This amendment, put down by Deputy Johnson, is on the lines of extending the operations of the Act. Deputy Johnson, last night, in presenting his amendment, based his arguments on the Interim Report of the Committee of Public Accounts. He gave as a reason for this amendment to extend the powers of the Minister, cases which were queried in the first instance by the Comptroller and Auditor-General, and then commented upon by the Public Accounts Committee. I think the argument Deputy Johnson put forward for his amendment was that the Minister himself must have intended that the scope of the Bill should be greater than the original Act seemed to contemplate; that in connection with the advances made under the Trade Loans Act the Minister had gone beyond the Act by advancing money for capital purposes. It does not seem to me that that is a sufficient justification, nor is it desirable, I think, that the powers under the amending Act should be extended. I think the reverse ought to be the case, and when Deputy Johnson argues on the lines of what has been done under the original Act he must take cognisance of the fact that everything done under the original Act is claimed by the Minister to be within the ambit of that Act. The Minister is, of course, fortified by the opinion of the Attorney-General on the matter. The purport of Deputy Johnson's amendment really is that he himself considers that it would not be undesirable that a large number of concerns should come within the Act which at present are obviously ruled out.
IN COMMITTEE ON FINANCE. - IN COMMITTEE ON FINANCE.
I did not specify a large number or a small number.
I stand corrected. Shall I say some? I do not think it would be desirable to hold out such a hope. After all, I think it is a hope that would not be fulfilled, because I think the Minister and the Advisory Committee would take a prudent view of any application that came on for a loan or an advance. I do not think it would be wise to hold out a hope to all and sundry that an application, on account of a concern needing money, would be accepted by the Advisory Committee, and agreed to by the Minister for Industry and Commerce and the Minister for Finance, unless the specific object of the loan was for a new undertaking or extension. I look upon this Act as an entirely temporary measure to deal with a temporary state of affairs. The limitations that ought to be put upon advances made in this way ought to be very strict and very stringent. I do not think it is desirable the State funds should be made available for trade purposes generally speaking. In fact, I go further, and say it ought never to be the case. When one considers the original object of and the atmosphere in which the Trade Loans Act was passed, in the first instance, in Great Britain, one must make the reservation that the situation that called for that Act was really a state of desperation caused through the collapse of the general commercial routine. One must remember, in this connection, that Great Britain is an industrial country, and that the depression in trade there bore very heavily in connection with the unemployment question with which they were faced. Any measure that could hope to deal in some way with the position of affairs as it then was would be welcomed and accepted as an exceptional measure dealing with exceptional state of affairs. But when we in this country passed our original Act, I do not know if the intention in the mind of the Minister was to create a large body of credit, in other words a large inflation of capital. I think the necessity did not exist to the same extent here as in Great Britain. If I was asked my opinion about the continuance of this Act I should have to say that on commercial lines I think it is unsound. Deputy Johnson's amendment to extend the operations of the amending Act beyond the terms of the original Act seems to me to be a retrograde step, and for that reason I do not think the House ought to accept it.
In extending the original Act for a further period a closer examination of applications for grants should be made by those responsible. I do not think Deputy Johnson is entirely in favour of his own amendment. I think the principal object in moving the amendment is to get a pronouncement from the Minister for Industry and Commerce as to the scope of the amending Act, when it comes into force. I think we would also expect from the Minister some reference to the guarantees that have already been given. I think it is not unreasonable for the House to expect that the Minister will outline a policy as regards the future operations under the Trade Loans (Guarantee) Act and whether the policy is to be a continuance of that already adopted. Does the Minister think these operations should be extended, or do his views coincide with mine in thinking that the operations of the Act should be curtailed? In any event, the circumstances surrounding applications should be very closely examined. We must recognise that, throughout the country, there are many traders who would be very glad to get the assistance of the Government in raising money in order to extend operations or to carry on. In many cases, even where there were excellent applications, when examined into, it is doubtful if these concerns would be in a better position ultimately. The extension of the guarantee in such cases might probably not be in the interests of these people.
I take a position in relation to this Bill somewhat midway between the position of Deputy Johnson and the position of Deputy Hewat. I do not feel that the Bill is one which we can abandon now. I think such facilities as it does give are necessary until better arrangements can be made. I hope a very much better arrangement will be made before any great interval of time. On the other hand, I would not like to extend the scope of the Bill, as suggested by Deputy Johnson, and I see no need for doing it. As regards what is meant by a capital undertaking, the position is perfectly clear now and requires no amendment of the Bill to clarify it. It may be that when the British passed their Act they attached a certain meaning to "capital undertaking." That meaning may or may not have been present in the minds of Deputies here when our original Bill was being passed. But, when a question arose in regard to the interpretation, as to whether capital undertaking included the acquisition of some sort of concern as well as the creation of a concern, we had advice from the Attorney-General in relation to that, and when the Bill has been so far administered on the basis of the wider interpretation of capital undertaking, we do not require any amendment at the present stage. We know what the section means. We know to what it can be applied, but, if we adopt a new section, we may have once again all the difficulties raised in regard to this; we may have on a new section some question of interpretation. We may have the Attorney-General giving an opinion, and we may have the Comptroller and Auditor-General disagreeing with that opinion. We may have proposals for further amendment. I think all this has occurred is an argument for sticking to the section as it stands.
