, the new Land Bonds Act provided for the creation of land bonds to the extent of £10 million. At that time it was hoped that that would be the end of the land bond system of purchasing. In an effort to safeguard the interests of the vendor, the Minister was obliged to marry the interest on the bonds to the prevailing national loan interest rate. This was an effort to guarantee that the vendor would get a fair price for his land.

In 1953 permission was sought for the creation of an additional £5 million worth of bonds. That brought the total up to £15 million. The 1964 Act increased that amount to a total of £25 million. Since then during every debate on the Estimate for the Department of Lands, the whole principle of land bonds has been attacked. There is no need for me to give a litany of the names of Deputies whose interest in and knowledge of the land problem was without question. It is rather significant that they were all critical of the purchase of land through the land bond system.

During the debate on the estimate in 1973 Deputy Sean Flanagan, a former Minister for Lands, referred to Deputy L'Estrange who, over the years had been annoying him and other Ministers about the purchase of land through the land bond system, and said he hoped he was now happy because £1 million had been set aside in the capital budget for the purchase of land—we were moving away from the old land bond system and in future land would be paid for in cash.

Speaking in the Dáil on 25th October, 1973, the Minister reiterated his criticism of the land bond system. As reported at column 631, Volume 268 of the Official Report he said:

Deputy Power thought that £1 million was not enough for the purchase of land in cash. I agree that every Minister for Lands would hope to see the day when land is bought and paid for in cash and nothing else and we will work towards that.

The Minister also said:

I believe the Land Commission should pay market value. Indeed, it was a previous Government participated in by Fine Gael and Labour who first introduced legislation making it compulsory for the Land Commission to pay market value. Admittedly they pay in bonds and, if we could get away from bonds, we would have an ideal situation.

I would hope that everyone would aim at an ideal system. If to get away from the bonds would be the ideal system why is the Minister now introducing a Bill which seeks an additional £35 million for land bonds?

Mr. T.J. Fitzpatrick

(Cavan): The figure is £20 million.

Mr. Tunney

I thought the Minister was moving——

Mr. T.J. Fitzpatrick

(Cavan): From £40 million to £60 million.

Mr. Tunney

Here, again, is one of the handicaps of not having a copy of the Minister's speech.

Mr. T.J. Fitzpatrick

(Cavan): I am aware that there is not available to the Deputy a copy of my speech but it is clear from the Bill that we are increasing the figure for land bonds.

Mr. Tunney

We read here that the most recent order was made on 20th January 1975, that that was for £1 million in land bonds, bringing the total amount to date in respect of all land bonds ordered since 1934 to £40 million.

Mr. T.J. Fitzpatrick

(Cavan): I am sure the Deputy has read the Bill.

Mr. Tunney

It is stated that the purpose of the Bill is to increase the figure to £60 million. While admitting that I was not aware of the Land Bond Act of 1969, I am emphasising that the Minister is seeking permission for a further £20 million.

Mr. Lalor

On a point of order, is there being set a precedent whereby the Minister is not circulating a copy of his Second Reading speech? This situation is holding me up from the point of view of other speakers.

Mr. T.J. Fitzpatrick

(Cavan): I apologise to the Opposition for failure to have the Second Reading speech circulated. However, if the debate looks likely to go on for any time I shall have the speech copied and circulated.

Mr. Lalor

I should be glad if that could be arranged.

Mr. Callanan

Each of us would be glad to have a copy.

Mr. T.J. Fitzpatrick

(Cavan): I shall do my best to oblige the Deputies.

Mr. Tunney

The essence of my complaint is that up to 1969 permission had been granted for the creation of £40 million for land bonds but the Minister is now seeking permission to extend that to £60 million while at the same time he is expressing the hope that the system of purchasing land by means of land bonds will disappear. That is an illogical situation. How can one hope for the removal of a system while making provision for its continuance?

The Minister spoke of the farm retirement scheme. I do not think that is very relevant in so far as the Minister is obliged to make provision for land acquired in that way by cash payments. We are talking here about the situation where, generally speaking, land is not being purchased any longer from the big landowner or the rancher but where the Land Commission, more than ever before, are concerned with the purchase of land from the people of Ireland and from the former tenants of these landlords. The purchase of land by means of land bonds is not a fair or an equitable system in so far as the vendor is concerned. He is not paid on the day on which his land is acquired and it may be two years later before the land bonds are paid over to him and these would have depreciated during that time.

There is an obligation on the Land Commission to pay for land at open market value. I anticipate the Minister referring later to the high interest rate in respect of land bonds but, unfortunately, because of the financial situation both at home and internationally, there is ample evidence to prove that land bonds will be at discount rate within six months, and that, consequently, the vendor is not getting a fair and equitable price for his land. There is an obligation on us to protect his interest in the same way as there is an obligation on us to help the weaker farmer to acquire a viable holding.

If the Minister were seeking a lesser amount we could take it that he was anxious for the removal of the land bond system but the seeking of an additional £20 million is an indication of his non-preparedness to abolish the system or, else, an indication of his lack of success in impressing on the Government the need for the removal of this system. There must be a greater effort towards making settlements by way of cash. With this in mind, it is my intention to oppose the Bill.

Mr. Callanan

I shall be brief in my contribution but that is not to say that I do not consider this Bill to be very important. It is very important and I am disappointed that a copy of the Minister's speech was not made available to us. However, I accept what the Minister said in that regard.

I have been greatly concerned with the whole question of land bonds. I consider this system to be a very immoral way of paying for land. The State should honour commitments to pay a certain amount for land acquired and this amount should be paid within a certain number of years. I can see the Minister's point of view. I was very disappointed when, on our accession to the EEC, the land bond system was not discontinued for all time. I expected that we would get an injection of money from the EEC for land settlement. The big problem with regard to the purchase of land by the Land Commission is that we have finished with buying up big ranches. We are now buying land from people who have it set. The acquisition of land under the retirement scheme is a different matter. Many Members are approached to have land acquired but people feel aggrieved that the only method of paying for such land is by land bonds. Land set under the 11-month system should be included in the retirement scheme.

It is a terrible state of affairs that the only system of paying for the land is land bonds. I appreciate that the interest rate has been increased to 16 per cent but that will be very little in 12 months' or two years' time. It has been stated that these bonds are redeemable but they are only redeemable on the Kathleen Mavourneen system, over 30 or 40 years. I am aware that if one is lucky enough to come up in the lottery one can redeem the bonds but this is not good enough. Every loan floated by the State is redeemable in a specific number of years after it is floated and I cannot understand why the same system does not apply in the case of land bonds. We all know the scourge that land bonds are and of how much they have fallen in value. Some of them are not worth £30 to the 100. The interest rate at the time they are issued is great and the land bond rate was always ahead of others but that rate does not remain attractive for very long.

These bonds are absolutely useless and nobody will buy them on the Stock Exchange. The Government should agree to these bonds being redeemable five years after issue. If this was done the whole problem would be solved. If I occupied the Minister's post I would insist on the Government of the day making these bonds redeemable within a period of five years. It is immoral to expect people to accept bonds as payment for land when they are redeemable only by chance. I accept the Minister's statement that we did not get sufficient money from the EEC to buy all the land required and that unless land bonds are issued we will not be able to buy land, except through the retirement scheme for which £3 million is available.

In my view £3 million is only a drop in the ocean. We must continue to buy land and build up a surplus. I accept that the Land Commission give market value when they purchase land but it is only on paper because they pay by way of land bonds. Farmers dread the thought of land bonds; they stink with the result that very few are anxious to sell to the Land Commission.

Land bonds should carry a Government guarantee that they are redeemable after a reasonable number of years. Earlier the Minister expressed his anxiety to get rid of land bonds but he has done little about it. It is like the 14-point programme this Government got into power on. I know we cannot get rid of land bonds but I believe it is possible to give the farming community a fair deal. It is not surprising to hear people who are paid for land by land bonds expressing the view that they were robbed.

I ask the Minister to insert an amendment in the Bill making the bonds redeemable within five years after the date of issue. We must create a pool of land but we will not succeed in doing so until we change the land bond system of payment. The live horse get grass attitude of the Government in this regard is causing great concern to the farming community. I will not accept this Bill until it carries a Government guarantee that bonds will be redeemable at par five years after the date of issue.

Mr. Reynolds

In my view the Minister was honest when he said that the Exchequer could not afford to buy all the land that is offered to the Land Commission. That would cost in the region of £20 million for the current year. In this regard it is pointless for any Member to suggest that because the Government cannot afford to buy all this land the country is bankrupt. I welcome the increasing of the interest rate to 16 per cent and this, in my view, represents a substantial rise.

Since 1923 land has been purchased with land bonds. We all look forward to the time when land bonds will be done away with. As some Deputies opposite pointed out, unless money becomes available from the EEC, no matter what Government are in power, there will be difficulty. There are people who sell land to the Land Commission; there are others who sell in the open market. There is a particular case in my constituency where one farmer sold a farm to another farmer at something in the region of £8,000. The Land Commission moved in and put a stay on the sale of the land and the Land Commission are now buying the land; they will pay the farmer in land bonds. This man, with the intention of buying land beside his homestead, sold a holding that was some distance from his homestead. He will now be debarred from doing that because, since he was paid in land bonds, he will not have the cash available to purchase this adjacent holding. In cases like this the situation is utterly impossible. The Minister and the Department should have a serious look at cases like this and pay these people in cash. There are people who find land bonds a suitable medium of exchange because they are getting interest at the rate of 16 per cent. In special cases, however, land should be bought for cash by the Land Commission.

Mr. Carter

This is an important measure since it deals with the medium of exchange. Regardless of the price of land, be it high or low, we shall have to find some agreement on a better system of exchange where buying or selling land is concerned. Land bonds are security of a kind. That is not the fault of the bond or of the system. It is our fault because we have never sought to maintain current values in land bonds. If one can hold a land bond from the date of issue to the date of maturity one gets one's money back. If, however, one has to have recourse to the current market one will not get one's money back. That is about the size of it. It is all very well to say it is regrettable we do not get money from Europe to buy land; I have known men who got money from America to buy land and, strangely enough, they lost it.

We should generate from our land our own system of money values. If we are able to borrow on the strength of it, well and good, but we must bear in mind at all times that we should never borrow beyond our means. I am not condemning the Minister now. Far from it. There have been many Minister for Lands since 1923 but none has ever got around to the idea of putting current value into land bonds. It would, of course, be a very difficult task.

