Mr. John McCarthy:

Let me take land borrowing, since historically it would have been one of the more common loan application purposes. When it receives an application for a land borrowing loan, there would be a number of things the Department would look for. The first is: do we have the capacity to sanction it from the point of view of the general Government balance? What I mean by that is that there is a slice of overall sort of borrowing or capital movements generally within the public system that the local authority is allowed to avail of. That requires us to have a system in place to know what capital repayments are happening by local authorities or what other run-down of capital balances is taking place so that we then know what capacity we have to approve additional borrowing and stay within the parameters that have been set for us by the Department of Public Expenditure and Reform. That is one of the first things we would look at.

The second issue that we would look at is to understand the capacity of the local authority to be able to fund the loan. There would be consultation with our local government finance people as part of that exercise.

In relation to a land acquisition loan for housing, in those cases ultimately the State would pay the interest because the way the system worked ten years ago when this was operating was that the interest was in effect rolled up for a period of time and was then recouped to the local authority at the end of the day.

The third issue that the Department would absolutely insist on, in accordance with section 106, is that there would need to be evidence that the borrowing had been authorised by the elected members and that evidence of the resolution passed by the council would have been submitted to us.