Seanad Éireann - Volume 111 - 19 February, 1986
Valuation Bill, 1985: Second Stage.
Question proposed: “That the Bill be now read a Second Time.”
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Before I call on the Minister I would like to take this opportunity of congratulating her on her recent appointment and of welcoming her to the House. I have no doubt that she will give the House whatever help she can.
Mr. Lanigan Mr. Lanigan
Mr. Lanigan: I would like to join in congratulating and welcoming the new Minister of State. It will probably be the last time that we will be of one mind with her entrance into this Chamber. We wish her well in her portfolio. We will cooperate with her as long as she co-operates with this House.
Mr. Howlin Mr. Howlin
Mr. Howlin: I would like to congratulate my constituency colleague on her promotion and wish her well in her appointment.
Mr. Belton Mr. Belton
Mr. Belton: I would like to congratulate my relative on her appointment.
Mr. Ferris Mr. Ferris
Mr. Ferris: As Deputy Leader of the House, I would like to avail of this opportunity to welcome the new Minister of State at the Department of Finance. I wish her a long and happy time in the  Department. There was a great colleague of mine in that office before her. He knew the Department well and if she lives up to the high standard which he set there, there will be no problems.
Minister of State at the Department of Finance (Mrs. Doyle) Minister of State at the Department of Finance (Mrs. Doyle)
Minister of State at the Department of Finance (Mrs. Doyle): May I at the outset thank you and indeed my colleagues from all parties in the Seanad for their good wishes on my arrival here today.
The main purpose of this Bill is to clarify and reinforce some provisions and concepts of rating valuation law in order to protect the valuation base which, as Senators will know, is the most significant source of locally raised revenue for local authorities.
The principal provision of this Bill, section 7, arises from certain recent interpretations placed by the courts on the application of section 7 of the Annual Revision of Rateable Property (Ireland) Amendment Act, 1860. Section 7 of the Act of 1860 stipulates that in valuing any mill, manufactory or other industrial buildings the commissioner of valuation shall not value machinery except such as is used for the production of motive power. With the increasing automation of manufacturing processes, which has blurred the old clear-cut distinction between what is and what is not machinery, there have been more and more frequent attempts made through the courts to have many items of fixed plant, associated with a maufacturing process and which traditionally were liable to valuation, treated as machinery. Examples of the plant which have been treated as machinery by the courts, and thus declared to be exempt from valuation, are industrial silos and other storage plant, brewery vats and bakery ovens.
For the purposes of the Valuation Acts plant is now defined for the first time in section 1. Section 7 proposes to amend the Act of 1860 in order to clarify the distinction between plant and machinery and to confirm the traditional practice with regard to the rateability of plant. Section 8 gives a schedule of categories of plant whose rateability has in recent  times been called into question, to which section 7 applies.
During the passage of the Bill through the Dáil it was asserted by some Deputies that what is conventionally known as process plant could be liable to valuation under section 8 of the Bill. This is not the case. Such plant, despite its name, is for valuation purposes generally treated as machinery. However, to allay the fears expressed and in the interests of clarity the Dáil passed an amendment to section 8 which expressly excludes from the valuation code constructions designed or used primarily to induce a process of change in substances. Senators need have no fears with regard to any extension of the valuation code: what is provided for under this Bill is merely the preservation of the existing valuation base — it does not add new categories of property to it.
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. A typical example of such property would be car parks. These are at present being valued but of course were not specifically referred to in the original valuation legislation which is over 120 years old. The categories of fixed property involved are listed in the schedule to section 3.
The Bill, in addition, provides statutory authority for the long estblished 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, of course, undergone radical changes in the course of time due particularly to the effects of inflation 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. It has been decided to avail of the present Bill to put the practice which has been in operation for a long time on a formal legal basis.
I want to assure the Seanad 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 and it does not change current practice with regard to the method of valuation. On the contrary, it will merely help to preserve the traditional valuation base and remove doubts about the interpretation of some existing provisions.
I commend the Bill for the approval of the Seanad.
Mr. Smith Mr. Smith
Mr. Smith: I would first like to join in the congratulations to the new Minister for State, Mrs. Doyle, and to wish her a very happy tenure of office. I suppose she might have preferred to come to office in different circumstances. We have all had those experiences. I am quite sure she will bring to bear her own individual talents on the matters pertaining to her duties.
It is rather a pity that the debate on the Bill, which was introduced in the Dáil almost a year ago was allowed to develop and create the kind of scare in the business community which could have been allayed by the Government if the amendment which was passed in the Dáil quite recently had been agreed to many months previously. We are dealing here with a Valuation Act which, as the Minister told the House, is more than one hundred years old. Naturally, with changing technologies and different developments in the industrial, business and commercial world it is unlikely that all of what was  incorporated in the original Act would meet present-day requirements. Therefore, we have no great objection at any time to a Government introducing measures which bring up to date Acts which are in need of amendment.
In this particular instance the CII and groups within the industrial and commercial sphere gave different estimates of the overall additional cost that would be involved in the passage of this Bill. I think that the Minister, in replying to the Second Stage, should indicate to the House what, in precise financial terms, will be the difference to the sole remaining ratepaying community arising from the passage of this Bill. If projections are given in relation to the additional rates which will have to be paid and are indicated to this House and sustained, all of us will have much more credibility in regard to Bills of this nature.
