Dáil Éireann debate -
Wednesday, 12 Dec 1934

Vol. 54 No. 6

In Committee on Finance. - Financial Motions. Resolution No. 1—Excise.

Minister for Finance (Mr. MacEntee):

I move:

1. That a duty of excise at the rate of six pence the gallon shall be charged and levied on, and shall be paid by the manufacturer of, all mineral hydrocarbon light oil made in Saorstát Eireann which, on or after the 1st day of February, 1935, is sent out, on or for sale or otherwise, from the premises of the manufacturer thereof or is used by such manufacturer for any purpose other than the manufacture or production of mineral hydrocarbon oil.

2. That, subject to compliance with such conditions as the Revenue Commissioners shall impose, the duty mentioned in this Resolution shall not be charged or levied:—

(a) on any mineral hydrocarbon light oil in respect of which it is shown, to the satisfaction of the Revenue Commissioners, that

(i) such oil was sent out from the premises of the manufacturer thereof on or after the 1st day of February, 1935, and

(ii) the duty mentioned in this Resolution was paid in respect of such oil when it was so sent out, and

(iii) such oil was subsequently brought back to the said premises from which it was so sent out or into other premises occupied by the said manufacturer, nor

(b) on any mineral hydrocarbon light oil which is shown, to the satisfaction of the Revenue Commissioners, to be intended for use in Saorstát Eireann in any process of dyeing or cleaning of textiles carried on by way of trade, nor

(c) on any mineral hydrocarbon light oil which is shown, to the satisfaction of the Revenue Commissioners, to be intended for use as an ingredient in the manufacture of articles which are not of the character of mineral hydrocarbon light oil or not merely a mixture or blend of such oils with or without the addition of some ingredient such as colouring matter.

3. That a drawback, equal to the amount of the duty mentioned in this Resolution which is shown, to the satisfaction of the Revenue Commissioners, to have been paid in respect of the goods in question, shall be allowed on the exportation from Saorstát Eireann or the shipment or deposit in a bonded warehouse for use as ships' stores of any mineral hydrocarbon light oil chargeable with the said duty, and on the loading into any aircraft of any such oil for use on a voyage to a place outside Saorstát Eireann.

4. That there shall, as on and from the 1st day of February, 1935, be charged, levied, and paid, on a licence to be taken out annually by every refiner of hydrocarbon oil, an excise duty of one pound.

5. That the Revenue Commissioners may make regulations for securing and collecting the duty mentioned in this Resolution, for prohibiting the refining of hydrocarbon oil otherwise than by persons who hold a licence in that behalf and have made entry for that purpose, for regulating the issue, duration, and renewal of such licences, and for governing generally the manufacture of mineral hydrocarbon light oil and the removal of such oil from the refinery, and the Revenue Commissioners may by such regulations apply to the duty and the drawback mentioned in this Resolution or to refiners of hydrocarbon oil any enactment for the time being in force relating to any duty of excise or of customs or to persons carrying on any trade which is for the time being subject to the law of excise.

6. That if any person does any act (whether of commission or omission) which is a contravention of a condition imposed or regulation made by the Revenue Commissioners under this Resolution, he shall be guilty of an offence and shall be liable on summary conviction thereof to an excise penalty of five hundred pounds and any article in respect of which such offence is committed shall be forfeited.

7. That for the purposes of this Resolution the expression "hydrocarbon light oil" means hydrocarbon oil of which not less than fifty per cent. by volume distils at a temperature not exceeding 185 degrees centigrade, or of which not less than 95 per cent. by volume distils at a temperature not exceeding 240 degrees centigrade or which gives off an inflammable vapour at a temperature of less than 22.8 degrees centigrade when tested in the manner prescribed by the Acts relating to petroleum.

8. That the method of testing oil for the purpose of ascertaining whether it complies with the provisions of the next preceding paragraph of this Resolution relating to the distillation of a certain volume thereof at a certain temperature shall be such as the Revenue Commissioners shall prescribe.

9. It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect by virtue of the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

The purpose of this Resolution is to assist in the establishment of a refinery for the manufacture of oil of this description in the Saorstát. Only one firm is at present engaged in the manufacture of the oil in question, and the capacity of the plant in that case is limited to 3,000,000 gallons of petrol per annum. The loss of revenue involved under the Financial Resolution now before the House will, consequently, be negligible. The second paragraph of the Resolution provides for the exemption from duty of oil on which duty has been paid but which has subsequently been returned to the premises of the manufacturer, and of oil intended for use in the Saorstát in any process of dyeing or cleaning of textiles. The usual provision is made for payment of drawback in respect of oil exported or deposited in a bonded warehouse for use as ships' stores. As it is the established practice, when an excise duty is imposed on a commodity, to require the manufacturer thereof to take out an annual licence, provision is also made in this Resolution for the taking out by the refiner of hydrocarbon oil of an annual licence on which an excise duty of £1 will be payable. The Resolution empowers the Commissioners to make regulations for securing and collecting the duty provided for in the Resolution and for prohibiting the refining of hydrocarbon oil otherwise than by persons duly licensed. The Resolution also provides that a penalty of £500 may be imposed for the contravention of a regulation or condition imposed by the Revenue Commissioners under this Resolution.

