Committee on Finance. - Transport (No. 2) Bill, 1944—Second Stage.

I move that the Transport (No. 2) Bill, 1944, be now read a Second Time. This Bill was so fully discussed prior to, and during the course of, the general election that no long statement regarding its provisions is now required. I assume that all those who spoke about the Bill during the course of the election had studied its provisions and, therefore, require no elaborate review of them. The Bill now before the House is the same as it was when originally introduced except that the dates have been changed so as to provide for its coming into operation on January 1, 1945, instead of July 1, 1944, as originally proposed. I contemplate that the House will deal with the Bill on Second Reading before the summer recess and I aim at having the Committee Stage of the Bill, which will be the longest stage, dealt with before the end of September, leaving the month of October for the final stages in the Dáil and the Second Reading in the Seanad, with the concluding Stages in the Seanad and, if necessary, in the Dáil in November. When circulating the Bill after the election, I circulated again the explanatory memorandum which was made available in the first instance and which describes in non-technical language the main provisions of the Bill. Associated with that memorandum and available to Deputies are the reports of the discussions that took place here in May on the Second Reading of the Bill. There was a long debate upon the Bill and any member of the Dáil who was not then present and who wishes to be familiar with the points of view expressed for and against the Bill will find them in the Dáil Debates. On that occasion, a number of Deputies referred to matters of detail. In the discussion on Second Reading of the Bill, we are, of course, entirely concerned with the principles of the measure. Matters of detail are discussed in Committee. I propose now to confine myself to a review of the principles of the measure, leaving for the more intimate type of discussion which is possible in Committee matters were referred to during the course of the previous Second Reading debate.

The principle of this Bill is that national economic development in the future and, particularly, our effectiveness in international trade requires that we should have a public transport system as adequate, as efficient and as cheap as can be provided—certainly, a public transport system as efficient and as cheap as any other country has. Whether it will be possible for us to realise that aim or not, it is the view of the Government that we should strive towards it. It is common ground amongst us, judging by the speeches made on the previous occasion on which the Bill was before the House, that we had not such a system in the past. If we are to have it after the war, then, in the view of the Government, we should now make the necessary arrangements to bring it about. It is our view that it would be unwise to wait until circumstances had developed in which the operation of such a system would be practicable before attempting to provide the legislative basis for it. We think it wiser to enact the necessary legislation now, to establish an organisation that will be responsible for the provision of that public transport service and to give it the authority of the Dáil to proceed as best it can in present circumstances to prepare for its creation when times are more favourable. In the view of the Government, the best possible method of providing the country with such a public transport system is to establish a new statutory transport organisation on the lines proposed in this Bill—a statutory transport organisation which will control all the public transport services in the country except those that operate across the Border. As Deputies are aware, special considerations affect those cross-Border services which make it undesirable that they should be interfered with at present.

I stated previously, and I would like to repeat it now, that if the present situation in respect of the cross-Border services should be altered fundamentally by legislation elsewhere, then we would have to reconsider our decision not to interfere with the operation of these services within our jurisdiction. For a number of reasons which will be known to Deputies, it is desirable that they should not be interfered with on our part, nor is it necessary to do so in order to create the organisation which will provide, for the greater part of the territory under our jurisdiction, the type of transport service which we believe to be possible.

We are proposing to create a new statutory organisation by amalgamating the Great Southern Railways Company and the Dublin United Transport Company. The new transport organisation resulting from that amalgamation will, we propose, be given maximum freedom in commercial operations. We are proposing to relieve it from the restrictions which in the past it was considered necessary in the public interest to impose upon railway undertakings, and other public transport services in latter years. When the provisions of this Bill were under discussion in the Press and amongst the public there were many references to monopoly by people who had obviously failed to realise that the essence of our transport problem is not the creation of a monopoly but the passing of a monopoly. In the years before the first World War, when the motor vehicle was in its infancy, railway undertakings provided the only public transport service and had in their areas a complete monopoly. Because of the monopolistic conditions which they enjoyed, they developed in a rather haphazard fashion and were not compelled by force of competition to adopt new methods of operation, as they became possible, to renovate their equipment or maintain their organisations at maximum efficiency.