We are living in a time when the whole commercial and industrial world is faced with mounting economic problems. Almost 3,000 companies have closed down in this country in the last three years. We do not want to indicate that the reason for this was the amount of rates that had to be paid. In many cases it can be written off against income tax liabilities. I certainly would not want to raise it as being one of the major questions. Nevertheless, it is important to indicate to entrepreneurs and people engaged in business that in no way are the Government in any hidden way trying, through the passage of this Bill, to extract more money by way of rates from this dwindling community.
In relation to the Valuation Act itself, it is fair to say that it has stood well the test of time. I would like to take this opportunity to pay a compliment to the people in the Valuation Office who, down through the years, have interpreted this Act in a very broad and reasonably fair way as far as my experience goes. The practice which was undertaken by the Minister for Finance during the last year in visiting processing plants both in the dairying and sugar areas to allay fears in these areas with regard to the question  of the types of machinery and plant that would be embraced by the new Bill, was a very worthwhile exercise and helped to allay some of the unease which prevailed heretofore. During the course of the past year — although this is an aside I would like to ask the Minister to investigate it — I have had representations from individuals who house antiquities, old pieces of machinery which have taken a lot of time to assemble. Most of this work is done as a hobby but it enables voluntary organisations to have access to these pieces of antiquity to raise funds for very necessary projects. The preservation of antiquities of this nature — old threshing mills and so on — and maintaining them so that future generations would have access to the types of machinery and equipment used in earlier times is a very worthwhile exercise. Under the present law the Valuation Office have to consider accommodation used for the preservation of antiquities of this nature in the normal way even though the owners enjoy no income whatsoever from their use of maintenance and in many cases undertake fairly considerable expense in bringing them together and finding parts in different areas of the country for them. I know that it is not directly relevant to this Bill but I mentioned it because anomalies of this kind arise. Perhaps in the context of a future measure — the Minister for Finance did indicate that he would be considering a more comprehensive Bill at a later stage — matters of this kind would be fully taken into account.
There is no argument against trying to assist local authorities in preserving the base for rates which they presently enjoy. It is already very greatly reduced since rates are no longer paid on domestic property and local authorities everywhere have very considerable financial problems. If, in the light of experience in our courts, some industries or commercial entities are able to exclude, for valuation purposes and subsequently payment of rates, plant which in the normal way should carry the burden of rates, it is only fair that the traditional system should be maintained. In so far as this Bill is an effort to maintain that base I have no  hesitation in giving it my support, but I am asking the Minister to clarify the position in her reply by indicating to this House that the amount of money which we raise through rates under this system, allowing for inflation and allowing for the normal annual increases which will be passed by local authorities, will be no greater than either the rate of inflation or that which the local authorities apply. If we are able to receive that kind of assurance from the Minister we will not oppose a Second Reading of this Bill.
Mr. McDonald Mr. McDonald
Mr. McDonald: I, too, would like to extend a very warm welcome to our colleague, the Minister of State at the Department of Finance, and to wish her well. We seldom have the opportunity to welcome new Ministers to the House and it is nice to find that, the House can welcome, in this important position, a Minister of the new generation so to speak. I wish her well in her work.
I want to welcome the Valuation Bill, 1985. It certainly clarifies and brings into the present decade legislation that was passed a long time ago in 1852 and 1860.
I particularly welcome the sections of the Bill whereby the Minister proposes to amend the schedules by order. The unusual part of this is that it is provided that whenever an order is proposed to be made under section 3 and section 8, a draft of the order shall be laid before each House of the Oireachtas and the order shall not be made until a resolution approving the draft has been passed by each House. The old formula was that the Minister would just make the order, lay it on the Table of the House and after a period of 21 sitting days the order would pass. Here, we are certainly introducing a very democratic criterion into the ministerial orders, which must be welcomed. Also, because the Minister is providing that facility it cannot in any way be taken that the Government have any ulterior motives either by way of endeavouring to increase valuations or to extend the categories of property under the schedules to the Valuations Act.
By virtue of relatively recent court actions we have had the valuations on  agricultural lands dropped and being proved unconstitutional from the point of view of the local authority making a raid. The only people who are subject to rates now are the industrial and commercial establishments. While it is important that local authorities should be left with some means of providing their own revenue, it might be a good idea to look at the entire system of raising local finances now, because in many counties the industrial and manufacturing valuation is so small that the yield from it is hardly worthwhile and the contribution to the costs of running services at county level is very small. Perhaps the time has come to look at the valuation system as an equitable means for raising local finance more especially if you take the business person and the small shopkeeper. They are very often caught on the double. They are forced to pay rates on the valuation of their commercial property and at the same time they have to pay the water charges and the refuse collection charges and so on on the portion of the house they live in. Some families can justifiably say that they are being penalised by having to pay twice for the same service.
Perhaps there is a difficulty there for the county managers but for some people, especially those at the lower end of the scale, there is an anomaly there, and perhaps the Minister would look at that problem from the county councils' point of view. In the last few weeks most counties have been dealing with the striking of rates and each year it is getting more and more difficult by virtue of the fact that some politicians and councillors for the past year or so have been publicly recommending that people should not pay some water or council charges. This, of course, reduces the yield to the local authorities. There will have to be deeper thinking so that the people engaged in the administration of local government should have their minds clear on exactly what is required and the best possible way of financing the activities of urban councils and county councils. It is important that there should be adequate finances for that. The Principal Act has  been in force here, has been utilised by the Valuation Office for almost a century and a quarter and it will continue to do so indefinitely. When this amending legislation was introduced I could see exactly the improvements which the Minister is making. If more concentrated effort had been made to bring in greater equity, it would have been very welcome.
