DAIL IN COMMITTEE. - BEET SUGAR (SUBSIDY) BILL, 1925—THIRD STAGE.
(1) Subject to the provisions of this Act and the regulations to be made thereunder, the Minister may, out of moneys provided by the Oireachtas, pay subsidies in respect of sugar manufactured in Saorstát Eireann during the period of ten years beginning on the 1st day of October, 1926, from sugar-beet grown in Saorstát Eireann at the following rates, that is to say:—
(a) in respect of such sugar manufactured in the first factory established in Saorstát Eireann for the manufacture of sugar from sugar-beet grown in Saorstát Eireann, subsidies at the rates specified in the First Schedule to this Act, and
(b) in respect of such sugar manufactured in any other such factory, subsidies at such rates as shall from time to time be prescribed by regulations made under this Act but not exceeding in any case the respective rates specified in the First Schedule to this Act.
(2) No subsidy shall be payable under this Act in respect of any sugar manufactured from sugar-beet grown in any of the years 1926, 1927, and 1928 unless it is shown to the satisfaction of the Minister that the price paid or to be paid by the manufacturer of such sugar for the beet from which the same was manufactured is not less than the price specified in that behalf in the Second Schedule to this Act.
I move amendment 1:—
In sub-section (1), line 20, after the words "Saorstát Eireann," to insert the words "and licensed."
This amendment is a minor one, but I think it is essential. The section says that subsidies may be paid "in respect of such sugar manufactured in the first factory established in Saorstát Eireann for the manufacture of sugar from sugar beet." I want to add after the words "Saorstát Eireann""and licensed." There is a possibility that two factories may be set up, and one promoter being in a hurry might get in front of the other and claim the subsidy The words I suggest are, I think, essential.
I do not think there is much risk of what the Deputy fears, but I accept the amendment.
Amendment put and agreed to.
Amendment 2.—In sub-section (1), line 22, after the word "subsidies" to insert the words "by way of payments to such amount as may be necessary for ensuring the payment of interest at a minimum rate to be prescribed by the Minister upon the capital invested in the undertaking or by way of payments in respect of sugar manufactured by the undertaking calculated at rates not exceeding," and to delete the word "at" in line 22.
This amendment has already been disposed of.
I would like to move the amendment, if I am permitted to do so.
This amendment was defeated on the resolution.
It was defeated on the resolution, of course, but now it is offered for inclusion in the Bill. I am not going to waste the time of the House by speaking to it, but I would like to have it recorded as moved.
Amendment put and declared lost.
I move amendment 3:—
In sub-section (1), line 22, after the word "rates," to insert the words "not exceeding those."
This is an amendment which I think is of importance. The section says: "at the rates specified in the first schedule to this Act." I suggest that we ought not to bind the Minister by legislation to pay these rates. He may not be able to do anything better, but we ought not to insist that he shall pay these rates if he can do anything better For that purpose, I suggest the insertion of the words "not exceeding those." The schedule speaks of "maximum" rates, but if there is any value to be got out of the word "maximum" we should insert words with a similar implication in the section.
I do not think we could accept this amendment. As I indicated when Deputy Johnson moved his first amendment, I think there is going to be no great rush at the present stage to put up factories on these terms. After a considerable amount of bargaining, we arrived at the figures set out in the schedule. Nobody is going to come to terms with us if, having arrived at a certain stage and saying: "We will close now and go to the Dáil and seek authority for those terms," we entered upon another period of bargaining The result would be that the people who proposed to set up a factory here would say that there could be no definiteness to any conclusions with us, and it might actually have the effect of causing them to doubt whether there could be a bargain made with us. I believe we cannot, without grave risk of scaring off not only the person whom we have struck a bargain with but anybody we might later try to strike a bargain with, accept this amendment. I do not think we can go back on these terms. We said we would seek power to give this man these terms: we are not going to re-open the matter with him. If we get this Bill, we are going to offer him these terms and not less terms.
I submit that if the Minister's view is as he has expressed it that he should have introduced the name of the firm and the terms of the agreement he has entered into and asked to have that agreement confirmed We are not asked to confirm any agreement with any particular firm. Names have been given us, and information has been given us, and the Minister is now asking for powers to give a licence to any firm or company or person. He argues as though the only possible interpretation of this Bill is that a particular firm—Messrs. Lippens—were concerned. But we are legislating to give certain subsidies— and this is a point of importance—to a firm which does not exist but which, may come into existence any time after the Bill becomes law. We have said in the schedule that these are maximum rates. There is some purpose in putting in the word "maximum." If there is any value in the word "maximum" in the schedule, surely there is equal justification for putting into the section the words "not exceeding those," as I suggest There are possibilities that the firm in question—the firm that it is hoped will come into being and take advantage of the offers in the Bill— may not do so. That is a possibility, and other firms may come in and say: "We are prepared to do this work and to give you all the guarantees necessary." I suggest to the Minister that this provision is simple and necessary, if the rates specified are the maximum rates and if you are to put into this section of the Bill the same terms as you put into the schedule in regard to these being the uttermost limit. The refusal to put in this provision rather suggests that the Minister is not prepared to make a better bargain, even if it were thrown at him.
The Minister is certainly prepared to make a better bargain but before making the bargain at all one must at least have some idea as regards definiteness.
Now, in this particular case Deputy Johnson conjures up a picture of a proposed sugar-beet factory dealing with three different Ministers for Finance. Because that is what really this particular amendment would entail. This Dáil will run for two years. At the end of two years, granted it runs to its maximum period, another Dáil will come in, and granted it runs to its maximum period, it will last for four years, and the third Dáil will come in at the end of six years, and last until the end of the ten years' period. During that period there may be three Ministers for Finance. This company that is to work the beet sugar factory is to sink a certain amount of capital, and is to be placed in the position of driving a bargain as to whether it is 75 per cent. or 80 per cent. or 85 per cent. or 90 per cent. for that period. I submit that it would be unreasonable to expect any contractor to enter into a bargain in which there would be such indefiniteness as that. This particular bargain may be good or bad. If it is too good from the point of view of the contractor, and if the Dáil does not want to stand for it, then it can turn it down. But to say that there is to be a bargain as from zero to 100 per cent. during the period of ten years is something which I do not think any contractor in any part of the world would sign any bond in respect of.
Will the President tell me what is meant by the term "maximum" in the schedule?
The full 100 per cent. "Not exceeding those" would mean any percentage from one to 100.
There may be subsequent factories inside the period.
But we are dealing with the first factory.
That is a different point.
The proposal is to insert in Section 1, sub-section (1), line 22, after the word "rates" the words "not exceeding those," so that the section would read: "The Minister may ... pay subsidies in respect of sugar manufactured in Saorstát Eireann during the period of ten years ... in respect of such sugar ... subsidies at the rates not exceeding those specified in the first schedule to this Act."
Mr. HOGAN
The point about the Bill as it stands, as the President has pointed out, is that, notwithstanding the word "maximum" in the schedule, the company can be absolutely certain that the terms cannot be changed during the ten years without coming to the Oireachtas. That is some guarantee. In a case like this, where you have not people actually burning to come in, even on these terms, I think that is a useful guarantee. I think it should not be objected to, if it makes it easier for us to complete the agreement, especially in view of the fact that if we want to deal with the matter at any time we can come here to the Dáil. The Dáil is always sitting, and we can deal with it.
I think the Minister must bear in mind the form in which this legislation is couched. This is a Bill to give general powers to the Minister to give subsidies in respect of a factory which has yet to be established on certain conditions. In explanation of the Bill the Minister tells us that there have been provisional arrangements made with a person who proposes to establish a company to build a factory. Now, that is all very well in a Second Reading speech or in an introductory speech. But the Bill that is before us does not deal with any specific firm. It does not deal with any company It only gives the Minister general powers. Surely we are not going to be bound in legislation to give the Minister not merely powers, but to make it obligatory upon him to pay the rates specified even though he might be able to do better. I want to safeguard the State with the possibility that if the Minister can do better, he may be allowed to do so. Under this section, if it remains as it is, there is every possibility that he will be bound, in any case, to pay these rates, even if he could do better.
Mr. HOGAN
He could come to the Dáil.
He need not come to the Dáil. You are asking that we should give him powers to do it, and not attempt to safeguard the interests of the State.
Mr. HOGAN
The point is that we must do business now in the light of the facts which we know.
Then put your contract before us and the name of the company.
Mr. HOGAN
I think we are only doing our duty in keeping in mind all the facts which were explained to the Dáil on Second Reading.
We must do business in the light of the facts that are before us. We know that you cannot do business with M. Lippens on better terms. We know there is little possibility of doing business on better terms with anybody else. We can do business with M. Lippens on these terms; there are no better terms. We believe that making any change in the Bill might mean some difference to a firm with whom we have been doing business and with whom we have made definite terms. What is the objection to leaving the Bill as it stands if it makes things easier? If the arrangements with M. Lippens fall through, and if in a year or two we can do better, the Bill does not preclude us from going to any other firm. If we can get better terms we can come to the Dáil. Why should we frighten off people whom we know are anxious and ready to do business on those definite terms?
I believe it is unprecedented for a legislature anywhere to give powers to a Minister and bind him to paying a certain rate; he is not allowed to make a better bargain.
I think there is no point of practical importance in what Deputy Johnson raises. We certainly will not be able to get better terms than those——
Then, there is no objection.
Unless we postpone the matter. There is this objection: people are not falling over one another to come and do it, and we do not want to hold out the prospect of further bargaining, further chattering and delay, and possibly dealings with subsequent Governments.
Amendment put and negatived.
I beg to move:—
In sub-section (2), line 31, to delete the word "and," and after the figures 1928 to insert the figures "1929, 1930, 1931, 1932, 1933, 1934, and 1935."
The effect of this amendment would be that the prices which the factory will pay for sugar beet—which under this Bill are fixed only for three years— will be extended for the full period of the subsidy guaranteed to the factory. I am not the least bit keen on subsidies. I disapprove of them and I also disapprove of fixed prices. We are, however, committed to both subsidies and fixed prices by this Bill. Apparently sugar beet factories cannot be established without subsidies in Europe, and if we are to have a factory we must have a subsidy. I have always taken it that a fixed price is a corollary to a subsidy. Where any firm or individuals get a sum of money from the Government for the purpose of furthering business interests, they shall have obligations to other people; the obligation in this case is to the people who sow the sugar beet. I presume it will be argued that the ordinary law of supply and demand will come into force after the first three years, and the absolute necessity of getting raw material will force the factory to pay a good price, not necessarily the price they pay during the first three years.
