"I move that the Bill be now read a Second Time."
The main purpose of this Bill is to clarify and reinforce some provisions in rating valuation law and to prevent the erosion of the valuation base with the consequent loss of revenue by local authorities.
The principal provision arises from section 7 of the Annual Revision of Rateable Property (Ireland) Amendment Act, 1860, which stipulates that, in valuing any mill, factory or other industrial building, the Commissioner of Valuation shall not take account of the value of any machinery, except such as is used for the production of motive power. In recent times, particularly with the increasing automation of manufacturing, there have been more and more frequent attempts to have many items of fixed plant associated with a manufacturing process treated as machinery. Examples of plant which have been called into question are industrial silos, brewery vats and bakery ovens.
The Commissioner of Valuation has consistently valued such plant, but in a number of important cases the courts have found in favour of the appellants, that is, to the effect that the items in question were machinery. It is proposed, therefore, to amend section 7 in order to remove any doubts and to confirm the traditional practice. The new section 7 provides that plant in the nature of a permanent fixture shall be valued and the categories are listed at section 8.
The Bill has a similar provision relating to certain types of fixed property other than plant which hitherto have been valued in accordance with the Valuation Acts, though not specifically referred to in that legislation. Some of these types of property did not exist or were not of practical significance when the code was established in the last century. Car parks are a good example. The categories of fixed property involved are listed in the schedule to section 3.
The Bill, in addition, provides statutory authority for the long established practice of fixing valuations of rateable hereditaments by reference to the valuation of similar hereditaments already valued. This practice is necessary because the Valuation (Ireland) Act, 1852, prescribes that the valuation of buildings shall be based upon an estimate of the net annual letting value. Letting values have undergone radical changes in the course of time due to inflation and to other factors, but in the absence of a general revaluation the changes have not been reflected in property valuations generally.
Accordingly, to prevent distortions and inequities arising as between old and new valuations and to preserve relativities, the practice has been to determine the rateable valuation by reducing the estimated current letting value to a figure consistent with the valuation of comparable properties already rated. This is referred to as "maintaining the tone of the valuation list", that is, it preserves a reasonable relationship between valuations within and between rating areas. I have decided to avail of the present Bill to put the practice on a formal legal basis.
I want to assure the House that the Bill does not represent any change in valuation or rating policy. It does not seek to extend the type of properties to be valued and rated. On the contrary, it will merely help to preserve the traditional valuation base and remove doubts about the interpretation of some existing provisions.
By way of some further background explanation it might be useful if I said a brief word about some recent court rulings in the matter. Difficulties in the interpretation of section 7 of the Annual Revision of Rateable Property (Ireland) Amendment Act, 1860 — to which I have referred — have arisen because the word "machinery" is not defined in the Act, nor is it defined anywhere else in the valuation code. The variety of types of machinery one may now expect to find in a factory as well as variations in their adaptation, situation or use may render definition almost impossible. In the late fifties legal challenges to the rateability of certain plant began to emerge on the basis of the ambiguity of the meaning of the word "machinery".
The general conclusion of the courts in cases heard to date is that any plant, tank or vessel to which or in which force is applied in any way in the process of manufacture is a machine and accordingly not rateable.