The Deputy can point out the nonsense, which he only can see, later on. All I ask him is to wait till later on. As I said, the Chancellor of the Exchequer stated that the economic price of flour in England is 41/-. The actual price here is 47/-. If we assume similar conditions of sale, the price here would be 45/-. In any event, as between the economic price in Great Britain and the maximum price here, there is a difference of 6/-. Of that 6/-, 2/- represents the price of the sack, which is not charged for in Great Britain but is charged for here. We can and may alter our method of fixing prices here so as to correspond with the British method. If we did, our maximum price here would be quoted at 2/- less. The British price contains a levy of 3/6 charged on every sack for the purpose of subsidising the production of native wheat. We subsidise native wheat on a somewhat different basis. But, allowing for the fact that only 20 per cent. of the wheat used in Great Britain is of native production, whereas 35 per cent. of the wheat used here at present is of native production, there is a difference between the subsidy element in the British flour price and in our flour price of 2/- per sack. These two items account for 4/- of the 6/- difference between the economic price in Great Britain and the actual price here. In addition, there is included in our price 1/- per sack, which is charged to meet the cost of the wheat reserve. That levy was referred to before here in the Dáil. It is still being made. It may not be necessary to continue it at all times, but, in the present price of flour, there is 1/- per sack levy which is brought into a special fund which is used to finance the wheat reserve. There is, therefore, a difference of 1/- per sack still to be explained.
I should mention that the cost of imported wheat delivered in this country is higher than the cost of the same wheat delivered in Great Britain. Wheat is brought into Great Britain in British ships at controlled and subsidised rates, and on the cargoes conveyed in those ships the British Government bears by far the greater part of the war risk insurance cost. We have to transport our wheat in ships secured in the open market and we have to pay the open market freight, and, further, the full war risk insurance charges have to be borne. These additional charges are probably more than sufficient to wipe out the unexplained difference of 1/- between the price of a sack of flour here and the economic price in Great Britain. But there are other factors operating as well. The wages paid in flour mills here are higher than in Great Britain, and apart altogether from wages, labour costs are higher, because the number of men employed in relation to output is somewhat higher than the number employed in British mills.
All these factors to which I have referred tend to show that the price of flour here is not excessively high. The attempts made to create public discontent by assertions of that kind are not justifiable on the facts and can only be described as the product of ignorance or dishonesty. The price of flour here at present is, in fact, less than it was three years ago. Nevertheless, as I said, the whole question is being investigated to see if there is any way by which it can be kept to lower levels.
The price of bread continues to be regulated by the Bread (Regulation of Prices) Act, 1936, the functions in relation to which have been transferred from the Minister for Industry and Commerce. It follows that when wheat prices increase, the prices of wheat offals must follow suit. In fixing the price of flour, regard is had to the reasonable price at which offals must be sold. The c.i.f. price of imported offals is now several pounds higher per ton than the present price of homeproduced offals. In fact, the price of imported offals, due largely to freight charges, is such that it is doubtful if further offals can be imported at all, at least for the present. Present indications, therefore, are that the supply of wheat offals will only be from 70 to 75 per cent. of the quantity available about this time last year. Conferences have taken place with the Irish millers and arrangements have been made to secure as equitable as possible a distribution of the available home-produced offals. It may be necessary to emphasise that control over the price of flour only began to operate strictly in December. Every effort is being made to make that control effective, and steps are being taken to investigate the results of that control and to judge in what special respects it should be further exercised.