There is this side of the argument too, that the farmers may be induced to grow sugar beet. As Deputy Gorey pointed out, great efforts are being made to induce them to start growing sugar-beet. I might say that those efforts are unreasonable and there is a lot of false and unreal propaganda. There is a danger that farmers will be lost in the mist of propaganda, in the mist of tales as to what prices they will get for their sugar-beet, and what quantities they can grow on the land. They will find at the end of three years they will have their lands tilled, their whole course of agriculture changed and an addition to their ordinary rotation which may involve them in, perhaps, twice the amount of tillage they usually manage. Being in such a position they would not be prepared to bargain The firm would have the monopoly; there is only one market for the beet and we may find that firm fixing an unreasonably low price, a price as low as they can possibly fix, consistent with the possibility that the farmer will continue to grow beet. It is only reasonable that when a guaranteed subsidy is given for a certain number of years, there should also be a guaranteed fixed price.
With this amendment must be taken the changes I propose to make in the second Schedule, which fixes the prices on a graduated scale that will be paid for beet in accordance with the Government subsidy. I have calculated those prices in proportion to the decline and the fall which take place in the subsidy over a period of about three years. I believe the amendment is one that will commend the project to the farmers, and it will give them a guarantee in their business for ten rather than three years. The amendment is a reasonable one and I would ask the Government to accept it.
Mr. HOGAN
I want to say at once that that is not the point of view of the farmers of the country. I would be sorry that anyone who desires to invest money in this country—an Irishman or anybody else—would think that that was the Irish farmers' point of view. The farmers are quite willing to take a fair profit. We have fixed a price of 53/-, which ensures a real and a good profit; in fact, it ensures a little better than a fair profit for the first three years. I am satisfied that the farmers will grow sugar beet. I am also satisfied that if experience shows the farmers that they can afford to grow beet at a less price, and at the same time get a reasonable profit, they will be quite willing to do their part. The farmers do not want exorbitant profits; they are not looking for a gold mine. They know they have to do business just the same as the ordinary business-man and they realise one must work hard for a fair profit. The farmers want no more than that and they are well able to take care of their interests. They do not want a soft thing and I would be very sorry that the idea would get out that farmers will not enter into this matter unless they are getting a soft thing. If, at the end of three years, it is shown that prices are to be altered, I am quite certain if the alteration is in the direction of reducing the price—no one can tell at this stage, not even Deputy Heffernan, because it is a new thing in the country—and if the equities of the case show that the price could be altered, I am sure you will get any number of good farmers prepared to alter the price by lowering it if they find they can make a reasonable profit by so doing. I would be sorry that any other view would go out from the Dáil.
With regard to farmers being lost in mists of propaganda and tales, Deputy Heffernan is expressing the viewpoint of the minority. He talked about bad farmers who were asked to grow beet and about the unfortunate farmer who cannot look after himself in the circumstances which, it is obvious to every man, will exist at the end of three years. That is purely a minority point of view. The ordinary good farmer is well able to look after himself. He knows perfectly well he has guarantees which are better than any guarantee we could put into the Bill. He is quite prepared to make a fair profit and to work hard for that. He knows well what it costs to grow barley, mangolds and wheat; he will take very good care, before going into this sugar beet business, to investigate what the prospects are, and we will take very good care to let him know the truth. We have gone about it the right way so as to get him authentic information; we are growing beet in five or six centres this year. We have not gone about looking for the farmer who has his land full of dock leaves and his farmyard full of manure. We do not look for that type of farmer; we look for the farmer who can make the growing of sugar-beet a success, and he is the only one we advise to grow sugar-beet. There will be facts as to costings and other items of information in connection with the industry placed at their disposal and in three years' time farmers will know perfectly well what 54/- per ton means. They will know at the end of three years what 53/-, 52/-, or 48/- will mean. They will know it better even than they do now, and they know it fairly well even now.
Two questions of importance seem to be raised in this amendment. Deputy Heffernan is trying to put into the Bill what has been stated as one of the consequences of the Bill, that is, that the subsidy proposed is a subsidy to agriculture. Deputy Heffernan evidently wants to ensure that it is to be a subsidy for agriculture I think, notwithstanding that statement, that it is clearly shown that the proposals in the Bill are in the main a subsidy to the owners of the factory. We have had it made clear to us that the experimental factory can only be established on the basis of a subsidy of a generous kind. Apart from the merits of the subsidy, or the amount of the subsidy, or any consideration of that kind, if we accept the view that it is well and good that a sugar beet industry should be established, that it is necessary in the first instance to have an experimental factory, and that such an experimental factory is only possible by way of a subsidy, then I think we have also to face the fact that it is to the owners of the factory that the subsidy is to be given. If Deputy Heffernan's amendment is carried that proposition is turned down and such a subsidy as is proposed would be transferred to the growers of the beet and, presumably, from the story that has been told to us, there will be no factory.
I am distinctly in favour of the general proposition that certain main products of agriculture should be guaranteed a price, but I am not prepared to take the view that there should be a guaranteed price at a rate which is alleged to be of such a kind as to give excessive, abnormal advantages to the growers. I think that these rates, if anything like the prospect is fulfilled, would be exceptionally high and would give too high a guaranteed price. While I am in favour of the general proposition that in certain crops, and for the promotion of certain agricultural methods, we should guarantee a living wage to the grower, I am not prepared to say that it shall be at the rate of 45/- or 44/9 or any definite sum over a period of years ahead, because that might mean guaranteeing very much more than a reasonable, living wage and very much more than is a reasonable profit as it is called. Taking that view, I am sorry I cannot support the amendment.
The question as between the Minister and me is as to whether he is or I am expressing the views of the farmers. I think I am expressing the views of the farmers, and that is why I tried to make a reasonably safe bargain for the farmers. The Minister talks a great deal about this scheme being intended only for the first-class farmers. I say that kind of talk does not amount to anything. This scheme cannot exist for the first-class farmer. It must exist for the average farmer. You cannot get sufficient first-class farmers to cultivate 5,000 acres round the factory. I doubt if you can get 50 per cent. first-class farmers in that area. The average number of first-class farmers is comparatively small, just as in every other walk of life the average number of first-class men is small. Even in the case of Deputies or Ministers the number of first-class men is very small. You must try to legislate for the average person. I am not trying to help the poor-class, worthless farmer, but we must try to help the average farmer, and it is the average farmer who is to supply beet to the factory He may not be a man who will always cultivate beet as it should be cultivated, but he will be the average farmer who will do his work fairly well and will produce fairly good beet.
The Minister is very fond of saying that every farmer knows what a barrel of barley costs and what a ton of mangolds costs. I deny that is the case. The farmers do not know the cost beforehand It is impossible for them to know it because a farmer may produce a ton of mangolds in one field under very different conditions from what he would produce them in another field. The Minister, of course, may average the cost and he may get the cost of producing a ton of mangolds, or a barrel of barley, under ideal conditions. But that is not what the average farmer knows. If you get into conversation with the average farmer he can only make a rough guess as to what the cost would be, and the Minister knows that quite well. I have asked farmers what it cost to do this or that and it is rarely I can get the exact figures, and even when I get the exact figures I am very doubtful about them. The costs vary according to the conditions, according to the climate, and according to the different qualities of land. It is no use saying that the farmer knows what it costs to produce a barrel of barley or a ton of beet. He may estimate it roughly, but my experience is that farmers under-estimate the actual cost and that they are inclined to over-estimate the yield.
Mr. HOGAN
That may be. I maintain that this amendment of mine is a perfectly reasonable proposal. If the factory has a right to get a subsidy for ten years, the farmer has undoubtedly a right to demand the same price for the same number of years. It is all very fine to say that ordinary business conditions will operate to make the farmer make a bargain. He has to make the best bargain he can for himself If the farmers were perfectly organised in an organisation in which they would stand loyally together and in which they might speak with one voice, they might make a good bargain and it might be possible for them to stand on their dignity. I say they will be in the position that they will have a large portion of their land cultivated and where they will be committed to a new system of cultivation and have a considerable addition to their rotation. They will then, to a certain extent, be in the hands of the one factory that exists in the country. I would, if necessary, be willing to meet Deputy Johnson's point of view in regard to the actual price to be paid. I simply fixed the price in accordance with the scale of subsidy to the factory. That is a thing that might be gone into further and the prices might be fixed somewhat lower. I am inclined to think, however, that that is a very difficult thing to do, because the only scale that I can see to go on is the scale in the schedule.
I see no reason why it should not be accepted; I see no reason why the farmers should be allowed to be in the hands of this monopolistic company, which is getting a large subsidy, and I feel that if a subsidy is given the people who supply the raw material are also entitled to a guaranteed price while that subsidy continues.
Deputy Heffernan seems to me to look at the matter entirely in the wrong way. We want to have this question of sugar-beet manufacture put on a business basis as soon as possible. We do not want to have the idea of subsidising it always at the high rates that are set out here, and we do not want farmers to get fancy prices always. We want them to do the very thing that Deputy Heffernan says they should not be asked to do, to take the lowest price consistent with their economic position and with the management of their farms. It will be in the interests of the factory to get not merely five thousand acres, but fifteen thousand acres grown if it can. If it makes a profit on five thousand, it will make a greater profit on fifteen thousand, because the proportion of overhead charges will be less. It will be the business of the factory to give a price which will induce the farmer to extend the area under cultivation, and it will be asked to do no more than that. They should not give one penny more than will induce the farmers to grow the necessary quantity of beet, and the farmers should be satisfied with that. It is better that the prices should be economic prices so that the farmer will give attention to the matter, be obliged to cultivate the beet properly and try to get good crops with a high sugar content. The price at which farmers will grow beet will be one of the factors to be taken into consideration at the end of ten years, when the matter has to be reviewed. There is no doubt that you cannot drop suddenly from a subsidy of 22/- to no subsidy at all. At the end of ten years there must be for some further period a reduced subsidy. If you make the farmers willing to grow beet only by paying some fancy price, something beyond the price that the factory must offer to get beet grown, you will postpone for a further period the putting of this industry on a proper basis. We are not proposing this by way of a direct subsidy to agriculture We could get far more tillage by having the beets thrown into a quarry hole than paying subsidies merely for the growing of beet, but that would lead us nowhere. What we want to do is to get this business on a firm basis so that it will get along eventually without a subsidy. If there are high profits to be got out of it on the present basis, there will be an encouragement to those who are managing the factory to keep their plant up-to-date, to adopt the newest processes—and there are always changes in processes in this matter of sugar-beet manufacture—to have a highly efficient factory. At the end of the period we will be able to see what profits they are making, and we will be able to deal with the thing rightly when considering what should be done. But the farmer is entitled to nothing more than a price that will induce him to grow the beet and to extend the area under it.
