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Dáil Éireann debate -
Wednesday, 30 Mar 1938

Vol. 70 No. 9

Committee on Finance. - Cement (Amendment) Bill, 1938—In Committee.

Sections 1 and 2 put and agreed to.
SECTION 3.
Question proposed: "That Section 3 stand part of the Bill."

You will observe, Sir, that Section 3 repeals sections of the Principal Act referred to in the sections of this Bill, and that includes Part V of the Principal Act in toto. The Principal Act contains one section which requires the Minister to publish in the Iris Oifigiúil certain relevant facts relating to the licence conferred on the entrepreneur to manufacture cement and to import it. That obligation is now removed and the Minister is no longer under an obligation to publish these particulars. I want now to ask the Minister some questions so that he may have an opportunity of answering questions which he would have answered by the advertisement in Iris Oifigiúil if this section were not passed. The first is a question of price. It is true that cement has been controlled by a cartel. I want to give the Minister an opportunity of denying something which I am not sure he will be in a position to deny. Cement has gone up in the last two years by, I suppose, 15/- to 20/- a ton. So far as I am aware the history of that increase in price is as follows:— The Minister began this system of levying a tariff on incoming cement by prescribing a licence fee. He put on a 5/- nominal fee in order gradually to raise the price of cement so that when the Irish product came on the market, the shock to the consuming public would not be too great because at that time he foresaw that Irish manufactured cement would cost much more than the imported cement. When he put on the first 5/- nothing untoward happened. But he then gave the signal that he intended to put on another 5/- at some stage with a view gradually to stepping up the price, whereupon the cartel intervened and said:—

"Now, look here, if you are going to go and put on 5/- a ton, we ourselves will put on 5/-; why should the Irish Treasury collect this 5/-. We are prepared to quote cheap cement in order to keep out Spanish and Polish cement to which the Minister referred; but if the Irish Government proposes to levy a general tariff of 5/- over and above what they are already levying, we will spare them the trouble."

And they did. Accordingly, they got word somewhere of the figure that was in the Minister's mind with regard to Irish cement and they stepped up the price of cement until they have reached a figure that they knew the Minister wished to arrive at. The result is that the cartel is now, and has been during the last 12 months, charging us £1 a ton more for cement than it would have charged us only for this interlude, and more than it is at present charging Great Britain. That represents £320,000 a year of an overcharge on this country. That is going into the pockets of the cartel.

Deputy Corish recently said that the fee of 5/- a ton was a very trivial matter in the cost of a house. It is true that if the fee was not more than 5/- a ton that would mean not much more than 30/- in the cost of a labourer's cottage. But the fact is that if you add to the licence the additional price charged by the cartel in anticipation of another licence fee here you will find that that will bring the additional price of the cement up to about £1 a ton. This works out at about £6 in all in the cost of a labourer's cottage. If one had an additional £6 to play about when building a labourer's cottage, one could do a good many things that one cannot do now. If this cement scheme had never been brought about, we would be getting cement at a low price. There is no doubt about that, for the cartel would keep down the price lest Spanish and Polish cement might establish a market here. That class of cheap cement never got a hold in the market here. That was a thing the cartel never allowed to happen. I know that the cartel would freely bleed us in the price of cement, but there is one thing they would never do and that is to induce us to look for a cheap cement in other markets. For that reason they were compelled to bring the price down to a low level so that nobody in this country would find it worth his while to venture on bringing a cargo of cement from Spain or Poland. They knew that the moment they forced the price up here, that was likely to happen. They kept a certain stock of cement in the country. If there is a large stock of cement at an inflated price, it would pay somebody to bring cement from the port of Daynia in Poland or from some port in Spain. So long as the price of cement was kept down everyone would go on dealing with the cartel. While I admit that the cartel can do something to abate the consumers' normal advantage, there are limits to which it cannot go. Because if they try to raise the price too much, cement flows in from other sources. I have reason to believe, and I suggest, that this increase in price was made with the knowledge and tacit approval of the Minister for Industry and Commerce. If that is true, I think the Minister has to bear a very heavy responsibility, because in order to cover up the increased cost of manufacturing cement in this country he is permitting and, in fact, officially encouraging the cartel to plunder the Irish consumer of cement, 70 per cent. of which cement was used in the erection of labourers' cottages and public buildings. I invite the Minister to deal with that question fully in anticipation of the repeal set out in the Schedule to this Bill because he will not have an opportunity of dealing with that matter when Iris Oifigiúil comes to be published.