What is business? Is it not based on trust, on confidence and on integrity? The land is here. It has been here for a long time and our 12,000,000 arable acres will be here for a long time to come. From that point of view it is a pity that we should have doubts about land bonds as a medium of exchange. These bonds are as good or as bad as we make them, as good or as bad as the confidence of those who deal in them. We started off in the worst possible way where these bonds are concerned. Land values go up and down and the unfortunate position is that we will never be able to release enough cash to deal with land sales on a cash basis. Concommitant with the scheme under the various EEC directives where cash is indicated we should always be in a position to underwrite any land bonds coming on the market at current rates and ensure that the bonds maintain comparative value.

It is a pity that land bonds should have reached the stage at which they are regarded as not being worth the paper they are printed on. The stock exchange deals in equities and stocks and shares and some stocks and shares reach a very high value but in many instances they are not backed by any relative values in the way that the land is. Land became more attractive when we entered Europe and today it makes anything from £1,000 an acre to £2,000 an acre, and even higher. Be that as it may, land bonds should be currency for the exchange of land and we should be able to devise a system to make them such currency. There are many people who would hold land bonds if they knew the bonds would maintain relative values. and could be cashed at any time or, at a time of emergency, turned into cash on a profitable basis. This cannot be done. This calls in question the methods of Governments at home and abroad. It is very important when a Government security is issued that it is fully backed. Small investors should be able to invest in the knowledge that at any time they can realise this asset to advantage. This is the main reason why the land bond system has such a bad image.

I am not blaming the present Minister for Lands because this system has continued through the years. We should realise it is something which is dealt with on the long term. I believe we never will have recourse to enough cash to exchange all the land we would like to deal in. We should, therefore, try to bring about a better land bond system. These bonds at issue will be worth 16 per cent. If one looks at the newspapers any day of the week one will see that certain land bonds issued in the past stand at a very low level now. Every new issue has to be updated and a higher price offered on the market in order to attract custom. This has the effect of depressing previous issues of land bonds.

This applies even to national loans. All Houses of Parliament should call into question the procedures of Government in issuing securities which they are not able to back to the hilt. We have an example of this outside, which I cannot go into, but if a predicted event takes place it will call into question the relative integrity of Governments, never mind business concerns. Government securities are always in the limelight and under security and people expect a lot of value from them. Nearly everybody in the House would agree that while we have our ups and downs in the farming system and while various methods of husbandry may be in-indulged in when we come to deal in land we should be prepared to back up whatever exchange we have to the hilt.

I am not as well versed in this as I should be and I am not a stockbroker. If I intended to buy land bonds I would like the advice of an experienced stockbroker. I believe in any given year the value of land bonds cashed on the market is not very large. If we had not this love-hate relationship in regard to land bonds we could do much better. If we tried hard enough we could put a public face on them. A number of people invest in securities of this kind on the long term as a rule so it should not be beyond the capability of the Government and their advisers to bring about a more equitable system in relation to land bonds.

Some years ago I felt in a particular case that the Land Commission literally robbed the vendor of land. He made some mistakes but everybody knows it is impossible for ordinary people to know everything about the various land Acts although some vendors pretend to be more stupid than they are in relation to them. This man was relieved of his land in return for land bonds which only carried approximately 50 per cent of their primary value. At that stage the land bonds were issued and the only opening the man had was to take up the matter at common law. At the time I advised him to do this because I thought the Land Commission were getting away with a lot. The system is very rigid. I am not accusing the Land Commission or their personnel; I am accusing this House because it is here that the laws are made. The land bond system should be much more flexible and we should seek to ensure that the bonds have the confidence of the community. I do not understand why we do not do that.

In the past many other Ministers for Lands introduced legislation regarding land bonds and they tried to write up the capital value of the bonds. They had good intentions and Members gave their views on the matter; year after year various issues of land bonds were introduced and, because of the loss in value of the currency, a greater price was offered each time. This had the effect of making the current issue of bonds more attractive than previous bonds.

If we intend to carry out the EEC directives and to administer the succession part of the Land Commission scheme we will need something more than cash. We will have to get the confidence not only of the farmers, not only of those interested in the scheme from the point of view of retiring, and of the brokers on the floor of the stock exchange but of everyone who is interested in investment.

There is no use in saying the Minister can ask this House to write up the capital value of any range of bonds if the bonds lose their value on practically the next day. If bonds lose their value faster than whiskey leaves a bottle at a spree, they cannot have the confidence of the people. The Minister and the Government should try to get more security into lands bonds, they should try to move away from the position that obtained in the past, where if bonds were mentioned to a broker, a bank manager, a solicitor or an auctioneer he replied he would not take them as a present. We can ask for as much capital as we like, we can mention any percentage figure we wish, but if the bonds have not the confidence of the people it will be to no avail. The problem will be that people will ask for cash.

Mr. J. Ryan

I should like to compliment the Minister on his achievements in the past few years. He is a rural Deputy and he knows the needs and the problems of smallholders. Anyone from rural Ireland knows of the problems of smallholders in the last 18 months. The Minister is the most reasonable and approachable man and, although I have flooded him with applications for land division in my constituency, he has always received me in a very courteous way.

I come from a county that is called "the premier county", that has the Golden Vale within its boundaries. One might think from that description that Tipperary, and particularly North Tipperary, has no problems and has no small farmers. The opposite is the case. In one area in my constituency there are many smallholders whom I consider qualify for the EEC disadvantaged area scheme. These people are living on holdings of up to 20 acres in hilly country. They have done a tremendous job during the years and have contributed to the economy of the country. I am concerned about these people who have been reared on the land and want to remain there— but if young families are not allowed an opportunity to get a better living there is a great danger the flight from the land will continue. If we are to save rural Ireland the work of acquisition and division of land must be expedited. I compliment the local officers on their interest in these people. They are doing a good job but they are constrained by the provisions of legislative measures.

The previous speaker referred to the issues of land bonds. They have served their purpose but we must have cash payments in order to get the necessary land for the smallholders. The Minister said that the farmers' retirement scheme would be supported by cash payments. I have no doubt the scheme will be a success but I am telling the Minister the time has come to examine the acquisition system so that in future land may be purchased for cash.

Many difficulties may be encountered by the families of people who have sold land for land bonds. The bonds may lose their value and, on the death of the owner, if cash is not available the land may have to be sold.

I am concerned that the scheme of land acquisition be speeded up. In the past year the Minister acquired 5,700 acres but I must compare that with the 57,000 acres acquired in a five-year period and with the fact that there are 12 million acres still available for acquisition. If rural Ireland is to survive and if farmers are not to clear out, then we must ensure that a quicker system of land acquisition be initiated. Otherwise smallholders will lose patience and will leave. I appeal to the Minister especially on behalf of smallholders in north Tipperary, many of whom have been waiting for years for farms to be divided. They have gone through a bad period and they believe the Government should show their concern by giving them additional land. I say that with full appreciation of the difficulties the Minister has to deal with.

Land is very dear and when farmers want to buy it or sell it, it is cash on the nail. Therefore, I suggest that the land bond system should be changed in some way. Cash is the best form of barter from the point of view of farmers and if land were bought for cash by the Land Commission it would eliminate a lot of delays. I congratulate the Minister on his efforts and appeal to him to have land division speeded up.

Mr. J. O'Leary

There is definite reluctance on the part of persons selling land persons from whom land is acquired by the Land Commission, to accept land bonds for numerous reasons. First of all, land vendors are concerned because the bonds are not doing very well on the stock market and they are worried about their position should they have to cash bonds. If the Land Commission were to offer cash for all lands on offer and which they propose to acquire, acquisition would be at a much faster rate and, perhaps, cheaper.

Mr. Tunney

Hear, hear.

Mr. J. O'Leary

Farmers are well aware that land bonds are not doing well on the stock market and at the same time they know that if they get cash they can get from 12½ per cent to 15 per cent interest per annum on what their farms realise, depending on whether they invest on a 6-month or a 12-month call and the terms they negotiate. For this reason the time has come when the Land Commission should phase out the land bond system. The sooner this is done the better. There is no doubt that the payment of bonds for land holds up acquisition and causes delays in the work of the Land Commission. People are not so ready to come forward to offer land when they know they will be paid in land bonds.

I know a number of cases where the Land Commission were able to tell vendors that they might be paid in cash and invariably the vendors were forthcoming and there was little delay in negotiating prices acceptable to both sides. A lot of delay would also be avoided if the rule were eliminated whereby for land compulsorily acquired the price fixed by the land court is in bonds. If it were left to the discretion of the court to decide the price on its merits land would be acquired in greater acreage more rapidly.

I urge the Minister to ask the Land Commission to settle as many cases as possible where there are disputes on prices before the cases are referred to the land court, which means endless delays and is an endless source of worry not only to vendors but to smallholders awaiting land division. Vendors are not sure that the Land Commission will not back down when they find that the land court has fixed a certain price. In such an event vendors are kept waiting for nothing.

I have said in the House before that the land bond system of payment should be phased out. In this Bill it is proposed to increase the total value of bonds by £20 million in a five-year period. In effect this means that bonds worth £4 million per annum will be issued. The transfer of this amount to the Exchequer, having regard to its vast turnover in recent years, would not be an unreasonable burden. After all it is only one-seventh of the tax revenue from the recent increase in petrol tax. It is not unreasonable to expect that this £4 million per annum should be transferred to the Exchequer. Many industrious smallholders are concerned about payment by bonds. They know that in many instances this system leads to extraordinary delays. This, in turn, leads to a reluctance on the part of neighbours who intend selling their holdings.

I ask the Land Commission to provide additional staff for the local divisional offices. I often wonder how these men can carry out all the work they must do, particularly those in the counties along the western seaboard who deal with applications for subdivision and the purchase of small parcels of land by non-nationals.

Again, I ask the Minister to reconsider the proposal in this Bill and to scrap the system of paying by bonds, as was urged by some speakers from the Government benches this morning. I have held this view for some time and have mentioned it in this House on a number of occasions.

Mr. Hegarty

I compliment the Minister on the good work he has done in the short time since he took office. We heard a lot about the uses and abuses and the value and lack of value of land bonds this morning. I agree with Deputy Carter when he said we are all partly responsible for the general approach to land bonds. If one decries something long enough, eventually everybody will believe him. We have succeeded in doing this with land bonds, in spite of the fact that they are worth 16 per cent per annum—a substantial amount of money even in present day inflated terms.

The most significant thing which has happened in the last two years was the farm retirement scheme. One might not think that in an area such as north-east Cork there would be a problem with subdivision and small farms. It is accepted by the EEC that the size of a viable holding has grown from 30 acres; in future we will be thinking in terms of a minimum of 60 acres. With that in mind we still have a long way to go. While we might like to get rid of land bonds we must be realistic and face the fact that the Exchequer could not stand this type of loan and must substitute land bonds.