Mr. Dillon:

Does hydrocarbon oil in this case mean paraffin and petrol?

Mr. MacEntee:

Petrol only.

General Mulcahy:

I understood the Minister to say that there was only one firm in the State manufacturing this oil. Will he state where the factory is situate, the total amount of employment given and what development he expects to take place as a result of the passing of this resolution?

Minister for Industry and Commerce (Mr. Lemass):

The firm in question has not yet commenced to operate. They are at present only installing the plant and the place in which it is being installed is at Haulbowline, County Cork.

Mr. McGilligan:

Will the Minister give us the names of the directors?

Mr. Lemass:

The name of the firm is "Cork Oil Wharves, Ltd." It has been operating in Haulbowline in another capacity for some time.

Mr. McGilligan:

Do you know the directors?

Mr. Lemass:

I cannot say what their names are at the moment.

General Mulcahy:

Has the Minister any idea as to the plans which the firm has for development? Could he give us an idea of how many persons will be employed at the end, say, of next year and the following year?

Mr. Lemass:

The development of oil refining is one of the objects which the Government has in view. On that account, various discussions have been proceeding between representatives of the Department of Industry and Commerce and representatives of the various oil interests. The position at present is that, if anybody were to undertake oil refining here, the motor spirit produced by them would be free of duty. There is a Customs duty of 8d. per gallon on petrol imported, without any corresponding Excise duty. As one firm is now about to commence the refining of oil and the production of petrol here, it is necessary to impose an Excise duty in order to protect the revenue. An Excise duty at the rate of 6d. per gallon is being imposed as against a Customs duty of 8d. per gallon, giving a preference of 2d. per gallon to the firm in question. It is, however, contemplated that the comparatively small development about to take place in County Cork will be the prelude to much larger development in the course of the coming year, as a result of which all the petrol required in the country will be refined here. In these circumstances, the amount of the excise duty might have to be increased to 8d. per gallon if the Exchequer should require the same revenue from petrol in the future that it has obtained in the past. In that event, the customs duty would be correspondingly increased, so that a margin of 2d. per gallon would be maintained in order to promote the utilisation of the spirit produced here.

The difficulty which operated in the past against the development of the oil refining industry here was that our market was not quite sufficient to absorb all the by-products of the industry. It is sufficient to absorb all the possible production of some of these by-products but an export trade would be required in respect of certain of the by-products. The possibility of procuring that export trade was one of the matters to which consideration was given. It seems now that no particular difficulty will arise under that head. The particular development which has taken place in Cork and which necessitates the imposition of this duty now, rather than at a later stage when more complete plans will have been prepared, is, of course, only a small-scale one. The total production of petrol by that plant will be not more than 3,000,000 gallons per year. One of the main products of the plant will be fuel oil, a market for which will be found amongst the shipping companies which are now using fuel oil to a much greater extent than they did in the past. The plant at Haulbowline, with the fine harbour facilities there, will be admirably situated for the sale of fuel oil to merchant and passenger ships.

The employment given by the industry is not considerable in relation to the capital involved in its establishment. If we secure that all the petrol and other oils required here are refined here from imported crude oil, the total employment involved will be not more than a few hundred men. Of course, there are other advantages. Considerable indirect employment will be provided in the manufacture of the containers in which the oil is packed and so forth. The fact that visible imports will be diminished and visible exports increased in value is also an important consideration.

The effect of this duty, therefore, is not really to alter the position of the revenue to any appreciable extent. It will alter the revenue to the extent of 2d. per gallon on whatever production of petrol takes place at Cobh; so far that is the only change achieved or contemplated here. If, as we hope, we reach a position when we are able to produce the full quantity of petrol the country requires through our refineries here, then the revenue position will be whatever the Dáil is prepared to make it by variation of the Excise duty created by this resolution. The company is known as the Cork Oil Wharves, Ltd. It has been established there for a number of years, operating certain storage plants, but it has decided, for various reasons, to cease to operate as such, and to establish a refinery plant.

Mr. Norton:

Will the Minister say whether the Company which will manufacture these oils has any connection with any of the importing oil companies or manufacturers? Does he hope that the Company will be engaged in production at the date when the Excise duty comes into operation in February, 1935?