We are satisfied that the section as it stands enables us to do what we think it desirable to do at the moment. To some extent it would, perhaps, be easier to administer the Bill if we narrowed the meaning of the section and put in words to bring it back to the meaning that, perhaps, the British gave it. On the other hand, to widen it, as is suggested by Deputy Johnson, would increase the difficulties of administering the Act. I think it is an extremely difficult Act to administer rightly and in such a way that no exception can be taken. If we were to include the provision of working capital for undertakings, in my view it could not be in any reasonable way administered by the machinery available. Some other sort of organisation rather than a Government Department, and civil servants who are not dealing with ordinary business problems, would be necessary for dealing with the guaranteeing or the provision of working capital. As a matter of fact, the facilities given under this Bill can only be regarded as just the best we can do now. I hope that, as a result of the work of the Banking Commission, proposals will be put forward which will meet the requirements of long-term credit that are not very well met at present. I would not like to be in the position, as Minister for Finance, of having to sanction or in any way deal with proposals for the guaranteeing of money to be used for working capital.
Will the Minister say why?
Really, because the Act cannot be administered at all on the rigid basis on which an ordinary Treasury matter would be dealt with. I believe if the Act is to be worked at all discretion has to be exercised, something like the discretion that a business house or a banker would exercise. That is not easily exercised by a Minister or by a civil servant, and it would be distinctly more difficult to exercise if you are dealing with working capital. If you can guarantee a working capital you are in a position where the Act would enable you to run a business and simply appoint a manager. You have no definite line laid down which is the condition under which a Government Department can best operate. Where there has to be some sort of personal discretion that is better dealt with by a financial or banking corporation of some sort. A Minister, where he has a rigid line laid down, where one side is right and the other side wrong, can deal with it very easily and need not pay any attention to any pressure that may be put on him. But to have the position as I remember it when discussing one of these loans and the giving of sanction —having the corridor outside my door filled with a deputation—does not create the best atmosphere for dealing with these things. If we are going to extend the scope of the Bill and enable loans to be given for working capital, I have no hesitation in saying that the Act could not be properly administered. You never could get it administered properly.
The interpretation given by the Attorney-General of a capital undertaking made it as wide as any Act that could be worked successfully with the Government machinery, and with the machinery that this is to be worked by. As I say, even that, I would hope, could be dealt with by some other provision than this. In the meantime, as against what Deputy Hewat said, we had no other provision to deal with these cases. There were a certain number of businesses that would never have been undertaken, and a fair number of businesses that would perhaps have collapsed if we had not this, and until some other arrangements are made I am in favour of working this as we have been working it heretofore. I see no objection to letting the wording stand. Now that we have a legal opinion as to what the section means there is no objection to letting it stand as it is, but there is objection to altering the words, because in the past there has been a dispute about it.
We are discussing an amendment by Deputy Johnson to insert the words "and to modify the conditions" after the word "time" in line 3 of the motion by the Minister for Finance. I have not heard any ruling and would like to know how far does the further consideration of Deputy Johnson's amendments to the Bill depend upon the passing of this amendment to the financial motion. I take it that these amendments could still be discussed even if this amendment to the financial motion were defeated.
The following amendments stood in the name of Deputy Johnson:—
To insert before Section 3 a new section as follows:—
"(1) Sub-section (1) of Section 1 of the Principal Act is hereby repealed and in lieu thereof the following is hereby enacted:—
"If the Minister for Industry and Commerce after consultation with an Advisory Committee nominated by him in conjunction with the Minister for Finance for the purposes of this section, is satisfied that the proceeds of any loan proposed to be raised, whether within or outside Saorstát Eireann by any public authority or by any corporation or by any body of persons corporate or unincorporate or by any person, are to be applied towards or in connection with the carrying out of any capital undertaking or towards or in connection with the carrying on of any manufacturing industry or in connection with the purchase of articles manufactured or produced in Saorstát Eireann required for the purposes of any such undertaking or industry, and that the application of the loan in the manner proposed is calculated to promote employment in Saorstát Eireann, the Minister for Industry and Commerce may guarantee in such manner and from and on such terms and conditions as he shall think proper, subject to the limitations hereinafter imposed and subject to the sanction of the Minister for Finance, the repayment of the principal of such loan and the payment of the interest thereon or the repayment of such principal or the payment of such interest.
(2) Sub-section (4) of Section 1 of the Principal Act is hereby repealed.
Before Section 3 to insert a new section as follows:—
The Principal Act shall be construed and have effect as if Section 8 were amended as follows, that is to say, by the deletion of the words "capital undertaking means an undertaking involving expenditure for or in connection with—
(1) constructional works of public utility calculated to produce revenue or (2) the creation of new assets of the nature of plant, premises or machinery intended for use in the production, transport or distribution of commodities."
I have proceeded on the assumption that the two amendments which would enlarge the powers of the Minister would not be discussable if this amendment on the motion were defeated. But, I think, on the other hand, that the amendment to the definition would be discussable on the Bill.
Might I put it this way: The financial motion has reference mainly to an amount of money and the granting of money. It says: "That for carrying out the provisions of any Act of the present session to extend the limit imposed by the Trade Loans (Guarantee) (Amendment) Act, 1925, on the giving of guarantees." It says nothing about different conditions. Does the absence of any phrase in the preamble to the financial portion preclude amendments later to modify the conditions?
