by Conor McCabe
Even land for which drainage is not available at present has been purchased in the belief that when drainage becomes available the price of land will remain sufficiently high to ensure a profit to the speculator who believes that he will eventually obtain at public expense free main drainage and water facilities.
These speculators feel that once they have bought the land at any price that that must be the minimum price they will get for it.
The result has been that the price of undeveloped land has been inflated entirely out of its real value and the local authorities have had to pay exorbitant prices, even for land for the housing of the working classes.53
The local authorities were being charged via higher land prices for the improvements they made regarding water, sewerage and drainage – improvements which gave the developed land its speculative price in the first place. The developers did not have to do anything except squat and wait for rezoning to come their way. And for some at least, Taca was the road to rezoning.
The committee’s main recommendation was to allow the High Court to designate areas which will:
… probably be used during the following ten years for the purpose of providing sites for houses or factories or for the purpose of expansion or development and in which the land or a substantial part of it has been or will probably be increased in market price by works carried out by a local authority.
Once a designated area had been established, the local authority would have the right to acquire that land within ten years at its agricultural price ‘plus some percentage of that value together with compensation for reasonable costs of removal but without regard to its development potential’.54 The committee proposed that landowners should be given the price of the land at its current use value, plus 25 per cent. This percentage was, in their opinion, ‘a reasonable compromise between the rights of the community and those of the landowners’.55
The committee also recommended that the rezoning of land for development purposes by local authorities should not in any way benefit speculators. In a particularly lucid section, it argued that:
The foundation in principle of this scheme is that the community is entitled to acquire land at existing use value plus some percentage of it when it can be established by evidence that works carried out by the local authority have increased the price of the lands.
This price however is also increased by the decisions of the planning authorities in their development plans at to the future use of the lands. Zoning may add a considerable amount to the price. We do not think that an increase in price caused solely by decisions of the planning authority can be classified as betterment [my emphasis].
Legislation which provided that a local authority could acquire lands at existing use value plus some percentage of it when their price had been increased not by local authority works but by planning decisions only would, in our view, be unjust and probably repugnant to the Constitution.
We therefore do not recommend that the designated area scheme should apply to lands in relation to which the sole cause of the increase in price is the decision of the planning authority as to their future use.
The committee also produced a minority report, which believed that ‘open market value must continue to be the basic determinant of the price of land acquired for public purposes’.56 It was signed by Michael J. Murphy and J.T. O’Meara, both government officials with the Department of Local Government.
The publication of the report in January 1974 was greeted with praise. The Minister for Local Government, James Tully, welcomed it. He said that the government agreed with its findings, and that they hoped to have ‘The bones of the necessary legislation drawn up by the end of the year’. According to the Minister, ‘if they did not stop speculation now they would never be able to stop it, as the problem was getting worse all the time’.57 The Irish Times’ journalist and local government correspondent, Frank Filfeather, said that the promised legislation would give ‘a tremendous boost to the building of the three satellite towns west of Dublin at Tallaght, Clondalkin and Blanchardstown and the acquiring of property in central Dublin for housing purposes’, as well as facilitating ‘The construction of the motorways recommended in the £160 million Dublin Transportation Study, the new Liffey bridges and the proposed new rail lines’.58 In an editorial entitled ‘Looking to the Land,’ The Irish Times warned:
… it may be assumed that those vested interests who have been fattening themselves on the status quo will react angrily against the findings of the Kenny Report, and will proceed to lobby with their experienced deviousness; they deserve no compassion and must be blocked off, together with any politicians who are over-sympathetic with their objectives of self-aggrandizement.59
The warnings of possible inaction were quite justified. Despite the positive soundings of Minister Tully, the reaction of the government to the Kenny Report was to shelve it. The two main recommendations – that the price of development land should be capped at the price of land plus 25 per cent, and that the act of recategorising land for future development should not be used as a payout for speculators – would have affected not only builders and speculators, but also the various politicians, banks and building societies who themselves profiteered from speculation and rezoning.