Mr. Lemass:

The plant has not yet been erected, and I could not say when the production of petrol will commence at Cobh. So far as I know, the Company has no connection with any of the distributors here at the moment. They have, of course, got connection with certain firms from whom they propose to purchase crude oil, but the petrol distributing companies are dissociated from them.

Mr. Belton:

Is the net position this: That a preference of 2d. per gallon is to be given to home-refined oil?

Mr. Lemass:

Yes.

Mr. Belton:

I understood the Minister to say that this Company will have to work under a handicap in this way: it will find a difficulty in getting an outlet for the by-products of the oil.

Mr. Lemass:

I did not say that would apply in the case of this Company in Haulbowline. I said it was one of the difficulties that would have to be overcome before the establishment of refineries capable of supplying all our requirements.

Mr. Belton:

I presume the Minister has gone carefully into the economic aspects of this. He indicated that if anything approaching our full requirements of this particular oil were produced here it would have a serious effect upon the Exchequer returns, and therefore this Excise duty will have to be increased. I understood the Minister to say that; and that, to my mind, is threatening this new industry. It is telling it: "Keep small. Remain a baby. If you develop to be a man I shall put a duty on you that will crush you."

Mr. Lemass:

No, I did not say that.

Mr. Belton:

Sixpence a gallon is imposed. Eightpence a gallon is the tax upon petrol now. If the refineries develop to the capacity of giving us our requirements or nearly our requirements, does he not propose that the Excise duty should be increased to 8d.?

Mr. Lemass:

I said that the differentiation between the Excise and Customs duty would remain at 2d.

Mr. Belton:

The Minister would continue a preference of 2d., and therefore you would probably increase both by 1d. Suppose we produced all our requirements, then you would probably have to raise the 6d. Excise duty to 8d., and I presume you would have to raise the Customs duty to 10d. or over. The Minister has worked out the economic details of this on that basis, and on that basis I presume he strikes this 6d. Excise duty and leaves it as a headline. If the revenue returns fall he will have to increase both the Customs duty on the foreign article and the Excise duty on the home article, still maintaining a difference of 2d. so that the Exchequer will not lose by the transaction.

Mr. Dillon:

I would like to ask the Minister one or two questions in respect to this Resolution. This Resolution simply means that we are going to give a Cork company a present from the public purse of 2d. a gallon on the petrol they produce.

Mr. Lemass:

Not necessarily.

Mr. Dillon:

That is what it means. It is on exactly the same principle as the treatment of sugar. The imported article pays a Customs duty and the home manufactured article pays a very much smaller Excise duty, and the imported article and the home-manufactured article are sold on the same footing.

Mr. Lemass:

Not necessarily.

Mr. Dillon:

Not necessarily, but that is what happens. In certain circumstances that course may be justified, but the House must remember that whatever sums we present to these manufacturers in Cork must be made up from some other source to keep the Exchequer in funds, and means the imposition of some other form of taxation. When we are going to impose taxation, I want to know what we are going to get for it. The Minister gives us no estimate of how much money the Exchequer will have to give this Cork firm by way of reduced duties. The Minister gives no estimate as to the number of men who will be employed as a result of this expenditure. I think it is a bad practice to come to the House with a vague general proposition of this kind, which obviously is half-baked, and ask for what may be a very large sum of money without giving us any indication whatever of the advantages that the State may expect to derive from the transaction. I think the Minister ought to let us know the nature of this company, and he ought to let us know the capital of the company; he ought to let us know how much petrol he will allow this company to refine on the basis proposed in this Financial Resolution. These are three essential pieces of information that the House ought to have before being asked to pass this Resolution. I asked the Minister for Finance whether paraffin oil, which is normally used in illuminating country houses, is exempt, and he said yes, and that this only applies to petrol. The Minister for Industry and Commerce says this applies to fuel oil.

Mr. Lemass:

I said nothing of the sort.

Mr. Dillon:

Does this Resolution impose no duty on fuel oil at all?

Mr. Lemass:

The Resolution has precisely the same scope as the legislation which imposed a Customs duty upon imported petrol.

Mr. Dillon:

So the Minister can assure the House that no other derivative of crude oil, except petrol, is affected by the Resolution?

Mr. Lemass:

Yes.

Mr. Dillon:

The third matter to which I want to draw the attention of the House is that it is an interesting commentary on procedure that here the imposition of an Excise duty is imposed by resolution, as is done under Financial Resolution No. 2, while the House will very well remember that an Excise duty was imposed on sugar not very long ago under the powers conferred under the Minister's Emergency Imposition of Duties Act. It is an interesting thing that when the Minister can make the shadow of a case that there was going to be some great development in Haulbowline as a result of the imposition of an Excise duty, we have a financial resolution, but when it is the Minister's proposal to put a farthing a pound on sugar, which he made a great to-do about taking off—holding himself up as the Christian Minister for Finance when he took it off—it is done in the silent and discreet method provided by the Emergency Imposition of Duties Act.