I support the Bill and the Minister's aims in implementing this legislation. I want to wish the Minister well in her new post.
Mr. Fitzsimons Mr. Fitzsimons
Mr. Fitzsimons: I also would like to take this opportunity of welcoming Deputy Doyle. It is very nice to have a glamorous Minister for a change and for that reason, if for no other, I hope she comes before us often. I had the pleasure of working with Deputy Doyle on the Oireachtas Joint Committee on Building Land. As I mentioned in the House previously, I had a very good record of attendance and, indeed, all the main members had. Perhaps Deputy Doyle's membership could be responsible to some extent for that. I must also say that Deputy Doyle proved that she has brains as well as beauty. I sincerely welcome her to the House.
The Acts which are referred to in this Bill are two very old Acts, those of 1852 and 1854. I feel that what is required is a completely new Act. It is very difficult to build, in accordance with modern requirements, on an antiquated Bill of that kind. I also find it difficult to accept what the Minister has told us — that the Bill does not represent any change in valuation or rating policy. Perhaps, strictly speaking, this may be so. The net result is that we will have higher valuations. That is the whole purpose. The problems, apparently, which initiated this Bill were that machinery was outside the scope of valuation. Now, to some extent, this will be included.
To put the background in some perspective in regard to the out-of-date methods in those old Acts, I could refer very briefly to the 1852 Act and just give the basis on which some of the valuations are made. They are as follows:
 Wheat at the general average price of 7s. 6d per cwt. of 112 lbs. Oats at the general average price of 4s. 10d per cwt. of 112 lbs. Barley at the general average price of 5s. 6d per cwt. of 112 lbs. Flax at the general average price of 52s. per cwt. of 112 lbs. Butter at the general average price of 65s. 4d per cwt. of 112 lbs. Beef at the general average price of 35s. 6d per cwt. of 112 lbs. Mutton at the general average price of 41s. per cwt. of 112 lbs. Pork at the general average price of 32s. per cwt. of 112 lbs.
These are completely unrealistic and totally out-of-date, and in that situation a new Bill is essential. Having said that, I know the problems that would be involved in a completely new method of valuation. The 1852 and the 1854 valuations were very comprehensive ones. One of the very good effects and bonuses attached to those valuations was the completion of the Ordnance Survey. The Ordnance Survey was primarily intended to give help for valuation purposes and to get a unified method of valuation. Much work was involved in completing the six-inch maps — maps to the scale of six-inches to a mile. The survey was started in 1825 and completed in 1836. That survey has given us a basis for the poor law valuation, or what is known as Griffith's Valuation. I think I should mention in passing that through that survey we have preserved our townland names. We have preserved a record of where our historic monuments are. In the actual valuation we have preserved a record of all the hereditaments, all the houses and the types of houses. For example, we are able to determine from that valuation the type of house and whether it was slated or thatched. This is very important. Although the key to decoding it is a very difficult one and is only available, as far as I know, in the Public Record Office, nevertheless, we have that marvellous record, which is attributable to Griffith's Valuation. What I am trying to say is that it was an enormous task. I have no doubt that to arrive at a comparable valuation attuned to the  present situation would be an equally major task. Nevertheless, I feel that it is necessary. On the basis of the Acts and what I have said about them I think it is impossible to get an acceptable system of valuation based on such outmoded methods.
The Confederation of Irish Industry has many times expressed concern about this Bill. In their Newsletter of 11 June 1985 it states:
During recent weeks many firms have become concerned about the implications of the Valuation Bill 1985 which could add considerably to rates charges on the manufacturing sector. The Bill proposes to impose rates on plant which is used to contain or transmit a substance.
It also states in the Newsletter:
The widening of the base on which industrial rates are charged in this manner could, depending on legal interpretation....
Again, I emphasise that legal interpretation is impossible because what many people were saying was that through the loophole it was possible to evade valuation. Legal interpretation will be important, but it would result in a doubling or trebling of the rates bill on a manufacturing industry, which is currently about £80 million annually. I think it is unrealistic at this time, when we have such a major problem with unemployment and then factories are closing down, to add this extra charge which will result in more factories closing down. As I said earlier, it is hard to understand it is so important that this Bill should be pushed through without any further delay having waited so long for it and it having been based on Acts which are totally out of date, 130 years old.
The Newsletter continues:
The expansion of the base as envisaged by the Commission on Taxation would result in a more equitable sharing of the burden of local authority  finances among the various sectors of the community.
The Confederation would strongly recommend that the effective base for the levying of rates or charges on manufacturing industry should be confined to buildings and attachments forming an integral part of the fabric of buildings on a site which imposes a cost on local authorities in the provision of services.