Again, might I explain? The position I have taken in the matter is that inasmuch as the present Bill is merely an extension of the amount of money and the time during which the Principal Act will operate, an amendment to the Bill in Committee which would really be an alteration of the Principal Act would not be in order. That is the view I have taken.
Does the Ceann Comhairle accept that view?
Yes, There are two separate questions. One is as to whether an amendment to the Bill would be in order, in view of the terms of the money resolution. The other is, whether a particular amendment in Committee to this amending Bill would be within the scope of the amending Bill. It has been laid down over and over again that when you bring in an amending Bill, that is a Bill intended to amend a Principal Act, you cannot, in Committee on the amending Bill, introduce amendments which, while amendments of the Principal Act, are not within the scope of the amending Bill which has received a Second Reading. On that basis, given the title of this Bill, and give the substance of this Bill amendments to alter the conditions under which guarantees may be given would appear to be out of order. But, if in authorising the expenditure of the money the Committee thought fit, and the House approved on Report, to alter the money resolution so as to give authority in the way sought by Deputy Johnson, that would alter the matter in Committee on the Bill. What is happening now is that I am allowing Deputy Johnson's amendment to the money resolution, and since his amendments to the Bill might be held to fall—at least one of them will certainly fall—on this amendment, the explanation of this amendment to the money resolution involves a discussion of the proposed amendments to the Bill itself.
Of all the amendments?
Of all the amendments?
I wanted to have that point made clear, because I would like to take Deputy Johnson's three amendments together. I imagine from what Deputy Johnson has said that his first position would be that he wants all the three passed, that the three have to be put together to give a Bill which in its entirety would be up to what he thinks is proper. I put it to him, for instance, that he could definitely move to take away sub-section (4) of Section 1 of the Principal Act, and that he need not necessarily go on to move, what really is an amendment to sub-section (1) of Section 1 of the Principal Act, the words "towards or in connection with the carrying on of any manufacturing industry": that there are, in other words, two positions in regard to the Principal Act. You might simply wipe out sub-section (4) of Section 1, which would mean that you take away the prohibition against guarantees for working capital. That is the position taken up in the corresponding legislation in Britain. Deputy Johnson has, however, gone further; he wants to put in sub-section (1) of Section 1 of the Principal Act an addition by inserting the words "towards or in connection with the carrying on of any manufacturing industry." Then later we have a definition of the words "capital undertakings." There are three propositions and they may be looked at simply from two points of view; they simply take out the prohibition against guaranteeing working expenses, and not merely do that, but say positively that the proceeds are to be applied "towards or in connection with the carrying on of any manufacturing industry." I presume that there is bound up absolutely and entirely with that second amendment, the amendment to sub-section (1) of Section 1 of the Principal Act, which is limiting the amendment of Deputy Johnson by way of definition. I would like to be clear on that matter.
Again I make a clean breast of it. The definition that I put forward was anticipatory of the Minister refusing to enlarge his powers by my earlier amendments. If he refuses to enlarge his powers I want him to be confined to what I conceive to be the real meaning of the section as it stands in the Bill.
I am definitely against repealing sub-section (4) of Section 1, which introduces this matter of guaranteeing moneys that are going to be used for working expenses. While that is so, I do not want to speak too strongly against it, because in certain contingencies I might find myself coming to the Dáil asking for some such amendment as Deputy Johnson is now proposing. I would consider that an unsatisfactory way to meet certain difficulties which we found arising out of many application that have had to be withdrawn from before the Committee because they dealt with working capital. We have already appealed to the Banking Commission, and put up to it that the working of this Act has been disappointing in its results. The number of applications that have come before us under it, and that have had to be withdrawn by reason of working expenses being a necessary item, as well as the big number of applications we have received show the necessity for some provision by way of long-term credits for business or industries. In the last eventuality, if there does not proceed any suggestion from the Banking Commission, it might be taken up by financial houses here. Then, I believe, I would have to come later to the Dáil—possibly explaining it as the worst means of meeting it—but asking them, nevertheless, to grant some such liberty as would be given if Deputy Johnson's second amendment were carried. At the moment I would urge against that. I would have great hesitation at any time in asking for it, and I certainly do not want to ask for it this time, until, if I may put it without offence, the Banking Commission has failed me in this respect.
The third amendment is to interpret capital undertaking to two very limited points. Deputy Johnson thinks that this is what was meant when the original Act of 1924 was passed. I doubt very much if that was the clear intention of anybody in the House when the 1924 Act was passed. For instance, let me take a point on which it was argued that it should be merely for the purpose of increasing employment—in other words, if you saw a place of business that had been giving employment to a considerable number of men had closed down, or was running on short time with the result that only one-tenth of the former employees were at work, that you should not consider that as within the terms of the Bill, but some better handling of that business which would give employment to the fullest number ever employed on that undertaking before—I doubt if anybody ever had that clear distinction put before him when we were passing the 1924 Act. I doubt if the 1924 Act would have been accepted if any limitation had been put upon it in that way. I do not think that any such limitation should be accepted now.
Would the Minister explain the meaning of sub-section (4), Section 1, as regards working capital in that case?