Mr. Lemass:

I should like to make it clear, in case any misunderstanding might have been created by Deputy Dillon's remarks, that this duty is not really being imposed because of the contemplated development at Haulbowline alone. If the only development was to be the establishment of this refinery there, we probably would not have encouraged anybody to go into the industry at all. This duty is being imposed really as an indication to interested parties that in the event of petrol being refined here it will be subject to an Excise duty of 6d. as against a Customs duty of 8d., and that there will be a preference of 2d. per gallon to be enjoyed by such persons. I can say that in a neighbouring country it is 4d. a gallon.

Mr. Cosgrave:

What is the neighbouring country?

Mr. Lemass:

Great Britain. The company that is proceeding with a small refinery at Haulbowline is an external company, and it will require to be provided with a licence under the Control of Manufactures Act before the business can be proceeded with. The capital, I think, is something in the nature of £150,000. The output of petrol which will be undertaken there will not exceed 3,000,000 gallons per year. Deputy McGilligan asked at what stage of development would the export market become necessary. That is a matter about which discussions are proceeding, because the products of any refinery vary according to the nature of the crude oil used. One gets a certain percentage, high or low, of petrol, paraffin oil, lubricating oil, or any of the other products, and different crudes have different peculiarities. I am told that it is, in fact, possible to get a synthetic crude which would provide all bye-products in the exact quantities we require them, but that is a matter upon which I am not in a position to express an opinion. However, it does seem clear that by various arrangements we can procure the establishment of refineries here capable of giving us the whole of the 35,000,0000 gallons of petrol, or whatever is the amount per year, plus the other oil products, in the quantities in which we require them and, in addition, to secure an export market for whatever surplus by-products are produced.

The employment given in the direct production of oil is, as I have said, not great in relation to the capital involved. The capital is several million pounds, but it is mainly in machine equipment, and the direct employment given is not great. There is, however, indirect employment given in so far as the refining of oil here means that all the other industries associated with the petrol industry, including the manufacture of petrol containers and so forth, will be developed here. In any event, the effect upon the trade of the country will be noticeable in so far as the value of our imports diminish and with the possibility of exports being secured instead. The loss of revenue that will follow from the maintenance of the Excise duty at 6d. while the Customs duty is 8d., and while there is only refining at Haulbowline producing not more than 3,000,000 gallons per year, is comparatively slight, because against that loss of revenue there will be, of course, other taxes which will yield an increased return in consequence of that development. Should it happen, however, that our plans to secure the complete development of the industry succeeded to the point that all the petrol was refined here, then the loss of revenue would be considerable, and it is at that stage that the Dáil would be asked to decide whether the duty should be retained at 6d. or increased to 8d. so as to secure the same revenue.

Mr. McGilligan:

I should like to ask the Minister does that 2d. equalise matters? Does the 2d. meet the difference in cost?

Mr. Lemass:

I do not think so. That is one of the points that have to be considered before a larger development takes place. The 2d. preference that will be enjoyed by the Cork company may permit of its selling its product at a slightly lower price than petrol is being sold at now, and it may have to do that in order to secure an entry into the petrol market. However, whether it is possible to secure a large scale development of the industry here on a basis which will mean that no rise in price will be necessitated, is a matter that is under consideration. The refinery there is a small scale refinery and, to some extent, costs there will be higher than at a larger refinery, but whatever higher costs may result will be offset to some extent by advantages in marketing the other products which that company will enjoy by reason of its location.

Mr. McGilligan:

If it requires a penny to meet the difference in manufacturing costs, then petrol will go up?

Mr. Lemass:

No, petrol will not go up.

Mr. McGilligan:

When we are refining all petrol here?

Mr. Lemass:

If it cost 1d. more to produce it here than we can import it as now, then the price would go up if we decided to increase the duty from 6d.

Mr. McGilligan:

And you have got to do that in order to keep up the revenue?

Mr. Lemass:

Yes.

Mr. McGilligan:

So that is a big dilemma?

Mr. Lemass:

We have had bigger ones.

Mr. McGilligan:

And got caught by them all.

General Mulcahy:

Deputy Dillon, when speaking, suggested an analogy between the way this is being introduced and the way in which the Minister for Finance dealt with the position of sugar when introducing a sugar Bill. He told us then that it might be necessary to increase the Customs duty and the Excise duty on sugar in order not to lose revenue, and the result is that to-day we are dealing, in Committee, with what the Minister describes as putting into permanent legislation proposals that will grip £750,000 additional payments for sugar by the people, imposed on the people during the calendar year we are going through now.