The points made by the Confederation are most important and should be taken into consideration. This has not been the case. In volume 43, 2 July, 1985, the Confederation of Irish Industry Newsletter stated that a survey was carried out in manufacturing industry by the federation and this confirmed the view of the serious cost implications which the Bill would have for the manufacturing sector. It gives a number of examples. These are as follows:
A major dairy co-operative estimate that the value of plant which would become rateable would be as high as the value of buildings thus doubling the rates chargeable. A major pharmaceutical manufacturer estimates the value of plant as two and a half times the value of buildings thus more than trebling the rates chargeable.
A major building materials firms estimates the value of plant as 2.6 times that of buildings thus more than trebling the rates chargeable.
A number of food processing firms estimate the value of plant at about 75 per cent the value of buildings thus almost doubling the rates chargeable.
A major chemical manufacturer estimates the value of plant at more than three and a half times the value of buildings thus more than quadrupling the rates chargeable.
A drink manufacturer estimates the value of plant at one and a quarter times the value of its buildings thus more than doubling the rates chargeable.
It also refers to the fact that the Minister may by order add a category of plant or vary the description of any such category to bring them within the scope of the  legislation, thus giving extraordinary power to the Minister.
Finally, in its Newsletter of 1 October 1985, volume 43, No. 21, in reference to the Valuation Bill, there are a number of suggestions made and I will not go into all of them. I would like to refer briefly to them. It refers to Schedule 3 (1), Schedule reference No. 3, and asks for a specific change to add the words “the easement or an analogue therefore in respect of all cables.” There is no change in that section.
In Schedule 3 (1), Schedule reference No. 5, the CII are seeking an appropriate change in wording here which would clearly show that buildings only are in question and not machinery. There is no change in the section.
It then refers to Schedule 3 (2):
CII believes that changes in the Schedule to the Act of 1852 have an effect similar to the enactment of a Finance Act, and CII also believes that new impositions of tax should be by means of a Bill presented for formal discussion by the Oireachtas.
The Confederation is seeking an assurance that it is not possible legislatively to use this mechanism to extend the base of valuation within the industrial sector.
There is no change in the section.
With regard to Schedule 5 (2), it is stated:
The Confederation believes that reference to valuations “which have been made and revised within a recent period” will tend to reinforce the discrimination against manufacturing industry unless made in the context of a general revaluation.
There is no change in the section.
With regard to Schedule 7, it is stated:
The Confederation believes that in the case of these Subsections and in all other places in the Bill, the use should be made only of two concepts which are buildings which are acknowledged to be within the scope of valuation, and machinery which is not within the scope of valuation.
 There is no change in the section.
With reference to Schedule 8 (1), Reference No. 1, it is stated:
The Confederation believes that the intention of the Bill would be more clearly stated by referring to “constructions of a fixed nature which are deemed to be an integral part of the fabric of a building but excluding all process plant which is technically and conceptually separate from the premises comprising a mill, manufactory or building...”
The important change is made here. This is the only change in the Bill which was initiated. I am satisfied that those who have argued for this change are satisfied with it. I accept that this does cover the essential changes that were required in the Bill. There are other aspects I could refer to but I do not think it would be appropriate at this time. Some of the matters could be raised on Committee Stage.
Finally, the present valuation method of maintaining the tone of the valuation list is difficult to understand because in that situation, while it is a very catching phrase, it is neither fish nor flesh. I am not sure if in that situation it can be scientific; but it is leaning towards that arbitrary method, as far as I am concerned.
In my opinion, a new Bill is needed in order to have a new approach and to take modern conditions into consideration. At that time, we were 100 years into the era of the Industrial Revolution and it is difficult to understand why this differentiation was not included. It is difficult to understand why we should try to modernise an Act so old, bearing in mind that, even in our own lifetime, we have seen more changes than previously took place in a period of 1,000 years. In that kind of situation it is hard to understand how a simple amendment can update an Act sufficiently. There are many who are concerned with the situation. They have cause to be concerned because the effect of the Bill is to increase the valuation and the amount of money to be paid by these  firms who, by and large, are in desperate straits at the moment.
Having regard to the fact that those who raised those objections seemed to be satisfied, I also welcome the Bill.
Mr. Ferris Mr. Ferris
Mr. Ferris: I suppose it is fair to say that, when one tries to amend an Act as old as this, one will have difficulties. There is nothing wrong with the Act but its age. During the period of 126 years since it was enacted in the House of Parliament, there have been great technological changes. The valuation which was placed on very many assets at that time has undergone a radical change. It was inevitable that there would be some anomalies under the old Act. It is for that very purpose that this updating Bill or amending legislation was brought in, first of all to protect the valuation base which is vital for local authorities if they are to survive. It was also to ensure that that base would apply to the year 1987 onwards until such time as we enact what Senator Fitzsimons has talked about, new legislation which would be more definitive and more in keeping with the technological era in which we now live.
Since the time of the original Valuation Bill in the 1800's, plant and machinery, as they were known at that time, have changed so much that there could be different interpretations in the valuer's mind of what is plant or machinery. It is for that very purpose that the Bill is being brought to the House, to ensure that there is as much definition as possible of what is to be valued for rateable valuation purposes. It is for the very purpose of the reservations expressed by the CII and other people that the Minister initiated an amendment in the other House. It was an important amendment in that it defined the areas that the CII were concerned with.