With the advent of the private motor-car for the conveyance of passengers and the private lorry for the conveyance of goods, it is no longer possible to contemplate a public transport service with the same monopolistic privileges. Any public transport organisation has now to face a competitor far more deadly than existed previously, the private lorry and the private car, and unless it can provide services which are efficient and cheap, those who might otherwise avail of its services can and will provide their own transport with their own lorries or their own private motor vehicles. Because of the change of conditions, it is no longer necessary to preserve the many cumbersome restrictions upon railway undertakings which legislators of previous years considered desirable. We are proposing, therefore, to give this new organisation as complete freedom as is possible in the public interest of commercial operation and to remove entirely all the archaic forms of control which are no longer practicable.

It appears to us there are certain safeguards which are necessary in the public interest and these safeguards are provided in the Bill. The other restrictions upon railway operators and public transport providers are completely removed. The safeguards which the Government consider essential in the public interest are, first, that the general policy of the public transport operators should be directed towards serving national economic aims; second, that there should be a public authority with control over the rates charged for transportation; third, that there should be given to the public authority power to require the provision of adequate transport facilities and, fourth, that there should be adequate protection against the discriminatory treatment by the transport operators of members of the public. All these safeguards are provided in the Bill. It is considered that these are the only safeguards which the public interest requires.

We propose to provide against the discriminatory treatment of individuals by making it illegal and giving the citizen who alleges discriminatory treatment to his detriment the right of appeal to the courts. We propose to give to the Minister for Industry and Commerce, subject to whatever consultation is necessary with the advisory committee, the power to require the new organisation to provide new services sufficient to meet the requirements of all localities and trades and are proposing to give him power to prescribe maximum rates of charge and, in the principal matter of ensuring that the policy of the organisation will be directed in accordance with the national economic interest, we aim to achieve that result by the device contemplated in the Bill of having the direction of the organisation entrusted to a board consisting of shareholder-directors with the chairman nominated by the Government, the Government-nominated chairman having certain powers which will enable him to ensure, whenever the interests of the shareholders clash with the public interests, that it is the public interests and not the interests of the shareholders which will predominate.

To effect the transport reorganisation which we have in contemplation, including the overhaul, renovation and modernisation of the transport equipment available, it is necessary to place the new company to be established in a stronger financial position than it would ever be possible for the Great Southern Railways Company to attain. It is proposed to give this new organisation that stronger financial position by means of a capital reconstruction scheme which, by affording a State guarantee of the principal and interest of the debenture stock of the new company, has secured agreement from the existing debenture holders and other stockholders to a reduction in the rates of interest or dividend rights which they at present have. By the provision of the Government guarantee, the obligations of the new company in respect of the Great Southern Railways system for interest charges and dividends will be reduced by approximately £110,000 per year. By means of the State guarantee of capital and interest, we put the new company in a position to raise new capital as required at lower rates of interest than it would be possible for any private undertaker to secure.

There is also the possibility of a saving in taxation. Under the provisions of the 1933 Finance Act public utility concerns which had previously been exempt from corporation profits tax were made subject to that tax, but an exemption was granted for a period of years to railway undertakings. That exemption has been continued up to the present and there is a proposal in the Finance Bill of this year to continue that exemption for another period. The Dublin United Transport Company is, however, liable to corporation profits tax. Arising out of this amalgamation, there will result a saving in corporation profits tax which will redound to the company in the form of increased net revenue. I am not committing the Government and it is not intended that the Government should be committed to maintain the present exemption of railway undertakings beyond the period contemplated in the Finance Bill of this year.

How much will be involved annually?