I have repeatedly urged on the House that there can be no effective regulation of prices for cement unless there is regulation of quality. One of the obligations, under Part V of the old Act, was that the Minister had to publish in Iris Oifigiúil the quality which he required the cement manufacturer to produce. The Minister, when questioned by me on the Second Stage of the Bill, said that the quality he had in mind to impose on Cement, Ltd., was one superior to the British standard. My recollection was that in fact commercial cement always exceeded the British standard, and the Minister or some Deputy said that his belief was that the British standard had been brought up to the average level of commercial quality cement. That is quite wrong. No modern cement industry in the world at present is trying to sell cement of the British Engineering Standards Association specification of 1925 and, if they did try to sell it, nobody would buy it. I had these figures in my hand when the Principal Act was passing through, and I have since found them. I want to put them on record so as to give the Minister an opportunity of dealing with them.

The British Engineering Standards Association specification is, first, in respect to fineness and the residue, on a sieve, 180 x 180 mesh to the inch, 10 per cent. maximum. The residue, in the case of an ordinary commercial sample of cement is only 3 per cent. Again, on a sieve 76 x 76 mesh per inch, the residue, under the British Engineering Standards Association specification, is 1 per cent. maximum, while the residue in the case of good quality cement is a trace. That shows the immense superiority of ordinary commercial cement. The second test is for soundness. The British Engineering Standards Association specification provides that the expansion, by the Le Chatelier test, shall be 10 millimetres maximum while the same test for an ordinary sample of commercial cement gives one millimetre expansion. The setting time is the third test. Here the British Standards specification provides 30 minutes' minimum for an initial set, whilst the time for an initial set, in the case of ordinary commercial cement, is four hours five minutes. In the case of a final set, the British Standards specification provides for a ten hours' maximum, and in the case of ordinary commercial cement the maximum is five hours ten minutes. There you have an immense superiority, on both these tests, of ordinary commercial cement.

Now, we come to what is, in my judgment, the most important of all tests, that is the tensile test. The British Engineering Standards Association specification for the tensile test provides that the breaking strain in lbs. per square inch of briquettes, measuring one inch by one inch, per section, shall be a minimum of 600 lbs. on a briquette seven days old, made of neat cement. The commercial test for a similar briquette is 946 lbs., more than 50 per cent. superior. For three parts sand and one part cement, the British Engineering Standards Association specification for seven days is 325 lbs. minimum and for 28 days 366 lbs. minimum. That is very important, that the British standard only requires a very modest increase in tensile strength over these vital three weeks of early setting. In the case of ordinary commercial cement, the specification provides, for three part sand and one part cement, a tensile test of 478 lbs. for seven days, rising to 616 lbs. for 28 days, which represents an improvement of about 100 per cent.

I direct attention to these figures because I apprehend that Cement, Ltd., will come forward with the British Engineering Standards Association specification of 1925 and say to the Minister: "If we produce cement for you which is equal to that specification, at the price which you fix as the price of good cement, we are filling the bill and we are giving the Irish consumer as good a cement as he has been getting outside at a price fixed by you." That would not be at all true. The commercial article at present being sold here is 50 per cent. superior to the minimum British Engineering Standards Association specification, and it is of vital importance to every consumer of cement in this country that that superior commercial specification will be insisted upon when the Minister arranges with Cement, Ltd., the type of cement that they will produce. That is the second question.

The third question arises out of something the Minister said in his concluding remarks when he stated that the quantity produced by Cement, Ltd., is going to be fixed. Why do you want to fix the quantity that they produce? Is there no hope ever of selling any abroad, or do we anticipate that the cost of producing cement in this country will be always so much higher than that at which it is produced by the cartel that we will never be able to compete in the markets in which the Poles and the Spaniards are at present competing? I am not sure that this is relevant, but the Minister also said that it is his intention to limit the profits. I take it that that will be a condition imposed on the company. What, then, is the stimulus left to Cement, Ltd.? What difference is there between Cement, Ltd., and any Government Department, if you are going to limit the profits? I see no advantage at all in having this individual enterprise system if you limit profits, because the only justification left for it is then promptly swept away.