The prime function of the Government and the Land Commission is to ensure that everyone in the farming industry will have sufficient land to make a decent living. As I have already said, even in my area there is the immense problem of small farmers. There are quite a number of farms coming available to the Land Commission at present. Only last week we met the Land Commission about the Fota estate. I was very glad to be involved in this. We got a sympathetic hearing from the Land Commission. They said they would be prepared to take over as much of the good land as was necessary for the relief of congestion. There is congestion all over the country.

I would like to discuss now the rules dealing with the second son. At the moment a man must own land before he is entitled to more land. It is time that was scrapped. In the past the Land Commission over-did this migratory aspect and neglected the locals to some extent. This was a bad idea. That is especially true nowadays in view of the substantial cost of land. We must now think in terms of the landless second son, or even the third son, if they are promising people. Again I urge that we forge ahead with subdivision.

Under the farm retirement scheme— which is working very well—we will be able to pay cash for this land. In future there will be a large amount of land to be divided. The only way this land can be acquired is by the use of land bonds. Where old people who are in need are involved, cash must be paid and in all cases, some cash must be paid. In other words, I would like to see more flexibility. There is a rule which says that compulsory acquisition must be paid for in land bonds. That should be changed because in the case of old people they are reluctant to leave the land. In the case of land acquired compulsorily from elderly people, the same rules as apply to the farm retirement scheme should obtain—that they be left in their home with an adjoining field so that they might enjoy those comforts for the rest of their days. Again with respect to old people in need of money, I should like to see some cash being paid out.

The farm retirement scheme is not progressing as quickly as I would like. I know there are quite a lot of delays involved. Indeed, that applies to the acquisition of land generally. The point has been made already that we should consider the appointment of more field officers in the Land Commission. At present, I do not know whether or not the Minister realises this in his part of the world, in the south the price of conacre has gone through the roof. If people are to survive in the business of farming, if something is to be done for them, let it be done immediately. I cannot see how that can be achieved unless more field officers are appointed to get on with the job. I would not even wait until such time as these sheds, houses and so on were built. I would allow the man in to get on with the job. That brings me to the point I made initially, that the work of the Land Commission would be much more effective and simpler if more consideration was given to local smallholders in so far as it would eliminate delays and the expense of building dwellinghouses, farm out-offices and so on. It is much more important to facilitate the neighbours. I think people with up to 45 or 50 acres should be considered especially in my part of the country where there is a considerable amount of very heavy, wet soil, where very often one has the requisite number of acres but they are not worth much when it comes to efficient farming.

The mileage clause applied in the allocation of land should be extended also. With modern equipment and so on, there is no need for the clause to be so rigid.

I should like to compliment the Minister for Lands on his whole approach to the division of land, indeed everything that comes under his care, which includes forestry and so on. Under his guidance a good job is being done. In his reign, as it were, the farm retirement scheme is getting under way and a lot of essential work is being done. The Minister should not hesitate to enlist all the help he can on the ground because that is where it is most needed. Those of us who attend meetings around the country hear a lot of complaints about large tracts of land remaining undivided, being let out in conacre, with a lot of indecisiveness, but I am sure the Minister will get around to all of that in due course. This seems to be a crucial year in farming. I think we would need a sort of crash programme with regard to the allocation of land.

Acting Chairman (Mr. Pattison)

I think the Deputy is going outside the scope of the Bill. Would he relate his remarks to what is in the Bill?

Mr. Hegarty

In view of the urgent need this year, I would hope that all necessary help would be enlisted in the job of division of land. While I am not in favour of land bonds any more than is anybody else—they are not the best way of paying for anything—we must put our priorities in order. The priority of any Government is to ensure that smallholders, north, south, east and west are made viable. Our available cash must be used to best advantage and quite a lot of it will be taken up by the farm retirement scheme. Therefore, land bonds will be essential for quite a while to come. The important thing is that the land be acquired and distributed amongst people. We may talk forever about gas and oil, wealth under the soil. We can talk about Navan and all of these things, all of which are good, but basically the long term wealth of this country is the soil, the wealth of farming. The best industries will always be those based on agriculture. If we are to survive as an agricultural community, we need to have viable holdings. That is the first priority of survival which has been long recognised here and in other countries in the EEC. We cannot go wrong if we continue as at present. While one has a certain amount of sympathy with people who would like to receive more cash, the important thing is that the people acquiring land will be able to do so in the shortest possible time.

Let me again compliment the Minister on his good work. I hope he will be around for a long time to continue it.

Mr. Lalor

I find it rather difficult to see the real purpose behind this Land Bond Bill, 1975, the Second Stage of which the Minister moved this morning. I found it difficult to credit what I thought I heard. That was why I was so anxious to get a copy of the Second Reading speech the Minister made, when he almost created the precedent that a copy of his speech would not be circulated.

I never did hear a Minister for Lands introducing a Land Bond Bill. The Minister mentioned that we had had Land Bond Bills for quite a period and that we had the limit raised to £15 million in 1953—when I was not here—to £25 million in 1964 and to £40 million in 1969, when I was here. In fact, it was the first time I heard a Minister for Lands introducing a Land Bond Bill with due apology, indicating that he would much prefer not to introduce such a Bill and indicating also that he agreed fully with all of the people in the House who expressed the view that land should be paid for in cash rather than in bonds. Then he went on to say that while the view that land bonds should be abolished altogether was one with which he would not find it hard to sympathise:

we have to be realistic and recognise that until the Exchequer is in a position to provide sufficient funds to enable all purchases by the Land Commission to be for cash, land bonds will continue to play a part in the land settlement programme.

I sympathise with the Minister in that view. I fully accept that insufficiency of money from the Exchequer is his biggest problem, one which he indicated successive Ministers for Lands had experienced. One of the things I dislike in the presentation of this Bill, seeking that the limit be raised to £60 million, was that the Minister painted a picture of that amount being sufficient for a five-year period. In fact, the additional £15 million ceiling that was created in 1969 has been sufficient to buy the amount of land the Land Commission were able to acquire for the past six years. He is now looking for an extra £20 million to cover purchases for the next five years. I suppose that is reasonable in the context of inflation. He said in his speech that since the introduction of the system of cash purchases in 1950 to 31st December last, 57,500 acres had been purchased for £5,072,000. Roughly that would be a little less than £100 an acre for cash purchase. He goes on to say that the figures for the 12 months ended 31st December last were 5,700 acres and £1,092,000, which shows an average price of £200 per acre for cash purchase.

The Minister then talks about the land bonds and it would appear, peculiarly enough, that in one way land bonds are proving more expensive from the State's point of view. The Minister says that during the year ended 31st December last the total issues of land bonds amounted to around £4,500,000, which was the highest ever figure over any period of 12 months, and represented an intake of 13,000 acres. That means that the land bought through the land bond medium was at a price over £300 per acre, whereas when the Department of Lands were able to buy lands for cash, they were able to buy it, according to the Minister's statement, at £200 an acre.

Therefore, a Minister for Finance, in the long term, would be very well advised in the national interest to make cash available to the Land Commission to purchase the land for cash, because it would appear that if the Land Commission had cash available to them, they would be able to satisfy the seller and, at the same time, satisfy the Exchequer by being able to buy land at two-thirds of the price they have to pay for it in land bonds. It must be remembered that from 22nd January the land bond has to be backed and, if you like, the Minister for Finance has entered into an internal national debt at the rate of £16 per £100.

The Minister talks about the success of the retirement scheme, and this arises from our joining the EEC. There is a very complicated arrangement under the scheme whereby the farmer is paid cash and in addition to that gets a pension. This scheme operates for, say, the 56- to 65-year-old farmer. I am wondering if the retired farmer could be given the choice of cash or bonds. In taking up the offer he is paid £10,000 for his farm. Suppose that farmer is the ordinary run of cute, hardworking farmer with his family reared and going away—that is the reason he is handing over his farm, that he has no son coming after him to continue with the work—and he gets £10,000 in cash for his farm and his pension in addition. He will search for a long time before he will get some place to put that £10,000 that will give him the 16 per cent return the land bonds give. Therefore, he might opt for land bonds.

On the other hand, the Land Commission, under the arrangement we have had, may move in on a son of some big farmer with 200 or 300 acres. He is more of a gadabout, a Fairyhouse or Curragh man, than a farmer. He sets the land and goes ahead to sow his wild oats. The adjacent smallholders call to their public representatives and suggest the Land Commission should acquire it for distribution among deserving smallholders. The result is that the Land Commission move in, and rightly so, on the land that is not being worked. They pay this young man in land bonds. At this stage he has accumulated a fair share of debt; the horses do not run fast enough and he gets tips from the wrong people. He gets £50,000 or £60,000 or maybe gets into the wealth tax bracket; but the Minister for Finance can get after him there. He goes to a solicitor and after about five years, probate having been taken out, and all the other matters that cause delay dealt with, his affairs are straightened out. The land bonds have been lodged to his credit and interest is accruing. However, at the stage that he can go about realising the land bonds, some Minister for Lands has introduced a new set of land bonds at 16 per cent, while his land bonds are at 10½ per cent or 11 per cent. They are worth only £60 in £100 at that stage, and instead of the land appreciating arising from inflation, the bond has deflated to a great extent, and he finishes up with only 50 per cent of what he had five years ago, which means a net amount of 25 per cent of what he had originally.

This man may be described as one of the idle rich that no parliamentary party represents. There is nobody to care about him, but he has not been treated fairly or equally as a citizen of the State. If he had enough money left to take the matter to the High or Supreme Court to find out whether it was constitutionally correct to deprive him of his means of livelihood and compensate him eventually to the extent of only about 25 per cent of what the estate was worth, I wonder might some learned judge not decide in his favour at some time and create an enormous problem from the State's point of view.

The Minister spoke about the recent issue of land bonds and expressed the hope that the latest series of land bonds created, which bear interest at 16 per cent, would prove very acceptable to landowners. Obviously, they will prove to be no more acceptable than land bonds of previous issues. They are a disaster from the point of view of the man at present who is endeavouring to administer for his estate to qualify for the previous land bonds in which he was paid and which overnight would have dropped in value quite considerably. I heard Deputy Hegarty compliment the Minister, while saying that he did not like land bonds. I noticed in a speech the Deputy made last year on the Estimate for Lands— through the courtesy of my colleague Deputy Tunney—on 4th July in Volume 267 of the Official Report Deputy Hegarty also complimented the Minister as he did today, and said he was very glad we were adopting a more realistic approach to the acquisition of land in that we were now prepared to pay the market value and prepared to pay cash. I went through the Minister's introductory speech on that Estimate and do not know how Deputy Hegarty got that impression, that the Minister said they would pay cash and that we would have no more of these annoying land bonds. Possibly he was assuming that with the introduction of the farmers' retirement scheme we would have an overall payment to all farmers in cash rather than bonds.