I can see that Deputy Johnson is seeking to put me into a dilemma. He must mean that the only reason why an undertaking was not running to its fullest capacity and was not employing the fullest number of people that might be employed in it, was the failure of money for working expenses, but that is not the case. I do not think there is anything contradictory in what I have said, and in still keeping in sub-section (4) of section 1. You can be very definitely against the provision of money for working expenses, and yet see such a thing as has happened in the Alesbury case, which I still hold, despite all that has been said about it, was not the provision of money for working expenses. I do not see any necessity for tying us up so tightly. I do not think it was ever meant as the position of people who hoped that not merely was it meant, but that actually there was something corresponding to this in the 1924 Act, and that there has been some enlargement of it by the Alesbury transaction. By the opinions that have been given upon it there is something to be said for that type of person seeking to bring it back to the original and having it more clearly defined, so as to prevent a thing of that kind occurring again. I am still of the opinion, and I am fortified by the opinions of two holders of the office of Attorney-General, that the thing was right and that it was within the Act. We have a definition now of what the Act meant. I say we should be in a position to continue the grant of loans to cases of the same sort, and we have that power under the Act without any enlargement such as Deputy Johnson wants to put in, but not if you put in this limitation proposed by amendment 3. Deputy Johnson moves beyond the British limitation to which he has referred so frequently by inserting in the main section "towards or in connection with the carrying on of any manufacturing industry." The British legislation has no provision against guaranteeing moneys to be used for working expenses. They have no provision corresponding to sub-section (4) of section 1 of our Act. The fact is, no money has been guaranteed under that except for capital undertaking.
In the British Act the term "capital undertaking" is there, and consequently it would not be considered right to use it for working expenses.
We have also capital undertaking in our Act.
But with a different interpretation.
We have it defined in a particular way.
So have the British.
The fact is we have it defined there. Although we have no provision against working expenses which is not found in the British Act we have still got an Act which apparently is more flexible than the British Act. I take it that Deputy Johnson is putting in these words for a very definite purpose, for "carrying on manufacturing industries." If we merely dropped the section which is against working expenses, we might then still carry on as before, and our Advisory Committee might always refuse to consider any application when they found that the money was really to be loaned for working expenses. Deputy Johnson wants to take that out and to insert: "Towards or in connection with the carrying on of any manufacturing industry." That would have this effect, that it would be almost impossible either for myself or the Minister for Finance to refuse an application no matter how firmly convinced we were that the whole money was going to be used for working expenses.
What about the security?
I am granting some type of security, but it would never be of the type of rigid and good security of fixed assets. Again when you give money for working expenses you have the security to a certain degree lessened. That is the difficulty we have, that we cannot understand just what security there would be for money advanced in that way. To leave out sub-section (4) of Section 1 would still leave a certain very big discretion with the Advisory Committee, the Minister for Finance and myself, and we could make it a rule in our dealings with these applications where working expenses were really in question that we were going to have nothing to do with them. If we have to take it as the wish of the Dáil that we should consider the provision of money for working expenses on pretty much the same footing as the guaranteeing of money for capital expenditure purposes again I do not want to be put in that position—very definitely not—but to a certain extent I lean towards some of these amendments, but for a different reason to what Deputy Johnson has put forward. I am afraid that the net effect of the comment of the Auditor-General, with the addition of what the Public Accounts Committee had to say about the particular case, will be this, that the Advisory Committee for the future will probably operate more rigidly and in a more conservative way than any bank; that to a certain extent the comment of the Auditor-General has pretty well spoiled the effect that might be looked for under the continuance of this Act.
I am afraid that will be the result, and I think it is bound to be the result, upon the new Advisory Committee who will have heard of this thing, and certainly will have to be advised of it. The new Committee will, I believe, react to it in that way. There will be the further result that the new Advisory Committee will have to have everything looked at in the most rigid and conservative way. I do not suppose there is any Act about which I have received so many representations and complaints from Deputies as this Trade Loans (Guarantee) Act. I have not the exact figures here, but if one were only to take the number of applications received, and set against it the number of application considered by the Advisory Committee, to see just what was the cause of complaint with Deputies here, I should say that more than three-fourths of the entire number of applications received were only what I might call considered by the Advisory Committee—using "considered" in this sense, investigated with the view of getting the fullest facts to see whether the security was good enough or the proposition a sound business one. Preliminary investigations showed there were certain difficulties, that it was money for working expenses that was required, and so on, and on that account a number of applications fell.
A small fraction of cases simply went by the board, and in any event the type of applications we got in the first few weeks after the Bill became law were somewhat of the nature of "I hear you are advancing money for certain purposes and I want some of it." They simply stated an amount that they wanted to go on with. Outside this sort of foolish case which would have gone by the board anyway, there were a number of good applications which were ruled out because of things that came to light in the first investigation. Only a limited number came in for detailed consideration at all. It may be that when the new Advisory Committee gets working, investigates the cases that have already been passed, sees how these loans are working and how far the State guarantee is likely to be called on, they may then begin to operate the Act, as it had been operated by the old Advisory Committee, and that is what I would aim at. I think the old Advisory Committee did their work well and safeguarded the State by putting up propositions only after they had considered them carefully, and passed good judgment upon them. While they did not act in any haphazard way, or give recommendations on loose cases, they certainly did not act at all with the same sort of rigid conservatism that generally marks the financial houses of the country.