The Kenny Report has been cited and praised by every opposition party and sidelined and forgotten by every government since its publication. In February 2007, the then leader of the Irish Green Party, Trevor Sargent, highlighted the fact that his party had ‘consistently called for the implementation of measures recommended in the 1973 [sic] Kenny Report, often in the face of opposition from Government parties’. He said that the ‘persistent foot-dragging’ in relation to the report ‘has denied people access to homes; it has cost homeowners hundreds of millions of euro; and it has allowed speculators to profit at the expense of house-buyers and communities for decades’.60 Four months later, the Green Party entered into a coalition government with Fianna Fáil, with a Green TD, John Gormley, as Minister for Local Government, and as such responsible for the implementation of the findings of the Kenny Report. Nothing was done. On 23 August 2010, NAMA reported that it had paid €6.12 billion for loans relating to land purchased for speculative purposes. This amounted to 22.5 per cent of all monies paid out up to that date. The Kenny Report, meanwhile, is out of print and off the agenda.61
MINERALS, GAS, AND OIL
In March 1956, the government passed an Act which granted tax exemptions on new mining activity. The previous year, a Canadian company, International Mogul Mines of Canada, had expressed interest in the copper mines of Avoca, County Wicklow, where, according to experts in 1955, there was ‘a potential of copper ore valued at about £20 million’.62 The government had entered into negotiations with ‘mining concerns in Sweden and Canada to have the mines developed and operated as a commercial concern’.63 These were successful, and Avoca was eventually leased to St Patrick’s Copper Mines Ltd, a subsidiary of Irish Metal Mining Ltd, which itself was owned by Mogul Mines. At the end of 1955, the Minister for Justice, Mr Everett, told the annual dinner of the Wicklow Chamber of Commerce that the government hoped that soon up to 500 men would be employed at the mines. Everett said:
No Irish industrialist need be in the least bit worried that his interests will be in any way impaired by foreign industrialists setting up here … [The industrialists’] sole reason for coming here is that the kind of industry will be established for the manufacture and processing of articles which are not yet made here, and which we need, not only for ourselves, but for export as well.64
Mr V.B. Bjorkman, assistant manager of the St Patrick’s Mines, Avoca, told the assembled guests that ‘they – the Canadian experts – were satisfied that about eight million tons of ore were readily available [and that] full production was about 18 months away’.65
The 1956 Act, ‘designed to compensate for high costs and the uncertainty of exploring for unproven resources’,66 was almost certainly written with the Canadians an
d Avoca in mind. In a speech given to the Dáil during the debates on the Mining Act, Seán Lemass, then in opposition, said that ‘every deputy knows that this Bill has resulted from a bargain with one group in relation to a particular undertaking … in so far as anyone outside the government service was consulted about this Bill, it was the Canadian groups interested in Avoca’.67
Northgate Exploration and Development Ltd of Toronto quickly followed Mogul to Ireland. In 1961, Northgate discovered large deposits of lead, silver and zinc at Tynagh, County Galway. The resulting increase in exploration in the wake of Tynagh resulted in significant finds, including the 80 million ton zinc-lead deposit outside Navan, County Meath, and the opening of five new metal mines.68 By 1970, Tynagh was the largest producing lead mine in Europe. During the first five years of operation in Ireland (1965-70), Northgate recorded a net profit of $36,628,000 Canadian dollars. It also had control of the copper/silver/mercury mine at Gortdrum near Tipperary town; a 70 per cent direct interest in the Smelter Corporation of Ireland; a 10 per cent interest in the Anglo United Development Corporation, and a 10 per cent interest in Avoca Mines Ltd.69 According to Kevin C. Kearns, ‘Irish mining developments during this period are properly acclaimed largely as an achievement of Canadian expertise and enterprise.’70 And it was Canada that was the net recipient of the value of these mineral deposits.