Mr. Lemass:

A preposterous statement !

General Mulcahy:

The Minister says a "preposterous statement." I should like to ask the Minister for Industry and Commerce if this also, in his opinion, is a preposterous statement: that the Ministry will require to continue to get the revenue they are getting from motor spirit in order to upkeep the roads; that they will require to continue spending on the roads at least the amount they are spending at the present time?

Mr. Lemass:

The petrol revenue does not go to the roads.

General Mulcahy:

The Minister for Industry and Commerce told us that it may be necessary at a particular time to increase the Excise duty from 6d. to 8d. I submit to the Minister for Industry and Commerce that he will be telling us in a few years' time at any rate—or he may be, or someone else will—that he explained that it would be necessary to increase the Excise duty from 6d. to 8d. and to increase the Customs duty from 8d. to 10d. I submit that, in fact, the net result in the ultimate of the proposals he is making to us to-day is to impose an additional burden of £300,000 on the users of petrol in the country; that the Minister has no intention ultimately of losing any revenue in this particular way; that the revenue is not going to suffer, and that an additional £300,000 or substantially more than that, is going to be borne by the motoring population in the country.

Mr. Lemass:

Of course the answer to that is that no decision has yet been made in favour of any particular set of proposals other than this small-scale development at Haulbowline. It is impossible to say, and I at this stage will not admit, that any larger scale developments should necessitate an increase in the price of petrol. It may, in fact, prove that such an increase is associated with any such development, in which case we would have to balance the advantages to be derived from the establishment of the industry against the disadvantage of that increase in price. On the information available to the Department from the experts with whom we have been discussing the matter, I am not yet convinced—and in that view I am supported by some of the experts—that the development of the industry here to the fullest extent need necessitate any increase in price. On one point I want to make a correction on what has been said. I said this duty applied only to petrol. The definition of petrol in the Resolution, which is similar to the definition in the existing Customs resolution, covers white spirit, but that need cause no complication because white spirit is, in fact, refined here by certain firms.

Mr. Dillon:

What is white spirit?

Mr. Lemass:

It is a by-product of crude oil used for various processes. It is somewhat similar to petrol in chemical analysis, and certainly it is covered by the Resolution. It is covered by the existing Customs duty, but the effect of that has been that certain firms are engaged in refining it here at the moment.

Mr. Good:

Will this proposal affect the proposal to manufacture industrial alcohol?

Mr. Lemass:

Not in the least. On the contrary there is reason to believe that it might facilitate the disposal of industrial alcohol and its admixture with motor fuel.

Mr. Belton:

Has the Minister examined the position with practical experts and arrived at this 2d. of a perferential margin as a reasonable inducement to a manufacturer to refine this oil here? Did the Minister indicate this figure to the people who are about to do this refining in Haulbowline before they spent any money on it?

Mr. Lemass:

I am quite satisfied that 2d. per gallon preference is an adequate inducement to anyone.

Mr. McGilligan:

How much profit have they on the 2d? Have they a penny?

Mr. Lemass:

I would not say so. A considerable amount depends on the nature of the by-products and the price at which they can be sold. The prices for those products—which are international prices—are fluctuating from day to day. There is, as the Deputy will realise, a certain amount of speculation in this business. I understand it is possible for them to vary the process of distillation at any time, so as to increase or decrease the by-products. The profit of the firm will depend on the extent to which they can dispose of those by-products profitably.

Mr. McGilligan:

I thought we had a guarantee that so far as this small amount of petrol is concerned there would be no difficulty in disposing of its by-products. I thought we had also a rather assured statement that, even if the amount got larger, by getting a certain different type of crude oil we would do away with the necessity of having to export the by-products.

Mr. Lemass:

I am not satisfied of that.

Mr. McGilligan:

But the first statement still holds—that with regard to this 3,000,000 gallons, the question of by-products and exportation does not arise?

Mr. Lemass:

It does not arise.

Mr. McGilligan:

Very well. Wipe it out then.

Mr. Lemass:

But the price at which it can be disposed of does arise.

Mr. McGilligan:

There is no complication. Let us leave that out of it; it is only a red herring. That being out of the way, what amount of this 2d. is profit to the firm and what amount is represented by increased costs of manufacturing at Haulbowline on this small scale? We will then get some idea of the inducement held out, and as to what part of this £25,000 is being given to this firm as a present and what is given to them to reduce the manufacturing costs so that they can sell on an equality, but only on an equality, with other people.