I see Deputy Esmonde here and I was also interested in reading his contribution last year on 3rd July in Volume 267 of the Official Report, column 140. I could be accused of taking Deputy Esmonde out of context, since he made a sizeable contribution, but he said that when the decision to acquire land was made it was very wrong that the people should be paid in land bonds which have shown, over a considerable time, a chronic tendency to depreciate. He said that if people's lands were being acquired they should be compensated in such a manner that they could put the compensation they received into something else and could keep pace with inflation and the depreciation of money.

The Minister's answer to that is to come here today, having introduced the last £1 million issue by order of the Minister for Finance on 22nd January creating an amount of £1 million bonds, bringing the amount created to date under all land bonds since 1934 to £40 million, and provide that the series bear interest at 16 per cent. I suppose Deputy Esmonde can say that the Minister has kept pace with inflation and depreciation in money if the recipient was in a position to hold on to the land bonds. The glorious thing about land bonds is that they are not redeemable. I often wonder if it would not be wiser for the Minister for Finance to float land bonds somewhat like the national loan and invite insurance companies and other investors to put money into them at 16 per cent interest and transfer the money so obtained to the Land Commission. But those land bonds are never redeemable.

This morning Deputy Callanan suggested that the Minister should seriously consider building into this Bill a new section guaranteeing that the land bonds would be redeemable. The Deputy mentioned five years; I should like to stretch it another three years because of my knowledge of the slowness at the legal end in trying to get farmers straightened out. Those bonds should be redeemable and if it is necessary—if we cannot do away with them altogether—that the State should have £20 million for the purchase of land through this medium over the next five years, some such guarantee should be introduced.

Deputy Hegarty spoke of the great value in the Irish soil and I fully agree with him on that. I find it hard to understand why a Minister for Finance would not be able to provide £4 million per year over the five-year period to make up that £20 million for the straightforward cash purchase of land. I am not creating figures but simply going on the figures the Minister presented to the House this morning. Could the Minister for Lands prevail on the Minister for Finance to provide, instead of £20 million over five years in land bonds, a guarantee that out of the huge amount of capital that has to be found now especially when we are moving into a situation of such over-spending that we have anything from £130 million to £160 million being spent this year not being met from taxation this year, sums of £4 million per annum would be available over the next five years to purchase land? As the Minister himself showed this morning this would enable the Land Commission to buy the land at 6.6 per cent of the price he is paying at present in land bonds and he is also building up a national debt of £60 million.

Irrespective of what former Ministers have done, in view of the enormous 16 per cent interest that has to be paid on land bonds in order to prevail on landowners and convince them when they are ceding land to the Land Commission that there is some justice in land bonds, I am putting to the Minister for Lands, to the Minister for Finance and the Government the urgent necessity of providing this £4 million per annum for the Land Commission. It is only right to put on record that in my 14 years' experience as a member of this House the Land Commission is a much maligned organisation and is constantly up against the problem of becoming more unpopular with our farmers, whereas the local Land Commission inspector or agent should be the most welcome person around a farmer's place because he is calling on him with a view to improving his situation. Admittedly, he is bad news from the point of view of the man who is setting his land or not working it sufficiently but the Land Commission come in for a lot of ridicule from politicians and from small farmers who have hoped down through the years for an addition to their land. I come from a rural constituency covering the centre of the country, the Counties of Laois and Offaly. My experience is that the officials of the Land Commission are continuously doing their best to improve the lot of the small farmer and could do much more if they had the "readies" to do business with the very often not reluctant farmer.

One of the problems is that when notice is issued by the Land Commission to a farmer of their intention to acquire land the Land Commission cannot then pay in cash. When the Land Commission approach a landowner with a view to acquiring his land and institute compulsory acquisition proceedings, the resistance comes under two headings: (i) he does not want to give up his land and (ii) he certainly does not want to give up his land for land bonds. The Land Commission put a notice in Iris Oifigiúil and follow it up. The case must go before the Commissioners to confirm that the Land Commission are to get the land. Then a price must be agreed and if it is not they must go to the courts again for a judgement. I have no doubt that nine out of ten disagreements would be avoided if the Land Commission could deal in cash.

I accept that it may not be possible at the later stage of negotiation but at the initial stage, when notice is served on the solicitor or on the land owner, if a price could be agreed in cash much of the proceedings would be done away with. The landowner's principal objection is the fact that he will be paid in land bonds. Nobody denies he will be paid the full market value for his land but when he eventually lays his hands on the bonds they have depreciated in value. I imagine the new land bonds at 16 per cent will stay near par for quite a time but when this Bill is passed and we launch the next issue of land bonds at a higher rate of interest, by the end of this year, because I do not expect this £1 million will last very long and I take it the Minister wants this Bill as quickly as possible, the value of the present bonds will depreciate. I am surprised at the unimaginativeness of the Minister for Lands. I am surprised that he has not been able to come in with a more comprehensive Bill than a copy of a Bill introduced in 1953, a replica of a 1964 Bill and a 1969 Bill, with his knowledge of the difficulty the Land Commission have had with bonds over the period.

The Minister departed from the subject of land bonds in his introductory remarks and lauded his retirement scheme. He said that one of the tremendous advantages of it was that all lands purchased will be paid for in cash. In claiming credit for this he is condemning the Bill he brought in today and accepting the fact that the system of land bonds is basically a wash-out. He said:

In launching the scheme I drew attention to the fact that the incentives which it offered were very generous, indeed liberal, in relation to our national resources, much higher than the EEC guideline amounts and up to the highest level on offer in any member state. I expressed confidence that there would be a substantial response to the scheme which was designed to enable a farmer, if he so desired, to retire with dignity and financial security after a lifetime of hard work.

The Minister is a very sensible man, a man who has made sensible contributions in this House down through the years, on both sides. I am sure he would like to be in a position to come in here with his next Estimate and announce that he has at last prevailed upon the Minister for Finance to provide sufficient money, say £4 million to £5 million a year, to enable the Land Commission to go ahead and really get down to the job with which they have been struggling for years, due to the handicap of land bonds. The Minister said in referring to previous measures which raised the limit:

I may say that the foregoing amending measures proved non-contentious and got speedy passage through both Houses.

The Minister came in with a replica of an earlier Bill, just replacing 40 with 60. The Land Commission have been doing good work but they have been doing that good work with their hands tied behind their backs. I was influenced by the contributions which I heard coming from spokesmen of the Opposition when I was in Government. Land has always interested me. I was very interested in the contributions made by the Opposition in 1964 and in 1969 on the question of land bonds and how unsatisfactory they were. I appreciated the problems of successive Ministers for Finance in making that type of money available to the Land Commission. Now, when we have a new type of Government, when we are budgeting for a deficit of £130 million to £150 million, and when we find it necessary to hand out millions of pounds every day to subsidise organisations like CIE, and so on, why is it not possible for the Government and the Minister for Finance to make available annually a miserly £4 million to buy £6 million worth of land? Over a five-year period, with £20 million in cash one could buy the equivalent of £36 million worth of land with a saving of £16 million at 16 per cent. That would be quite an important saving from the State's point of view.

I would ask the Minister between now and Committee Stage to have another chat with his colleague the Minister for Finance. I have spoken before of the length of time it takes from the acquisition of land to its reallocation among small uneconomic holders. When a constituent calls to me in 1975 and says that Joe Murphy's farm was taken over in 1971 and asks when it will be divided, I have to tell him that Joe Murphy's farm was actually taken over by the Land Commission last year. He does not believe me because he read in the papers that Deputy O.J. Flanagan was having it taken over in 1971. I have to write to the Land Commission and get a letter back saying that the compulsory acquisition proceedings had to be gone through and the land was actually acquired on 31st March last. I send it on to my constituent who is rather surprised because he was promised it about two years ago. Deputy Hegarty said land is held for far too long by the Land Commission.

Mr. Creed

I accept that.

Mr. Lalor

I say that also, but the Land Commission are wrongly blamed very often. I condemn them for holding the land too long but a wrong impression is sometimes created. The compulsory acquisition procedure and the price negotiations take time. If we were dealing in cash we could solve 75 per cent of the problem and the economic holders who eventually get the land would have it three or four years earlier. The land would be in better heart and the nation would be far better off.

Taking into account the interest on the land bonds and their non-acceptability to the land owners, the Minister should be able to help the land Commission to get out of the rut in which they have been for a long time. I have no doubt that the Land Commissioners would welcome this. The Minister could come into the House and, apart from praising himself on the farm retirement scheme which we left on the plate for him before we left office, say: "Here is something we asked Fianna Fáil to do when they were in office. They did not do it. We are now doing it." This is the same dose as before except that it is costing far more. It is now costing us £16 in every £100 in land bonds. That is the major difference. When we have reached that figure we have gone past the stage where we should be using the land bonds system which is so unacceptable to the farmers. I suggest that the Minister should withdraw the Bill.

Mr. Creed

I will be very brief because the Bill is restricted and does not give much scope for debate. I have no doubt that the Minister would be delighted to be able to tell the House that he was in a position to pay cash for all the land acquired by the Land Commission. My information is that far more cash was available to the Land Commission last year than in any other year. I should like to know if that is true. I hope some day the Minister will be in a position to tell the House that there is sufficient money available to pay by cash for all the land acquired but, while there is a scarcity of cash and while there are difficulties in providing sufficient cash to buy the available land, there is no alternative to the land bond scheme.

There is a revulsion against land bonds on the part of the land owners but I believe that if any other Government agency issued land bonds they would be more acceptable than they are from the Land Commission. For years land owners have had a revulsion against the Land Commission as well. I do not share that viewpoint. Anybody who represents a rural constituency has great experience of Land Commission officials at local level and at departmental level. From my experience in dealing with Land Commission officials over ten years, I could not speak highly enough of them. However, there is a need for somebody who would do a good public relations job in respect of the whole sphere of the Land Commission's activities. The lack of a good public relations service is responsible to some extent for the degree of opposition among landowners to the land bond system. Bad as is this system, it should be explained clearly that land bonds earn 16 per cent interest, a rate which would not be attracted by money invested in any other capacity.

There are long delays both in the acquisition and division of land but any reasons for such delays should be explained clearly otherwise, the people concerned lose confidence in the Land Commission. This is another reason for having a good public relations service.

I am glad to note that there is progress in relation to the farm retirement scheme but it is difficult to understand how a man who wishes to retire from farming is paid cash for his land while land that is acquired, whether compulsorily or otherwise by the Land Commission, is paid for by way of land bonds. I am aware of one case where, subsequent to the death of a person who had lived alone, the Land Commission were alerted to the fact that the deceased's land had been sold to a local farmer. As this man was not considered to be in need of land, the Land Commission acquired the farm by compulsory order and the land bonds were paid to the next-of-kin who totalled 21 people. These land bonds are of very little use to that number of people. What I would suggest is a system whereby portion of the land acquired would be paid for in cash and the remainder in land bonds. This would be more equitable.