I do not know if there is any use in carrying this argument further. My point is, why subsidise the factory and why not guarantee a price to the farmers? The farmers, in my opinion, have a right to a subsidy as well as the factory.
Simply for the reason that the industry is being subsidised Why subsidise the factory and not subsidise the farmer?
Why subsidise the farmer?
Why subsidise the factory, then?
The Minister talks about the profit that will be made by the company, which will encourage the farmer to branch out and increase the acreage. Will the Minister consider the question of fixing a price in proportion to the cost of production?
No, there is the same objection.
Mr. HOGAN
Deputy Heffernan does not know where he is going.
I do. I maintain that if the company makes a profit——
Mr. HOGAN
Would you apply that to the individual farmer?
The Minister knows that you cannot apply it to the individual farmer.
Is it proposed to subsidise the individual farmer for ten years?
Mr. HOGAN
That is another question.
If the company makes a large profit, why not arrange that the farmer shall get portion of that profit, his proper share of it? If, according to the ordinary laws of supply and demand, he is able to make a good bargain, well and good; if he is not, he can continue growing at the lowest margin of profit, because doubtless the company will bring the price to the lowest point they can, while continuing to get the farmer to grow the beet. That is the price they will fix. The farmer will have to give the beet; his land will be tilled and the rotation started. It has been stated that in the bacon industry the farmer has found himself producing for a ring that controls prices and that he cannot get out of it. He is in a form of industry that he cannot easily get out of, and he has to continue. He will be in the same fix here, and he may be kept just to the starvation price, enough to keep him, while the company will continue to make very good profits with the subsidy they are to be given.
I would like Deputy Heffernan to produce an amendment which would ensure to the grower a return on the average expenditure on the production over any given year. I would like to guarantee to the farmer that he will not lose in a particular year by the cultivation of his land for beet. But I do not see the wisdom in putting figures which, as Deputy Heffernan himself said, may or may not be profitable in that particular year. He does not know what the cost of production will be in any year, and the sum named may be sufficient or may be insufficient. It is only intended to be an enticement, or an inducement, a promise held out of an assured market at a definite price. I say that I would be prepared to support any proposal which would guarantee to the producer a price which would be measured by the cost of production in the year, but I cannot see my way to put a figure in a Bill which is applicable ten years ahead. I am afraid that Deputy Heffernan's illustration of the pigs was rather against his argument, because we know the effect on the variation in prices in pig production, that when the prices are unprofitable people cease to breed and feed pigs, and that is one of the difficulties, I think, in regard to the pig trade, that there is such variation. Here the risks of that great variation are less because the factory is established and is bound to have some inducement for the farmer to grow, or close up. Deputy Heffernan may answer my argument by saying that this scheme may be rather a Stock Exchange scheme and that it is intended to get all it can within the business for three or four years, and then it will not matter very much if the cultivation of beet ceases. In such a case Deputy Heffernan's amendment is of no effect and would not have any value. If Deputy Heffernan moved in the direction of guarantee against loss on production a guarantee based on an ascertained average cost of producttion, that certainly would get my support.
Mr. HOGAN
I am not surprised that Deputy Johnson is not enthusiastic about Deputy Heffernan's amendment. Perhaps Deputy Heffernan would consider the bringing in, on Report, of an amendment basing the farmers' price on the cost of production, that is to say, having some distinct relation to the cost of production. That is Deputy Johnson's suggestion.
I think the Minister is getting into deeper waters. He is suggesting that the farmer should deal with the profit and loss account.
Mr. HOGAN
I made a suggestion for the purpose of allowing Deputy Hewat to point out the danger.
I am obliged to the Minister for his consideration. I am afraid Deputy Heffernan is not very convincing in connection with the arguments in favour of his amendment. One of the arguments he puts forward is that if the factory, fortunately for itself, is going to make a profit, the price paid for the beet at the factory will be varied with the amount of profit the factory is making. That situation is, I think, Gilbertian. Fancy a situation in which the factory is there and the price you are going to pay for the raw material is dependent on the profit and loss account they were able to produce for the farmer at a certain period. In various disputes or arguments between labour and capital we recognise the very great difficulty in one side convincing the other side that they were right. If you imagine a case in which the farmer on the one side and the factory on the other were going to settle the right price of beet on the basis of a profit and loss account I think eternity would not be long enough to settle that question. As far as the settlement of the question as to what it is going to cost the farmer to produce the beet is concerned that is also almost equally impossible to arrive at.
I have had discussions from time to time with farmers and they and I have never been able to see eye to eye on the question of profit and loss. Take a field of beet. The farmer will admit he is getting so much for the beet. I say in an ordinary business way: "What is your cost on the other side?" He will tot up the cost in a rough-and-ready way, which is more or less effective, and there will be a balance in the air. I could not convince the farmer that that was his profit. He would count that as part of the losses. In a case of that kind if you cannot, even in a friendly argument, arrive at any basis on which you could find a profit and loss for a field of turnips or oats it would be hopeless in the other case.
I never explained that the price could be fixed in accordance with the cost of production. That is an argument of Deputy Johnson My argument is, the factory gets the subsidy and while that subsidy is in existence the farmer should get a fixed price. I will leave it at that.
Amendment put and declared lost.
I move:—
To add at the end of sub-section (2) the words:—"and that the wages paid to and the hours of labour worked by persons employed in and about the factory are not less favourable that those commonly recognised by employers and trade societies in the trade in the districts where the work is carried out, or in the absence of such recognised wages and hours, those which in practice prevail amongst good employers, or if there are no such wages or hours recognised or prevailing in the district those recognised or prevailing in the nearest district in which the general industrial circumstances are similar."
The amendment is to insert in the Bill what is known as the Standard Fair Wages Clause. It has not been drafted to apply especially to this Bill. It is one in regular use, and while I do not think for the moment it is going to have any practical effect of influence on the company—I think other influences would be of greater importance in fixing the rates of pay—I think it is desirable to introduce in legislation of this kind this principle that where a subsidy is being paid to a factory certain obligations shall be imposed on the factory in respect of the conditions of employment within that factory. The principle has been adopted in all State contracts for years, and municipal contracts generally, and is recognised, at least, as imposing a certain moral and a certain legal obligation in respect of the rates of wages and conditions. I ask that that should be done in the case of the beet sugar factory. As I say, I do not think it is going to make any practical difference to the business in question, because the skilled labour will be able to obtain what might be called a monopoly price, and the unskilled labour will be special and will not be dependent on the wages round about. I have no doubt they will be able to make their own terms, and those will become the recognised wages in the district at least. In view of the special stress that the production of sugar involves during a particular season, it will not have any effect on the actual practice. I think it is necessary to introduce a provision of this kind in any measure which involves the payment by the State of a subsidy or bounty through the company, and to impose on them the obligation to treat their employees according to a reasonable standard and to give them fair conditions.
I would not like to accept this amendment in its present form. There is, as Deputy Johnson said, no trade such as this in existence. There are, no doubt, special conditions of work in connection with sugar manufacture. During the campaign period the factory will be running for 24 hours a day for seven days a week, and, of course, there can be no such thing as conditions which would involve no night work or Sunday labour. On the other hand, I think it has been admitted generally that where Government money has been expended, say in the case of contracts, there should be a fair-wages clause and reasonable conditions of employment should exist.
I think the same argument that makes us take a stand in regard to contracts has application here, but I would like to consider the terms of the clause before I agreed to it. I would like to consider it more fully than I have yet had an opportunity of doing, and if the Deputy did not press the amendment I would undertake to give the matter further consideration before the Report Stage is reached.
I thank the Minister for the way he has received it. The phraseology of the clause that I put forward has been adopted merely because it is the standard which has been accepted both by employers and employees. It has been accepted by Governments as well as by public bodies, and has been in operation for quite a long time. It does not contain what I would like to see in such a clause. I may say that while it may seem not to be particularly appropriate to these conditions, it has been found, in practice, to fulfil almost any requirements even under exceptional conditions such as this may be said to be. However, the Minister has promised to consider the phraseology of the clause, and I therefore will not press the amendment at this stage.
As Deputy Johnson has pointed out, and as the Minister has admitted, there is nothing objectionable in the amendment so far as the wording of it is concerned. The broad objection that I have to it is this, that I maintain the saving grace in this thing is that the factory for the manufacture of sugar is a private undertaking, and there is no reason why a clause of that sort should be brought into it any more than it should be brought into any other private undertaking. It may be said that the concern is to work with the assistance of a subsidy. The subsidy, however, is to be given for a very definite purpose and has nothing to do with the manufacture of sugar. My desire would be to preserve the private character of the enterprise, and to save it as far as I could from getting within the clutches of the Government. In my opinion there is no place in this Bill for the amendment at all. The Bill does not deal with the question as to how they are going to run the factory, what rates they are to pay or anything of that sort. It merely deals with the question of the subsidy, and I ask the House to consider this as a private undertaking. I have no objection to the wording of the amendment, but I object to any clause of that sort being brought into the Bill.