The amount involved annually would vary considerably. At the present time it is substantial because the Dublin United Transport Company is paying not merely corporation profits tax, but excess corporation profits tax. That situation could, of course, be changed by a reduction of fares in Dublin. That course may in fact be adopted. The reasons against it are not so much financial as traffic reasons. But clearly the amount involved depends entirely upon the rates of charge in operation. The original theory, as I understood it, was that any companies that were subject to statutory control of their maximum charges were on that account exempted from corporation profits tax. That theory was departed from in the Finance Act of 1933 but it was continued, on a temporary basis anyway, in respect of railway undertakings as distinct from other firms. I could not attempt, because it would be a complicated calculation, to put a precise figure on the revenue that will accrue to the company but, in any event, the exemption from corporation profits tax to railway companies is, as I mentioned, a temporary arrangement continued as required by Finance Acts which the Government is not committed to maintain indefinitely.

The capital reorganisation which the Bill provides for, together with the better management which we believe to be possible in the case of the Great Southern Railways Company, will we expect enable the company to provide better transport services than were possible in the past, to provide these services at cheaper rates than operated normally before the war, to effect a reconstruction and modernisation of its equipment very largely, if not entirely, out of revenue and at the same time to effect a steady reduction in its capital liabilities. The Bill does in fact provide that it shall be an obligation of the company to redeem the substituted debentures, that is, the debentures issued in substitution for the existing debentures of the Great Southern Railways Company, not later than 1960. It may be held that that is a rather high standard to set for the company and that, in its efforts to attain it, it may be compelled or induced to maintain rates of charge at a higher level than would otherwise be necessary, but in fact we believe it can be done. The effect of maintaining that provision in the Bill is this, that if it cannot be done the matter must come to the Dáil again, because new legislation would be required, before 1960.

The new company will have on constitution capital liabilities of approximately £13,400,000. I know that members of the last Dáil in discussing this Bill were somewhat confused by the fact that the maximum capital liability of the company was stated at £20,000,000. That is a maximum capital liability which cannot be exceeded by the company without the authority of fresh legislation. In fact when the company is constituted its capital liability will be £13,400,000, of which £9,900,000 will represent 3 per cent. guaranteed debenture stock and £3,500,000 common stock. Three per cent. upon the debenture stock would involve an annual payment of £296,267. The payment of a dividend of 1 per cent. on the common stock would involve an annual payment of £35,257. The total amount, therefore, required to pay in full the debenture interest of the company plus a dividend of 1 per cent. upon the common stock would be £331,524.

Is the 1 per cent. fixed?

No. The maximum dividend which may be paid upon the common stock is 6 per cent.

The Minister has been speaking of 1 per cent.

The information I want to give the Dáil is that a dividend of 1 per cent. on the common stock would cost £35,257. The Deputy can calculate for himself what 2 per cent., 3 per cent. or 4 per cent. would cost. But, if the company were to pay its debenture interest plus 1 per cent. on the common stock the total amount would be £331,524. The reason I am giving that figure is because I want to draw attention to the fact that the lowest point at which the combined net revenues of both the Great Southern Railways Company and the Dublin United Transport Company ever reached in the past was £448,193. In the worst year of both companies, which was in fact the year 1938, when the Great Southern Railways Company was in a very precarious financial position and when the Dublin United Transport Company had not yet secured the benefit of the reorganisation which was then in progress, the combined net revenues reached that figure which I have mentioned— £448,193—and I want to mention that figure to bring it into comparison with the other figure I mentioned— £331,524—which represents the amount required to pay the whole of the debenture interest plus 1 per cent. on the common stock. It will be clear, therefore, that even on the basis of the lowest net revenue obtained by the company in pre-war years, the company's debenture interest is fully and adequately covered and that therefore the prospect of the Government having to make good its guarantee of that interest is, so far as one can see, reasonably remote.

But the Minister is completely ignoring redemption on the one hand and making up the deficit for renewals on the other.

I am not. I am going to deal with it now.

In reply to Deputy McGilligan I think the Minister gave a different figure regarding debenture interest—£241,000 odd. Is there a mistake?