Deputy Hewat asked as to the scope of the amending Bill, and as to my opinion on the guarantees already given. I cannot give any further incations received, and set against it the number of applications considered by formation on the guarantees already given, except this, that they have met with the approval of the Advisory Committee, of myself, and of the Minister for Finance, and our opinions are more or less expressed by the fact that we have given our approval to them. I do not think Deputy Hewat would ask me to take any single one of them, and say with regard to it whether I think it likely or not the State will be called upon at any time to meet its secondary liability on the matter. I do not think the Deputy would ask me to advance to that point. Another question was on a matter of policy under the Bill: Is the extension proper, are the operations of the Trade Loans Act to be enlarged or diminished and should applications be rigidly examined? As regards the letter, I can answer it easily. Applications have been very carefully examined, I will not say rigidly but carefully examined, and have been subjected to very definite criticism in the two Departments after they came from the Advisory Committee. As to its operations being enlarged or minimised, I feel that its operations are going to be minimised, and that the Bill is going to be defeated to a certain extent by what has happened. I never expect to get back to the state of progress that had been attained before the old Advisory Committee went out of existence. I would not call for any enlargement in the sense of Deputy Johnson's amendment or any curtailment of the powers under the Act such as would be given by Deputy Johnson's third amendment.
In the growth of operations this temporary Act will either have to be dropped at an early stage or continued as a permanent measure. What has the Minister to say on that?
I stated on the Second Reading that at about Christmas time I had made up my mind that it should not even be extended to this year. Then I came to the conclusion, because a number of applications began to come in, and because it was seen that the applications already in hand could not be completed before the expiry of the present Act, that some extension was necessary, and inasmuch as the report from the Banking Commission, which may establish a new state of things, could not be expected before the expiry of the present Act, I decided to move forward for an extension to this year. I think that shows my mind. I did not by any means regard it as a thing to be continued from year to year.
Are you still limited to one million pounds?
Yes. Deputy Hewat asked me are we going to look on the Trades Facilities Act as a measure which may be limited by amount and by a period of time, and whether it may be considered as one of the Bills to be renewed from year to year. In other words, does he mean that when we limit a single Act as to time we will always consider the grafting on of the new Act to the expiring one? I do not think that ought to be the case. It is only to meet an emergency that this type of legislation ever came about.
Can the Minister give us the figures showing the total amount that has been guaranteed, the total amount that has been passed by the Advisory Committee, by the Minister himself, and the Minister for Finance?
I think I gave that figure before—£111,000.
That is not exactly what I mean. The Minister gave the figure of £111,000 as regards loans in which a guarantee was given. The Minister says he divided the loans into four sections, putting first those on which a guarantee was given and he explained £111,000 had been guaranteed under that. Then there are loans in which guarantees are not given, but in respect of which there was approval and recommendation sent by the Advisory Committee, as well as approval given by the two Government Departments concerned.
But awaiting completion.
That is the figure I want. The total of that, including the amount which has been actually guaranteed.
My figures differ according to the different dates. The figure for the 22nd April is a little bit old. The figure for the first lot is £106,000. That has since been increased by £5,000, so that it becomes £111,000. On the 22nd April, the amount under the second category approved by the two Ministers, but awaiting completion and legal formality, was £108,000. Whether the £5,000 from the 22nd April means that one £5,000 loan was a guarantee which advanced from the second category to the first, I cannot say. I presume it was. The combined amount would not vary, so it would be £214,000.
Can you now give the figure for the third category, where recommendations came from the Advisory Committee and were passed by the Department of Industry and Commerce but were not sanctioned by the Department of Finance?
£390,000. I can get these figures absolutely correct at very little notice. The only benefit envisaged by Deputy Johnson in this type of legislation on the other side was the lower rate which might be charged to investors for money if they had a Government guarantee, as opposed to what they would be charged if they had not. That was looked to here, but it has not turned out to be a big advantage. The rate does not vary greatly. There is some variation, but the advantage is mainly the extension of time for which repayments would run. The combination of these two things does give some benefit under this Act over what would be got from ordinary banking transactions. As to its future and on the question of working capital, I fail at times to understand the mentality of this House with regard to public money. We have had at times the old demand that used to be made so strongly not merely for the extension of unemployment insurance but even a grant of money beyond what would be due on a contributory basis. Money is often demanded in the way of grants to local authorities, relief grants of one type or another. You would have in the third step this provision of guarantees against working expenses, and in the fourth remove, getting towards the ideal state, you would have the Trade Loans Act as it stands with this allowance of a guarantee only for the capital undertaking. The last stage, towards which we should move and which we should hope to approach soon, is that in which there would be no Trade Loan Facilities Act at all, but in which there would be such a definite rehandling of financial institutions here and such a facing up to the newer conditions, that the necessity for trade loans would be done away with, and in which the State would not come in and assume even a second liability. I think that is an answer to Deputy Hewat.
I think that is a very complete reply.