Laissez-faire! The Deputy, as I said before, is usually consistent in his advocacy of the Manchester School of Economics, but he occasionally lapses and recovers himself when another opportunity arises, and this he deems to be such an opportunity. Let me remind the Deputy that this Bill is giving not only a subsidy and a licence but particular privileges, and the company will inevitably have to introduce foreign skilled labour. But supposing, as has happened in other industries and in other countries not very far away, that it was thought profitable as a private enterprise, an individual undertaking not subject to any Government restrictions, to introduce Coolie labour at Coolie prices, would the Deputy still maintain his view that there should be no intervention and no interference, and that there should be no restrictions upon the conditions on which such a company would carry on its business, while at the same time it was receiving Government subvention?4Some of us are familiar with the conditions that at one time prevailed in certain chemical industries, certain iron industries, where alien labour from Eastern Europe was introduced and introduced because of its cheapness. If there was no restriction and if the ideals of Deputy Hewat were in practical operation, then the cheapest possible labour, living on the lowest standard in Europe, Asia, Africa, or South America could be introduced, and we should have no right and no reason to intervene. That is Deputy Hewat's argument, and he would like that to prevail and to be allowed under this Bill. My desire is to prevent even the possibility of that thing happening.
I do not think that Deputy Johnson has much grounds for that argument. He could apply the same argument to any industry to-day run by private enterprise. Is there anything to-day in this country to prevent private enterprise from bringing in Coolie labour or Indian labour?
Are they getting subsidies?
I do not think that enters into it at all. If you are going to treat this particular factory as a subsidised industry because of the subsidy that you give to it, then, of course, Deputy Johnson is right and any advocacy that I may have advanced in favour of the Bill is gone altogether. I say so far as the introduction of Coolie labour into this industry is concerned, that it could be no more introduced into it than it could into any other industry in the country. The safeguards against the introduction of that kind of labour are public opinion, and, if I might say so, the power of the trade unions. But, supposing there is no objection by the trade unions, and supposing there is no objection by public opinion, then why not introduce Coolie labour if you want to? I presume because it is a perfectly impracticable proposition, and this is only a red herring drawn across the track.
Yes, it is really drawing a red herring across the track. The proposal is to withdraw this amendment, the Minister to bring in another amendment on the Report Stage. I wonder if Deputies would allow this amendment to be withdrawn now?
Agreed.
Amendment, by leave, withdrawn.
Question—"That Section 1, as amended, stand part of the Bill"—put and agreed to.
Section 2 agreed to.
SECTION 3.
(1) Every company to which a subsidy is paid under this Act in respect of sugar manufactured in any accounting year shall within ninety days after the end of such accounting year furnish to the Minister a balance sheet for such accounting year duly audited by the company's auditors and also a profit and loss account for the same accounting year similarly audited.
(2) The balance sheet and profit and loss account to be furnished as aforesaid shall be drawn up in such manner as shall be prescribed by regulations made under this Act, and such balance sheet shall contain (in addition to any other matter required by such regulations) a summary of the company's share capital, assets, and liabilities with such particulars as will disclose the general nature of such assets and liabilities and the manner in which the value of the fixed assets was arrived at.
(3) Every such company as aforesaid shall on demand furnish to the Minister such explanations as the Minister shall think proper to require in respect of any balance sheet or profit and loss account furnished by the company pursuant to this section.
(4) A copy of every balance sheet and profit and loss account furnished to the Minister pursuant to this section shall be laid by him before each House of the Oireachtas within one month after such balance sheet and profit and loss account are so furnished to him.
(5) If any company makes default in complying with any of the provisions of this section such company shall be guilty of an offence under this section and shall be liable on summary conviction thereof to a fine not exceeding five pounds for every day during which the default continues.
(6) In this section the word "company" means and includes any in corporated body and the expression "accounting year" means and includes any period in respect of which the annual accounts of the company are made up.
I move as an amendment:—
Before Section 3 to insert a new section as follows:—
"Every company to which a subsidy is paid under this Act shall appoint on its board of directors one director who shall be nominated by the Minister for Finance. The term of office and remuneration of the director to be appointed on the nomination of the Minister for Finance shall be such as shall be prescribed by the Minister."
The effect of my amendment is obvious. I want to have a director nominated by the Minister for Finance to sit upon the board of the company that controls this factory. Under this scheme the Government is giving a subsidy of approximately two millions to the people who are going to establish this industry. The greater portion of this two millions will go to the factory That is particularly due to the fact that the Minister has refused to guarantee the price to the farmers beyond three years. Where such a large subsidy is going to the company it is only right that the Government giving the subsidy should have some voice in the control of the industry. As the Bill stands at present, the Government have no control whatever. It is absolutely free to the company to do what they like and to receive the subsidy, provided they carry on their business on a paying basis. The only safeguard the Ministry has is the annual balance-sheet which has to be submitted to the Minister. It is well known that balance-sheets are very dubious things which can hide a great many facts and figures that never can be elucidated or found out; and even, with all these questions that the Minister is allowed to ask, there well may be many things that he will be unable to find out. There may be the concealment of capital and the concealment of earnings. There is no reason why such a thing could not be done without doing anything actually dishonest or that would bring the company within the power of the law: to increase, for instance, the value of their holdings to a great extent They may, with their profits, introduce elaborate new machinery, and still the profits would be small and the Minister would be called upon at the end of ten years for a subsidy for a continuing period. In view of these possibilities, and the safeguards we have, we have no adequate control of the business of the factory or its internal management, and I think it is only right that the Government that gives this subsidy should have a representative upon the Board.
I also had the intention of putting in an amendment, which I will put in later on, to the effect that the beet-growers would have a representative on the Board. Possibly that is more important than the amendment I have put in, but, for the present, this amendment stands, and I suggest that the Minister should accept it.
I do not think any useful purpose will be served by accepting this amendment. We could have no control over the factory nor over the management of the factory, and no firm of sugar-growers would put their money into the project if we had control; and if we had control, I venture to say the thing would be messed.
One director would not give you control.
The Deputy talked about control. One director would give no control or give us no real information One director would only serve to allow the blame, or some share of the blame, to be put upon the shoulders of the Government if there was failure. He would not be able to find out about the costings. If he asked for them they would refer him to the manager, and he would get no information. You would gain nothing by having a director on the Board. I do not like to take a political simile, but it would be like where you have the representatives of one nation sitting in the Parliament of another. They do not get you very far. Where you have a director on the Board having an entirely different interest from any other representative and having an opposing interest because, as I have indicated, the question of subsidy is bound to arise in ten years, good care will be taken naturally and inevitably that he would learn nothing. The result would be that if anything went wrong it would be simply ascribed to Government interference.
I think that the necessity for sub-section (3) in Section 3 proves that there is something after all in the amendment moved by Deputy Heffernan. Sub-section (3) says:—
"Every such company as aforesaid shall, on demand, furnish to the Minister such explanations as the Minister shall think proper to require in respect of any balance sheet or profit and loss account furnished by the company pursuant to this section."
Now that shows that the Minister is taking some precautions in view possibly of the fact that balance sheets do not always disclose everything, and that there is a possibility that all the information that might be required in view of liabilities undertaken would not be furnished and would not be got in the ordinary way. The Minister said one director would get no information. I suggest that one director, although he would not have any control, so far as policy is concerned because he would be in the minority, would do much to prevent lengthy correspondence between officials of the Ministry and the managing director of the factory, and although that correspondence might go on over a long time, the Minister would not get anything like the same detailed information about the board that he would if this amendment were accepted. Deputy Heffernan has gone a long way on the right road when he said that he also intended, and would move at a later stage, that a directorship should be given to the beet growers, who, after all, are the workers. I wonder would he agree to give a directorship to the Union that would represent the workers upon the farms and distribute the directorships in a more equitable way, representing the different interests concerned in the development of this particular industry. However, there is, I think, a good deal to be said against the claim for nomination on the board of a business concern representing the people who have financial interest, such as in this particular case, because you cannot have control of policy. But you can get more detailed information if you provide a man of brains, and knowledge of accounting work, and you can get far quicker information from him than by the method provided by the Government in sub-section (3) of Section 3. That is the only thing I see that would warrant me in claiming that Deputy Heffernan's amendment has something in it that should recommend it to the Minister, and if he goes on the point that the factory is turning out a balance sheet no satisfactory to the Minister, and if he points out that he will have to resort to the powers he asks for in sub-section (3) he will find that there is considerable difficulty in getting an explanation of things, and that it will take a far longer time to get that in the way the Minister wants to get it than if he agreed to the amendment of Deputy Heffernan.
I would like to assure Deputy Heffernan that the nomination of a director on this concern would not achieve any of the objects he wishes to achieve by the proposal in his amendment. The only position, as the Minister has said, that the director could take up in a concern of that kind would be to be a scape-goat on behalf of the Ministry for anything that went wrong. It must be clear to the Committee, that the Minister is only interested in the profit and loss account. As a matter of fact, he is not interested in the loss at all, if there is a loss. He is only interested in the profit, if there is a profit, and it turns out to be exorbitant. The section here provides for his getting all the information he can possibly want. It says, "Every company shall, within ninety days after the end of each accounting year, furnish to the Minister a balance sheet for such accounting year duly audited by the company's auditors." There, of course, is exactly where the difference is. They say "balance sheet" in one case, and "profit and loss account" in the other. I may say that the balance sheet and the profit and loss account are two entirely different things. The Minister is taking care that he will get the profit and loss account, which is much more important than the balance sheet, and he has taken power to examine into it, and that can be done very effectively, and really there will be no trouble at all except there is excess profits. Loss does not concern the Ministry in the least; it does not concern anybody but the company themselves, and to put a director nominated by the Government on a board of that sort is, I think, only inviting more trouble than it is worth. I would imagine it is a sort of addition that the company would welcome rather than otherwise.
If I used the word "control," I did not mean to suggest that one director would mean Government control. I rather suggested that this one director should act as a watch-dog. I do not agree with the Minister for Finance. I do not believe that this director, if he were a man of the right type, and with a knowledge of finance, could be prevented from finding out the facts about the company. He would be on the board and he would be at their meetings, and nothing could happen with which he would not be acquainted. Provided he was a man of the right type and of knowledge and ability, I believe he would be a very useful addition to the board and would be able to provide useful information to the Minister.
Would the Deputy explain what information he would get for the Minister?