Regarding the subdivision of land to people in congested areas, it would be wise to devise some means of inducement to the allottees to pay in cash. Perhaps they could be referred to the Agricultural Credit Corporation or some other lending agency. It would cost them less to pay in cash than to spread the repayments over a number of years.

In conclusion I wish the Minister well and express the hope that at a later date he will be in a position to inform us that there is a sufficient amount of cash available to pay for land that is acquired. The present system of payment is totally unacceptable.

Mr. O'Malley

Land bonds are a State sponsored fraud and if this House passes this Bill so as to create a vast further quantity of land bonds, Dáil Éireann is perpetuating this fraud. Like the Minister, I happen to be a solicitor and during the past ten or 12 years I have been involved on behalf of farmers in many dealings concerning land. On many occasions I have had dealings with the Land Commission in this respect. Consequently, I am aware of the position as are many other Deputies who have spoken today. I have rarely heard a degree of unanimity such as that expressed today by Deputies on both sides of the House. The only difference in what is being said from these benches compared with the Government benches is that the people opposite add that the Minister is doing a good job.

Any of us who is associated with land dealings knows that at this time of rapid inflation, land bonds are a fraud from the point of view of the people from whom land is being taken by the Land Commission. There are many people, lawyers and others, who realise now that the acquisition of land by way of land bonds amounts almost to expropriation of property. The Land Commission say—and correctly, so far as it goes—that they are giving full market value. Nominally, that is true and has been true for the past ten or 12 years.

The price fixed, often after long-winded procedure of appeals, on the face of it is approximately a fair market value but then the person concerned is told he will be paid in bonds. Many farmers and land owners do not understand bonds very well.

They assume that if they are told they are getting £50,000 for their farm that they are getting that amount. However, if they open the financial columns of the Irish daily newspapers of the last few days they will see that the current issue of land bonds, the ones in which people have been paid up to today, the 12½ per cent issue, are standing at £83. For every £100 nominally that some landowner believes he is getting from the Land Commission he is, in fact, only getting £83. From that the farmer must subtract stockbrokers' commission, if he is going to sell the bonds, and this amounts to about 1 per cent. This means that he is getting £82 for every £100 he thought he would get.

This is only in respect of bonds allocated since January, 1974. Up to that time the allocation of bonds was at 9¾ per cent and, according to this morning's newspaper, they are standing at £62.25 and £62.75. I know quite a lot of people, allocated bonds by the Land Commission in 1973, who have not yet received the bonds but the Land Commission insist, in spite of the fact that 12½ per cent bonds have come out since and that the Minister this morning announced that he is issuing 16 per cent bonds this year, that they will still get 9¾ per cent bonds. In other words, if a person was selling these bonds he could do so at £62.25 or if he was buying them —I believe that nobody other than the Government stockbroker buys these wretched things—he would do so at £62.75.

I have a case of a client of another solicitor in my constituency where a widow who sold her farm in 1973 to the Land Commission——

Mr. Donnellan

Many farms were sold in 1972, and years before that, but the Deputy has only made reference to those sold since 1973.

Mr. O'Malley

I am aware of that. In the case I have in mind the woman in question sold the farm in 1973 to the Land Commission and she was allocated 20,000 bonds at 9¾ per cent. Through no fault of her own or of her solicitor and, in fairness, through no fault of the Land Commission, the transaction cannot be closed because there is someone in occupation of a small part of the farm who will not leave. I made representations to the Land Commission that to pay this woman in the bonds which were allocated to her in 1973 would be grossly unfair because they are worth between 62 and 63 per cent of their nominal value. The Land Commission replied to me, politely but firmly, to the effect that the bonds were allocated then and she would have to take them. I believe the farm was sold for in the region of £20,000 but this particular lady will now get only £12,400. I regard that to be as near expropriation of property as one can get. The difficulty about this Bill is that it is perpetuating that expropriation, it is perpetuating that fraud.

I know that this Bill is exactly the same as four earlier Bills referred to earlier; it is extending the ceiling of limit on the number of bonds that can be allocated. None of us were very keen on bonds but if the arguments which were made against bonds on those earlier occasions were valid then—I believe they were—they are infinitely more valid now. During those times we used have inflation at between 1 and 3 per cent per annum and in 1969 it was running at 5 or 6 per cent per annum. Inflation is now running, on the last full year for which we have figures, at 23.8 per cent. To take the last quarter for which we have figures, the quarter up to mid-February 1975, inflation would be running at the rate of 32 per cent per annum but we still have this land bond saga perpetuated.

I understand that somebody has or is contemplating an action in the High Court to have this bond system declared unconstitutional. I do not know whether that action is being proceeded with but I hope it is and if it is I wish the citizen who is taking it every success in his efforts. Looking at the matter if not from a purely legalistic point of view at least from an equitable point of view almost inevitably the man must win the case, and I hope he does. Therefore, even if this Bill is passed it may well be that the whole system will be thrown out by the High Court or the Supreme Court. If those on the other side of the House were to vote in accordance with the way they spoke the Bill certainly would not be passed but, notwithstanding their total opposition to land bonds being perpetuated, they will probably vote for it.

In January or February of last year I tabled a number of questions to the Minister for Lands pointing out to him that the then current rate of land bonds at 9¾ per cent was somewhere between £80 and £82 and that people were being paid in those bonds which were only worth four-fifths of their nominal value if one could sell them. The Minister told me that he had just made a new order bringing out 12½ per cent bonds. He had no doubt they would stand at par for a good period and would prevent any injustice. It is just 12 months since those 12½ per cent bonds were issued and they are now standing at £83 and the 9¾ per cent bonds which I complained about because they were standing at £81 are now standing at £62-£63.

A number of people who were paid in those bonds did not realise the vital necessity of trying to sell them as soon as possible. There were more people who were paid fairly substantial amounts of those bonds, like £50,000 or £75,000—only a moderately large farm is worth that nowadays—who found that they could not sell anything like that amount of bonds because the market could not bear them. I understand that one of the few people buying bonds at present is the Government stockbroker who more or less has to buy them in order to try to keep a market in them going but he is only buying them on behalf of Departmental funds, or whatever Government stockbrokers buy these things for, in order to create and sustain a market. The real reason why very few private individuals will buy the bonds is that in practice they are irredeemable.

What the Minister will obviously tell me at the end of the debate is that I am not strictly correct in that and that, in theory, they are supposed to be redeemable after 60 years, or some enormously long period like that. I know there are annual draws held for the redemption of some of the older bonds but the amount redeemed each year is minute, a few hundred thousand pounds out of £10 million outstanding, and one's chances of coming up in a draw are negligible; they must be at least 1,000/1 against a holder coming up in any particular year. In practice these bonds are redeemable but they are also, in practice, like the old British stocks issued away back at the beginning of the century at 2½ per cent and 3 per cent which are now irredeemable and the price of which has dropped in many cases to below £20 for £100 worth of stocks. The unfortunate people are stuck with these and I am very much afraid that we are rapidly coming to the same situation where Land Bonds are concerned because, if 12 months after they were issued at 12½ per cent at the beginning of 1974, they have already lost one-fifth of their value and if, two years after the 9¾ per cent were given out, they have lost practically two-fifths of their value, that is ample proof that these bonds are little better than irredeemable pieces of paper and it is wrong for the Government at this time of rampant inflation, which will shunt the price of the bonds down further and further quicker and quicker, to perpetuate that system.

This system was never totally satisfactory. It may have been reasonably satisfactory and not too unfair 20, 30 and 40 years ago when money was holding its value and when there was only very limited inflation. It is a totally different situation today with 8 per cent inflation in the last quarter alone. If that pattern is repeated throughout the year it will mean 32 per cent per annum inflation. One's imagination begins to boggle. The Minister announced today that he was issuing 16 per cent bonds. Unfortunately I will be proved right when I forecast that within a comparatively short time these bonds will stand below par. There is no doubt whatever about that. It is not so much that the interest rate is inadequate, it is the irredeemability of bonds and the lack of market which causes them to drop so quickly and so drastically.

There is an aspect of paying 16 per cent on bonds which is important from the agricultural point of view and from the point of view of the division of land. The annuity is directly related to the amount of interest payable on the bonds.

For one year now we have had 12½ per cent. Prior to that for some years we had 9¾ per cent. We are now at 16 per cent. I have had experience in the eastern half of County Limerick, where the land is probably better than average, of people refusing to take land when it was allocated to them on the ground that the annuity was too high and they could not afford it. In many cases the annuity was working out at more than would have been paid for conacre lettings of the same land, and a good deal higher in some cases. These refusals were made in respect of land acquired by the Land Commission at a time when they were paying 9¾ per cent interest on bonds. This year we will have land coming in for division where the interest will be 16 per cent. On the strength of that the annuity will be 50 per cent or 60 per cent higher and I believe the Land Commission will run into increasing difficulty from now on as a result of this.

Mr. Donnellan

Would not inflation eventually solve their problem?

Mr. O'Malley

People have refused land allocated to them in the last couple of years on the ground that it would cost them too much. Perhaps they would have been wise to take it and put up with the hardship and loss. As Deputy Donnellan suggests, inflation, which is the cure for all the ills as far as the Government are concerned, would then get them out of their difficulty. I do not think that is the right approach. I do not think one should have to depend on inflation to get one out of difficulty. That will only create further inflation and it is a totally reckless argument to say one should depend on inflation bringing down one's real cost. I believe these refusals of land in the last year or two were not confined to County Limerick. I believe they were repeated in other areas. I also believe that the number of refusals will be much higher in future.

Is the system of land acquisition and division subject to an annuity any longer appropriate? When the Land Commission was established at the end of the nineteenth century its primary function—indeed, its sole function—was to vest in tenants land which they held under very insecure tenure, land owned by absentee landlords who had very little interest in the land other than as a means of income to support their social and other activities. That situation has disappeared but the Land Commission is still struggling on more or less on the same basis. It is worth recalling that, towards the end of his period as Minister for Lands, Deputy Seán Flanagan became convinced that the Land Commission as it exists was no longer appropriate and should be abolished. I believe he was right in that and, as time passes, I am becoming more and more convinced that he was right.