I hope we will get from the Banking Commission some suggestions, and that these suggestions, if adopted—there is another "if"—will relieve us from the necessity of having any type of legislation of this sort, even as a temporary measure continued from year to year. Looking at it, however, as a temporary measure to be continued for this year, we should neither enlarge nor restrict it in either of the ways suggested by Deputy Johnson. I would urge against the other amendment that, although it is difficult to define, in so many words, what "capital undertaking" means, we have some idea as to what it means. We have cases on the point and we know what these cases mean. If these cases are going to be used as precedents, and if they may be followed, the House, in voting for the Bill, will be ensuring that no matter what has happened in the past, it will not be repeated in the future. As regards the second amendment, I would urge against this, that although the applications showed that there is considerable need by way of a provision for working expenses, that should not be done under this Act. We should leave firms to find moneys for working expenses as best they may, if we are going to give them help by way of guarantees on fixed assets. On the other hand, I would urge against two points in Deputy Johnson's amendment. He wants to enlarge this by saying: "In connection with the carrying on of any manufacturing industry." That in itself, with the working-expenses section deleted, I would not consider of much harm, because I do not consider it an enlargement. I think what the Deputy wants is in the Act. I would object to the other point where he amends the Bill so as to read: "By any public authority or by any corporation or by any body of persons, corporate or incorporate, or by any person." I have a technical reason against that, the point being that you cannot get any great charge upon the assets of an individual and that the only way to get after him is by way of bill of sale. No advisory committee, given that as a method of getting after an individual's assets, would ever put up a recommendation for the acceptance of the Government. If that were passed, I do not think that the advisory committee would act on it, and the only effect would be to throw on myself and the Minister for Finance the onus, at times, of over-riding the committee. If you found that the committee was simply turning down a case because it was a single individual and you had that technical point of the bill of sale coming in, and also had this expressed approval through the passing of this amendment for considering such individual cases—on those grounds I would urge against that amendment also.
I confess that it is rather difficult, in face of the arguments of the Minister for Finance and the Minister for Industry and Commerce, to stand on the case which Deputy Johnson has made, and to say that there ought to be such amendments to the existing Trade Loans Facilities Act as would enable that Act to operate in such a way as to give, in addition to a loan for capital expenditure, a loan for working capital. They have, admittedly, the experience of twelve months through the working of the Act, and they have pointed out the difficulties, which are, undoubtedly, real difficulties, but, on the other hand, I do not think that it is a case which should be accepted. It is not a case for refusing Deputy Johnson's amendment because the difficulties in the administration of the Act are such that they are not prepared to face them. I gather that, in principle, there is an acceptance on the part of both Ministers, to a very great extent, of the point of view which Deputy Johnson put forward for the extension of the capital.
No.
That may be so on the part of the Minister for Finance, but undoubtedly the Minister for Industry and Commerce has pointed out that should the Banking Commission fail——
Oh, no. I may have made a mistake or I may have misled the Deputy. I said I may have to come forward later if the Banking Commission does fail in the sense of not making a suggestion which would be adopted by the financial houses, but until that time I am against wiping out sub-section (4) of Section 1.
That is just the point. So the Minister does recognise that the difficulty exists at the moment. He is pinning his faith, as is the Minister for Finance, on what the Banking Commission will do, but in the event of failure on the part of the Banking Commission to make such a report and in the event of the failure of the banking institutions to do what even the report of the Banking Commission suggests they should do, the Minister will have to reconsider the position, so that actually Deputy Johnson is facing up to the position that the Minister for Industry and Commerce may have to face up to later. It seems to me in that there is acceptance of the principle, and while I feel it is undoubtedly difficult for me and for our Party to advocate the entrance of the Government and the State into business—difficult indeed to visualise a condition of things where the State might be part proprietors of a number of businesses—one recognises the purposes of this Act and understands that it was meant to relieve unemployment, that it was meant to enable industries that might have been in difficulties to continue in existence. One has to recognise that there are industries to-day in difficulties, industries that should under ordinary normal conditions be able to live against competition but because of the fact that the amount of money available for the running of business is so restricted, difficulties are here placed in the way of industries that we do not find elsewhere. Under such conditions as those the State has in another way attempted to order the running of industries here, to provide employment, we might say almost to compel the citizens to purchase from certain industries working in the country. Citizens are compelled to purchase commodities manufactured here and sometimes to purchase them at a higher price, and the purchaser pays. The State through Deputy Johnson's amendment is invited to intervene and the citizen is in another way asked to assist these industries to live against the difficulties of the moment.
The interim report of the Committee of Public Accounts pointed out a weakness in the operation of this Act. I confess that I feel in agreement with the Minister in his point of view on that, and I am prepared to go so far as to say that there are even possibilities of the State losing in some instances, but, everything considered, in the interest of the State and industry I think the State should take its chances. While one would not be prepared to counsel a policy that would allow the finances of the State to be put at the disposal of industrialists or business men without adequate security, we recognise that money is paid out day after day and week after week through the Unemployment Fund. We have to ask ourselves is it possible to spend money in any other direction whereby men can be employed and can give services for the money they get, services that will be beneficial to the State from the moral point of view and very much better for themselves than the methods by which they obtain money at present? Under conditions such as these. what is the wiser policy for the State? Is it better to take a chance that even in some instances the State might lose or that the State should stand rigidly for giving no aid whatever to a struggling industry that might be kept in existence if certain facilities were given to it by the State which it cannot obtain from other sources?
Putting one argument against another, it seems to me it would be a much sounder policy for the State, where security can be obtained, that industry should be aided by such a measure as the Trade Loans Facilities Act than by the other policy that is being adopted. When a man in business comes forward for a loan there is a recognition on his part at once that he is going to get something that he has got to repay. He knows that if he is to repay that money, if his credit is to be maintained by himself, he must work and he must give good service. He recognises that he has got to live against competition. He must, if he is to succeed, do his work well, and I am convinced that we would get a much better spirit amongst our industrial population, that we would get the work much better done, and that all-round we would get industry established on a better foundation by such a method as is here suggested than by any other policy the State can pursue. If the Minister is not prepared to accept Deputy Johnson's amendment to extend "capital" to mean "working capital," I would urge on Deputy Johnson that any alteration of the Act at the moment is inadvisable.
