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Dáil Éireann debate -
Wednesday, 6 Jul 1932

Vol. 43 No. 2

In Committee on Finance. - Estimates for Public Services. Vote 73—Leather Subsidy.

I move:

That a sum not exceeding Six Thousand Six Hundred Pounds (£6,600) be granted to defray the Charge which will come in course of payment during the year ending 31st March, 1933, for payment of subsidy in respect of leather (sole and insole).

When the Executive Council was considering its tariff policy, prior to the introduction of the Budget, the matter of sole and insole leather arose on an application made by the Tanners' Federation for the imposition of a protective duty. The matter was examined with considerable care, because it was felt, in so far as leather was the raw material of an important industry, any action taken in respect to it would have to be such that the fortunes of the allied industry would not be adversely affected. It was felt, however, that, in so far as it was desirable to impose a tariff, arrangements might be made which would permit of boot and shoe manufacturers procuring their requirements, in so far as they had to import them, free of duty, although there were certain difficulties arising out of the fact that a number of manufacturers were also merchants, and that it might be impossible to distinguish between leather imported for manufacturing purposes and leather imported for merchant purposes. The main difficulty we came up against was that there are established throughout the country a number of hand boot manufacturers, a type of craft which we would be very slow to damage in any way. The imposition of the duty on sole and insole leather, involving as it would a slight increase in the price of sole and insole leather, would have a very serious effect on hand boot manufacturers. We decided, therefore, that the method of tariffs was not the one to adopt in this case. I said that the imposition of a tariff would have the effect of increasing prices, because it is clear that leather is being imported at prices which are either uneconomic, or that can barely repay the cost of production and transportation. The leather trade journals published in Great Britain and in other parts clearly show that price cutting is widely practised, and that in the depressed condition of the industry in other countries all sorts of methods are being adopted to hold trade. A particular effort was being made by English tanners to secure themselves in the market here.

Having, however, ruled out the method of tariffs we considered what alternative methods might be adopted to preserve and to develop the tanning industry. As Deputies are aware, the tanning industry was once very widely established here. Its decline is, of course, largely attributable to the substitution of motor cars for horses, and in no circumstances, no matter how favourable, could the tanning industry ever be restored to the position which it formerly occupied. At the same time there is considerable scope for development. There is at the moment one fairly large tannery, and a number of smaller tanneries, all reasonably equipped and reasonably efficient, producing leather of a very high quality. In one small tannery leather of a particular quality is produced which is, in fact, exported. The present production in respect to sole and insole leather is very, very far from all our requirements, although the tanneries are equipped and are in a position to supply in quantities all the requirements of the Saorstát. They are not, in fact, supplying more than ten per cent. at the moment. We decided, therefore, upon the method of subsidy and got into consultation with the Tanners' Federation and discussed it with them. Certain proposals were put up by them as to the rates of subsidies they suggested. These rates were, in our opinion, excessively high, and would have involved the State paying not merely all the labour costs of production, but some part of the cost of raw material as well. We went into the matter again in as great detail as was possible, and ultimately decided that a rate of 1½d. per lb. for sole and insole leather manufactured after the 1st July would be sufficient to put the Free State tanners in a competitive position, would not impose any undue burdens upon the taxpayer, and would meet all the circumstances of the case. The information available to us would seem to indicate that the payment of this subsidy would reduce the cost price of Irish leather to in or about the selling price of English leather. In so far, however, as Irish leather is admittedly of much superior quality to imported leather it was felt that manufacturers were in an advantageous position to secure the market here in the event of the subsidy and the rate fixed being given. The present position is that roughly 10,000 hides are tanned in the Saorstát every year and, of these one-half are manufactured into sole and insole leather. At the rate of subsidy we propose the annual cost would be £1,650 upon the present output. If the output increased four times from 5,000 to 20,000 hides, the total annual cost would be the amount provided for in this estimate, £6,600, which is as much, if not something more, than we anticipate will be required in the present year.