Deputy McGilligan's question related entirely to the debenture interest payable in respect of the Great Southern Railways Company stocks. I am dealing with the full debenture interest of the new company arising out of the amalgamation scheme.

That is with all the full capital brought in?

The £13,400,000.

The total net revenue of the Great Southern Railways Company in 1943, before making provision for renewals and depreciation, for the writing off of certain stocks and work in progress, was £1,335,000. That 1943 net revenue represented an increase of £675,000 upon the previous year. That increase in the net revenue of the Great Southern Railways Company was due to some extent to increased passenger and goods traffic; it was due partly to higher rates of charge for transportation which came into operation in July of last year: it was however, in a very large measure due to managerial methods which offset increases in the cost of operation, including the payment of emergency bonus to the employees of the company, and represents a real economy due to the application of efficient methods of management to the concern.

I do not like to interrupt the Minister but could he say how much of the increase was made up between May and the end of the year and how much up to May?

No, I could not. However, for the purpose of illustrating my point, I can give another comparison which I think will be equally effective: The revenue expenditure of the Great Southern Railways Company last year increased by 5 per cent. That represented the increase in wages paid in consequence of Emergency Bonus Orders, the increase in the costs of fuel and other equipment. The only possible comparison we can make is with the Great Northern Railway Company. The revenue expenditure of the Great Northern Railway Company increased in the same year by 13 per cent. I am not making that comparison for the purpose of casting any reflection upon the efficiency of the management of the Great Northern Railway Company. It will be obvious, I think, to most people who are familiar with both concerns, that there was much more scope for improvement in managerial methods in the Great Southern Railways Company than in the Great Northern Railway Company but if the increase in the revenue expenditure of the Great Southern Railways Company last year had been similar to the actual increase in the case of the Great Northern Railway Company, the difference in the net revenue would have been £375,000. It will be clear, therefore, that the actual improvement in the revenue position of the Great Southern Railways Company, resulting from the application of better methods of management, alone increased the net revenue position by an amount more than sufficient to pay the whole of the debenture interest for which the new company will be liable.

It was quite obvious from certain questions which Deputy McGilligan asked in the Dáil when the Bill was under discussion previously that there is a misunderstanding as to the intentions in respect of the redemption of the substituted debenture stock. If the intention were to redeem the substituted debenture stock by equal annual payments, with additions to meet the tax chargeable thereon as well as to pay the debenture interest as it accrued and 1 per cent. on the common stock, the net revenue in future would require to exceed £1,119,000. But there are other and more economical ways of reducing the capital burden, particularly in the case of the Great Southern Railways, where methods of working in the past have been wasteful, cumbersome and inefficient. In the discussions in May last I drew attention to what already had been done in the case of the Dublin United Transport Company, where substantial capital liabilities have been wiped out, where the revenue position has been considerably improved, where the basic wages of the workers have been increased by 24 per cent., exclusive altogether of the emergency bonus payable during the emergency, and where a substantial allocation has been made to a fund to provide benefits for the employees. I want to say that, in the case of the Great Southern Railways Company, there is far more scope for the application of the same methods and the same principles than there was in the case of the Dublin United Transport Company. We believe that, by the application of the same methods, the same sound management both in relation to the ordinary operations of the company and its general financial affairs, it is possible to secure a similar lightening of the capital burden of the new company while, at the same time, making available funds to provide for the re-equipment of the concern, for the extension of its activities, and for the reduction of the rates and charges.

I have given a very general picture of what the Bill intends to do. It proposes to set up a national transport organisation, to give that national transport organisation, which will be formed by the amalgamation of the Great Southern Railways Company and the Dublin United Transport Company, reasonable freedom of activity in commercial management, to make it subject only to the safeguards which are considered essential in the public interests to which I have referred, to give it the benefit of a substantial lightening of the burden of interest by the capital reorganisation scheme, to which the shareholders of the existing concerns have already agreed, to give it the benefit of a Government guarantee in respect of the new capital raised for reconstruction purposes, which will enable it to get that capital more easily and more cheaply than private concerns can attempt, and thus to place the management of the concern in a position that it will have, not merely the powers, but also the resources to carry out the transport reorganisation that we believe to be necessary in the national interest and which we desire to have proceeded with as rapidly as possible.