Ratepayers are becoming an extinct race in this country from various political actions of various Governments down the years. There are very few of them left. Naturally, those that are left, particularly in the industrial field, are worried in case any changes initiated by way of legislation would be a disincentive to them to continue.  I welcomed the contributions from the CII. I read them. I made representations to the Minister while the legislation was in the other House just to satisfy myself that what we were doing was not adding another penalty to that section, but defining it in such a way that nobody could misrepresent what was plant and what was machinery.
The Minister, in using that very feminine description of preserving the tone of the valuation list — which is lovely phraseology — helped us to understand what she means. It means that we are preserving the base. Senator Fitzsimons defined it precisely. We are trying to define what is included in the legislation so that the wrong interpretation cannot be given on the ground that would cause industry to worry. The Minister, in inserting section 8 in the other House by way of an amendment, has now defined what the categories of plant are, which can leave no doubt at all in anybody's mind, so that the Valuation Office in Ely Place will know exactly what we mean by plant to be excluded for valuation purposes. That schedule on page 4 of the Bill says:
1. All constructions affixed to the premises comprising a mill, manufactory or building (whether on or below the ground) and used for the containment of a substance or for the transmission of a substance or electric current, including any such constructions which are designed or used primarily for storage or containment (whether or not the purpose of such containment is to allow a natural or a chemical process to take place), but excluding any such constructions which are designed or used primarily to induce a process of change in the substance contained or transmitted
2. All fixed furnaces, boilers, ovens and kilns.
3. All ponds and reservoirs.
By setting down a category in that schedule of excluded plant, the Minister is eliminating any area of doubt or misrepresentation.  The fact that the Minister has the power under the Act to bring an amending order before the House to add or exclude any other type of plant, is something that we welcome. Otherwise we would have amendments coming back here, maybe not in 100 years but in an age of fast-growing technology and we could have amendments being required very quickly. The Minister will have the power to bring in such an order, which will be subject to debate in the House and will be subject to the agreement of the House. There cannot be any underhand work in adding to or taking from this category of plant. We welcome that.
Some of the categories of fixed properties which the Minister has referred to in her speech and which are outlined on page 3 of the Bill are also worthy of mention. I want to mention one that has been excluded and which because of its very nature, had to be excluded. I would prompt the Minister into considering it as a possibility in the future, particularly when we are trying to raise revenue. That is not what this Bill is about. This Bill is about definitions to protect the existing code. The categories are listed: construction affixed to lands or tenements, other than buildings referred to in section 14; lands developed for any purpose other than agriculture, horticulture, forestry or sport, irrespective of whether or not such land is surfaced — that would include car parks, it also includes any constructions affixed thereto which pertain to the development. The Schedule also refers to cables, pipelines and all the other things that go with the transmission of power.
The Schedule goes on in Reference 4 to refer to all fixed moorings, piers and docks.” I would have liked if it had referred to yachts, which are quite moveable objects. They do require a service. They require facilities. They are generally owned by people who are opulent and people who rarely pay a contribution towards the maintenance of any of the facilities that they want, whether provided by harbour commissioners or by anybody else involved in piers and other  facilities. It is a pity because everybody else, including the motorist, has to pay his fair share towards the cost of providing services, whereas yachts and yacht owners seem to be exclusively able to enjoy total exemption. It would be inappropriate to include it in that particular section but when I saw “fixed moorings, piers and docks” I could not restrain myself from suggesting that possibly the Minister for Finance might at some stage in the future treat the owners of yachts and the registration of them as a source of revenue for the State which could be used for the benefit of the less well-off people in our society. I would suggest that for consideration by the Minister or her senior Minister in the Department of Finance in the future. There are quite a few yachts around the country. That is a source of income that has been untapped up to now. God knows all the other sources have been looked at and shuffled around quite a lot. Let us look at some new places where we might get some revenue.
The Bill, generally speaking, removes any anomalies. The Minister's amendments remove the worry of the CII. I cannot see any contention in it now. I agree it is a vital piece of legislation particularly for local authorities to service the base which will be used for their 1987 income year. It is to be welcomed for that reason. I realise how important it is to have rateable valuations correctly and legally defined so that county managers have powers to levy rates on property. If we implement that, together with the waiver scheme which we have still in the rateable system, any cases of hardship can easily be dealt with by the county manager at that level.
I welcome the legislation. It is a pity that it has to be done in this way and not, as Senator Fitzsimons said, by way of new legislation. That could only be done if there was something to protect the existing format which would ensure an income for the local authorities in the future.
Mr. O'Leary Mr. O'Leary
Mr. O'Leary: It is unnecessary for me to welcome the Minister, as the Minister  is aware that she is welcome in this House. The Minister is, I am sure, highly delighted with the similarities in the speech which she has given today and the speech which was given by the Minister so long ago in the Dáil when he introduced the earlier version of this Bill. No doubt it is a coincidence that the Minister arrives at the same conclusions in precisely the same order as the former Minister for Finance and did not receive a brief from a similar source. I bring it to the Minister's attention as a warning that briefs from officials should be looked upon with the greatest suspicion.
Senator Smith raised quite an important point, that this Valuation Bill was first presented by the Minister for Finance on 11 March 1985; it was passed in the other House last week. That it should be presented to this House today in the expectation that it will be passed into law towmorrow is a disgrace. Indeed it tempts one to lend support to the view which was expressed today in a newspaper that the abolition of this House is called for. If the Government do not treat us with respect it is impossible to treat ourselves with respect. If we do not get the respect of our fellow parliamentarians it is impossible to expect that they will provoke from us an adequate response to the legislation which is put before us. This is the kind of legislation for which a reasonable length of time should be allowed for consideration of the various issues in this House. The Members will no doubt be aware that the two measures we are proposing to change during the course of today and tomorrow are very ancient and have been much changed over the years.