It is desirable, I think, to correct at once an erroneous view contained in a recent letter published in the Press from Deputy Dillon. Deputy Dillon put the query as to whether the price charged for flour is based on the net profit of the least efficient millers. That is not correct. The price of flour has been based on a formula arrived at by examination of the costs of the millers in the country. The price arrived at by a formula is an average price for the whole country and it is consequently not giving a reasonable profit to the least economic millers. The question as to the usefulness of that formula for the purpose of control is one of the matters that have been carefully examined. Deputy Dillon in the letter to which I have referred also suggested that household flour should be considerably cheaper than bakers' flour. After full consideration of the relevant factors it was decided to fix the same price for all flour permitted to come into the operation of the control. Household flour in this country was cheaper than bakers' flour, but it is very doubtful if there was ever any justification for the difference in price. A bigger percentage of Irish wheat was generally used in household than in bakers' flour and Irish wheat was and is dearer than imported wheat. It is difficult to understand why household flour should be cheaper but at present, as I have mentioned, the prices of Plate and Canadian wheat are almost the same. It is even possible that on a basis of actual cost the price of household flour would, under other arrangements, work out higher than the price of bakers' flour. In connection with the distribution of wheat, the system adopted by the Grain Importers (Eire) Ltd., is to allocate through the recognised former grain importers. The millers at the ports of Dublin, Cork, Limerick and Waterford get wheat at c.i.f. prices plus the importers' charges. The mills situate elsewhere have to pay carriage charges. The arrangement seems to work out satisfactorily inasmuch as no representations have been received by the Department in relation to it. If occasion arises a different scheme can be easily adopted.
I turn now to deal with the problems that have arisen in connection with the distribution of commodities. So far the only commodity that it has been found necessary to ration, in the generally understood sense of that word, is motor spirit. The control of the distribution of other commodities in varying degrees short of actual rationing has, however, been unavoidable, in order to ensure that available supplies are distributed equitably. In co-operation with the traders concerned, the Department has succeeded in avoiding the imposition of rationing in respect of any of these commodities, and it is the intention to continue to rely on the present methods and to refrain from imposing any additional rationing scheme except as a last resort.
Generally, the efforts of the Department to secure equitable distribution of available supplies of essential commodities have been successful. By arrangement with the traders concerned or due to the directions given by me in the exercise of my powers under the Emergency Powers Order, 1939, available supplies are distributed where control is necessary, on the basis of the average of pre-war deliveries, and while cases of individual hardship may have occurred as a result of that restriction, an inevitable consequence of restrictions of this nature, every such case coming to notice has received the most sympathetic consideration, having regard to all the necessities of the situation. Petrol is the only commodity which is rationed in this country.
In the case of petrol, the rationing schemes came into operation on the 2nd October, and since then the same basic allowances have been allowed. It was evident shortly after the war began that difficulty would be experienced in obtaining supplies of petrol. That expectation has proved to be true. There is a false idea that there are considerable stocks of petrol in the country. That is not so. The stocks consumed are just being replenished and no more. Very few tankers arrive here now. Supplies are arriving in relatively small quantities. The situation is being kept constantly in review, and the amount of petrol permitted to be purchased depends upon the stock position. Consumption has been restricted to between 25 per cent. and 30 per cent. But if supply should improve, every effort will be made to increase the ration.
It was inevitable that in putting a scheme of that magnitude into operation there were found to be errors and omissions and some motorists may have considered that their cases did not get adequate attention. I believe now that the scheme is working quite satisfactorily, and provided the public comply with the simple instructions which they get, nobody should be without a petrol licence for a basic supply at any time.
It is obvious that once rationing becomes necessary, persons cannot get the petrol that they think they ought to have. It seems that the great bulk of motorists have adapted themselves to the altered conditions, but considerable pressure is exercised by individuals for bigger allowances. The supply position is such that we cannot meet those demands, but every effort is made to give as liberal an allowance as possible to persons engaged on essential services or those who must use their cars in the course of their business. It is appreciated that persons like commercial travellers must suffer more than most other people under the petrol rationing scheme, but every effort is made to give liberal treatment. But it would be very awkward for the Department to attempt to discriminate as between one class of traveller and another, and especially between travellers in the same line of goods. So far commercial travellers have been granted three times the amount granted to the ordinary motorist and, if possible, sympathetic consideration will be given to increasing their ration. For the next couple of months I am arranging to increase these rations, but I cannot say that that increase will be permanent or will be permitted over any prolonged period. The same consideration will be given to persons engaged in business who require the use of a car. Deputies will be interested to know that notwithstanding the rationing scheme the number of cars licensed in January of this year shows no falling off on the number registered in the corresponding month last year. Public transport for passengers and goods is not affected by the petrol ration as all requirements are granted. Similarly State and local services are not restricted. All the petrol necessary for agricultural purposes is also given. As was announced in the Press, a 50 per cent. increase has been granted to all private owners for the months of March and April. I now come on to deal with the question of State control of prices and will state briefly the principles upon which that control has been operated. A state of international war has, as in the past, been marked by a progressive rise in the level of prices and in the accumulation of abnormal profits.