The information asked for under sub-section (3) of Section 3 would do away with the necessity for a director.
Deputy Davin is right. It would take a long time for the Minister to get the actual facts, and he might not get the correct information Deputy Hewat surely does not accuse us of not knowing the difference between a balance-sheet and a profit and loss account, but I maintain a balance-sheet and profit and loss account could be drawn up, so that an outsider could not get a proper view of the company's position. It is common in high finance and in company promotion to issue misleading profit and loss accounts and balance-sheets which, although not conveying anything contrary to law, convey a totally wrong idea of the financial position of the company which they are supposed to describe. In view of the fact that the Government stake such a large amount on this, and leave the whole control in the hands of a private company, of necessity the Government should know how the company is getting on towards the end of the period of subsidy in order to place themselves in a correct position to deal with future subsidies, if any. Deputy Hewat says that they are not concerned with the loss. I maintain they are as much concerned with the loss as with the profit. If the company is losing towards the end of the period of subsidy, they will ask for a continuance of the subsidy and, per haps, for a larger one. I suggest that there is nothing unreasonable in this amendment.
Mr. HOGAN
What about Deputy Davin's suggestion that there should be a director, not only for the farmers, but also for labour?
What a curious conception Deputy Heffernan has of the duty of a director! I spoke before in connection with the sugar-beet debate of the amount of confused thought that it has given rise to. The Government is to appoint a director. That is a revolutionary proposal, if to no other extent than this, that it is the shareholders who are represented in a company by the directors, and according to all the laws that prevail in the Free State, as in other civilised communities, a director is in a fiduciary position in regard to the shareholders, whose interests he is there to protect; but Deputy Heffernan's conception of business as to be conducted henceforth in the Free State is that the Government is to have a watchdog in the guise of a director—in other words, a spy, who is to give information, which otherwise would not be forthcoming, so as to check what might be a fraudulent balance-sheet and in the matter of profit and loss account. Does not the Deputy know perfectly well that if he were able to persuade, as fortunately he is not able to persuade, the Minister for Finance to appoint a director in connection with this factory, he would be an official of the Ministry of Finance? That, undoubtedly, would carry out the watchdog ideal of the Deputy. Then you would be confronted with this extraordinary spectacle of a company, invited here to set up a factory with the lure of a subsidy, having its business transactions interfered with by a civil servant and reported by a civil servant to his departmental chief. Where is that going to stop? I have thought it my duty more than once to protest against the encroachment of the Ministry of Finance, not that I have any objection to civil servants—far from it—but I do not want to see civil servants put into what would be a false position and give rise to a precedent altogether indefensible. If we are going to nationalise, in heaven's name, nationalise. If we are going to set up a sugar factory, in the nation's name, let us do so. Surely Deputy Heffernan has forgotten the primary conditions of this enterprise, that the State is attempting to establish an industry which has not existed here before, or, to measure words more carefully, it is attempting to explore the possibilities of creating an industry which was never here before. That is only to be done by conducting, what is called by the Minister, the experiment, on the most careful lines. If the Ministry is right in giving this subsidy and this advantage to a Belgian firm which has carried on the sugar industry for years and years with success, it would be an extraordinary performance to interfere with the conduct of their business in these exploration years and interfere by an interference that is wholly unskilled. That is what I deprecate If the Minister for Finance were a Minister in a country where this was a long-established industry, where they command the services of expert men in this industry, and if they were to make a proposition when the years of the subsidy were over and when it was established, beyond yea or nay, that this was a paying industry, that the farmers would provide beets in a continuous quantity, in a requisite amount for the sugar factory, then the Government, perhaps, could go into this business on a bigger and larger scale, and with a view to that, and with a view to profit-sharing they wanted control, I could then understand Deputy Heffernan's proposal. The important thing is that we are at the inception of an enterprise. We are at this point: Will the farmers play up, will they turn aside to put under beet cultivation the requisite number of acres? In so far as the conduct of that experiment is in question, it is highly essential that the firm that is doing the conversion of sucrose beet into actual molasses, sugar, and pulp, should not have its actual business sagacity and skill interfered with by an amateur. It is all very well for Deputy Heffernan, in recommending his proposal, to use the word "control," and then, under criticism, to withdraw the word "control." What sort of a director is he to be? He has to sit at the meetings of the directors, and when there is a question of control, he is to be silent and inert, according to the revised view of Deputy Heffernan, and merely to take notes of figures and report, not to his fellow-directors, but to the Ministry, which is not a shareholder, and which, apparently, until this period is over, does not pretend to be a shareholder.
Would the Deputy explain how he justifies interference by a civil servant in sub-section (3), Section 3?
That is a different matter. The Government is perfectly entitled to see whether the thing is being carried on as a bona fide transaction. What Deputy Heffernan forgets in using the misleading analogy of a director representing the Ministry is, that he thinks of the Government in another light than that in which it actually correctly is to be viewed, namely, it is the citizens in their corporate capacity, functioning in their corporate capacity, and it is the citizens' money that is being used to subsidise the company. However, the thing is that the company is enticed, if I may use such a word, because it is made worth its while by this favourable subsidy to invest in the venture, and it is the citizens' money pro tanto that is being adventured. It might be out of order to revert to it, but Deputy Heffernan spoke of the farmer at the end of the period at which it is to have a fixed price as being in an unfavourable position But is not the factory at that stage at the mercy of the farmer? If the farmer cannot be induced to supply the requisite amount of beet, the factory goes out of business. In answer to Deputy Davin, it might be possible for the firm so to conduct its business that it would secure having a return that would give it back again the money it had put in, and then be ready to clear out of the country. The Ministry of Finance to this extent is perfectly entitled to be a watchdog, but to create a system of espionage and to put in a civil servant on the board of directors, where he is, according to the Deputy's account of it, to be a director and yet not a director, seems to be ludicrous.
When you come to consider Deputy Heffernan's amendment, it has to be considered that this enterprise is an entirely new business in this country. Neither Deputy Professor Magennis nor any other Deputy need wonder at the amendment being brought up and discussed here, and considering the arguments made as to this being a subsidy to agriculture, Deputy Professor Magennis need not wonder if we ask what the figures are. The assumption is that you are going to get 50,000 tons of beet at the figure of 54s. per ton. That would represent about £135,000 every year. In about ten years £2,000,000 will be expended on this factory by way of subsidy, provided you get the 50,000 tons of guaranteed supply. That would leave the company a profit of £650,000.
They are £2,000,000 wrong.
Are they? £2,000,000 is a little too much for me. 50,000 tons at 54/- per ton will give you £135,000 a year.
Yes. It is not Deputy Gorey's figures that are criticised, but the application of the subsidy.
Mr. HOGAN
Work it on the basis of 2 cwt. of sugar to a ton of beet.
I am working the figures on the guaranteed prices to the growers. The growers producing 50,000 tons of beet a year will receive £135,000 a year, and £2,000,000 is to be paid for the 10 years' growth, provided the 50,000 tons of beet are got.
I am coming to the director.
Assume that the Deputy's figures are correct, let us hear about the director.
You are giving to the growers for ten years £1,350,000, leaving to be paid to the directors or company £650,000.
Mr. HOGAN
How does the Deputy get the £2,000,000?
On the assumption that the 50,000 tons of beet is grown annually for ten years. If the State does not want supervision over that money, if it does not want to ensure that the thing will be made a success, do not put a director on it and take no notice of it. The company are to get the whole raw material from State subsidy, and the proceeds that are to be realised from the raw material together with £650,000, and they could go on for that time and go away with the balance.
Deputy Gorey's figures are vitiated by the fact that the £2,000,000 are calculated from 1930 onwards, and that the production of beet will be 80,000 tons annually——
Mr. HOGAN
And also by the fact that, I think, they would have to work out about 14 per cent. of sugar out of 15½ per cent. of beet.
I rise to direct attention to the revelation of ethics of capitalistic enterprise that we have had. The shareholders, we are told, are by virtue of their savings invested in this enterprise, but because of their inexperience, their lack of knowledge of the business, and the fact that they are only interested in what they can get in a monetary way out of it, to hand over the responsibility to the directors. The directors, no doubt, are responsible to the owners of the business, and the responsibility includes the care of the persons employed in the undertaking, looking after their conditions, and also having some regard to the national needs and the public well-being. But we learn from Deputy Hewat that one of the directors will only be a scape-goat, and that everything would be, or might be, hidden by the majority of the directors. We learn also from the Minister that the directors may be deprived of any exercise of the responsibility that the shareholders have devolved on them for the care of the business, and of the persons employed at the business, and of any social consequences that the conduct of this business may entail.
I am afraid that is true. I am afraid it applies to many enterprises, and that, as a matter of fact, the only care the directors have—the only sense of responsibility they have—is to see whether a sufficient amount of profit is gained from the industry for the shareholders.
Of course Deputy Johnson will not put me down as saying that or agreeing with it.
Deputy Hewat quite clearly stated that the director that may be appointed on behalf of the community to see that the industry was carried on in such a way as would conduce to the well-being of the community would have dust thrown in his eyes, and that he could be fooled anyhow by the remainder of the directors If that is the position of a director on this company, and I presume it is the position of the directors of any company—that he is powerless if the majority like to fool him—it is certainly a revelation, and it is well to get it from one so experienced in the ways of company management as Deputy Hewat.
I do not think I said any such thing. If I did I certainly retract it immediately.
I think we should remember that directors of a public company, particularly of a company of the kind foreshadowed in this Bill, are not going to be experts in the production of sugar. There may be one person who knows something about sugar-beet production, or even about the sale of sugar, and the marketing of it— there is quite a possibility, not by any means a certainty, even a probability —but it is equally probable that all the rest of the directors will be either ornamental or interested only in the finances and the manipulation of the finances of the company. They will have nothing at all to do with the management of the company beyond the financial side. They will know absolutely nothing about the production of beet, the management of a beet factory, or the sale of the sugar. Their chief interest will be to see whether they can have an inter-locking interest with another company, with the refinery company, with a Continental company, with a big machinery manufacturing company, inter-locking interests that will enable resources to be hidden, and generally to manipulated the share capital. That will be the business of the directors, and all the technical knowledge required will be left in the hands of one person.