Mr. Lemass:

The Deputy is taking one particular thing as fixed, namely, the price of petrol—the imported price of petrol. The price at which it is charged to the people distributing it here has varied in the last six years——

Mr. McGilligan:

So has the sale price.

Mr. Lemass:

——from 3d. to 6d. a gallon.

Mr. McGilligan:

So has the sale price.

Mr. Lemass:

Not altogether, but it has varied undoubtedly. At the present time, I think it is generally contended that none of the people supplying petrol to this country is making any profit out of it. At the price at which petrol has been imported here for some time past it has been imported at a loss. That fact has been the subject of comment in financial papers, and it is inevitable that at some stage there is going to be an upward movement in petrol prices, in which case it will be possible to contemplate a development of petrol refining here without any financial inducement to the firms undertaking it. However, under present circumstances it is necessary to give a preference of 2d. per gallon, a large part of which will be required to cover increased manufacturing costs in a plant of the size contemplated at Cobh.

Mr. McGilligan:

Will there be a halfpenny profit after the increased manufacturing costs?

Mr. Lemass:

I said that the company will have to contemplate selling petrol at a somewhat lower price in order to secure an entry into the market.

Mr. McGilligan:

Let us take it in relation to the present price of petrol. The figure must have been fixed in relation to some fixed set of circumstances; otherwise there would be no basis for any figure at all. Let us take the present price and other surrounding circumstances; will there be a halfpenny that will go to this firm as profit?

Mr. Lemass:

I came to the conclusion that 2d. preference was necessary.

Mr. McGilligan:

But why? Is it all required to meet extra manufacturing costs? If it is you are going to give this company only just sufficient to equalise manufacturing costs, and you are going to make them sell lower. They will bless you. On the other hand, it is quite clear that they would not undertake to manufacture on that basis without getting some profit out of it. There must have been some determining factor. It may be a very loose estimate, but there must have been something in the way of an estimate as to how much of this sum is required to equate the difference in manufacturing costs. If there was any consideration at all given to the matter of further development there must have been some consideration given to the point as to how much of the 1½d. or 2d. per gallon increased manufacturing costs will disappear when they are refining not 3,000 but 30,000 gallons. It is only in those circumstances that we will get any idea as to what is the preferential rate that would have to be maintained.

Mr. Lemass:

There are different estimates from different experts on this subject.

Mr. McGilligan:

Nobody can bring in a measure to this House and say there are different estimates; there must have been some one estimate taken as fairly fixed. There must then have been some advance from that fairly fixed basis in arriving at some calculation as to the prospect of the establishment of bigger business hereafter. Surely, we can get that? Even if it is packed around with reservations, let us hear what was the figure in the Minister's mind when he thought of this 2d. What was the figure? What was the proportionate part representing the increased manufacturing costs? I gathered on the last occasion that it was the whole 2d. or very nearly the whole 2d. Let us say that came from 3,000,000 to 10,000,000 refined. How does the 2d. disappear, and how does the proportionate part of the manufacturing costs go down? When will we get to the point that if 2d. is the manufacturing cost we will be getting ½d. profit on the 10,000,000 gallons? There must be some calculation—I do not care how vague the figures are—for bringing in this 2d. instead of 3d.

Mr. Lemass:

It is based on a 3,000,000-gallon plant.

Mr. McGilligan:

With 2d. absorbed in manufacturing costs?

Mr. Lemass:

To a slight extent it represents the fact that at present prices the profits of petrol refining companies importing are negligible.

Mr. Good:

Is there any guarantee that the 2d. will continue for any time?

Mr. Lemass:

The intention of the Government is to maintain a preferential of 2d.

Mr. Good:

How long?

Mr. Lemass:

To maintain it, unless conditions change. I think it is inevitable, if we secure development of oil refining to the extent we hope, that it will be necessary to take powers to regulate that industry, because of its importance to the revenue. In these circumstances, it might not be necessary to give the security to the home firms in this particular manner, but, so far as it is a matter of Excise and Customs duty, the preferential will be 2d.

Mr. McGilligan:

Even though on a big manufacturing scale it only requires 1d.?

Mr. Lemass:

That will come for consideration in connection with the selling price.

Mr. Dillon:

We have now got a situation in this House when we are asked to give £25,000 yearly to a firm in this country and the Minister is not in a position to say what proportion of the £25,000 is going into the shareholders' pockets as a gift from the Exchequer. That is what this situation means.

Mr. Lemass:

The Deputy's statement shows clearly that he does not understand it.

Mr. McGilligan:

The Minister said that.