What is the case for the extension of the Act with regard to working capital? Can we visualise a condition of things where an industry stands every chance of succeeding on condition that further capital may be made available for it to extend its fields of operation? We may even in agriculture see a trade organisation brought into existence. We may see capital expenditure in the shape of buildings, but conditions may arise when further capital is essential for the running, management and success of the industry. We may see possibilities of an industry prospering on condition that not alone is it given capital expenditure for buildings or plant, but also some additional sum for working capital. Is it wise that there should be an extension of the Act in that direction? I think there is an acceptance of the principle that it is better.
Deputy Hewat argues to the contrary. He may be possessed of the individualistic mind that feels that combination for business purposes on the part of a community other than the strictly business community is not to be encouraged; but, considering the conditions in the country, it is, I feel, the duty of the State to encourage industry and business by whatever legitimate means it can employ. We might, for instance, see possibilities for the extension of a bacon factory, but it will depend on two things, the ability to secure money for the extension of premises or machinery and the ability to secure money as working capital. There are opportunities in that field to-day, but under the Act it is not possible to obtain a loan that you can put into plant and buildings. The restrictions, such as they are, prevent any further effort on the part of the Minister for Finance or the Minister for Industry and Commerce to help an industry like that.
I agree with Deputy Johnson that there is a good case for an amendment of the Act. The defence of the Ministers is that they are thrown back on the report of the Banking Commission. I am not in agreement with the Minister for Finance that the difficulties of administration are such that an extension of the Act is not to be countenanced. I do feel that whether the Minister decides now or at a later stage to extend this Act, beyond question it would be a much sounder method for the Government to adopt for the encouragement of industry than any method that has been pursued so far Existing methods certainly have had very limited success.
On another occasion I stated that the responsibility for dealing with a matter of this kind must rest with the responsible Ministers, and if Ministers were prepared to come to the House and ask for an extension of their powers in the direction I have now indicated in the amendments put forward, I would be prepared to support them. I think it would be wrong for me to say that, notwithstanding the Ministers' disavowal or even refusal to seek these enlarged powers, we are going to impose such powers upon them. That would be a wrong attitude for the Dáil to take. Ministers know the situation industrially; they know the requirements; they know whether the circumstances are such as would warrant them in calling for these extended powers or refusing to call for them. It is a responsibility which must be placed upon the shoulders of Ministers to ask for, or refuse to ask for, such powers as are under discussion. In view of the fact that Ministers are not willing to seek these powers then I, for one, am not going to try to force the powers upon them.
I think there has been some satisfaction derived from this discussion. We know more clearly what the views of the Ministers are regarding the continuation or extension of this method of assisting industry. I am not convinced by the argument that it is well to continue for twelve months on the course we are now on. I think even for twelve months it would have been desirable to have made some change in the conditions under which this Act is to be administered. A good deal of importance has been attached to the fact that the difficulty facing business houses has been to obtain money for long terms from banks; it is largely to meet that difficulty that the Trade Loans (Guarantee) Act was intended. Having that in mind, what is the objection to repealing the section relating to working expenses?
If it is necessary for a firm to raise money for working expenses, and it cannot raise that money for a long term, and it can give ample security to satisfy the Advisory Committee, the Minister for Industry and Commerce and the Minister for Finance, where lies the objection to providing money for working expenses under the provisions of this section? Hitherto Ministers had said that the difficulty about raising money for working expenses was that there was not a tangible asset. Surely that is not accurate? At least it is not consistent with the attitude of Ministers regarding this Act. It was stated more than once by the Minister for Industry and Commerce that the moneys to be raised for working expenses would not be balanced by the creation of a tangible asset. Therefore, security was not created. But if the Advisory Committee and the Ministers in question were going to be careful and rigid in the carrying out of their powers and not lend moneys unless they saw fair and valuable security, it really would not matter very much, if at all, whether the money raised was to be used for working expenses or capital undertakings, provided the other conditions were complied with, in view of the Minister's interpretation of the Act as it now stands.