I submit that the matters I have referred to are of vital importance to the country and that it is essential that the Minister should take this opportunity of giving this information which he otherwise would have been obliged to give us in Iris Oifigiúil at the appropriate time. In connection with the price, which was the first matter mentioned, when the Minister comes to deal with that he might answer an important question that arises. Supposing when Cement, Ltd., come into production in two months' time and the price of Irish cement is fixed, that it is substantially in excess of the price ruling at the present time, what will the position be of persons who have contracts to deliver cement? Secondly, what will be the position of persons who have contracts for the completion of large building schemes, whose ultimate contracts for the building depend on the price that has been tendered by the supplier of cement? Does the Minister propose, by statute or regulation, to amend all these contracts and, if he does, has he power to do it, and where?

If Deputy Dillon is ever in need of a new occupation he should take to writing thrillers. I think that neither William Le Queux nor Edgar Wallace could rise to the heights of imaginative creation which he has done just now. That was a good thrilling story when he pictured the inner councils within the cartel meeting to discuss how they were going to deal with the situation that arose here, how they planned to give effect to the secret wishes of the villain of the piece — myself, of course — who desired to increase the price of cement, even though foreigners get the profit, so that we would disguise the fact that the price of Irish cement was going to be so much dearer than the foreign cement. It was a thrilling scenario, and if he wrote it for the movies I think he would get a substantial fee. It happens to be all bolony.

The Irish Press will get cross with the Minister if he uses nasty words like that.

That is not a nasty word; it is a nice word. It is all nonsense. I am not as familiar with the plans of the inner councils of the cartel as the Deputy professes to be, but I am certain that nothing happened except this. First of all, the cartel, so far as this country is concerned, did not exist when the 5/-licence fee went on. That rather knocks the bottom out of the Deputy's story. I am equally certain that whether we put on the 5/- licence fee or not, whether this Government was in office or not, whether I was Minister or not, or whether Deputy Dillon had remained an Independent member or leader of the Farmers' Party, or joined Cumann na nGaedheal or not, the cartel would have extended its operations to cover this country inevitably sooner or later. The only reason for surprise is that we were ever excluded from the scope of its operations. I have often expressed the opinion here that that was purely accidental and that the accident would be remedied as soon as the necessary arrangements to that end could be made. These arrangements were made and, when made, all that happened in the inner councils of the cartel, I am certain, is this, that they decided to get as much as they could out of this market while it was left to them, and that the increase in price, in so far as it was not caused by an increase in other charges, was occasioned entirely by that desire — to get as much profit as possible out of this market while in it, and that the only limitation that operated in the fixation of the price they charged was the possibility of killing the market and reducing the actual sales. As a proof of that, I mention the agents, who happen to be of our own nationality, who were engaged in the distribution of that Continental cement and who, operated by a similar impulse, increased their commission from about 2/- per ton to 8/- or 9/- per ton. That, I am afraid, rather destroys the beauty of the Deputy's story.

It does not, in my opinion. The Minister has been very careful not to deny the truth of my story.

I said it was bolony, but perhaps he did not understand me. I meant that it was nonsense, untrue, without foundation, and, in fact, inconceivable. Let us turn to the other questions which the Deputy succeeded by some method unknown to the Standing Orders, in hanging on to this section of the Bill. He spoke for a long time about the British standard specification. Nobody mentioned the British standard specification except himself. I think Deputy Dockrell did ask on the Second Reading for an assurance that the cement to be produced here would conform to the British standard specification. Deputy Dillon thinks that the British standard specification is nonsense and that, in fact, cement that conforms to it is inferior. Deputy Dockrell wanted an assurance that it would be at least up to that standard. I think the only assurance I gave the Dáil was that the cement manufactured here and the cement to be imported would have to conform to the Irish standard specification, and that specification, which will shortly become operative under an Order to be made by me, was prepared by a committee established by me, or by me in association with the Institute of Civil Engineers; and I am assured by persons who are in a position to give an authoritative opinion that it sets a standard considerably superior to that prescribed in Great Britain.