The Members will no doubt be aware that the text of the existing legislation can be found in the invaluable book, Local Government by H.A. Street, where the Valuation Act, 1852, in so far as it still exists, can be found in its entirety, together with the 1860 Act. This Act is referred to by the Minister as the 1860 Act but is really the Annual Revision of Rateable Property (Ireland) Amendment Act, 1860. The Members will be interested to know the original purpose  of that Act, what we call the short title of the Act. It is an Act to enable the treasury to defray one moiety of the expense of the annual revision of valuation of rateable property in Ireland out of the consolidated fund. In other words it was temporary legislation to cater for a position which arose in one year. This is legislation which is the basis of our charging rates year by year.
An examination of that Act that is still extant will show that there are large gaps because it has been long repealed. Only certain sections of that Act are still law. Neither of these Acts is very long. This House is expected to change these ancient enactments in a hotch potch way when ample time was available for the parliamentary draftsman to consolidate the 1852 and the 1860 Acts — even if he left all the other little changes that have been taking place since — into new legislation with the proposed amendments. It would have been the least that this House and the other House could have expected by way of explanation of the importance of the changes which are proposed during the course of the consideration of this Bill.
The Valuation Office and the successive Ministers should learn a lesson from this Bill. Sometimes Ministers consider that they are performing a public service by doing nothing, by ignoring problems and pretending that they do not exist. If you ignore problems and do not tackle them when they arise what happens is that concessions which are run by ratepayers or taxpayers by way of exception to the general rule become, in their minds, a matter of entitlement. That is what has happened in this case. Legalistic definitions, which I accept as being necessary, of plant and machinery, and legalistic definitions of what was rateable and what was not rateable, enabled substantial industries like, for example, certain creameries, processing industries, breweries, distilleries and refineries to take a substantial portion of their buildings — you could not in ordinary language call them anything else — out of the rateable valuation system. It was ignored for such a long time by successive Ministers that  now they have the cheek to think that they are entitled to the exception. Indeed they flaunt the good fortune which they have gained at the expense of other ratepayers over the years and used this exception which they have gained as justification for continued discrimination in their favour. That is indeed an incorrect result of the inactivity by politicians in these areas. There is a lesson in that for us all.
As regards the publicity which I and other Members of this House have received from people like the Confederation of Irish Industry, it was done in such a way as to create an impression and mass hysteria with regard to the future cost structure of various industries. Does everybody in Ireland think they should not pay tax? Is every pressure group to be in some way exceptional and to be kept outside the net of having to make their fair contribution to the tax-gathering system. I know we can have responses from certain parties, particularly parties in opposition. You can pretend to people that you can have lower rates, you can have no service charges, you can lower the income tax rate all at once and still maintain the same level or increased level of public spending. That is irresponsible politics. We in the Seanad should be above the consideration of important matters of policy on such a glib basis.
Before talking about what is in the Bill I would like to talk about what is not in the Bill and which in my opinion should be in the Bill. A problem has arisen, and it is the kind of problem which will in future give rise to other problems, with regard to the proper interpretation of section 14 of the 1852 Act. This is one of the Acts we are amending. I do not expect the Minister's response to this question during her Second Stage reply. It would be quite unreasonable to expect it. I say it for the record and for the purpose of alerting those in authority about the problem which no doubt they know exists. Something should be done about it.
Any improvement to agricultural holdings are exempt from rates. A problem  has arisen with regard to whether or not the intensive rearing of pigs and poultry falls within the exception envisaged by section 14 of the 1852 Act. It has been decided by the Supreme Court that in a particular case where a farmer is farming land and is also engaged in intensive poultry raising that person should not, in respect of the poultry buildings, be rateable. What has not been decided — I know the matter will be decided in the reasonably near future — is whether a person who has no other connection with farming but is merely in the business of intensively rearing farm animals, whether poultry, pigs or any other farm animals, can rely on the same exemption. That is a decision which the courts will have to take on the basis of this ancient section which we are leaving unamended. Of course, the court must arrive at whatever is the right decision on the basis of section 14. But that is the kind of policy decision that politicians should be taking and not leaving it to the court to decide whether or not in the future such buildings should or should not be rateable.
In general the Bill has my support, and in its twin objectives it should have the support of all of us. It is seeking to revert to the normal position which it was intended to obtain with regard to the valuation of what you and I would normally understand to be buildings and what you and I would understand to be plant but which, as a result of a series of judicial decisions, were not felt to fall within the definitions of the 1852 and 1860 Acts. Consequently a reduced valuation list had to be made in a number of counties and higher rates had to be paid by other ratepayers.
The Minister is seeking to do two things. In sections 2 and 3 the Minister is seeking to amend the 1852 Act in order to expand the categories of fixed property which is capable of being or liable to be rateable. In other words, it is amending section 12 of the 1852 Act by adding a Schedule, which is contained in section 3 of this Bill. Having created a new category of rateable property, the Minister is then seeking to extend the provisions of the 1860 Act to that category. The  1860 Act appears to be the charging Act. As distinct from saying “It is liable to be rated”, it says “Rates will be paid in it for the particular year”. I do not understand why the Minister is using apparently different and contradictory definitions of plant in the 1852 Act and the 1860 Act. I realise this is a matter which is probably more suitable for the Committee Stage of the Bill. I would be very happy for the Minister to respond to it on Committee Stage rather than on Second Stage.