With the comparatively recent experience of the Great War as an example, it was possible to anticipate within reasonable limits the conditions which were likely to arise during the present emergency and, accordingly, to frame measures of prevention and control which would ease, as far as possible, the whole burden of these conditions on the community as a whole. To the extent that this country is dependent on outside sources of supplies of materials and manufactured products and that those goods, in addition to their market value, must include in their price the cost of freight, insurance and so forth, it was clear that an increase affecting large sections of internal price levels would be forced upon us. It was also clear that the impact of such increases would bring about adjustments in the price levels of native materials and manufactured products and that, throughout the price structure as a whole, a general movement upward would, therefore, take place. Such movements, coupled with the fear of scarcity, provide ideal conditions for the accumulation of abnormal and excessive profits and the competing scramble of wages and prices.
The measures of control taken have, therefore, had, as their primary aim (1) to bring all increases in the prices of commodities under control, (2) to limit such increases to the recovery of unavoidable and proved increases in costs, (3) to limit profits and profit margins to normal and peace-time proportions and, lastly, to secure the maintenance of the greatest economy possible in costs of production and distribution. Our first aim was to put into force necessary preliminary measures of control and, immediately following the outbreak of war, I made orders under the Emergency Powers Act, which, provisionally, fixed the prices of a wide range of commodities of common use and necessity at levels which prevailed immediately before the war. A large number of commodities were covered by these orders. In addition, I publicly announced my desire that, before the price of any commodity be increased, application for such increase should be made to the Department of Supplies for examination, and sanction for such increase obtained beforehand. At the same time I appealed for the co-operation of manufacturers and producers, importers, wholesalers, retailers and other traders in whose best interests it was, as well as in the interest of consumers, that no uncontrolled movement of prices should take place. In due course, war conditions brought about the necessity for adjustment in the prices fixed under the terms of the orders to which I referred, which were conveniently described as "standstill orders."
Following examination in my Department, those adjustments were effected either by amending orders or by new orders, or by removal of the commodities in question outside the scope of the standstill orders. The frequent changes brought about by the war conditions and the frequent price revisions which must follow such changes have made it necessary to institute practically a system of continuous control.
The control is directed to three main groups of traders: (1) manufacturers and producers, (2) importers and wholesalers and (3) retailers. In the case of manufacturers and producers, it is the aim of control, mainly, to permit only such price increases as are warranted by increased materials-cost and to provide only for normal, or peace-time, profits at reasonable rates, due allowance being made for contingencies arising out of the war. In practice, allowance must frequently be made for the impact of other increased costs and other factors, arising out of the war, in each particular case. In the case of importers, wholesalers and retailers, it is the aim of control so to determine gross profit margins as to provide only for normal peace-time profits, judged by reasonable standards, and to prevent the acquisition of excessive profits which would follow automatically on the maintenance of the pre-war percentage margin of gross profit on the increased prices of war-time. Generally, though certain increases in distribution costs have taken place, traders have been discouraged from attempting to recover such increases which, at present, are not very measurable in terms of wholesale or retail prices. It is true to say, therefore, that very serious practical difficulties exist in the way of general and effective enforcement of the aims of control in the case of wholesale and retail prices. A multiplicity of methods and customs of determining profit margins are found in the wholesale and retail traders and, in the case only of a limited number of commodities, is rigid enforcement possible. In the case of the remainder, control on broad lines only is exercisable, either by agreement with groups of traders or by survey and inspection of individual traders. The methods of revision may, briefly, be defined as follows: in the case of manufacturers and producers, it is the determination of pre-war costs and war-time costs and the expression of the increase in terms of the pre-war price as a percentage or a sum per unit of sale. In the case of importers, wholesalers and retailers, it is the determination of the pre-war margin of profit per unit of sale and the provision of the same amount per unit of sale in the new price. These methods involve a detailed examination of costing accounts and the volume of work in each revision, therefore, depends on the number of prices and qualities in any commodity or commodity group and the nature or extent of the trade or industry. Since the commencement of the war, price revisions in regard to a wide range of commodities, covering a wide area of our industrial and commerical activities, have been undertaken.