The Deputy asked why we should fix the quantities of cement to be produced in these factories. There are two reasons. Clearly, it is not desirable that the company, if it is to be an importer of cement as well as a manufacturer, should be at liberty to reduce unnecessarily the quantity of cement to be manufactured here. In fact, if there is any advantage in doing so, under the arrangement we are making there is, in fact, every inducement to them to eliminate imports as quickly as possible. But we have fixed an upward limit to the amount that may be produced at each of the factories in order to ensure that the intentions of the Government to distribute the manufacture of cement through the country will be given effect to. From the manufacturers' point of view, undoubtedly the most satisfactory arrangement would be to produce all the cement in one plant. But that would be by no means satisfactory from the consumers' point of view. It would suit the consumers within the immediate vicinity of that plant because they would possibly get the cement cheaper. But, it would not suit the consumers throughout the rest of the country who would have to pay very high transport charges and, consequently, get the cement much dearer. Because of that we decided that the most economic way to produce cement in the circumstances of our market involved the establishment of at least three producing centres, possibly four. In order to ensure that that would be done, we fixed an upward limit to the quantity of cement to be produced by the licensee at each of the plants he was authorised to establish.

There is no reason why the manufacture of cement for export should not be undertaken here. There is, in fact, quite a prospect of a business of that kind developing, but, obviously, it will not develop for some time, because it will be at least three years from now before the full quantity of cement required for this market will be produced, much less a surplus which can be exported. But the Deputy need not be apprehensive that the manufacture of cement here will be in any way inferior to the method of manufacture in other countries. The plant which has been installed is as up-to-date as exists in the world. The methods of manufacture are as economic as are in operation anywhere. The quality of the cement to be produced will be as high as any other. I give the assurance that it is my intention to see that these conditions shall continue to exist by the use of my powers, if such a use should be necessary, under the original Cement Act, 1933.

The Minister did not touch on the matter of contracts and what the position will be.

I do not know what the Deputy wants me to say. I think most contractors had certain difficulties in connection with the rise in the price of cement which has occurred over the last two or three years. That is inevitable. In fact, contractors in future are going to have the advantage of a relative stability in cement prices, something which they have not had heretofore.

The Minister has not taken my point. You could put a provision in your contract that the price of cement was to be 40/- per ton, plus any impositions put on by Oireachtas Eireann. That is all right. But if you make a flat contract for the delivery of cement at 40/-, your supplier must hedge your contract. He must secure himself against any future rise in prices if he undertakes to deliver. But, suppose a contract of that character is in existence in which he unconditionally undertakes to supply cement at 42/- a ton, and that the Minister comes along and fixes by law that nobody will sell cement at less than the price of Irish cement, he is obliged by law to charge more than that although he has hedged his contract.

No. I am saying that the imported cement will be sold at the same price as Irish cement. The difficulty which the Deputy contemplates will not arise because the Irish cement will be sold at the prices now prevailing. There is going to be a reduction in the price of cement in consequence of this new arrangement and not an increase.

I find it difficult to follow the Minister, because in one part of his statement he says that the price of Irish cement is definitely going to be lower than the price of imported cement.

I have said lower than the prevailing prices of cement here now.

Is the present price of cement delivered in this country to be the basis per ton for the Irish factory?

No. The price at which Irish cement will be sold was fixed when this contract was entered into with this company — when this licence was issued to them. That was a number of years ago, and has no relation to the present price of cement at all. It was fixed in relation to the manufacturing costs. These were taken out and analysed in detail. It was noted that a number of them were fixed: that they were capital charges of one kind or another. A formula was prepared which fixed the price of cement, subject to certain variations. It is at that price the cement is going to be sold, and it is at that price imported cement is going to be sold. What I have stated to the House is that that price is lower than the prevailing prices for cement here.

The Minister, in another part of this speech, said that the cost of cement here will be based on the electricity, coal and labour charges. A moment ago he said that a formula was prepared some years ago on which the price to be charged for cement here is based. Is he able to tell the House what increases have since taken place in electricity, coal and labour charges? If these increases have been such that Irish cement will be dearer than British cement, are we to take it from him that the imported cement will be allowed to be sold under the price of Irish cement?