I suggest to the Minister that, notwithstanding the weighty arguments— if one is thinking of factory management—he has put forward, there is something to be said for Deputy Heffernan's advocacy, that the nominee of the Ministry on the directorate might be able to frustrate, or at least be able to keep them informed, so as to be able to frustrate undesirable financial manipulations. At any rate, certain aspects of policy affecting the public that a company of this kind, or a similar company might be tempted to indulge in, could not be indulged in without the knowledge of even a single director. I do not support the proposal on the grounds that he is likely to be useful in influencing the management, in influencing the fulfilment of the trust—or, what perhaps one should say would, in a civilised community not merely a community of financiers, be a trust—but that he may be able to see that the public interest was safeguarded in whatever proposals are made by the directors.
As I say, I am not pressing support for this amendment, because I realise that in such a company ethical considerations of the public welfare and matters of that kind are not the functions of persons on whom devolve the interests of the shareholders. Shareholders do not think in those terms, and directors do not think in them as a rule, particularly in a company of the kind foreshadowed in this Bill? I just want to say that, by giving more or less general support to the idea behind this Bill, that it is desirable to develop beet growth, and sugar production, the method is by no means faultless, and the introduction of big financial interests, unless some definite check from the public point of view is imposed, may have consequences of a kind which will undo all the good that the production of sugar beet will, we hope, bring with it.
It is perfectly evident from the reception the Minister has given to every amendment put down to-day that the Government is absolutely tied, hand and foot, to a definite bargain with this firm. They have made a bargain, and will not break away from it in the slightest iota. I am not in favour of nationalisation, and neither am I in favour of Government control. I maintain that when the Government, to all intents and purposes, takes a share in the establishment of a company, it is right that the ordinary principle of private control should be abandoned, and that the Government should have a certain voice in the control. They cannot obtain control of the company but they will at least have a voice, if there is somebody watching their interests and the interests of the public, whose money is being put up. Incidentally, but perhaps more important, the interests of those who are supplying the raw material will be watched so that they get a square deal.
I understood a separate director was suggested for that.
I know. The Minister wants me to get on to that. He has been waiting for it for a long time. I have not put forward the amendment yet. I may do so on the Report Stage. I may say that a similar suggestion has been made by the beet growers in England. The idea is not original, as it was put forward by those who supply the factories in England They have a great deal of experience there, and they have been supplying for years. With that experience they decided that it would be a good thing and a safeguard to have a director appointed.
Has any one else accepted the idea?
They are putting it forward to try and get it accepted Deputy Hewat is very anxious about the rights of the ordinary recognised system of carrying on business, and is against interference of any kind by the Government. I would be with him there practically all the time were it not that the Government have interfered, and are practically financing, this factory. Approximately they are putting up £2,000,000, it is calculated, and the company puts up about £300,000—dependent on circumstances, I suggest.
The Government do not put one penny up unless sugar is produced.
I do not think it is likely a beet factory would be established for the purpose of not producing sugar. The object of the factory is to produce sugar. I see no use in pressing the amendment, as the Minister is evidently tied hand and foot to the bargain made beforehand. He comes to the Dáil, and just as in the case of the Shannon scheme, we might as well say nothing. The Dáil simply sanctions the bargain. I suggest that if such a bargain is definitely made with a company, the Dáil has a right to know exactly what the terms of it are.
In this particular matter I would like to say there was no bargain. The matter was never discussed, so we can reject the proposal really on the grounds of its foolishness, and leave all other considerations out. This sugar-beet industry will not be in any different position in relation to the Government from, say, the boot industry If we had kept the sugar tax on at the rate it was before the Budget there would be no necessity to pay a penny of a direct subsidy to these people. They would simply have the advantage of a protective tariff. They would then have been in precisely the same position as the boot people, except that they would have a ten years' guarantee. It is not suggested that we should appoint a director on every boot factory or for every clothing factory. There is really no more reason except that we have a ten-years' period in question why we should not appoint a director for a boot factory. Ordinarily, directors are there for one interest, and that is to represent the shareholders. There is no reason why anything should be concealed from a particular director, why they should not work harmoniously together. But, if you put a man in, not to represent the same interest as the majority, but to be simply a detective there, I think that it is only human nature to expect that he will be given very little information There are high political officers in other countries who do certain acts on advice, and what happens is that the people who advise meet together and decide what advice is to be given. Then the high political officer comes along, or they go to him, and they advise him on the lines they have already arranged without his presence. It would be quite possible for a director to attend every board meeting and every sub-committee, and not be able to gather any information that we could not get by means of an ordinary question. As a matter of fact, a director who is in a minority on a board, could get no information that the majority do not wish him to get. When he would ask for a return he would be told: "We do not want to be bothered with that." When he would ask for the manager to be brought up to answer some questions, they would say: "The manager is busy, let him attend to his work," and he would get no information.
Will the Minister for Finance ask the Minister for Industry and Commerce why he argued so strongly for a London, Midland and Scottish director on the Great Southern Railways?
I have no doubt he could give a very good answer.
Does not the Minister's whole argument assume that there is going to be something cloaked by the company?
Certainly that is the basis of the argument.
Deputy Heffernan's amendment is based on that. I say that if Deputy Heffernan is right, he gets no cure by the appointment of a director—absolutely none. We would have the disadvantage of being in the position that any failure would be, to some extent, ascribed to us. We would be also in the other position, that instead of the company dealing, say, with farmers or workers, purely on a business basis, we would have people coming along here and saying: "Did the Government's nominee consent to give farmers only 49/- per ton or did he agree to something else?" In every way, I think it would be much better to have no director, and certainly a director there could serve no purpose, and he would be hated by his co-directors.
I quite agree with the Minister. If the picture he has given of public companies and directors is correct, it would be better to keep out of it. If these companies are anything like the picture he paints, the less we have to do with this the better.
That is Deputy Heffernan's picture.
No. Deputy Heffernan has made a demand, and the Minister went on to picture what the realities are.
If what Deputy Heffernan asks for is agreed to?
No, but that an amount of dust can be thrown in his eyes. In fact, the amount of dust that Deputy Hewat could throw in the eyes of some person whom he does not want to know anything—that the majority of the board can throw in the eyes of the other fellows. That is the experience of the Minister. That is the general experience of everybody in the Dáil of what companies and directors are. Let us keep out of it, then. I ask Deputy Heffernan to withdraw the amendment.
Deputy Gorey has reasoned on too narrow a basis. The Minister is not really arguing from any knowledge of public companies. He is arguing from his knowledge of the Dáil, and he is putting the minority director in the position of the minority Deputy. I recognised the words. You move for a return, and the Government say: "Oh, no, we cannot grant this." I knew where we had got to. The Minister's argument, which is becoming a stock argument, is that of the infinite gullibility of mankind. One director cannot get at the truth in a company. One Geddes Committee cannot get at the truth in a Government department. We get this over and over again. He may be right. I hope he is not, for the sake of human nature. But, if he is right, what is the corollary to his argument? It is this: "Vote for this Bill now; leave everything to the Government." Three or six or nine years hence it will be: "Leave everything to the company and, to a certain extent, to the Government; do not dare to come down and presume, on the Estimates, to criticise the action of any person connected with the company; it must not be done." I hope, in contradistinction to Deputy Gorey, that Deputy Heffernan will at least divide the Dáil on this amendment.
The Minister, in refusing to accept the amendment, has drawn an exaggerated picture in regard to the conduct of big companies.
I do not know that it is necessary to emphasise it, but I said that ordinarily directors are there to represent one interest, the interest of the shareholders, and there is no reason why there should be any suspicion between them, or why there should be any refusal of information to an individual director. But, if you put somebody amongst them who does not represent the shareholders' interest, but is in the position of a detective, you can expect that he will be treated differently from an ordinary director.
I am merely coming to the point where the Minister said that if a director asked for the manager to be present at the meeting to explain something, the majority of the Board would say: "No, he is too busy," or "he is not available." It is well known that in large business concerns the manager is the chief executive officer, and, unless he gives an explanation, he must be present at every meeting of the board. Therefore, when the Minister goes that far, he is asking the Dáil to bear with him too long. It is also well known that if a director asks for a certain return in regard to working expenses, or any other matter, he must get it, and it is not left to the majority to decide whether a director will be furnished with particulars or not. I should like to hear the Minister explain why he deemed it advisable to insert sub-section (3) of Section 3. Was it merely copying what is in a British Act, and, if so, for what reason?
In order to get all the information required and that will be necessary for us to decide what line we are going to take at the end of the ten-year period, when the question of the subsidy is bound to be raised again.
Amendment put and declared lost.
I beg to move:—
In sub-section (1), line 13, to delete the words "the company's auditors" and substitute the words "an auditor or auditors nominated by the Minister."
Under the Bill, as drafted, the company may appoint auditors for the purposes of this Act, and auditors for their own purposes. I think it is not definite enough that the auditors, first, shall be qualified, and, second, that they are of a character and quality acceptable to the Minister. I suggest that it is important that the auditors shall be, first, qualified auditors, and, second, that they shall be of a character of which the Minister, at any rate, would approve. I have put down the amendment in the form that they shall be nominated by the Minister, but I can see that it might be a little less objectionable to the company if they were auditors approved by the Minister However, the important thing is that the auditors shall be qualified and shall be approved of by the Minister. Otherwise we may have the possibility that Deputy O'Connell and I, who are not qualified auditors, may be the company's auditors, or any persons with as little qualifications.
The point that Deputy Johnson makes at the end is certainly quite a good point. The auditors must be qualified auditors. I will look into that aspect of it. It would not, as the Deputy recognises, be possible to say that the company should accept the auditor that I might nominate, because that might mean that it might be compelled to submit its books to people in whom it might have no confidence at all, and it might disclose information which the company might not wish to disclose. It may well be that before the end of the ten years' period it will be possible to get offers from other people on such terms as would incline us to accept them for the erection of other factories. These rival businesses are always very jealous of their trade secrets. I think you could not expect a company to submit to the audit of its books by people in whom it has no confidence. I think the certificate of an ordinary auditor, whose certificate we take for income tax purposes, would be good enough. We have power to ask for information, if there is anything requiring explanation on the surface of the document and the accounts they give us.