The benefit of this mining activity to the Irish exchequer was minimal, due to the tax breaks and the fact that the minerals were shipped directly out of Ireland and processed overseas. In terms of employment, from 1961 to 1971 the number of mining and quarry jobs in the State actually decreased by 149, although the 1971 figure was an increase of 564 on 1966 employment levels. The financial benefits of mining in Ireland were further eroded by the 1967 Finance Act, which brought changes in the law so that no tax was due on profits earned for the first twenty years of any mining operations begun prior to 1986. As most mines were reckoned to have an operating life of less than twenty years, this meant that the Canadian companies had been given Ireland’s natural mineral resources, effectively, for free.
The tax changes were announced by the Minister for Finance, Charles Haughey, in the Dáil in April 1967:
The achievements of [the mining] sector have been impressive and have contributed very satisfactorily to employment and export earnings … I am told that a great future expansion in exploration and development is possible and that additional tax incentives can generate a large volume of outside investment. I have accepted this argument.71
By way of explanation as to the tax holiday, he said:
Many different types of allowances and incentives have been suggested but, instead of bringing in rather complicated new provisions, I have come down in favour of the simple decision to substitute for the existing reliefs a twenty-year period of complete exemption. I believe that Ireland now offers a very favourable sphere of activity to mining organisations and I hope they will not be slow to take advantage of this.
In his analysis of the Irish mining industry, Kevin C. Kearns said that ‘in light of the successes resulting from the 1956 incentives many questioned the need and justification for augmenting the State’s generosity to such a degree. There was, as one observer averred, “some mystery” surrounding the new concession.’72 The tax holiday was eventually rolled back in the wake of the Navan find.
On 31 January 1968, the soils division of An Foras Taluntais completed a survey of east central Ireland which unearthed evidence of potentially significant quantities of lead/zinc/copper mineralisation in County Meath and north County Dublin. News of the discovery was presented in a paper to the Royal Irish Academy in June of that year, but the findings were not released until 30 June 1969.73 On 25 July 1970, the Canadian-owned Tara Exploration and Development Company applied for a prospecting licence for an area of 18 square miles in County Meath; five months later the company’s shares almost doubled in price when it confirmed that it had ‘encountered zinc and lead mineralisation from 296 feet to 354 feet in the first drill hole in a new prospect’ on the farm of Mr Patrick Wright at Nevinstown, about a mile from Navan.74 It was soon obvious that this was a special find, and on 30 August 1971, the President of Tara Exploration, Michael McCarthy, announced that:
… the Navan ore body has clearly demonstrated its potential as a major world source of zinc and even at this stage of the development programme is can be said that the arrival of the Navan mine on stream will rank it as the largest zinc producer in Europe and among the four largest in the world.75
Contemporary analysis put the value of the Navan deposits at around £2 billion.
The news of the size and wealth of the find led to protests and public criticism of the terms of the 1967 Act. At a meeting of the Law Society in Trinity College in 1974, Mr David Giles of the Resources Protection Campaign pointed out that under existing law, all minerals in the State were owned by the State:
There is no reason why the State should not retain its ownership of this fantastic potential for economic and social development and, while compensating the mining company for what it has already spent, use the profits from Navan to develop a smelter, metallurgical industries and humane system of social services.76
The opening of the mine was further complicated by counter-claims on the mining rights for the area. Eventually, in 1974, the Irish State took a 49 per cent interest in the mine, and agreed to accept royalties on the profits, not on the ore itself. The result was that Tara was able to extract million of pounds worth of ore from Navan and not have to pay a penny in royalties to the Irish government, who were fobbed off with profit warnings. In 1987, the Department of Energy requested royalties of £4.1 million on profits of £107 million.77 This was rejected by the company and in 1989 the State sold its remaining share to the Finnish state-owned mining company Outkumpu for €50 million. One third of this amount was to cover back payments in royalties. Tara Mines was now fully nationalised, but it was Finland, not Ireland, that owned it.