Take it that the price of Irish cement is 8/- per ton more. There is a duty of 5/- per ton on imported cement. What becomes of the difference — the 3/-?

If there was a difference of 3/-, presumably the manufacturer would get it, or somebody engaged in the distribution of cement. But there is not this 3/-, and that is the point that I have been trying to make clear to Deputies, because, obviously, if any of the factors to which I have referred should vary here to an extent sufficient to be reflected in the price of cement they will vary elsewhere. I cannot say how much the price of cement will have increased beyond the original contemplated figure by reason of any increase in coal and other charges. It is unnecessary to deal with that, because if, for instance, there was an increase in the price of coal which affected the price of Irish cement, it would also affect the price of British cement. There is no reason to contemplate that the manufacture of cement in Great Britain is any cheaper than it is here, except in so far as their coal, labour or electricity may be cheaper, but, subject to these three charges being the same, I should say that the cost of manufacturing cement here would be lower, and not higher, than in Great Britain.

The price of cement delivered in London to-day is 42/-. Here it is £3.

The big factors are the three charges I have mentioned — coal, electricity and labour.

Surely electricity is not cheaper in England than it is here.

Of course it is.

Sections 3 to 8 inclusive agreed to.
SECTION 9.
(1) The following provisions shall have effect in relation to a transport works order granted to the holder of a cement manufacture licence, that is to say:—
(a) such order shall contain such provisions as the Minister thinks necessary or expedient for the purpose of such order;
(b) without prejudice to the generality of paragraph (a) of this sub-section,
(iv) such order may incorporate all or any of the provisions of the Lands Clauses Consolidation Acts, with such modifications and adaptations as the Minister thinks proper.

I move amendment No. 1:—

In sub-section (1) (b) (iv), page 4, line 5, to delete the word "Consolidation."

Amendment agreed to.
Section 9, as amended, agreed to.
Sections 10 and 11 agreed to.
SECTION 12.
(1) For the purposes of this Part of this Act, importation shall be deemed to take place when the importing conveyance is reported under the Customs Acts.

I move amendment No. 2:—

To delete sub-section (1).

This is a sub-section that should not have appeared in the Bill. It would appear to enable a defendant to say, if he failed to report his vehicle at the customs station, that no importation had taken place, and, consequently, that no offence was committed.

What induced the Minister to put in this sub-section? Was it simply taken from some other Act?

Precisely, without reference to the particular circumstances here.

Amendment agreed to.

I move amendment No. 3:—

In sub-section (2), page 6, to delete all words from the word "not" in line 1 to the word "country" in line 5 and substitute the following —

be deemed to have been manufactured in a particular country if, but only if, either—

(a) the prescribed proportion of its value is derived from expenditure of a prescribed kind incurred in that country in respect of materials produced or work done in that country, or

(b) the prescribed operations connected with its production have been carried out in that country.

Section 14 provides that any licence issued for the importation of cement may have a condition attached to it that the cement should be manufactured in a particular country, and Section 12 provides that regulations may be made defining what is meant by cement described as having been manufactured in a particular country. It is not always practicable to settle the origin of cement by reference to the proportion of its value which is derived from expenditure in a particular country. On occasions, an easier test might be whether particular operations connected with the manufacture of cement have, in fact, been carried out in a particular country, and we are taking power to make regulations in that form.

May I take it that the amendment strengthens the Minister's power to direct Cement Limited to buy cement in a particular country?

Yes, if we propose to use that power. I am told that the section was inserted in the original Bill for the purpose of implementing trade bargains of one kind or another.

Amendment agreed to.
Section 12, as amended, agreed to.
Section 13 agreed to.
SECTION 14.

Under paragraph (f) of sub-section (2), the Minister seems to be able to specify any condition he likes. I should like again to call attention to the question of price. The fact is that the price of cement delivered on the site in London is at present 42/-. That means, I suppose, that it would be about 40/- f.o.b. at the port of London.

Is the Deputy proposing to hang this on to 14 (2) (f)?

Under (f) the Minister can attach any condition he likes.

And the Deputy thinks he can say anything he likes on that paragraph?