A number of Deputies have probably received telegrams and other communications from the Tanners' Federation, in which they state that the rate of subsidy proposed here is too low and will not have any beneficial effect upon the industry or result in any substantial increase in the output of sole and insole leather here. I ask the House to appreciate that we have to take into account a number of factors and we are satisfied that the rate proposed— 1½d. per lb.—is adequate to offset the natural disadvantages which the Irish tanners are labouring under vis-á-vis their English competitors. Although it will not permit of their making any large profits and will involve a hard fight on their part to improve their position in the market, nevertheless it is as much as the taxpayer might be expected to give them to help in that process. The revival of the industry is undoubtedly of importance, because there is a very large annual consumption of leather of one kind or another here. If we get a start made on sole and insole leather, we may be able to branch into other parts of the tanning industry and engage in the manufacture of other types of leather of which there is a fairly large consumption here. The subsidy is being provided for by estimate because it is largely experimental. If, after the experience we gain during the present year, following the passing of the Estimate and the operation of the subsidy, we consider that it is desirable to proceed further along these lines, a Bill will be prepared and introduced in the Dáil to deal with the matter. It will be necessary, of course, to take powers to examine the books of producers and to take other steps to ensure that no unjustifiable claim will be made against the Vote. We are satisfied that it is not necessary to have these powers for the present year, as we hope to be able to take the necessary steps to safeguard ourselves against fraud, and get all the information necessary for the allocation of the Vote. But the legislative proposals which will give us the necessary power will be introduced, if it is subsequently decided to proceed with this subsidy arrangement. I may add that it is intended to limit the subsidy paid to any one firm to the amount which would be paid on 25,000 hides. In other words, if in the case of any one firm, production exceeds 25,000 hides, the subsidy will be paid on 25,000 only. It is not expected, however, that total production will reach that amount in the present year. I think the Dáil should pass this Vote. It is, in our opinion, likely to lead to the development of an industry which offers considerable possibilities in the future. If it has the effect which we anticipate and leads to that development, the money will have been well spent. If it does not lead to development, the money will not be spent at all and the taxpayer will have suffered no loss.

I want to be very brief on this Vote, but there are one or two points to which I desire to direct attention. We are now going to give a subsidy for the tanning of leather and we have got to do that because the boot manufacturers, although they have got their tariff increased from 15 per cent. to 25 per cent., cannot be got to use Irish tanned leather. They are certainly not doing it. If they were doing it to any great extent, this subsidy would not be required. We are faced with the position that, although a tariff which could not be said to be unsuccessful has been suddenly raised from 15 per cent. to 25 per cent., the people enjoying the benefit of that extra 10 per cent. will not give to other people a little of what they are enjoying themselves. Why will they not do it? They made their case when the application for a tariff on leather was on before. Their case was really based upon two things—the material supplied to them from the Irish tanneries and the price at which it could be supplied. The first objection was really fundamental and was never removed. So far as I can understand the technicality of this matter, we are almost entirely concerned on this Vote with the main part of the hide, the sole leather bends. That is the part of the hide that remains after the head part and the belly part have been cut off. I understand that there are two processes by which the hides are prepared for the tannery after the animal has been flayed. There is the wet salted process and the dry process. The dry process produces a less good type of hide for tanning. It is more apt to show defects when followed by further processes, but, nevertheless, it is cheaper. That is what is imported. Our manufacturers say that if they do not get that cheap, imported hide, brought to a certain point under the dry process, they cannot manufacture in competition with other folk. They stated that even if the tanneries here were to go off the wet salted hide— they showed no indication then of doing that and I do not know whether they have shown any indications since —even then the price would be prohibitive. I quote from the Tariff Commission Report, No. 11, page 43, paragraph 142, the relevant portion:—

"During the course of the investigation of the application, it was made abundantly clear that Saorstát boot manufacturers were using a class of leather which was not being produced in this country and obtaining it at a price which, even if increased by the full amount of the tariff asked for, would still make it possible to import it at a lower price than that at which home-produced leather could be bought."

The tariff asked for was 25 per cent. and I think that paragraph has a relation to the 25 per cent. The tariff application was later reduced to 15 per cent. I think this document proceeds, until the later paragraphs, on the basis of a 25 per cent. tariff. I draw attention to these words:—

"...it was made abundantly clear that Saorstát boot manufacturers were using a class of leather which was not being produced in this country, and obtaining it at a price which, even if increased by the full amount of the tariff asked for, would still make it possible to import it at a lower price than that at which home produced leather could be bought."