I believe that the division and allocation of land should now be based solely on agricultural principles. Whatever is likely to increase agricultural output as a whole should be the criterion by which land would be acquired and divided. We should no longer tolerate this totally inappropriate system inherited from the end of the last century because it is no longer relevant. One has, for instance, the situation where land is taken from first-class farmers because of local agitation. My sympathy is nearly always with those looking for more land but I also have great sympathy with those from whom the land is taken because I have come across first-class farmers who had their lands taken from them and divided into small allotments none of which would make an economic farm even when added to existing holdings. I have seen over the past ten years many cases where a very good farm was divided in such a way that the total production from it after its division was probably less than if it was left with one good farmer in the first instance.

Mr. T.J. Fitzpatrick

(Cavan): Is the Deputy interested in mass production from huge farms or is he interested in having a reasonable number of people settled on the land operating family farms?

Mr. O'Malley

These are not huge farms. I have frequently seen a farm of 40-50 acres taken over.

Mr. T.J. Fitzpatrick

(Cavan): I do not think the Deputy ever saw a farm of 40-50 acres, which was well worked by the occupant, being taken over. If the Deputy knows of such a case, I would like to have particulars of it.

Mr. O'Malley

I have frequently seen small farms taken over by the Land Commission. Everybody knows that is done. The Land Commission are foolish to do that. In many cases it would be far better to sell such a small farm to a good farmer who did not have enough land and perhaps subsidise, as has been suggested, the loan which he would have to get from the ACC, his bank or wherever else he could get it, rather than divide it into units which are so small they are of little use to those who get them. The proof of that is there are cases where people are now refusing land although they may have spent the last ten years agitating for division of land out of estates which were likely to become available.

Mr. Donnellan

The only instance I have seen of that is where there may be a reduction of unemployment assistance if the person took the land.

Mr. O'Malley

I am afraid we do not get that in Limerick so it does not arise. I have seen land refused on the grounds that it has become too costly. The Minister will now have the worst of both worlds. He will drive up the annuities on the land that will be divided and at the same time, even though the amount of interest seems abnormally high, he will have a situation in which within a comparatively short time the strong probability is that those bonds will fall below par and, perhaps, substantially below par.

The House will recall that a little over a year ago when the Minister issued the 12½ per cent bonds he was in no doubt that those bonds would stand at or very close to par for a good period of time. A year later they had been reduced by almost 20 per cent of their value. In spite of the fact that interest rates are dropping throughout the world the value of land bonds is not going up. On the basis of pure economic laws if interest rates generally drop the value of land bonds should go up but that is not the case. The House should consider why this is so. I suggest the reason is that there is no genuine market in bonds. If you are allocated a large amount of bonds, such as £80,000 ar £100,000, and you put them all on the market together you cannot sell them because nobody will buy them. The Government stockbroker takes a small quantity each day in order to maintain a market. You are also faced with the difficulty that in practice the bonds are practically irredeemable. A family could hold land bonds through three generations from grandfather to son to grandson and they would never be redeemed while they were in possession of that particular family.

Mr. Donnellan

I know of a small number of such cases and I know who took the land off the people.

Mr. O'Malley

Land bonds were never completely satisfactory but at no time were they more unsatisfactory than they are at the moment because of the rate of inflation and because of the way their value has dropped over the past year. It may be a cause of amusement to Deputy Donnellan and other Deputies on the other side that people who thought they got land bonds to the value of £100 last year now find their value is only £82, less stockbrokers' commission, if they can sell them. While this may be a matter of amusement to Deputy Donnellan and others, it is not a matter of amusement to the unfortunate people who have those land bonds and who are now without land.

Earlier on I described this as a State sponsored fraud and if one analyses it one finds it difficult to disagree with that description. It comes very close at least to partial expropriation of property. There must be grave doubts now as to whether or not the whole system of land bonds is constitutional. It is no harm to point out that the arguments which are valid at the moment may not necessarily have been valid ten or 20 years ago because the rate of inflation then was nil in some years and very close to that in most years and also because the value of bonds up to about ten years ago did not fluctuate very widely. They moved very slowly and, perhaps, might go up or down a couple of points in a year.

Mr. Esmonde

They generally went down.

Mr. O'Malley

Yes, but they went down often at the rate of one or two points per annum. They are now going down at the rate of nearly twenty points per annum. Something which may have been valid and not unconstitutional 30 years ago must very certainly be called in question today as to its constitutionality. One of the tragedies about this is a lot of people who get those bonds frequently do not realise how valueless they are until after they receive them. I know of people who were issued bonds which stood at £98 whom I advised to sell immediately. They said: "I will lose £2 if I do so". I told them: "If you hold on you may lose £10". Those people some four or five years later are standing to lose up to £40 on every £100 bond, not just £2. Even if the current issue of bonds were to stand at £98 as soon as they are issued people are faced with a problem. Even if you read about them in the newspapers quoted at £98 you cannot actually get that for them because nobody wants to buy them except the Government stockbroker who will only take a small quantity. Very often the price which appears in the newspapers as the price of the bonds is a false figure because the Government stockbroker only buys £2,000 or £3,000 in a day, or maybe up to £10,000, when there may be on offer in the Stock Exchange £100,000 or more.

In the last few years, a moderate sized farm of 100 acres would have made £100,000 and a man who is lumbered with land bonds in that amount could spend the rest of his life trying to get rid of them. The tragedy is that every week that passes he will get less. Unfortunately, the only difference between what is now proposed to be issued and what was issued in the past is that the rate of interest is higher, that they will open at or close to par, that they may stay at or close to par for three or six months and then will begin to drop. This will happen in the very same way the 12½ per cent bonds issued by the present Minister last year have dropped 18 points down to 82 or 83 points.

We have heard approximately four speeches from the other side of the House and all the Members agreed with what Deputies Tunney, Lalor, Callanan and myself have said in relation to these matters. We have stated the facts but, in fairness, I must say it is not just now that Fine Gael have become aware of the injustice of the system. As long ago as 28th October, 1971, in a debate on the Estimate for the Department of Lands the then Fine Gael spokesman on lands, Deputy L'Estrange—who is still a Member of this House—spoke on this matter. It was at a time when bonds were falling perhaps two or three points per annum and when inflation was at a rate of 5 or 6 per cent per annum. At column 497 of the Official Report of that date he said:

Now I come to the question of land bonds. We are all aware of the appalling hardships which have arisen as a result of the depreciation in value of land bonds. In some cases they have dropped 20 per cent. That is unfair and unjust. If we believe in cherishing all the children of the nation equally we should certainly see that the people are paid cash for their land. It is not right that one section of property owners should be singled out to be paid in land bonds which depreciate so quickly. As the Minister knows, that system delays and frustrates the acquisition of land.

That was said when land bonds were dropping two or three points per year. I wonder what Deputy L'Estrange would say in a year when land bonds are dropping at almost 20 per cent per year? Surely everything he said then is ten times more valid now? That was the official view of Fine Gael less than four years ago but in spite of that the Minister is now just creating more bonds and perpetuating this grave injustice.

Deputy Lalor and other speakers referred to the length of time the Land Commission take to divide land after they have acquired it, or apparently acquired it. Frequently it is four or five years before anything is done and very often solicitors are blamed for delays in these dealings with the Land Commission. Perhaps I might make the point to the Minister, who is a solicitor himself, that the Land Commission have retained a most archaic method of buying land. Could they not adopt the ordinary simple, straightforward way of buying land that private individuals adopt and not have this terribly long-winded system of going before commissioners, going to courts, going before examiners with schedules and having everything checked and treble checked? It is quite unnecessary.

Since the passage of the Registration of Title Act, 1964, the great majority of titles of agricultural land are absolute and if they are not absolute on the folio by virtue of that Act they become absolute on a dealing for value if the equity note is more than 30 years old. In 95 per cent of the cases the equity note is more than 30 years old. Why cannot the Land Commission accept what is good enough for everyone else and not drag out the legal aspect of the acquisition proceedings in a way that makes it very difficult for solicitors to comply with their requirements? People cannot understand that while they may sell their farm to a neighbour and have the transaction concluded in a month if they sell the farm to the Land Commission with exactly the same title it can take one or two years to conclude the matter. Why should it be necessary to go to examiners and to courts in a most roundabout, elaborate and laborious way to get simple points clarified and accepted when an ordinary purchaser can buy without any difficulty? I know the legal delays are only part of the general delay on the part of the Land Commission with regard to the division of land but it is one element in it.

Mr. T.J. Fitzpatrick

(Cavan): No doubt, the Deputy will be surprised to hear that my predecessor allowed the outdoor staff to be considerably run down. When I became Minister there were 20 vacancies for outdoor staff——

Mr. O'Malley

The outdoor staff have nothing to do with legal matters——

Mr. T.J. Fitzpatrick

(Cavan): It is all concerned with the question of delays.

Mr. O'Malley

The inspectors have nothing to do with the legal matters. The matter of title is a question for the solicitors involved.

Mr. T.J. Fitzpatrick

(Cavan): Some of the files make interesting reading. Some solicitors have been asked to reply to ruling but have not done so for three or four years. Perhaps it may be the fault of their clients—I do not know if that is the case—but the files are there to prove what I have said.

Mr. O'Malley

All I am pointing out is that the method adopted by the Land Commission with regard to the purchase of land is totally archaic and I challenge the Minister to deny that. An ordinary individual may buy a valuable farm for £100,000 and have the sale closed in three or four weeks but the same kind of transaction can take 12 or 18 months where the Land Commission are concerned. There is something wrong there. The individual who spends a large sum of money on a farm is just as anxious to get a good and proper title as are the Land Commission. If that can be done for an ordinary individual in three or four weeks, I do not see why it cannot be done by or on behalf of the Land Commission.

It is regrettable that at a time of enormous inflation, with the clearest evidence of a huge drop in the value of land bonds in the last 12 months, the Minister for Lands is asking the House to enable him to perpetuate and to keep in existence for at least five years more a system that people on every side of the House know is unjust and inequitable. By asking the House to pass the Bill, I regret to say the Minister is asking us to do something that will cause injustice, hardship and severe loss to many people in the next five years through no fault of their own.

Mr. Taylor

I am pleased that Deputy O'Malley is back with us and that he has made his usual valuable contribution. He seems to have a very pessimistic view of the functions and operations of the Land Commission and their officers. He may be influenced by happenings elsewhere but I doubt if there is justification for his remarks. He described this Bill as State-sponsored fraud. If that remark can be justified, I cannot understand why he has remained so silent during his years here when we had several Bills dealing with this question. I suppose he had not the same freedom then as Deputies on this side have with our present open system of Government: we have freedom to voice our views on all matters. Deputy O'Malley had not the same freedom and neither had his colleagues, apparently, since 1922 when land bonds were first created.

This Bill is necessary if we are to enable the Land Commission to function properly and to pay for the purchase of land from now on. We have the happy situation where we have 12,000 applications for participation in the retirement scheme. All land paid for under that scheme will be paid for in hard cash. The scheme is much more attractive than anything similar in the EEC. The levels are liberal and this should encourage people who can no longer work their land to hand it over to the State for division.

