Denis Naughten (Longford-Roscommon, Fine Gael)

I welcome the opportunity to speak on this Bill. It is a long time coming and is welcome. The Bill requires dramatic amendment but I accept and welcome the principle of it.

Before dealing with the content of the Bill, I compliment the 33 staff who work in the lands division. As public representatives we have all had dealings with the lands divisions in Cavan and with regional inspectors on numerous occasions. We have examined issues to improve the public service delivered. Many civil servants could take a leaf out of the book of the staff in the lands division, whether they be the staff in Farnham Road in Cavan or the regional inspectors, in terms of the manner in which they deal with queries from public representatives. It has always been a pleasure to deal with those staff.

However, a major difficulty is the inadequate resources available to them. On average there are fewer than one and a half staff members per county to deal with the number of queries concerning the processing of applications. There have been numerous instances where young people building houses on applying for a mortgage have found that they do not have the proper title and the application is held up in Cavan, although the staff there have been extremely proactive in addressing that problem.

To pick up on one of the Minister's final points, I hope that the staff in the lands division will not be redeployed but that they will be reallocated to address the huge mess in regard to the issue of title. The transfer of title causes major delays in the processing of applications.

As the Minister stated, the Land Commission was originally established in 1881 as rent fixing body under the Land Law (Ireland) Act of that year. It subsequently developed into a tenant purchase agency and purchased 13.5 million acres of land for tenants. Eventually the commission embarked on a countrywide programme of land structural reform but, as we are all aware, that was not without controversy. There were significant controversies.

Some people allege that the dormant accounts fund, which we discussed earlier when dealing with the Dormant Accounts (Amendment) Bill, will become a political slush fund, but the Land Commission was its predecessor in that respect and significant allegations to that effect have been made over the years. The fact that the commission's acquisition of land ceased in 1983 was a positive development. Such acquisition restricted farmers who genuinely wanted to expand their operations. In many cases, the Land Commission stepped in prior to sales being closed and deals being done.

While such acquisition facilitated small farmers, which must be acknowledged, it restricted more progressive farmers who wanted to expand their enterprises. There were a number of controversies over compulsory acquisition of land where land was leased. I know of one family of three sisters who lived quite close to my home who leased land. That was one of their sources of income at that point, but the Land Commission stepped in because that land was being leased. However, it annoyed and hurt the family in question that the tenants who received that land subsequently let it to the individual who had been renting from the sisters in the first instance and nothing seemed to have been done about it. There have been other similar instances over the years.

This legislation is long overdue. The Government gave a commitment in 1993 under a partnership agreement to address this issue, but it has taken 12 years for this legislation to be introduced. Sustaining Progress contained a commitment to ease the burden experienced by farmers who were paying land annuities. This legislation does not address that core principle. While the Bill attempts to bring forward measures to cut the existing number of land annuities and it provides for those with annuities of under €200 per annum threshold, it fails to address the core element of people with outstanding annuities. The issue of annuities will not be resolved by the Bill. The discharge of the land purchase annuities for those with annuities of €200 per annum is a positive development that will benefit approximately 4,500 farmers. The majority of these holdings are small in size and the annuities attaching to them are very old.

It has been calculated that the staff costs involved in collecting the full capital sum of these annuities, if paid on time over the next 14 year period, would roughly equal the amount to be collected. There is a great deal of paperwork involved in collecting annuities. If this measure is taken up, it would eliminate much of the paperwork involved. If the current costs of recovery and staff costs I outlined are correct, it is uneconomic to collect annuities of under €200 per annum. Surely it makes economic sense to propose a write-off of annuities of under €500 per annum. It is not uneconomic to collect those annuities now, but with additional collection costs in coming years, such a write-off would make economic sense.

This system is still paper-based and will continue to be if there is a significant uptake of this measure because it does not make economic sense to computerise the system. Will the Minister to re-examine the threshold proposed? It would not involve a massive cost to increase the threshold from annuities of €200 per annum to those of €500 per annum, but the savings from doing that would be significant and result in a return that would make such an extension of the measure cost neutral.

The second and probably the most controversial element of the Bill is in regard to farmers with annuities of more than €200 per annum who will be able to redeem them at a discount of25%, subject to all outstanding arrears being paid in full. Those farmers will have the opportunity to buy out their land at a discount of 25%. Approximately 2,500 farmers have annuities of more than €200 per annum. If there is a full up-take of this measure, it would be yield a return of approximately €18 million to the Department and, as a result, two thirds of existing annuities would be written off.

The period of six months for the take-up of this measure is inadequate. The Minister knows that and does not need me to tell her. It is proposed to introduce it in the spring of 2005 and that it will be open up to the autumn of 2005. Either the Minister is prepared to proceed with this or she is not. If she is, the least she must do is extend the timeframe for the take up of it until the introduction of the single farm payment. That is a basic element. It would at least give people the opportunity to do that.

The Minister stated in her speech that the Department does not require title. No bank will give money to farmers unless they have title. Trying to get title is a major issue in the delays when a young couple are applying for a mortgage.