Their attitude was that, even given a 25 per cent. tariff, Saorstát leather would not be bought. In other words, given a 25 per cent. subsidy, the tanner, if he passes on the entire subsidy to the boot manufacturer, cannot get him to buy his leather. What is the amount of this subsidy? It is stated to be 1½d. per lb. on sole and insole leather. If you take that and spread it over the whole hide, not giving any percentage to the different types of hide—head, belly and bend— it amounts to 9 per cent. What situation, therefore, is going to arise? According to the Tariff Commission Report, even if you gave a 25 per cent. subsidy—they, of course, use the word "tariff" but I think the terms are equivalent—and if the tanneries pass that on to the boot manufacturers, they will not be able to get the boot manufacturers to buy their stuff. What chance, then, have they of doing that if they get only a 9 per cent. subsidy?

There are other people than boot manufacturers involved.

The repairers are brought into this, and the same considerations are said to apply. The case is not made with the same vehemence but the same considerations are stated to apply. With a 25 per cent. tariff, it is stated the imported stuff would still be bought. Here we have a 9 per cent. subsidy. Unless there is some considerable change in the industry in the Free State or unless the tanners have decided to employ not the wet salted hide, but the dry hide, I do not see any chance of this subsidy being any good whatever, and I do not think there is any necessity for the subsidy. When the tariff to the boot manufacturers was being increased from 15 per cent. to 25 per cent., the Minister should have used some persuasion to get them to impose upon themselves the obligation to use some percentage of home-made leather. We would then have been saved this £6,000—if it is only going to be £6,000. Surely the use of £6,000 worth of home-tanned leather could be brought about by the boot manufacturers. I think the two things could have been combined in that way and we would have been saved this subsidy.

I would like to ask the Minister if it was at the instigation of the tanning industry that he imposed a tariff on leather-bound books.

No, the tanners are not responsible for that.

I would submit to the Minister that he is only wasting the time of the House in introducing a subsidy of 1½d. per lb. for leather. The Minister's milling policy has already given the knock-out blow to the dock expansion in Limerick. The hundreds of unemployed who are looking for employment on that scheme are seriously disappointed. The one industry in Limerick that is capable of giving employment is the tanning industry but the 1½d. per lb. that is offered by the Minister is of no use whatever to that industry and the Associated Tanners have decided not to accept it. I would appeal to the Minister to increase the subsidy to the level of the tariff on boots. Anything less than 25 per cent. is no good and it will be of no use.

I would also impress on the Minister to increase this subsidy to 25 per cent. When the Minister talks of giving the industry 1½d. per 1b. I would point out to him that this is of no use whatever. It will not in fact give employment to one man more than the number employed already. There are in Limerick hundreds of unemployed anxiously looking to the Minister to increase the subsidy to 25 per cent. Unless the Minister increases it to that figure he may as well withdraw his subsidy altogether.

I rise to support the principle of the subsidy for this industry. There is in the City of Cork at the moment an abattoir which has practically speaking a huge waste of hides which are only sold for a few shillings a piece. The means of utilising this by-product by turning it into a commercial commodity has been explored by this particular firm and they are thinking of embarking upon the very industry which the Minister proposes to subsidise. I feel that this is a step in the right direction and that through its means we will be utilising one of our products, a product which we are producing here at a very cheap rate. The subsidy will open up a means of utilising that almost waste product and will give an opportunity of developing an industry from this by-product. It is an industry that will give very considerable employment. We all know that in the past there were in the City of Cork several tanneries which have now gone out of existence. If we can revive that industry we will be doing an enormous amount of good. The Minister is commencing in the right direction. He has given a reasonable subsidy and it is better to start with a reasonable amount than with a very large subsidy. I do not know of any industry which could be started that can command more sympathy than this particular industry of tanning. It will foster the dead meat industry and the byproducts of that industry will be used at home. The subsidy will start or revive what ought to be a prosperous industry in this country if it were only properly worked.