It appears that the definition of “plant” which is contained in the definition section, section 1, is wider than the actual categories of plant included in the Schedule inserted in the 1860 Act by virtue of section 8 of this Bill. I wonder whether the difference in that definition will lead to a situation where there will be substantial contention as to whether or not particular items of plant fall within the second definition. If it does not fall within the definition contained in the new Schedule to the 1860 Act, rates will not be payable in respect of it in a particular year. That would appear to be the actual effect of the section. While it would be rateable as such, the commissioners of valuation would not have the authority to actually rate the plant unless it falls within the definition contained in the 1860 Act as distinct from the 1852 Act. It is the conflict between the 1860 Act and the definition “plant” contained in section 1 of this Bill that appears to have the seed of a potential problem.
The second problem I would like to bring to the Minister's attention is whether the Minister is happy with the exclusion contained in section 8 of this Bill which has already been read into the record by Senator Ferris and from which I will read a section:
...excluding any such constructions which are designed or used primarily to induce a process of change in the substance contained or transmitted.
For example, one of the things the Minister mentions as being excluded as a result of judicial decision is brewery vats. Will a brewery vat be considered by the courts to be a vessel primarily for the storage of  products or primarily to induce a process of change in the substance contained within the container? The Minister should consider that. It appears to me that brewery vats are being left in a no-man's-land which will mean further judicial interpretation. That, to say the least, is a less certain way to establish the parameters of the law than to introduce proper amendments in Seanad Éireann
I can also see quite a substantial number of other problems. I am not sufficiently au fait with the process industries as such. Let us look at people like Pfizers, the refinery, where a substantial portion of their storage capacity would consist, particularly perhaps in regard to the other cases I mentioned rather than the refinery, of storage during the process of change as distinct from storage of the raw material and storage of the finished product. This would seem to be clearly within the definition of plant to be valued on the enactment of this legislation. The essential element I would like to bring to the Minister's attention is this. Is the Minister satisfied that there is within the new Schedule contained in section 8 of this Bill, a definition which will enable the Valuation Office to value property with certainty and which will enable the people who have received the valuation to accept it without the necessity for individual applications in respect of every individual property to the Circuit Court? I am not satisfied that the Minister has acheived that with the amendments which were introduced in the other House. These are the kinds of considerations I would consider it our duty in this House to examine. The proper examination of these and the proper receipt of representations from various sections of the community during the legislative process means that the length of time for the consideration of this Bill is inadequate and does not reflect credit on this House or on the Government. It is becoming increasingly normal practice that where legislation is introduced which gives rise to problems — for example, the Broadcasting and Wireless Telegraphy Bill and the local radio stations Bill, consultations take place outside the Houses of the  Oireachtas and all the necessary amendments are agreed before it comes back to both Houses of the Oireachtas for the rubber stamping.
Instead the Houses of the Oireachtas should be treated as chambers of the Oireachtas for the examination and the changing of legislation in the common good. I do not consider that the public perception or indeed the work of this Government would be one whit diminished if this Seanad decided that, in the interest of achieving the objective which I think we all share, we found it necessary to amend some portion of this legislation. As long as this House is treated as if an amendment made by it is a matter of defeat for the Government, this House will deserve the contempt of the people. We cannot do our job unless we are given the freedom of action within the confines of the policy which we accept, of course, to amend legislation and not to change the principle of the Bill which is not our business but to make its implementation more effective. Because I accept the principle of the Bill the Minister will be pleased to know that I intend supporting the Second Stage of this Bill and we will see about the rest later.
Mr. Durcan Mr. Durcan
Mr. Durcan: I too would like to compliment and congratulate Deputy Avril Doyle on her appointment as Minister of State at the Department of Finance with particular responsibility for the Board of Works. She takes up appointment in a very interesting office, one which has ministerial responsibility over a very ancient body and a body which has wideranging powers and functions in relation to this State. She also moves to one of the most delightful suites of offices that any Minister can have and I know that she will bring to them not merely the natural graciousness that she possesses but also that talent, ability and determination which she has shown since entering the Houses of the Oireachtas three and a half years ago. I wish the Minister success in every area of the wide functions that she will have to carry out there.
I speak not out of any great conviction  in relation to the Bill but I support the twin objectives of it. It is good that we as legislators are introducing a little clarity into the valuation code. In particular I welcome the definition contained in section 1 which will help to alleviate the difficulties which have arisen recently in our courts in terms of determining what is plant as distinct from machinery. This will make it easier to value such hereditaments as premises. It is extremely important that within the valuation code, which is the basis of an aspect of our tax system, there should be certainty. I welcome those sections of the Bill which introduce that type of certainty. I also welcome section 5 of the Bill which is the section that puts into statutory form the practice that has been carried out and adopted in the past of comparing buildings with other structures in the vicinity of like character. The Minister referred to it as maintaining the tone of the valuation list. It is extremely important that that practice which of necessity had to be adopted by the commissioners and their officers has now to be put into legislative form and I welcome that.