The Minister also says they must have this resolved within six to eight months if they are to avail of the discount. That is impossible. If the Minister contacts her colleague in the Department of Transport, he will tell her that the NRA retains money for property it has compulsorily purchased over the years because title still has not been sorted out. The timeframe should be extended to two years, giving farmers time to put the financial arrangements in place to allow them to buy their annuities, to tap into the single farm payment and to sort out ownership title where there are disputes or ambiguities.

The 25% reduction in the buy out price is not enough and the package needs to be more attractive if we are to have a maximum take up by farmers. The option to buy out the annuities affects 2,500 farmers and the discount should increased to 50%, as it was in 1992-93 when the buy out discount on the outstanding capital was offered to each annuitant who was not in arrears at that time. The main cohort who will take this up are people who were in arrears in 1992-93 who could not avail of the buy out clause then.

The Department is offering no assistance to those farmers with significant arrears. The last buy out scheme did not address the issue and neither will this. People who got land did so to make their farms viable. The majority were small holders who could not get loans from the bank because they would not have had adequate credit ratings. That is why they were involved with the Land Commission in the first instance. Farmers who owe significant arrears to the Department cannot participate in this buy out scheme until those arrears are paid but the Minister is giving six months to pay the arrears, six months to get the title in order and six months to raise the finance to buy it out. It is impossible.

The total amount in arrears due to the Department from farmers with annuities over €200 per annum is €3.6 million, an average of €1,565 each. There is, therefore, no reason why a flexible approach cannot be taken by the Department. The element that would have to be written off —€3.6 million — is less than the amount being written off for annuities under €200 per annum, which will cost the State €4 million. Will it cost the State any less to collect that €3.6 million over the number of years? The Minister's own debt collectors are charging a fee of 20%. If the Minister is prepared to give a private company 20% to collect the arrears, the least she could do is ensure the farmers get the same discount on their arrears if they come up with a full and final settlement. No offer is being made to them for any discount on arrears but the Minister is prepared to give it to a private company. That is unfair. At the very least they should get the same offer as is being given to private debt collectors.

The interest rates on arrears are significantly higher than rates currently available. They vary from case to case but some are as high as 18% given that they were contracted with the Land Commission in the 1970s and 1980s. No repayment is less than 11% per annum, significantly higher than rates available from the commercial banks. The loan sharks would not squeeze people as tight as the Department has done over the last number of years with significant interest rates and no assistance being given to waive the outstanding arrears.

The Department has ignored this issue for many years. It did not go out to collect the money from farmers but brought in debt collectors to do it. It is a paper based system and no financial institution still works on that basis. There is a huge financial burden just to administer this scheme that has not been fully recognised in the discount offered to farmers.

A number of things can be done for those in arrears. Agreement should be reached on a payment plan over a number of years with little or no interest. The State can borrow at the ECB rate of 2% while farmers are paying at least 11%. The farmers who currently owe significant amounts of arrears may not be able to meet these debts or be able to afford to buy into the opt out so the 25% reduction will not be available to them. The Minister should capitalise the overall debt along with the outstanding annuities and give a 25% discount on that, particularly when she is giving a private company 20% to collect the money. It is getting a commission that the Minister is not even prepared to give to farmers.

For those farmers who cannot choose to take up the offer and decide to continue to pay the annuities, the Department of Agriculture and Food must provide help and assistance to repay these debts in a structured manner.

The provisions under sections 4 and 6 twist farmers' arms to pay arrears. I was interested in the Minister's comments on this in her speech. In section 4, she states that the powers will not be applied without notice being given to the annuitant in a proportionate manner if applied but it does not say that in the Bill. If it did, we could accept it, or if she introduces an amendment on Committee Stage we will accept it, but she is not talking about that here. In the past farmers from Malin Head to Mizen Head were penalised by provisions introduced here to get the cowboys in the system. The heavy hand was not supposed to be used on genuine farmers but when the provisions were introduced, the exact opposite happened. If the Minister wants to bring in sections 4 and 6, and she is serious about giving farmers every opportunity to make repayments before invoking those sections, she should write it into the legislation rather than merely commenting in the House, because as soon as the legislation is passed there will be different interpretations of it. I hope the Minister will introduce relevant amendments.

The legislation allows the Department to claw back headage payments, premia payments and the single farm payment from farmers who have annuity debts. Many farmers are paying extortionate amounts of money for store cattle and weanlings. I do not see how they can make a profit from them. Therefore, the only income they will have this year is what they get by way of premia payments and the single farm payment, and it is that income the Minister is taking from them. Many have other loans and suppliers to pay. Could the Department feasibly take someone's farm retirement scheme payment under this legislation? Is it possible that these powers might be extended to other Departments in the future so that, for example, social welfare payments could be tied into it? The Department of Agriculture and Food is essentially talking about an attachment of earnings, taking a payment from a farmer by deducting it from moneys that are due.

See this speech in context