Mr. Dillon:

The Minister has clearly admitted that he is not clear in his mind as to what proportion will compensate the manufacturers for the increased cost of manufacture; and what part is going to tempt manufacturers into the business by the prospect of profits. That is one aspect of the question. The other aspect is that supposing a production of 35,000,000 gallons yearly is produced, and supposing it is true that a substantial part of the 2d. that he is giving to manufacturers now is compensation for the increased cost of production, we must assume that when manufacture is on the 35,000,000-gallon basis, they will continue to require some preference as between foreign petrol and their product. In any case, we have no guarantee that they will not. If it be no more than 1d. the operation will cost the country £145,000 yearly. We ought to know definitely what we are going to get, as a community, for the £145,000. It might be justified if we were getting some very important consideration, and it might be justified if it could be demonstrated that we were going to drop revenue, unless petrol refiners were roped in to the tune of £145,000 or that it was going to come back to the Exchequer from some other source. In making up our minds we should bear in mind that there is a very close analogy between this proposal and the proposal in respect of the white elephants set up by the Minister for Finance, to use his own term, at Tuam, Mallow and Thurles. We were told in the beginning that the expense of these operations was to be spread out among the consumers, by economies in manufacture and in a small increase in the price of sugar. Subsequently, we discovered that the Exchequer intervened and stated that having made its distribution of the added costs, it found it had to heap on ¼d. per lb. by way of Excise duty in order to assist the Exchequer.

Mr. Davin:

What about the profits made in Carlow?

Mr. Dillon:

I do not know if Deputy Davin followed the debate. The case I am making is that we have no guarantee as to how the £25,000 will be spent.

Mr. Davin:

On sugar beet.

Mr. Dillon:

We have no guarantee that, in the long run, this enterprise will not cost the taxpayers £145,000 yearly, and we have no notion what we are going to get for it. Having arrived at the figure of £145,000, could the Minister say how that was arrived at? One penny on 35,000,000 gallons was the figure given by the Minister for Industry and Commerce. We have no guarantee that the Minister for Finance may not intervene again and put on another penny with a view to restoring the Exchequer end. All that cost may devolve upon the traders and the taxpayers, without telling us what he hopes to get out of it by way of advantage to the community. Yet we are asked to pass this resolution.

Mr. Moore:

I wonder if Deputy Dillon were Minister for Industry and Commerce, would he be able to get all the information that he is asking the present Minister to supply. I wonder would he find it easy to ascertain the actual cost of producing crude oil in Peru and Ecuador, the cost of transport from there to Haulbowline and finally the cost of refining. Surely, if oil companies have not been given entirely a wrong reputation they are concerns which manage to keep their affairs pretty well to themselves. In my opinion, they keep them so well, or are able to put such a false gloss upon them, that they can deceive anyone, so that even the Minister for Industry and Commerce believes that they are selling petrol in this country without profit. I do not think there are many who, being familiar with the history of the oil companies, will agree with that opinion. In this case it is evident that no oil company is going to explain its costs to a Government, and all the Minister handling a matter like this can do is to take approximate figures. In my opinion, the Minister has done well to get this industry going at a concession of 2d. per gallon. It will put the petrol position in this situation, that the companies supplying the product will not have the power over the country that they had previously; that instead of being merely trading organisations without any fixed capital worth while and in a position at any moment to make any demands they thought well of on the community in this country, they will now have a much bigger interest in this country and will not have the same power to extort that they had previously. Certainly the present position cannot be considered satisfactory by any means—that you should have, with regard to a commodity that is in such very general use, on which the life of the community depends so much, three or four concerns acting in close unison, with the power at any moment to put on 6d., 8d., or 1/- per gallon on the commodity, and no one with even the right to say: "We cannot let you do that: you will have to sell it at a lower price."

Mr. Dillon:

Does the Deputy propose to start an oil well in Galway?

Mr. Moore:

As to all this talk about prices going up, as the Minister pointed out, there is no such thing as a regular price for petrol. There is a purely arbitrary price fixed from time to time at the whim of the distributing companies. It is obviously a purely arbitrary price when petrol costs practically the same in Athlone as in Dublin where it arrives. It is a purely arbitrary arrangement by which in Cork petrol costs 1d. per gallon more than in Dublin. Yet Deputy McGilligan insists that there is a price for petrol. Who has ever been able to say whether the action of the distributing companies in raising the price at any moment was justified or not. In regard to prices, the existing companies have the country very much under their control, and the one big benefit I would expect to arise from this new development is that the temptation will be less upon them to extort from the community in future than it has been in the past.

There is only one thing that I feel a bit dissatisfied about and that is the prospect for the export of by-products. The parent company of this concern has just finished a big refining station at Manchester with a capacity of 100,000 tons a year. Obviously they will have a very large amount of by-products to sell, and it will be remarkable if they do not first insist on selling the by-products of that concern before they allow the subsidiary company to sell any quantity in any market which they can control. I do not feel altogether satisfied on that point. Otherwise, I think the development is a good one.