Over 70 million tonnes of ore was extracted from Navan during the period 1977 to 2008. The current owners are New Boliden, a Swedish mining and smelting company. Annual ore production at Navan stands at 2.7 million tonnes, with yields of 200,000 tonnes of zinc metal and 40,000 tonnes of lead metal contained in concentrates. These are shipped out to either Boliden’s smelters in Norway and Sweden or to other smelters in Europe.78 There is no smelting facility in Navan, nor has there ever been one. The raw material was extracted and exported for processing, same as the cattle of Meath in 1968, the year the minerals were first discovered.
In 1989, the then leader of the Irish Workers’ Party, Tomás MacGiolla, said:
… because of loopholes in the mining lease granted by the [1973-77] coalition government, Tara Mines has not paid a penny in royalties in almost 13 years of operation, despite the huge level of ore produced. The failure to ensure that a smelter was built has meant that huge quantities of raw ore have been exported and used to create jobs abroad, rather than here in Ireland.79
The servicing of exporters, rather than the production of exports: this was Ireland’s way of utilising its natural resources.
‘WE HAVE A LITTLE GAS, NOT VERY MUCH’80
Three Americans arrived in Dublin in March 1958 in order to set up an oil exploration business. They called it the Madonna Oil Company and, having hired the prominent Dublin legal advisors Arthur Cox & Co. of St Stephen’s Green, they made contact with the Department of Industry and Commerce and its Minister, Seán Lemass, with a view to obtaining a licence to explore for oil and gas. ‘When progress proved to be satisfactory, the company approached the Ambassador Oil corporation of Texas, with a view to selling the lease already negotiated.’81 Lemass wanted a change of name before he would issue a licence, and in December the company became Ambassador Irish Oil Ltd. One month later, on 31 January 1959, it was granted exclusive oil and gas rights over ‘The whole of Ireland, including the seabed and subsoil which lie beneath the territorial waters and the high se
as under the control and jurisdiction of the Government of Ireland at this time or in the future, but not including the Six Counties’.82 It was later revealed that Ambassador paid just £500 for these rights. Two years later, a two-thirds share in the lease was sold for £230,000.83 In 1969 the Irish government renegotiated the 1959 lease with its then owners, Marathon Oil, who in 1965 had taken over Ambassador’s activities in Ireland. The company was allowed to keep one third of Ireland’s oil and gas rights, and got to choose which areas it kept and which it gave back. It kept the southern box, and in 1973 Marathon Oil confirmed that it had found commercially viable quantities of natural gas off the Old Head of Kinsale, County Cork. Having secured the rights for less than a quarter of a million pounds, Marathon Oil set about selling the gas back to Ireland at a cost which was estimated in 1977 to be £700 million.84
The renegotiation of oil and gas rights lead to a fresh round of speculation. Between April 1971 and January 1974, the Irish government issued fifty-nine non-exclusive petroleum prospecting licences, which allowed the holder to search for petroleum and natural gas on the continental shelf surrounding the Republic.85 Each licence cost £610, which consisted of a £10 application fee, a £100 consideration fee, and a £500 yearly rental fee. Of the sixty-one companies which held the licences in 1974, only eight were Irish. The vast majority of the survey and exploration work, however, was undertaken by four companies who were themselves licence holders. These were: Western Geophysical; Delta Exploration; Continental Oil, and CCG. They worked on a subcontracting basis and sold the results of their surveys to the licence holders, who did not need to have any experience in oil and gas exploration in order to attain a licence. They merely needed to be ‘competent persons’ and have the necessary funds to ‘purchase the technical competence’ needed for exploration.86 Nor did the government require of the licence holders that they actually explored for oil and gas. ‘It was possible’ wrote Paul Tansey in 1974, ‘to spend £610 on acquiring a licence, undertake no expensive exploration work and hope that the non-exclusive licence will provide a passport to securing an exclusive licence’.87