I know that many members of the Dáil are concerned with the provisions of the Bill as they affect the staffs of the amalgamated companies and I just want to make some brief references to outstanding matters in that regard. All these matters can be discussed in detail in Committee and, if any Deputies have doubts concerning the provisions of the Bill, or require to make sure that the Bill has in fact the effect that its drafters intended, amendments can be submitted and debated. One of the matters which aroused a great deal of discussion in May last was the provision for compensation on redundancy. I made it clear that this Bill is intended to provide only for compensation to workers or employees of the existing companies who may be rendered redundant because of the amalgamation. Some Deputies did not appreciate that Section 9 of the Railways Act of 1933, which provides for compensation on loss of employment in other circumstances, would continue in force or would apply to the new company. We are concerned here only to safeguard individuals against loss of employment by reason of redundancy resulting directly from the amalgamation and, because that was the intention, it was provided that that right of compensation would persist for six months. It was considered in framing the Bill that six months gave ample safeguard to the individuals concerned, because it is quite obvious that any redundancy which will occur will become apparent immediately the amalgamation occurs.

There can be no comparison between the experience of the operations of the 1924 Act, which amalgamated 26 railway companies, all of which were operating railway services only, operating them in competition with one another and frequently in adjoining districts, with what is proposed here. The amalgamation of the 26 railway companies under the 1924 Act created a great deal of redundancy and, in fact, it was probable that some of the redundancy which resulted from that amalgamation would not become apparent for a number of years after the amalgamation occurred. On that account, the Act provided for a period of seven years in which workers could claim compensation on loss of employment as a direct result of the amalgamation. In this particular case, however, we are amalgamating two completely self-contained units, each of which is operating transport on a monopolistic basis in separate areas. It is quite clear, therefore, that there cannot be anything like the same experience as resulted from the 1924 Act, and that any redundancy that will result will be in the managerial and executive grades, not in the operative grades. Such redundancy will become apparent at once and, for that reason, the six months' provision was regarded as adequate. However, it really does not make any difference what period is in the Bill and, as I intimated previously, I am prepared to have the question of the adequacy of that provision debated in Committee and the Bill amended, if it appears to the Dáil desirable that it should be amended.

I should like, however, Deputies to keep in mind that a great deal of unnecessary litigation may result from leaving the provisions of the Bill in respect of redundancy unduly ambiguous and workers may be induced to incur expense in litigation, or the trade unions which cater for the workers may be compelled to incur expense in litigation, which it is desirable should be avoided by having a clear and precise definition of what the Bill intended to achieve in that regard. I want to make it clear that the Bill is intended to achieve that redundancy resulting directly from amalgamation shall be covered by the compensation clause. The general provisions of the Railways Act, 1933, which applies to all railway companies, will apply equally to this new organisation and specific provision is made in order to secure that in the Bill itself.

One of the obligations of the Great Southern Railways Company is to arrange the conditions of employment of its workers in accordance with agreements negotiated with the trade unions which represent these workers. I saw it stated in the Press during the course of the election campaign—one does not pay too much attention to things said then, but this particular statement requires some notice—that legal opinion had been secured by some of the railway unions to the effect that Section 55 of the 1924 Act did not apply to the new company. I have had that point examined and I am satisfied there is nothing in it.

The legal advisers of the Government are quite specific in their belief that the obligation of the Great Southern Railways Company, both in regard to their railway employees under the 1924 Act and their transport employees under the 1933 Act, will be carried over, so far as conditions of employment are concerned, in relation to the new company.

Does that cover Section 10?