While in general I am not a very great advocate of tariffs or subsidies I am prepared to support the subsidy in this particular instance mainly for the reason that this industry provides in its manufacture a means of using up a considerable amount of home raw material. It is a different thing from some of the tariffs that have been imposed recently by the Government. In the case of the woollen or any other industry we had not any assurance that any considerable amount of the native raw material would be used. Here I am given to understand that the proprietors of the largest tanning industry are prepared to give an undertaking that fifty or sixty per cent. of the hides used in their factory will be Irish hides. It is for that reason and for that reason only that I am prepared to lend my voice in support of that subsidy. As far as my information goes the tanners and the trade unionists who are supporting the demand for a tariff or subsidy on leather are of one mind as to the effect of the Minister's Resolution. They consider that it would be practically useless to give a subsidy of 1½d. per lb. by way of helping the industry. If any subsidy is to be given it must be a far greater amount than that proposed by the Minister. The Minister must give the subsidy on a more liberal scale. I find it difficult to get up here in this House and support even this subsidy for I believe there are other and better ways of helping an industry than by subsidies, but I believe an exception could be made in this case. If the Minister presses for it he can get a definite guarantee that fifty or sixty per cent. of Irish hides will be used. That is the sort of guarantee that he would be unable to get or could get in the case of any other tariff industry.

Mr. Byrne

rose.

If we are to finish the Committee Stage of the Manufacturers Bill we have to start before 10 o'clock.

Of course there is agreement. Deputy Byrne knows that.

Might I be permitted to say one word?

Deputy Norton is one of yours. Play the game or do not play it.

I have not spoken on this motion yet.

If Deputy Norton speaks then Deputy Byrne must be allowed to speak.

We propose to give way if the thing stops now. That is what the Minister wants.

We formally object to that. If the purpose of the agreement is that Cummann na nGaedheal is to put up three speakers and we cannot get a speaker at all, I object.

Might I point out to the House that the proposal is again to come before them at a later Stage?

Point it out to your own supporters.

Four speeches on this and no speech from the Labour Benches.

We will dispose of the matter now. Objection has been raised to this subsidy on the ground that it is inadequate. Deputy Reidy said that the tanners were against accepting it and that the subsidy was quite useless. Deputy Bennett deserted his flag though he said he found it hard to support the subsidy, yet the Deputy wants the subsidy on a more liberal scale. I submit that the Deputies who have spoken against the amount of the subsidy know nothing about it except what they gather from the telegrams they got from Limerick this morning. The fact is we are proposing in the 1½d. per lb. subsidy to give the tanners 60 per cent. of the labour costs. If we were to raise the subsidy to 4d. per lb. that would provide not merely all the wages paid by the tanning companies but we could in fact make better provision by giving the workers the amount direct and in that way with the money we could provide for a large number of workers if we were to adopt that method.

Do you adopt that as a universal principle?

I do suggest in this case that in bringing the cost price of the leather produced in the Irish tanneries to the point where they are put in a better position than the makers of the imported leather, we are giving them a fair opportunity of securing themselves in the market if they are prepared to go out and fight for their place there. They have a better product; their leather is much better than the imported leather. They can undoubtedly beat the English leather if conditions are levelled up so that they can fight fair. We are levelling up conditions and we do not propose to do more than that. The proposition which we are making is quite a reasonable one. If the members of the Associated Tanners' Federation decline to take this subsidy I am quite certain we will get people to engage in the manufacture of sole and insole leather and they will consider this subsidy sufficient.

Prosecute them for sedition.

You will grant no tariff where the tariff would more than cover the cost of labour?

I do not know to what the Deputy is referring.

The Minister laid down what appeared to be a principle—that there will be no tariff granted where what is given will more than cover the cost of labour.

I did not lay it down as a principle. I would not lay it down as a principle. I say that in the matter of tanners there is no case for a larger subsidy than we are giving. I admit there is nothing generous about it; we cut it as fine as we could. We are endeavouring to put the tanners here in a position in which they can fight on equal terms with the importers. They will have the advantage of having a better product.

The Minister thinks that £6,600 will cover the actual wages paid by the tanning industry. Is he aware that in 1929 over £8,000 was paid in wages?

The tanning industry produces more than sole and insole leather, and the duty is paid only on sole and insole leather—roughly, about half the production of the tanneries.

Is it not a fact that the Minister, in the case of other tariffs, gave assistance greater than was demanded even by the manufacturers themselves?

One does not compare a tariff with a subsidy.

Resolution agreed to and reported.

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