The Ministers interpret the Act in a way which is not consistent with that view, because they have told us that they are prepared to guarantee a loan which is not necessarily to be used in the creation of a new fixed asset. They are prepared to guarantee the loan which is to be used for the acquisition of an already existing asset, which does not mean the employment of labour, and quite clearly in the Act the object is the employment of labour. But they defend it by stating that the acquisition of the existing premises by a new company will enable that new company to raise capital for working expenses and that by the expenditure on working expenses they will be able to create employment. That is the position Ministers have taken and are contending that they are authorised to take under the provisions of the existing Act. It seems to me that that position is entirely unsatisfactory. It is entirely unsatisfactory if we are to maintain the existing Act in its present form. And though Ministers have told us, and we how know what their interpretation of the Act is, and that we need to be no longer under any misapprehension as to what their intentions are, I think it is very unsatisfactory that a sum of £900,000, or the balance between £200,000 or £230,000 and £900,000, may be guaranteed in the manner which has been adopted in at least one case in the past. The Minister is entirely opposed to giving a guarantee for a loan for the purpose of working expenses. But under the interpretation of the Act which now exists and which we are warned may be followed in the future, this is possible: a firm seeks a loan for working expenses of, say, £7,000 or £8,000. That is prohibited by sub-section 4 of Section 1, and it cannot be granted. The firm may then say: "We must have these working expenses to keep our factory, our mills, our workshops going, and by that means to employ a considerable amount of labour." Ministers are naturally desirous of facilitating that operation, but they cannot provide the working capital when they are prohibited by the terms of sub-section (4), and the bank will not advance the working capital for the purpose and the company is faced with closing down. But it is possible under the section as interpreted by the Ministers, for that company to say: "We will turn our company into a limited liability company (it has hitherto been a private company) and we will then purchase from the existing company, the old company, the assets, out of the loan of £20,000 or £30,000 which we may borrow under the provisions of the section and which the Government may guarantee." And having purchased the assets of the old company and got the guarantee it is then for them to go to the bank and get the working capital. It may be within the letter of the section, but in my view it is distinctly against the spirit of the section, and it is a mere invitation to companies to devise ways and means to over-ride the intentions of the section; and the Minister becomes a party to that device. I think it is undesirable, and I think it is most unsatisfactory that a firm seeking to get guarantees under the provisions of this section, however sound and satisfactory the prospect may be to them to stretch and enlarge and extend what was clearly the intention and go to a good deal of trouble for reconstructing —legal and accounting trouble—so that the business may be fitted into the Act. I think it is undesirable, and it was with the object of trying to make it possible for the Minister to do the thing which he has done easily and without stretching the intention of the Act that I put down these amendments.
I admit at once that if the Act were amended as I have suggested it would place an immense power in the hands of Ministers. I think it is very doubtful whether it is the kind of a power which should be permanently exercised by Ministers. I say definitely that it is not the kind of power which should be permanently exercised by Ministers. If Ministers can assure us that the need for this kind of emergency legislation has passed nobody will be more delighted than I, but I have no evidence of the truth of that suggestion. I hope it is a fact and that it will be possible to learn of that fact, if it is a fact, before many days have passed.
An important figure was given by the Minister which, I think, ought to be placed in the possession of the Dáil and emphasised. Bear in mind the process under which loans are granted under this Act. In the first place an application is made to the Advisory Committee. The Advisory Committee inquires into the business possibilities, needs, and so on, examines the securities and generally investigates the question from the industrial and financial point of view. The Committee makes its recommendation to the Minister for Industry and Commerce. He in turn makes his decision and seeks the sanction of the Minister for Finance. It should be understood in this regard that when the Bill on which our Bill is based was being discussed in the British House of Commons it was very strongly insisted upon that the Advisory Committee was to be the actual deciding authority except for the final formal approval of the Minister; the undesirability of any political or even Civil Service touch upon the question was evident, and they wanted to dissociate as clearly as possible all political or even Civil Service command of this question.
Mainly political. I do not think there was any great insistence on the Civil Service end.
There was some reference to the Civil Service end also, but it was mainly political. It was probably not possible to adopt that attitude here. I am not quite sure if it has been possible to adopt it even there, but that was the mind of the Ministry when introducing the original Bill. It certainly was not possible to adopt that very rigid attitude in this country. But, as I explained, you had the three stages: the inquiry by the Advisory Committee, the approval or disapproval of the Department of Industry and Commerce, and, after approval, the reference to the Department of Finance. The Minister has told us that under the existing Act loans have actually been given amounting to about £111,000; that loans have been recommended and approved to the extent of another £111,000. That is to say, £222,000 or £223,000 have been passed by the Advisory Committee and the Departments concerned, but that £390,000 have been passed by the Advisory Committee and the Minister for Industry and Commerce but not sanctioned.
Not yet sanctioned.
Not yet sanctioned by the Department of Finance. So that out of £900,000 sought for, only £222,000 are already sanctioned and granted. I do not know whether the prospects are good for the balance to be guaranteed within the next twelve months. The process must be very much quicker than it has been for the last twelve or eighteen months if that is to be the case, or the sums in question will have to be very much greater. My amendment referring to the extension of the powers to include a loan for the carrying on of a manufacturing industry, was intended to give clear effect to what I conceive to be the intention of the Minister. A manufacturing industry might desire to continue its business on money raised under a guaranteed loan even for the manufacture of stock, which might be called working expenses—might be capital required for working expenses —but it might be the means of giving effect to the intention of the Act as interpreted by the Minister in a way which an expenditure on a capital undertaking would not be clearly intended.
The Ministry does desire, in fact, by the evidence of the history of these loans that have been guaranteed, to enable a manufacturing industry to carry on, even though it is not engaged in the production of new fixed assets. The object of the amendment I put down was to give a clear expression in the Bill of the intention of the Minister. However, he is not prepared to seek those powers. He insists that the interpretation that has already been placed on the Bill by himself and the Ministry generally is satisfactory to him and he is prepared to go on in that way. He tells us, however, that the comments of the Comptroller and Auditor-General may have the effect of slowing up activities under the Act. I do not know quite what that means, but if it means that there will be a greater hesitation in guaranteeing loans for businesses which must needs alter their construction to enable them to fit into the Act then I do not think it would be by any means a disaster that there should be such a slowing up. On the contrary, I think it is better that such loans should not be guaranteed if it becomes necessary so to alter and vary and change the form of the business to fit into the Act, and, if one may say so, to avoid and evade the requirements of the Act. I think the comments of the Comptroller and Auditor-General, if they do put a check upon that, will have been very good in their results.