Yes, Section 10 of the 1933 Act; that is also covered. There is some slight doubt—and I am having the matter considered at the moment —as to whether the protection given under the 1933 Act to employees of the railway company will also attach to employees of the Dublin United Transport Company after the amalgamation. Deputies will realise that the employees of the Dublin United Transport Company never had the same measure of protection which was extended to the employees of the Great Southern Railways Company under the 1933 Act. It is intended that the same measure of protection shall now apply to employees of the Dublin United Transport Company as applied to employees of the Great Southern Railways Company. The intention is that Section 10 will apply, not only to the employees taken over by the new company from the Great Southern Railways Company, but also to employees taken over from other transport companies which will be affected by this measure.

I also want to make reference to the superannuation proposals. The Bill, as framed in Sections 42 and 43, requires the new company to take over all the responsibilities of the amalgamated companies under existing superannuation schemes, and also to frame a scheme for such employees as are not covered by existing schemes. Deputies, I am sure, will have seen in the newspapers that the Great Southern Railways are bringing into operation a new superannuation scheme for certain of their employees who were not covered before this, and that may require a consequential change in the wording of the Bill.

Will the Minister say why the trade union representatives were not consulted in that matter?

I have no information with regard to that.

Does the Minister know that they were not consulted?

I do not know that. I am not in a position to say whether or not they were consulted.

At any rate, they were not excluded?

As I say, I have no information in that regard. However, in connection with the provisions of the 1933 Act, as regards a superannuation scheme, which are no longer in operation, Deputies will remember that the Railway Tribunal decided that the scheme proposed then did not meet the reasonable requirements of the employees at the time.

But these provisions remained in it.

No, they did not.

Why was not this scheme submitted at the time?

That is a different matter, but might I say that the Great Southern Railways Company have now brought forward a new scheme for the benefit of their own employees. They have brought in this scheme themselves, and it is in the same category as a scheme that was introduced by the Dublin United Transport Company. They were under no statutory obligation to bring in that scheme, but they have done it themselves, and, as a result of the introduction of that scheme, it may be necessary to introduce certain changes in the Bill. However, we can discuss these matters, or any changes in the Bill that may be necessary as a result of the introduction of the new scheme, when we come to discuss the Bill in Committee.

Reference was made also to the Railway Clearing System Superannuation Fund. I shall not deal with that matter now, because it is a most complicated subject and would take a very long time to discuss fully, but the intention of the company, as conveyed to me, is that none of the clerical staff will lose in the matter of their pension rights, by reason of the refusal of the Great Southern Railways Company to make the contribution to the fund which was required this year or last year. If, however, Deputies wish to raise any specific point in connection with that matter, we can discuss it on the Committee Stage of the Bill. I think that we should be in a better position to deal with such matters on the Committee Stage than at present, but in any case I should not like to go into that matter at the moment. I have read a large number of documents on the question of the Railway Clearing System Superannuation Fund.

Will the Minister say that these additions will not be on anex-gratia basis?

No, and it is not intended that they should be. I think, however, that I am correct in saying that the Railway Clearing System Superannuation Fund is not solvent at present.

That is right.

I am not sure whether the age is 65 or 68—I think it is 68— but I think that in the past the company themselves made whatever additions were necessary. However, there is a very complicated state of affairs there, in respect of which it is desired to ensure that no employee will lose and that whatever addition has to be made, in order to see that the employee will not lose, will be made. The intention, so far as the staff of the new organisation is concerned, is, firstly, that in so far as the amalgamation of the two companies may involve some redundancy amongst their employees, they will be compensated in accordance with the proposals in the Bill; secondly, that the new company will have the same obligations as the old company in respect of new conditions of employment, in accordance with agreements with the trade unions concerned; and, thirdly, that superannuation rights will be guaranteed by Statute. Whatever amendments Deputies think may be necessary in order to bring these conditions about can be considered better, I think, on the Committee Stage of the Bill. I do not think it necessary to say anything more. If Deputies think I have not said enough I can only refer them to what I said previously on this Bill.