Mr. McGilligan:

The last contribution is interesting as showing the state of the Deputy's economic mind. There are three considerations that operate with him. One is that petrol, he seemed to say, is governed by those who own the oil wells. Do we change that by this?

Mr. Moore:

Yes, inasmuch as this company is not part of the combine. It is in opposition to the combine.

Mr. McGilligan:

It is not producing oil as far as this is concerned; it is refining oil brought to it. We do not change the question of the price paid by the community for petrol by this, in so far as the owners of the wells are concerned. The second point Deputy Moore made was that it was not really the oil producers who mattered, but the distributors. Does this affect the distributors?

Mr. Moore:

Yes.

Mr. McGilligan:

How?

Mr. Moore:

It lessens their power.

Mr. Lemass:

It is a new entrant into the field.

Mr. Moore:

It brings in a new company that, to say the least of it, is not in the combine.

Mr. McGilligan:

What the Deputy himself said shows that it is in the combine. He said that he had a hesitation about this because of the refinery at Manchester and all the interlocking. This new entrant is interlocked with the people at present throttling us.

Mr. Moore:

No.

Mr. McGilligan:

That is what the Deputy said.

Mr. Lemass:

It is not.

Mr. McGilligan:

Deputy Moore and I are at one in this—that we do not believe that these people, who are stranglers of the community when operating from outside this country, are going to come in here, retaining the same business instinct and nationality and become benefactors to the community when they get to Haulbowline —not a bit of it. I am also in agreement with Deputy Moore when he says, apparently, that either the owners of the wells or the distributors have been able to put something rather easily and quickly across the Minister, when he so compassionately talks of the situation to-day and says that they have been for a long time selling petrol at a loss.

Mr. Lemass:

I did not say it was sold here at a loss.

Mr. McGilligan:

Sold by the oil owners or distributors? I wonder does Deputy Moore believe that amended statement.

Mr. Moore:

No.

Mr. McGilligan:

Not at all. It is nonsense. The situation that Deputy Moore welcomes is that we do not make the slightest impression on the people who are producing the oil. Remember, they are huge companies which are interlocked—probably the biggest monopoly the world has seen— interlocked all round the place; and this driblet of 3,000,000 gallons, which we still have to buy from them, is going to make no impression on their sale prices all over the world.

Mr. Lemass:

What has their sale prices all over the world to do with it?

Mr. McGilligan:

I think they have quite a lot, except the Minister believes that we are going to get a tremendous benefit.

Mr. Lemass:

It is the sale price here which matters.

Mr. McGilligan:

Exactly.

Mr. Lemass:

That is not similar to the sale prices in the world.

Mr. McGilligan:

That depends upon two items of cost—the cost of refining and the cost at which the unrefined article is bought. I am dealing with the second of these.

Mr. Lemass:

And the cost of distribution.

Mr. McGilligan:

Let us work down to that. As far as the cost of the unrefined article is concerned, we do not gain on this—we will not gain a penny. As far as the costs of manufacturing are concerned, the Minister tells us that on this small scale it is going to take the whole of the 2d. to equalise matters. I do not think Deputy Moore believes that. I do not believe it. I do not believe anybody is going to enter into business here if he is only getting what makes the extra manufacturing costs. He is going to get a little bit off it. What has this to do with distribution—the third item? I thought we already had a magnificent instrument in the Prices Commission to regulate distribution. Perhaps that went wrong.

Mr. Lemass:

The Deputy tried his hand at it when he was Minister.

Mr. McGilligan:

I found I was up against it; but I never had to confess that the people I was trying to beat down in price were selling at a loss.

Mr. Lemass:

Nor have I suggested that they are selling at a loss.

Mr. McGilligan:

You have suggested that the people who are sending petrol into this country are selling at a loss. Do not quibble.

Mr. Lemass:

That is a different thing.

Mr. McGilligan:

That is the point I am talking about. What about distribution? Where do we gain on this, as far as distribution is concerned? What is the impact on distribution costs? These people are going to sell from Haulbowline refined petrol at 2d. differential in manufacturing costs. How does that in itself affect distribution? Deputy Moore says that is not going to affect the monopolistic control of the price of unrefined petrol, knowing, as he must know, that this will only mean that the people down there will get a little bit extra in the way of profit, that as far as the community is concerned petrol will be on sale at Haulbowline at very much the same price as it is on sale at present and that this means nothing to distribution. Although he objects to the whole question of petrol prices at the moment he welcomes this proposal and thinks we are getting an industry here for a small concession.

Resolution put and agreed to.