I would be prepared to ask the sanction of the Dáil to alter the amendment to the word "approved" instead of "nominated," if that would meet the Minister's point.
I would like to think further over that. Anything that would ensure that he would be one of the reputable firms whose certificates are taken in the ordinary way, would be all right.
The Minister can be the judge of the qualification.
I would not like to go further than I have already gone— some qualification that would be taken in the ordinary way.
I think the Minister might make that alteration so as to safeguard the appointment of auditor —I mean to say that the appointment of auditor of the company should meet with his approval. I think this is a reasonable request, and it is not one that any company could object to— that the auditors should be people of standing, such as would be approved of by the Minister.
I will think over that and see what form of words we can get. I would say it would be the type of auditor that we would approve of for other purposes. I do not like to confine ourselves to approving of one particular firm or anything like that.
I do not want to press that particular view at all. I realise, too, that in trying to indicate a particular class of qualification in the Bill we might make a mistake. Therefore a general proposal that such an auditor shall be approved by the Minister should, I think, meet with general sanction.
For instance, there is a list of public auditors who are appointed by the Minister every year.
They are in a different category. They are for a particular class of audit, which is not company business. I am not thinking of confining the approval to them. I am thinking purely of the qualifications which will have the sanction of the Minister.
I agree on the matter of qualification, and I will see what sort of amendment we can bring up on Report.
I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 8:—
"In sub-section (2) of Section 3, line 21, to delete the word ‘general.'"
The point here is that "the general nature of such assets and liabilities" leaves the way open to a general indication of the assets and liabilities. Such a balance-sheet shall contain "a summary of the company's share capital, assets or liabilities with such particulars as will disclose the general nature of such assets and liabilities." Now, that would enable the disclosure simply to be the shares or stocks without any indication of what the shares may be or the class of share. It is too wide. "The nature of such assets and liabilities," should be wide enough. I said a few minutes ago that there was such a thing as interlocking of companies of this kind. We know that, as a matter of practice, modern company organisation has followed the course of a company having so many shares in an associated industry, and that company having so many shares in this industry, with such a general complexity of share-holdings that nobody knows by any balance-sheet or any return of a financial character that can be published, what is the real position of the company. The use of this word "general" rather encourages a company in any statement of finances, to hide the facts by a very round and bald statement. I think that any value that is to be got out of this sub-section is lost by the insertion of the word "general"—that it practically invites the hiding of the nature of the assets and liabilities, and the manner in which they are arrived at. I, therefore, move to delete the word "general," so that it shall be clear that it is, in fact, the nature of such assets and liabilities that we desire to know.
I do not think the word "general" there has got the force that Deputy Johnson ascribes to it, but I can see no objection to its removal, because it would certainly be necessary for the Minister to obtain a satisfactory knowledge from the account submitted to him. Deputy Johnson, in advocating the removal of the word "general," dealt with the ramifications and financial relations of commercial companies. I would not go so far as to say that, with the knowledge and information that the Minister has power to obtain under this Bill, any balance sheet could possibly be misleading to him. If Deputy Johnson means that he has any idea of restricting the operations of the company, I do not agree with him. He says that other associations of companies have large ramifications in connection with their businesses. Is it going to hurt anything affected by this arrangement, to build a sugar-beet factory, if they do have these arrangements? I rather think that the only aim this Bill has is to get the sugar-beet grown and to get the sugar manufactured out of the beet. I would go so far as to say that it is not material whether one ounce of that sugar is eaten in the Saorstát or not. If it were all exported and money got for it, the purpose of the Bill would be accomplished just as much as if the sugar was eaten by the people of the Saorstát. The whole assumption on which this criticism is based is that this is a company coming here with ulterior motives and for ulterior purposes. In so far as that may be so, I think the Bill sufficiently protects the interests of this country. As regards this amendment, I see no objection to the deletion of the word "general," because, in my opinion, it is redundant, and except the Minister has some good reason I think the amendment might be accepted.
This matter was discussed on the British Bill in the House of Commons. It is doubtful whether the removal of the word "general" would effect any substantial change. If it would effect a change, it is doubtful what exactly that would be. The phraseology here is taken from the Companies Acts. It is well established. It is what a company is bound to do as the law stands at present. I do not know that we would really alter the position very much, or alter what is required to be disclosed, if we omitted the word "general," and left the phrase to read "the nature of such assets." That might mean, in practice, practically the same thing as "the general nature of such assets." In any case, the sub-section should be read as a whole. (Sub-section quoted.) It would be possible to insert further requirements in the regulations. Then, there is also the power to ask questions on points that are not clear. I am not sure that the removal of the word “general” would effect anything. On the other hand, as the wording is taken from the Companies Acts, I am slow to change it.
I realise quite well that the phrase "the nature of such assets" is a wide one, and the effect of the amendment may not be very much in altering it. What I feel about it is that there is, by the insertion of that adjective, an invitation to be more general and less precise than the phrase would imply if the word "general" were not there. While it is true that subsequent sub-sections may enable the Minister to require further particulars, I think we should rather aim at having the nature of such assets and liabilities disclosed in as clear and precise a form as would be assumed to be required, without inviting too general and vague a description. The term "general nature" rather suggests that it was intended that the nature of such assets should not be defined except in one sweeping phrase—assets or shareholdings in other companies. Some general phrase of that kind would cover this term "general nature."
I believe that there would be no change if we accepted Deputy Johnson's amendment. In that faith, I accept it. It may vary the meaning very slightly.
Amendment put and agreed to.
I move:—
Amendment 9.—In sub-section (4), line 27, after the word "account" to insert the words "or other financial statement."
The section provides for financial statements other than balance-sheet and profit and loss accounts, which may be asked for, but only profit and loss accounts and the balance-sheet are to be laid before the House. My desire is that any such statement that may be required by the Minister should be laid before the House in the same way. I think it is obvious that if there is any purpose to be served by presenting a copy of the balance-sheet and profit and loss account, it is at least equally desirable that any other financial statement which the Minister may require should also be laid upon the Table.
I am afraid I cannot agree to that. This other statement that may be required will enable us to be certain and to assure the Dáil that the profit and loss account and the balance-sheet, as far as they go, are accurate; and not merely accurate in the sense that balance-sheets drawn up by reputable people always are accurate, but that they are not misleading to the unwary. We could not undertake that matters of a confidential character, which the company might be obliged by our questions to disclose to us, should be made public to their rivals, or should be made public in any way. I do not think that would be reasonable No company in the ordinary way of business could afford to do that. Anybody who will reflect for a moment will see that it might be highly inconvenient and highly injurious to a company to have confidential information broadcasted. The whole purpose of this information is not really to deal with some of the matters which Deputy Johnson adverted to this evening, but simply to let us know what terms we should give to other people who might apply for permission to erect factories, if we thought it well to have additional factories, and what terms we might agree to give this first company at the end of its period; it is for the purpose of letting us know to what extent our subsidy is sufficient or is more than sufficient. I do not think we are much concerned with other matters that are interesting to students of economic and social questions.
Amendment put and negatived.
I beg to move:
In sub-section (6), line 37, after the word "includes" to insert the words "any person and."
In Section 1, sub-section (3), we read: "Every subsidy paid under this Act in respect of any sugar shall be paid to the person by whom the sugar was manufactured." The term "person" appears in several cases. In Section 3 we read "every company," assuming it shall be a company that is to be subsidised, and not assuming the existence of any person as being a possible recipient of a subsidy. The term "company" appears in several sub-sections. I desire to include in the definition sub-section that where the term "company" appears, it shall include any person or any incorporated body. There are other ways in which this might be done. One would be to include in each of the preceding sub-sections the word "person" or "company"; but by putting it into the definition clause it might serve all the purposes necessary.
There is, perhaps, matter in this amendment that requires looking into. I am not sure that it might not be better to provide in a section or sub-section to be introduced on Report that these subsidies should really be given to a company only. There are some objections which were suggested by the draftsman to the adoption of an amendment in the form which has now been proposed I promise to consider the matter and meet in some way the point raised by Deputy Johnson, in whatever way is found best on examination.
Amendment, by leave, withdrawn.
Question—"That Section 3, as amended, stand part of the Bill"— put and agreed to.
SECTION 4.
The Minister may by order make regulations for all or any of the following purposes, that is to say:—
(a) prescribing any matter or thing which is in this Act referred to as prescribed or to be prescribed by regulations made under this Act;
(b) prescribing the requirements, agreements, and evidence to be complied with, entered into, or given by persons claiming or intending to claim subsidies under this Act for the purposes of proving their right to and the amount of such subsidies.
Before we pass from Section 4, I thought I had sent in an amendment suggesting that there should be inserted in this section a provision to the effect that amongst the regulations which may be made by order there should be one prescribing the form and nature of the balance sheets or accounts to be furnished as required by Section 3. Section 3 sets out that there shall be balance sheets and profit and loss accounts submitted, and certain regulations may be made indicating how they should be drawn up. But then we read in Section 4: "The Minister may, by order, make regulations for all or any of the following purposes." Unless it is said that paragraph (a) fulfils all the requirements, I think it will be necessary to show that the form and nature of the accounts and balance-sheets that are required should be amongst those things which the Minister may by order make regulations for.
I think that matter is covered: "Any matter or thing which is in this Act referred to as prescribed or to be prescribed by regulations."
Question—"That Section 4 stand part of the Bill"—put and agreed to.
SECTION 5
(1) If it is found at any time that any person has obtained any payment by way of subsidy under this Act to which or to part of which he was not lawfully entitled, the amount of that payment or of that part of the payment may, irrespective of the amount thereof and without prejudice to any criminal liability in respect thereof, be recovered by civil proceedings at the suit of the Attorney-General of Saorstát Eireann in either the High Court, the Circuit Court, or the District Court.
(2) In any proceedings under this section a certificate in writing signed by the Minister stating that a person has obtained a payment of specified amount by way of subsidy under this Act and that such person was not lawfully entitled to such payment or to a specified part thereof shall be conclusive evidence of those matters as stated in such certificate.