Despite Deputy O'Malley's view that we should not divide small farms, I hold that people with a low acreage who adjoin such farms and who have a low output would benefit from even small allocations. I disagree with the view that a smallholding would yield more if it were left to one new owner. Even a small addition to a farm will help to increase its production.

We are all agreed that during the years land bonds have not fared well on the stock market but making pessimistic speeches in this House will not create the necessary confidence to encourage people to hand over their holdings. Because of our EEC entry the situation has changed drastically in many respects and people who own land now are guaranteed prices in whichever area of production they are engaged, tillage, dairying or beef. It would be a help to them to accept divisions of lands and in my county, where we have so many congests, I have never heard of anybody refusing a division.

For those reasons, it would be preferable to create an atmosphere of confidence rather than to dwell on the theme of this being a State sponsored fraud as Deputy O'Malley did. Although saying that, I suggest to the Minister that in the years ahead he should make as much cash as possible available because people who sell land are not accustomed to going to stockbrokers to deal with their business. They may need the money for other purposes and the price of land should be in a more convertible form than land bonds. There is another way to overcome this problem. If people are not paid in cash it should be possible to allow a little more on the realisable value of land bonds. We talk about an issue of land bonds at 83 and it might be possible to have the value of such issues at higher rates.

I would point out that despite the fact that many purchases during the years have been by way of land bonds, more than 1,316,000 acres have been purchased by the Land Commission. If the Opposition dwell on the unattractiveness of purchase by land bonds, we should like to know from them the alternative methods they suggest would be more efficient. When the Land Commission buy land, delays are often caused by the establishing of title. The owners might be overseas and it might be difficult to contact them.

This Bill deals specifically with bonds and it is well to remember that in 1950 the inter-Party Government introduced the voluntary purchase of land by the Land Commission on the open market. I do not know any better way of buying than on the open market. The suggestion of improving the structure of the Land Commission does not come under this Bill.

I welcome the introduction of the payment in cash to those retiring. That is our immediate concern. We have a pool of land available which could be handed over very quickly to the Land Commission and utilised for division. In my view, the problem of creating adequate cash at this stage will not prevent a person from handing over his land to the commission if he considers it to be in his best interest. I would prefer to encourage people to do this rather than to discourage them.

Mr. Daly

I will also be very brief. I was surprised to see this Bill to create additional land bonds being introduced. I understood for quite some time that it was the policy of the Minister for Lands to phase out land bonds and finish the scheme. I do not think anybody on either side of the House can find anything good to say about this scheme. Although Deputy Taylor was right in much of what he said, he could not find anything favourable to say about the scheme. In my view land bonds have been the biggest single cause in slowing up land acquisition for many years. As I said, I was under the impression that this scheme was to be phased out. I am very disappointed the Minister has seen fit to continue with this scheme which has caused concern to so many people, especially those from whom land was acquired over the years.

In my constituency the delay in the acquisition of land by the Land Commission in many cases often results in owners giving up their land because if they give it to the Land Commission they will be paid in land bonds. These bonds in the past have proved unstable and unrewarding as an investment. This has resulted in a delay for the commission in acquiring land for division and has caused frustration to the owners and smallholders in the adjoining area who were expecting divisions. A farmer who expects to be paid for his land in land bonds will do everything in his power to hold on to his farm rather than have land bonds in exchange for his holding. I hope this scheme will be the last to be introduced. I also hope that the time will come when the Land Commission will be able to pay cash for any land they acquire.

I was pleased to note that the Minister proposes to pay cash to those retiring under the farm retirement scheme. This is a very important scheme. It would be detrimental to the agricultural industry, particularly in the western areas, if the scheme were to be tied up with land bonds. I would like the Minister to give me a definite assurance on this because I am afraid that at some future date he may try to change it. As I have said, it is time to phase out the land bond scheme. It has been most unsatisfactory in the past and I am sure that no Deputy on either side can find anything good to say about it. If we could find some way of trying the value of land to land bonds, the bonds at some stage might be used by those who have left farming to get back into agriculture, if they have not made the progress they expected in their new life.

A farmer in my constituency lost quite a considerable amount of money. He sold his farm for £16,000. A deposit had been lodged with his solicitor. The Land Commission decided to acquire the farm. If the sale had gone through he would have invested his £16,000 two years ago but because acquisition is a slow process, he lost on the deal and will be paid in land bonds. Now he will not be able to start a new business as he intended.

From their performance over the years I am sure nobody could say anything in favour of the bonds. Is there any way in which they could be improved and so compete with other investments? The Minister should look for alternative ways of financing land acquisition and so finish with land bonds. If he did that, he would have the support of everyone in this House.

Mr. Donnellan

I cannot defend land bonds. It was remarkable to hear the contributions from the Fianna Fáil Party who had been in Government for approximately 32 years. Over the past ten years I have made a contribution on the Estimate for Lands and complained about the land bond system where there arises the case of compulsory acquisition with the Land Commission paying land bonds. Those people who are critical of the Minister today took a long time themselves to devise some other system. It is a wonder they did not do so. I know Deputy Tunney is not in the House very long. As a matter of fact, I cannot understand why he is the Opposition spokesman on Lands at all.

Mr. Tunney

Stranger things have happened.

Mr. Donnellan

Perhaps if he ever becomes Minister he may devise a system to abolish these land bonds. I would vote against this today were it not for the fact that it is necessary to have this issue of land bonds so that the Land Commission can acquire land and give it to small farmers badly in need of it. I feel very strongly about that. There is no way in which anybody can defend the land bond system.

I listened with interest to Deputy O'Malley. It is a great pity he did not use those words when his Minister for Lands was in office or during the time when his party were in office. It is a pity he did not persuade them, with his beautiful flow of language, to change the land bond system or provide cash. I know it is impossible, with the resources at our disposal, to get enough cash with which to pay for all the land acquired by the Land Commission. I repeat that I would vote against this Bill were it not for the fact that it is necessary for one reason only and that is to give land to small farmers because the Land Commission have not enough cash with which to purchase that land.

Reference has been made to the farm retirement scheme. I am glad that cash is being paid under that scheme but I am not satisfied there is sufficient activity in this respect on the part of the Land Commission. I know inspections tend to be rather slow and finalisation of some cases takes quite a long time. I see the Minister says, in the last page of his brief, that some of them have been finalised.

My only reason for speaking was to express my deep resentment of land bonds. They have caused a great lot of trouble. I am aware of people from whom land was taken many years ago who, through perhaps lack of education—certainly through no fault of their own—are still in possession of land bonds worth nothing to them and about which they feel very sore. Perhaps the main reason why land bonds cannot be defended is the high rate of inflation which, as we all know, is not of our own making. Land bonds now worth £116 will be worth only £100 in no time at all. Perhaps there might be a swing in the opposite direction. Certainly it would be necessary that there be such a swing in the opposite direction because people are very reluctant to accept land bonds which are worth nothing to them.

Excepting the question of land bonds. I should like to congratulate the Minister on all aspects of progress in the Land Commission, and particularly on the fact that since he became Minister he has ensured that there were plenty of field officers operating in County Galway. As a result of that, quite an amount of land which had been in the possession of the Land Commission for a long time, a lot of it up to ten years, is now in the process of being divided. Therefore, I should like to thank the Minister on behalf of the smallholders in that direction.

Mrs. Hogan O'Higgins

I shall be brief. I think somebody else offered before me. I rise only to speak about land bonds and, in this respect, I would rather be on the other side of the House. I am slow to criticise the Land Commission because my family has had long connections with it. My grandfather was on the Congested Districts Board and my father was Minister in the Government that set up the whole system of land bonds. Everybody in the House criticises land bonds. I think I am longest here of those Deputies who spoke on this matter; I am 18 years in this House. Since I came in here, I never heard a person say a good thing about land bonds. Those Deputies not so long here, like Deputy Callanan, Deputy Tunney and Deputy O'Malley, will not recognise that Land Commission problems form the bulk of our work in rural areas, certainly those west of the Shannon. It is difficult to stand on this side of the House and say: "Do not give land bonds" because, if you do not give land bonds, you will have no money with which to acquire land and the small farmer will not get land. While all of us want to see the small farmers improve their holdings we must recognise that the man from whom the land is acquired is entitled to be paid properly and paying him in land bonds is not paying him properly. There are a couple of cases in my constituency at present causing a great deal of anxiety, substantial farms that have been acquired and the owners of which have been paid in 12½ per cent land bonds which would now stand at approximately 83. With regard to one estate the land court awarded approximately £53,000 to the owner of the property and in the other, with which Deputy Donnellan is very familiar, approximately £25,000 was awarded to the owner of the property. One has only to do one's arithmetic to calculate how much money those people will lose.

I find, no matter how one advises a constituent, he will not surrender until the last minute and, very often, he will get an extension on his time of possession, when the land bonds keep falling in value. In the end, the whole thing is very unsavoury and a very unhappy position obtains. Small farmers get land; they are delighted to get it and they turn the blind eye on the unfortunate man who suffers virtual confiscation. I have quite an obsession as to the morality of this. It is one thing which is beginning to come between me and my night's sleep. I think it is morally wrong to take land from any farmer, be he big, medium or small, and give him land bonds because they are not now worth the paper on which they are written. It is no good saying to me: "They are at 83". Sure, they are at 83 but, if one tries to sell them on the market one will not get 83. Indeed, if one can sell them at all, one will be lucky. The Department of Finance will not accept them in payment of death duties. One Department foists them on unfortunate people and another Department will not accept them. It is wrong and we are all responsible. We were responsible in the early 1920s; Fianna Fáil were responsible in the 1930s and 1940s; we were responsible in the 1950s, Fianna Fáil in the 1960s and we are responsible again in the 1970s. As far as I am concerned, this cannot continue. I do not know what to advise.

One advises the Land Commission to go ahead with the farm retirement scheme, and they are doing good work in that respect, making a pool of land available, paying the man in cash who surrenders it and everybody is happy. If they suspended the acquisition of land by land bonds for a few years, went ahead and divided the land they have in hand—certainly in County Galway it would take them all of their time to get rid of the land they have in hand as well as the land that will be surrendered to them by retiring farmers—and did not proceed with acquisition by land bonds, I do not know whether that would make the small farmers happy. As I see the situation at present, that is the only thing that would make me happy— that some better scheme be envisaged under which a farmer would receive adequate payment for his land. At present, my sympathies are with the small farmer who is anxious to make a living. I am all in favour of giving him a just amount of land but I am not in favour of doing so at the expense of somebody else. At present it is the few who are being penalised while there are a large number being made happy. Therefore, the few penalised are forgotten and they are not in a position to defend themselves. There is a system of acquiring land whereby if you are dissatisfied you go to the land court. As far as I can see, nobody is satisfied with the land court. I am not satisfied with it. I tried to criticise the land court on the Estimate for the Department of Justice and on the Estimate for the Department of Lands, and I was told it was not appropriate. I do not know where you criticise the land court. Be that as it may, my constituents, and I am sure the constituents of other Deputies, are not satisfied with the kind of treatment they get there.