In effect I welcome the contents of the Bill. I would not be speaking here today if I were merely to welcome the effect of this Bill. I want to voice certain criticisms. The first criticism is the amendment of our valuation code. Once again we have a Government responding in a willy nilly manner, to the decisions of our courts. There is no thought-out pattern, which would bring our valuation system into the eighties but rather a response to a particular situation. On the one hand that response is in great measure due to the impetus of the Confederation of Irish Industry. On the other hand I am glad to see that the Government will at least respond when asked by a body as important and responsible as the CII. Indeed it is only fair that a tribute should be paid to the CII for their input into this Bill.
The basic fact that must be recognised is the total failure of this Government to come to grips in terms of one area of our taxation system and in terms of codifying the entire valuation laws. They have totally failed to take on board any of the  recommendations of the Fourth Report of the Committee on Taxation in this regard. We must point fingers, not at the Minister because she has only had a few days of responsibility, but at this Government specifically for failing to take on board a complete reform of the valuation code. I say that as a Government supporter. If we are to bring the certainty that this Bill specifies in two areas into the overall valuation system then there must be a complete codification of the existing legislation and also a recognition of the interpretation of that legislation by our courts.
There is another aspect of the Bill with which I am appalled, that is the provisions contained in sections 3 and 8 of the Bill which allow the Minister, by order, to amend or revoke the amended schedules that we are introducing. It seems that other people who will stand in this Chamber in the future will be prevented from voicing the kind of criticism I am voicing here today. We will have Ministers of all parties, all persuasions and all opinions in the future, simply by order, under their seal of office, amending the valuation code. It is wrong that the basis of one aspect of our tax system can be amended by ministerial order. Orders must be placed before the Houses of the Oireachtas but I wonder how aware will bodies like the CII and people who are paying rates be that the whole basis of one important aspect of the tax system is being amended simply by ministerial order. I would ask the Minister to consider these two points. Firstly, there should be an overall codification of the valuation system and, secondly, we should not give to the Minister power to amend the valuation code by ministerial order. To do so would be extremely dangerous.
I want to refer to one other aspect of the valuation code which has been and will continue to be the subject of much interpretation by our courts, that is the question of premises, buildings, hereditaments or tenements used for public purposes. It seems that there are a number of conflicting decisions of all courts in relation to buildings of this nature. My  understanding is that, for example, county council offices are rated. It has been decided by the courts that rates must be paid on those buildings. During the past week it has been held by the Circuit Court that the headquarters of a fisheries board is a totally exempt hereditament. This is one area where clarification is needed.
I welcome this Bill in so far as it clarifies and introduces certainty into an area of the valuation code. In welcoming it, my welcome is guarded and limited because the Bill goes a very small way and does not introduce the overall clarity and the overall certainty that is lacking in the valuation code. I hope the new Minister, with the responsibility she is taking on and with the determination and ability that she has, will use those qualities to see that that kind of codification is achieved during her term of office.
Minister of State at the Department of Finance (Mrs. A. Doyle) Minister of State at the Department of Finance (Mrs. A. Doyle)
Minister of State at the Department of Finance (Mrs. A. Doyle): I should like to thank all the Members for their good wishes and their gracious welcome to me this afternoon. As I stated in my opening speech, and perhaps it would be no harm to reiterate the point that appears to be causing greatest concern, Senators need have no fears with regard to any extension of the valuation code. What is provided for under this Bill is merely the preservation of the existing valuation base. It does not add any new categories of property to it. Several Senators, starting with Senator Smith, expressed their fears in relation to that issue in particular. There is, therefore, no question of an increase in the rates burden on any sector of the community.
Another fear that was broadly voiced was in relation to the position concerning the valuation legislation generally. At the moment there is an ongoing review in relation to the valuation code. This is being undertaken by the Department of Finance and the Valuation Office. It is, perhaps, regrettable that the business before us today and the reviewed code could not be discussed at one and the same time. But the House will appreciate  that to prevent any further erosion of the financial basis for local authorities the matter being dealt with today has to take precedence in the event of the other revision not being ready yet to come before either the other House or the Seanad.
Let me deal with a few specific points. In reply to Senator Fitzsimons, machines are not being included in this Bill. They are, in fact, expressly excluded from valuation by section 7 (1) of the Bill, as they have always been. Senator Fitzsimons also referred to the CII. They have indicated that they are now happy with this Bill and that the Bill itself will not produce any increase in valuations. The CII now concede that those dire forecasts, as quoted by Senator Fitzsimons, made last year are without foundation. The Senator referred to the desirability of the review of the valuation code and it is agreed that such a revision is eminently necessary, and is, as I say, afoot.
Senator McDonald referred to local authority financing and about the Government being very concerned about the matter. This is being reviewed as part of the examination of public expenditure as a whole and it is a matter we all share his concern on.
Senator O'Leary's general point was in relation to the updating of the valuation code as a whole to which I have referred. As I have said, we agree, and this matter is being pursued. His other points I will deal with on Committee Stage hopefully tomorrow morning.
I hope I have covered all the points raised by the different contributors and I commend the Bill to the House.
Question put and agreed to.
Committee Stage ordered for Thursday, 20 February 1986.
Seanad Éireann 111 Valuation Bill, 1985: Second Stage.