I beg to move:—
Before Section 5 to insert a new section as follows:—
"(1) At the expiration of the period of ten years fixed by Section 1 of this Act the assets of any undertaking engaged in the manufacture of sugar in respect of which a subsidy has been paid under this Act shall be valued by a valuer appointed by agreement between the Minister and the person or company owning such undertaking or, failing such agreement, by the Chief Justice of the Supreme Court.
(2) Upon the completion of the valuation there shall be allotted to the Minister, to be held in trust for the State, shares in the undertaking equal in value to one-half of the aggregate amount paid by way of subsidy.
(3) In the distribution of any profits of the undertaking in excess of the amount necessary to pay interest at the rate of five per cent. per annum upon the assets not allotted to the Minister, the shares held by the Minister shall rank equally with those not held by the Minister."
This amendment is a much more important one, and it raises a question of principle and public policy. It is proposed by the amendment that, at the expiration of the ten-years' period, account shall be taken of the amount of subsidy that has been paid to the company, that credit should be taken of that amount, and that it shall be deemed to be, in part at least, capital provided by the State to allow the company to carry on its business. I think it is quite correct to state that a subsidy of this kind is in the nature of capital advanced, which may be required for spending, perhaps lavishly, for the purpose of creating a goodwill and creating a business. My proposal is that a proportion of the subsidy shall be treated as having been capital advanced. The proposal is that at the expiration of ten years the assets of any undertaking engaged in the manufacture of sugar in respect of which a subsidy has been paid under this Act, shall be valued by a valuer appointed by agreement between the Minister and the person or company, or, failing such agreement, by the Chief Justice of the Supreme Court. The valuer shall complete the valuation, and there shall be allotted to the Minister, to be held in trust for the State, shares in the undertaking equal in value to half of the aggregate amount paid by way of subsidy. Then, in the distribution of any profits in excess of what would pay five per cent. upon the company's assets, other than those provided out of the subsidy, shares held by the Minister shall rank equally with those not held by the Minister.
It is my view that the subsidy paid over is in the nature of capital expenditure, that the State is prepared to forego half that capital expenditure at the end of the period, but as to the other half that it shall participate in the assets of the company, and that its shares shall bear the proportion of the profits that might ensue after 5 per cent. has been paid on the shareholders' capital. I think that is a very reasonable proposition. It will enable the State to get some advantage from the subsidy in addition to the indirect advantage that will accrue through what is hoped to be an improvement in agricultural production. It is quite reasonable, I suggest, that the State should become part-owners of an industry, a corporation, and the assets of a corporation, which is only being made possible by the expenditure of State moneys. Very moderately I am suggesting that in any case after the ten years' period has elapsed, the shareholders' investments will be entitled to 5 per cent. as a first charge on the profits, and that after that 5 per cent. is paid on a kind of Preference share, that the State share will rank equally. I submit that is a reasonable proposal, and that it should not be objected to by any company making any arrangement of the kind if it is intended that the company shall be a permanent acquisition to the State: if it is intended to be anything more than a flash-in-the-pan arrangement for the purpose of skimming the cream and then letting the separated milk down the gutter or to feed the pigs. The assumption is that the business to be established will be one for the benefit of the State and shall be a permanent one. On such an assumption it is reasonable that the State will rank as part-owners of the company by virtue of the sums of money they have paid as subsidies. I therefore move the amendment.
I have stated my belief that it is really too much to expect that at the end of the period of ten years the company, having received this subsidy of 22/- for so long, can suddenly carry on without a subsidy. I believe that for some period, shorter or longer, some perhaps very much less subsidy, but still some subsidy, will have to be paid. If the case is not that, and that does not represent how the matter will stand, certainly extraordinary progress will be made during the coming ten years. If we still have to pay a subsidy, then it means that if we alter the capital in this way, we will have to give a larger subsidy than otherwise in order to pay the interest on our shares. If this company succeeds to the extent of having much more than 5,000 acres under cultivation, supposing it succeeds to the extent of having 8,600 acres under cultivation, it would mean about £2,000,000 of a subsidy. It would also mean that the capital of the company would have to be watered to the extent of £1,000,000. Probably the genuine capital in the company, even with the extension required to deal with that larger acreage of beet, would not be more than £400,000 or £500,000. In commercial undertakings where risks are involved, where the future is uncertain, where attention has to be given to many details, 5 per cent. is not regarded as anything like a reasonable interest. In any commercial undertaking with these risks the interest has to be higher than, say, in the case of the National Loan or the British War Loan. They would have to pay double the interest.
For every £1 that went in paying interest above 5 per cent. to bring the interest up to 8 or 9 per cent., or what would be regarded as reasonable by the Government in its dealings with the company, you would have to pay £2 interest on the watered capital. That would result in having an abnormal subsidy. Dealings with other factories that might be set up, would be made much more difficult by having this artificial subsidy, part of which was coming back to the Exchequer in interest on this watered capital that was put in. I think that would create a very undesirable position, and even when you do get to the stage when the subsidy would not be required, you would have the position where you might have your industry really bankrupt by the over-capitalisation that would be created. You would be probably in a position in normal times where the company could actually manage to pay very little over the 5 per cent. They would, however, take up the position that, rather than pay £2 to the Government for every £1 their shareholders got in addition to the 5 per cent., they would try to make a few appointments, perhaps sinecure appointments of shareholders, manipulate the thing in some way, or perhaps enter into contracts with some other company, and get the profit through the other company. At least, you would have the temptation to have all sorts of devious methods resorted to for the purpose of avoiding the liability to pay £2 to the Government for every £1 they made themselves. When we know the efforts that people resort to, to avoid paying 5s. in the £ income tax, I think you can expect that a company would go to great lengths to avoid making money, two-thirds of which would go to the Government. I do not think that it would work. I think that we must look upon the establishment of the industry as our return.
Might I suggest to the Minister that he is mis-reading the proposal. It is not suggested that the State contribution would be doubled.
No, but that is my argument. I suggested a company with an average over the ten years of say, 8,600 acres. Then, roughly, half the subsidy paid would be a little less than a million pounds. I said that even allowing for the extension of the plant, such an increased acreage would mean double the capital. The capital would not be more than £400,000, probably, and the water would be double the original capital, so that there is some margin.
Sub-section (1) distinctly says that the valuer shall value the undertaking.
Well, assuming that it was kept up to the mark as it would presumably be.
The valuer would value the undertaking, and the shares held by the company and the shares held by the State, if the subsidy was sufficient to allow of it, would rank equally; they would be equal in amount, and only after the five per cent. had been paid on the shareholders' capital would the State come in.
It is quite probable at the end of the time that the valuer would say that the State would have no value at all. I think that would be the position at the end of the ten years, if you take that view of it.
Then the five per cent. is worth nothing?
I can make nothing out of it than that there shall be shares in the undertaking equal in value to one-half of the aggregate amount paid by way of subsidy. So that as far as I can see, the case might easily be worse than I suggested, that the amount of water might be ten times the amount of the shares representing the value of the undertaking held by the company, and in that case all the arguments I have been using are greatly reinforced, and the position then is that you would absolutely force your company into some fraudulent method of dealing with it; it would take care only to have five per cent. and to give the profits to the shareholders in some other way.
But the shareholders would surely have some voice in the management then?
Well, if it is meant that the Government should take it over, I think they could do nothing but mess it. I have no belief that at practically any stage in an industry like the sugar industry, the Government could make a success of it. We must look as a return for our money, to the creation of the industry, just as public money had actually been spent in the erection of boot factories at present, and we are looking for nothing but the creation of boot factories. We are looking for nothing but the creation of a sugar-beet factory, and in proportion as the first factory is successful, we will get better terms for the subsequent factories, if it would seem that the industry is capable of being established here. I think we cannot look for any other returns except future factories.
Could the Minister tell us how the public money is being spent in the building-up of the boot industry? Is any subsidy being paid to boot factories?
Deputy Cooper is paying a subsidy any time he buys a pair of boots, except he smuggles them through the Customs.
Deputy Cooper has not bought a pair of boots for eighteen months; he has made his old boots do. But there is a great difference between a subsidy and a protective tariff. The Minister for Finance must realise that a subsidy depletes the revenue and a protective tariff increases it.
I hope that Deputy Johnson does not view this action of the Government in the light that the subsidy that is proposed to be paid is to be everlasting, or that it is not possible that the industry will be put on a permanent basis by the subsidy for ten years. If, at the end of ten years of subsidising, the industry is not in a position to stand on its own legs, I say that the money that will have been expended by way of subsidy, will have done no permanent good. I wonder do Deputies realise that the real question of the success or otherwise of this undertaking lies in the ability of the beet-manufactured sugar to compete in the market with cane sugar.
Mr. HOGAN
No. The factories, too, compete with the beet sugar, which is subsidised in every country in Europe except in Holland.
The competition of all those countries in Europe, including Holland, really lies as between beet and cane sugar.
Mr. HOGAN
I think so. The Minister may be right in saying no, but I say the price of sugar in the world market is a factor, and that price is not made and will not be made for any one country for its home consumption. The price of sugar must and will be regulated by countries in a position to export sugar.
Mr. HOGAN
Where it is all subsidised.
That is immaterial to the argument. The growth of manufactured beet sugar in Europe throws an extra quantity of cane sugar on the market available for export. The price they are prepared to take for their sugar is going to be the controlling factor for all other sugar produced. The whole point in this argument is that the world price must be the price in whatever factory you establish, that is the price which the exporting countries are prepared to sell their sugar at in the country to which they export it. That question is still to be decided to-day in every country in Europe. That is the contest that is going on to-day in every country in Europe, and unless you, as well as the other countries that are producing beet sugar, are going to put a prohibitive tariff on cane sugar, and shut it out, the success of your beet-sugar factory lies in the world price of sugar. I maintain that, even if the Minister for Agriculture argues that there is no difference.
I think that is incidental Amendment 11 provides for Government participation at a certain stage in this industry. My contention is that at a certain stage in this industry, say at the end of ten years, the production of beet sugar having been subsidised in the meantime, if the factory is not prepared to carry on without a subsidy, the Government, as far as the amount for the subsidy for beet is concerned, have paid away something which may be of a temporary benefit, but is of no permanent good to the country at all.
I move to report progress.