To the extent that it has been found practicable, control of these commodities has been extended to cover all prices from manufacturer to retailer but, as I have said, control in regard to numbers of retail prices must depend on the co-operation of consumers and enforcement by inspectors through individual traders. A price arrangement with a group of manufacturers or traders concerned in any commodity is, in the first instance, entered into and, thereafter, the terms of that agreement are altered or modified according as the necessity arises. It cannot be too greatly emphasised that, once a commodity comes forward for revision, the process of control continues automatically. The price arrangements made are, therefore, subject to all the fluctuations occurring in the nature and conditions of trade and to the margins of error arising out of that degree of estimation which is, in certain circumstances, unavoidable, so that the results of such arrangements must, in due course, come forward for examination and check. It is in the examination of manufacturing and trading accounts of individual firms for the purpose of that check that a serious volume of additional work will fall to be carried out by the machinery of control, for which adequate provision must be made. It is only by the results of the control measures which have been taken that the degree of success achieved can be evaluated and any necessary adjustments in the system applied. The measure of co-operation and conformity with the policy of the Government which has been forthcoming from manufacturers and traders is substantial. It is undoubtedly the case, however, that price increases have taken place without the sanction or knowledge of the Department, and it will be increasingly necessary to undertake a general survey of such commodity prices as these come forward for review with a view to investigation in at least these cases of most importance to the community. Since the outbreak of the war the work of the prices branch of my Department has been carried out by the personnel of the Prices Commission.
So much for the general system of control, but, supplementing that general control, there is the process of price investigation by individual inspection and the examination of complaints received from the public. It is, in fact, by inspection through inspectors on the receipt of complaints from the public that the control can touch most nearly the immediate consuming public in respect of a wide range of commodities and the variety of conditions governing purchases and sales and that is, in fact, their only means of protection. Since 1st September we have received 1,354 complaints, of which 55 per cent. were in respect of food prices, 12 per cent. in respect of fuel, 10 per cent. in respect of animal feeding stuffs, and the balance in respect of miscellaneous commodities, including building materials, tobacco, textiles and clothing.
It was not found possible to pursue a large number of those complaints owing to the absence of vital particulars, such as the names and addresses of the traders concerned. In most of these cases further information was sought by letter, but it is clear that a large body of consumers would not enter into correspondence and such cases can be dealt with only by the personal attendance of the inspectors. On investigation 36 per cent. of the complaints were proved to be well founded; prices were reduced and in many cases refunds were made. In the remaining 64 per cent. prices were found to be reasonable.
In addition to the investigation of complaints from members of the public, a considerable number of complaints have been made at the instance of local authorities and also at the instance of the Department of Local Government and Public Health, the Department of Defence, the Department of Posts and Telegraphs, and certain charitable institutions. Those investigations arise out of contracts other than those entered into by contractors under the combined purchasing scheme. Owing to the large quantities of goods passing, such investigations require greater attention and much more thorough examination than ordinary complaints and, of course, inspections of costings and accounts are frequently necessary. The number of such cases received since 1st September was 231. A further increase in the number of such cases may be anticipated, especially towards the end of the financial year, when fresh contracts are being placed. It is the practice in such cases to specify the contract prices which, in the opinion of my Department, are considered fairly reasonable.
I have spoken far longer than I intended, and yet I have given only a very rough outline of the activities of the Department of Supplies and dealt only in a very general way with the policy operated by it. If there is any matter concerning the supply of particular commodities or the working of the policy of my Department upon which Deputies may require information, I will be only too glad to give it to them. It is desirable in all matters relating to supplies that there should be the widest possible publicity so that any suspicions that may be entertained as to favourable treatment of some individuals as against others concerning the control of prices and the elimination of excess profits should be removed. I hope that Deputies, in approaching the matter, will do so in a constructive manner.
It is recognised that difficulties concerning supplies are to be anticipated. It is because such difficulties were regarded as inevitable that a Department of Supplies was created at all. We cannot undertake to remove all the difficulties but, recognising that the war has created a situation in which supplies of many commodities will be curtailed, it is desirable in the national interest that they should be curtailed as little as possible. I hope Deputies will endeavour to make their views constructive and give us the benefit of any suggestions they have in mind as to how existing or anticipated difficulties can be removed.