As the Bill stands I could not vote for it. I shall talk to the Minister afterwards. It is a long time before 10.30 tonight; there is all day tomorrow, and the Bill has to go through its other Stages. However, I shall give the House one small example: in my constituency last year a person died under doubtful circumstances. He had a large block of land bonds. His widow told me she thought his big problem was that he was short of money, he could not sell land bonds, and the whole thing was too much for him. I say this to the Land Commission officials and they say: "We know it is wrong but do not blame us. You are in Government now. We have been in Government for only two years. Fianna Fáil were in Government 32 years. Everybody knows it is wrong, yet we go ahead perpetrating this injustice. If we have any honesty at all we cannot continue this. I should not be saying this from this side of the House but I could not live with myself if I did not.

I congratulate the Minister on the work he has done in other areas of his Department. He has done a great job on the retirement scheme and also on the wildlife preservation and forestry end of his Department, and his officials are working extremely well in their areas. They are not responsible for these land bonds. We are responsible for them. The buck lies here and we cannot pass it.

Mr. Esmonde

I do not think there has been any speaker who has said one word of condonation, not to talk about praise, on the matter of giving lands bonds for land acquired. Land bonds are given only where there is a compulsory acquisition. A voluntary acquisition can often be arranged for a cash consideration. Payment in cash is the basis for the retirement scheme.

I would describe this Bill in terms of "needs must when the devil drives", and I want to explain what I mean by that. Deputy O'Malley went back through the history of the Land Acts, and he was quite correct in saying that the early Land Acts were passed for the purpose of enabling the sitting tenant to acquire the landlord's interest and to make himself a fee simple owner in lieu of the very doubtful tenure he had experienced before that time. We come to the case of the 1923 Land Act, which I would describe as the Cosgrave Land Act and which is probably the most important Act we have ever had in the land code, because that brought in a certain amount of compulsory acquisition of land that had not existed heretofore under the land code.

That Act had an extraordinary effect. In many cases it actually compelled the tenants to become freehold owners whether they wanted to or not. I have spoken to some of the very elderly men still alive who came in under the 1923 Land Act for the first time. Prior to that they qualified under the earlier Land Acts but preferred not to take the road that was indicated by the Land Act. They were happy with their tenancy and with the circumstances under which they lived with the landlord. Anyway this was the effect of the 1923 Land Act and this policy has permeated the thinking on land law to this day. It has gone to such an extent now that the Minister and his Department are getting constant goading from land owners to take acquisition proceedings and to push the acquisition provisions of the Land Act to the very maximum, and this has meant a larger requirement of money and resources to pay for the land acquired.

A lot has been said about the morality of land bonds because of the way they depreciate. However, there has been another development in recent times which might dry up the tears of those people who weep about land bonds being given under acquisition. When the 25 per cent stamp duty was brought in to protect the land ostensibly for the people, many people managed to buy land because they had the resources and because they had the extra 25 per cent in their pocket. I would hazard a guess that a lot of that 25 per cent was ill-gotten gains, a lot of it was got out of machinations in the last war, and land was bought here with that money from underneath the noses of the Irish. I would not weep too many tears if those people were given land bonds for the land they had acquired, because they acquired land in circumstances that could not be regarded with any degree of pleasure by any genuine Irishman, and the sooner that land is back in Irish hands the better.

Those words may sound unjust, having one law for one and another law for another. I do not look at it that way. The land belongs to the Irish people and, where possible, that land should be made available to Irishmen. We have had a hard enough historical past without giving rise to events in the present which will create another historical past for future generations to deal with. One will realise the necessity for this if one looks through my constituency and other constituencies and sees the amount of very fine land and estates owned by people who are not nationals and not even resident in this country. They have a nominal steward from a nominal company, very often a company in an office that is very hard to find. It is only on a piece of paper in the companies office and on a plate in some other part of the country. I am well aware that the Land Commission have had considerable trouble in trying to ascertain the real owners of some large holdings of land in my constituency, and that is the position in other constituencies as well.

As a Parliament of Irishmen we should realise what the problems are and stop weeping salt tears about land bonds being given to that type of people. They are only speculators. They are not genuine farmers or landowners, never were and never will be. It is our duty to get rid of that type of person from the land of Ireland. These people are no aid to the nation, no aid to their neighbours or to anybody else.

Mr. T.J. Fitzpatrick

(Cavan): They are not all foreigners.

Mr. Esmonde

They are not all foreigners. That is the trouble.

Mr. Tunney

The Deputy was not concerned about them last year when he criticised the bond system.

Mr. Esmonde

I criticised the bond system, but I am referring to a specific situation, and I think the Deputy is aware of it.

Mr. Tunney

We are also concerned about small landed men who have to yield up land——

Mr. Esmonde

Exactly. I do not think there are many of those. There is a retirement system provided for them and they are given cash. They can always get cash if they do it on a voluntary basis.

Mr. Callanan

On the 11-month system land cannot be transferred under the scheme.

Mr. Esmonde

I know. That is under the retirement scheme. That is a Brussels rule, not an Irish rule. It is a rule that binds us and the Deputy knows that. It is EEC law. The directive is there for anybody to read.

Mr. Callanan

It is law anyway.

Mr. Esmonde

I know that. I have described it as law.

Mr. T.J. Fitzpatrick

(Cavan): It is law that was negotiated by the Deputy's party when they were in power. Both directives were negotiated by my predecessor.

Mr. Callanan

It is the law of the land.

Mr. T.J. Fitzpatrick

(Cavan): Negotiated by Fianna Fáil.

Mr. Esmonde

I know Deputy Callanan is concerned about this and I have tried to explain this to him on previous occasions in the House. I hope he will get a little book on European law and find out exactly what the position is in regard to the financing of that directive.

Mr. Callanan

Deputy Callanan is well able to get all the information he wants and study it.

Mr. Esmonde

Have another read of it.

Mr. Callanan

There is not much about land that Deputy Callanan does not know, but I am sorry for interrupting and I apologise to the Chair. It is seldom I do interrupt.

Mr. Esmonde

I enjoy the cut and thrust of debate.

Mr. Tunney

The Deputy criticised land bonds in 1973 more effectively and made a good case against them. I hope he has not changed his mind.

Mr. Esmonde

No, I have not but I am dealing with certain types of individuals who came in here with hot money and bought land.

Mr. Callanan

Nobody condones that.

Mr. Esmonde

We know enough about our neighbours in a small nation like this to ask how certain people managed to buy land so quickly in such large amounts in certain rural areas. One of the prize places for these people to buy land is my own county, Wexford, and there is pretty hard feeling among my constituents on this matter. It is a very hot issue at present and I would not like to see the Exchequer being plundered to compensate these gentlemen who have become new land owners. Bonds are quite good enough for them and at 16 per cent they are being amply paid and there might be a chance of their paying a little tax on the dividends. We know how money was being made in the recent past and there is not a lawyer in Ireland who does not know how it is done and that not a penny tax was paid. I have referred to it on several occasions in this House and elsewhere. I have claimed no privilege when speaking on this subject. If those people are compensated by land bonds they are getting their just deserts.

Having said that, I think it is possible to have an improved arrangement regarding land bonds and I am inclined to agree with Deputy Lalor who mentioned a matter that I intended to mention myself, that the land bonds should be buyable by members of the public if they want to buy them and not just allocated as compensation on the acquisition of land. You would then have a fund of ready cash. I am certain many people would be interested in buying at 16 per cent, a good rate of interest, and possibly making some arrangement regarding tax in connection with those bonds. Possibly people in the higher tax-paying group would be prepared to subvent land bond issues occasionally. The bigger institutions might be pleased to do it and you would have a fund of ready cash which would certainly assist in the acquisition of land.

Again, as Deputy Lalor rightly said, the price paid per acre for land when paid in cash was a great deal less than the nominal price when land bonds were given as compensation. There may be more than two reasons for that. First, when cash is paid it is a sale by agreement; there is no contention; there is harmony between the Land Commission and the seller, whereas, when dealing with land bonds, the nasty words "compulsory acquisition" are associated with them and in those circumstances there is bound to be a bias. First, the person objects to being compulsorily acquired and secondly he objects to being paid in land bonds and, arising out of that, he sees that he might be left with a non-liquid, non-transferable security and possibly a depreciating one. Therefore, he fights for the last penny and that costs money and means that the highest possible price is paid.

To be fair, there is sometimes a misconception about the fixing of the price of land in relation to land bonds. I have been in a case where this was done by the High Court judge on appeal to the Appeals Tribunal when land bonds were standing at, say, ten points below par. The necessary number of land bonds was allocated to my client on the basis that the price of the land bonds was 90 and my client was also allocated money for the intervening period when he was out of his money. Fair compensation was paid in that case and the various weaknesses of the land bonds system were covered.

One might describe land bonds as a Government currency, the Government's way of paying for land acquired. We are now moving into the realm of capital taxes and this money paid by the Government is of its nature capital and I do not see why, if the Government demands a capital tax, that capital tax should not be paid in the Government's own capital currency. In respect of death duties and capital tax, I think it is fair that the Government should accept land bonds to meet payment of such taxes. If that provision were introduced and if land bonds were made available for purchase by the general public just as they would buy saving certificates in the Post Office there could be a constant cache that could be drawn on and bought by members of the public as they wished. Rates of interest go up as well as down and allowing for that, if the Land Commission are any way right regarding the interest rates on their bonds it seems that their issue of bonds would be a viable proposition in the financial world.

Deputy O'Malley referred to the question of the annuity being related to the interest on bonds and he uses this as an argument against voting for the Bill on the basis that this high rate of interest is putting an undue load both on the Exchequer and on the purchaser or allottee, that this would have an effect on the annuity payable. It would, but only in a very small way because basically the price of the annuity, as to its greater part, is assessed and charged in relation to the actual cash paid per acre for the land acquired. I think the Land Commission have failed to move with the times in just using the land bonds system and the complete acquisition of all interest in the land as being their way of dealing with congestion and allocation of estates. I have often before suggested that a system of leasing would be a far better and quicker method of getting land allocated and might save the Land Commission capital they now have to spend on the acquisition of land and might make the entire process of acquisition and resettlement a good deal cheaper than it is.

Debate adjourned.