If you choose to put in paragraphs like that, you must expect a wide discussion. Under this paragraph, the Minister "may impose such other conditions as he thinks fit."

I cannot attach a condition about the price of cement at the port of London.

You can order them to buy in a London ship or at the port of London, and to pay the man in London a certain price — no more and no less. You can name the ship he is to put it in. Does the Minister seriously contend that the difference between the price of 40/- in England and the price that will be charged for cement here will be no more than the difference in the cost of manufacture arising from higher wages, gas and electricity charges and the higher cost of coal in Ireland? Would the Minister be good enough to give us two categorical statements now, or on the next stage of the Bill if he prefers— (1) the exact specification he has fixed for Cement, Ltd.?

As to quality?

It will be published in the course of a few days.

That is quite satisfactory. Will the Minister also tell us the price at which the cement is going to be sold?

I understand that that has been published by Cement, Ltd.

Not to my knowledge.

It is difficult to state the price, because it is a delivered price and not an ex-factory price. They have made arrangements with the transport companies for zone rates —for a level transport charge to particular areas. The price of cement in those areas is to be the ex-factory price, plus the transport charge. So far as I know, that has been communicated by the company to the importers and they have also been told the various discounts they will be allowed, as cement is sold under different conditions. It is a very long statement and I could not attempt to analyse it here.

I have not seen it. Can I get it from the Minister's Department?

I am speaking only of a printed document which I have seen. It was issued yesterday or the day before.

If I apply to the Minister's Department, shall I get a copy?

Probably.

When the specification is published it will deal with fineness, soundness and the tensile test.

I understand that there is an opinion amongst experts that tensile strength has no significance in relation to cement and that some other test should be applied. I do not know whether the committee which has been set up is working on that basis or some other basis.

If they are working on the British standard specification they must be working on that basis.

This will be a new specification.

But it will be analogous to the British standard specification.

Under paragraph (d), the Minister is given power to impose a condition that cement shall be imported at a specified port or place or by a specified route. What was the intention in taking that power? Take the case of the ports of Ballina, Galway and Sligo. It would be unfair if the Minister were to require importers in these areas to import their cement via Cork or Dublin.

The Deputy, no doubt, appreciates that many of the provisions of this Bill will be inoperative if we work on the lines I indicated of issuing a sole import licence but we have to provide against that not proving possible and for our having to issue a number of licences to individual importers. In such event, the arrangement we would make would be to effect the distribution both of our home-produced cement and of the imported cement on the most economic basis. Transport is such an important item in cement costs that, obviously, we would try to ensure that cement produced at Limerick would be sold as near as possible to Limerick and that cement produced at Drogheda would be sold as near as possible to Drogheda. Consequently, the cement to be imported would come into those areas which could not be served by these centres. That will be a very cumbersome thing to arrange, and that is the reason we were trying to deal with the matter by the other system we have outlined here. Those particular conditions will not become operative unless that other system cannot be operated, in which case we shall have to fall back upon the less satisfactory and more cumbersome arrangement of regulating cement imports in the way I have just described.

Sections 14 to 17, inclusive, agreed to.
SECTION 18.

Under this section, the Minister places upon himself an obligation to repay the licence fee in respect of an import licence in the event of the licence being revoked?

Suppose the Minister revokes the licence for fraud or because it was secured by misrepresentation, does the Minister propose returning the fee?

If, in fact, the cement is not imported, the fee must be returned.

And the Minister proposed then to proceed for a penalty?

Section 18 agreed to.
Schedule and Title agreed to.

I propose to take the next stage to-morrow.

You do not want the Fifth Stage to-morrow?

In view of the publicity that has been given to this Bill, it is obviously desirable that it should become law as quickly as possible. It has been announced that prices are going to come down and that certain alterations in the method of importation are to be effected. In these circumstances, everybody desires — representations have been made to me on the subject — that the new system should be brought into operation as quickly as possible. In any event, certain discussions have to take place and certain agreements have to be made, and made fairly quickly, if the new system is to be operated when the home-produced cement is available, which will be in the course of next month.

We are prepared to give the Minister all the stages of the Bill this day week.

That will suit me.

Report Stage fixed for Wednesday. 6th April.

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