We are opposed to the Second Reading, not alone on the ground that we consider that the Minister is still rushing the matter but on the main general principles of the Bill. While opposing the Bill we entirely agree with the Minister that the national economic development of the country and, as he said himself, our effectiveness particularly in international trade, depend upon having an effective, cheap and adequate transport system in the country. He may take it that we are fully at one with him in the aim to establish that particular type of transport system but we are as convinced as any Party can be, that this Bill is not going to provide it, particularly on the principles that he apparently advocates. So far as one can judge from reading the debate on the last occasion this Bill was discussed, it would seem that the one principle the Minister was really standing on was the financial principle enshrined in the Bill. I was not able to disentangle entirely the financial principle embodied in the Bill from the principle of the control and ownership of the company by the owners of the common stock and the Minister's remarks here to-night would indicate that he regards the principle of control and ownership embodied in the Bill as a principle that he would completely stand over although I think he indicated in the last Dáil that he was not entirely standing over it. I believe that the financial proposals embodied in this Bill are going to hang such a weight on transport in this country that the system which it visualises will be bad, and that it is not going to provide these services that are essential here to keep the ordinary life of the country going in its development to that further production in the country that the presence of an adequate transport service would bring forth.

The Minister for Finance, in making his Budget statement on the last occasion, referred to the shadow under which any Minister for Finance here would work with the contingent liability of the guarantee that is provided for in this Bill for the debenture holders. He said that no Minister for Finance could assume without misgiving such a heavy liability. Subsequently he went on to say that "the possibility of having to meet that guarantee was one which must not be forgotten in any pre-view of public expenditure during the financial years that lie immediately ahead". When the Minister for Finance makes a statement of that nature he is not thinking of saving his own face. When he begins to feel anxiety as Minister for Finance, he is feeling anxiety, not for his own particular position or his own particular outlook but he is thinking of the financial posi tion of the country generally. When the Minister for Finance to-day looks at the contingent liability which is likely to fall on the finances of the country as a result of this guarantee, he must feel that there is a bill there to be paid by somebody.

I suggest that if a heavy burden on transport has to be borne by the users of transport it would be as disastrous to the country as if the burden were shifted over to the Minister for Finance. As a matter of fact it might be a better safety valve if any undue burden on the transport users of the country had to be shifted over to the Minister for Finance because it would be clearly disclosed. At present under cover of a war emergency a very heavy burden is imposed on users of transport and they are not able to kick against it. It is damaging the position of the country very definitely. If there is too great a burden for the maintenance of our transport system imposed on the people then we ought to see it in the clearest possible way. When we consider how important the financial burden of the new capitalisation of this company is likely to be, I do not think the Minister has yet either adequately or fairly represented the position to the House. I think he attempted to skip rather lightly over it in dealing with the matter to-day. I submit to the Minister it is not a matter that should be lightly skipped over. If there is a principle to be supported in connection with the financing of transport under new conditions in this country, then we ought to see this principle clearly. The fundamental point in connection with that principle is that it must provide cheap and adequate capital for the company.

When the Minister was questioned by Deputy McGilligan on the 9th May, with regard to the expenditure that would be necessary by the company to meet the stockholders of the Great Southern Railways Company under the new arrangement, he gave certain figures. We find ourselves in this position, if we deal with the Great Southern Railways side of this arrangement, that the owners of the Great Southern Railways stock are being given debentures and common stock. The amount of debentures to be held by them will amount to £8,048,000, while the common stock will total £3,525,000. The Minister was asked what moneys would have to be made available in order to pay for that stock and to deal with redemption and he indicated that in the first year of the formation of the company the redemption provisions would require £640,800, that the interest on the debentures would require £241,457 and that the 1 per cent. interest on common stock would take £35,257, a total of £917,514.

The Deputy appreciates that that is dealing only with the Great Southern Railways Company?

I want the House to be fully aware that I am dealing only with the Great Southern Railways Company, because it is only by dealing with the Great Southern Railways Company that we can get a picture of what the financial provisions really imply, and see how the ex-Great Southern Railways Company stockholders, who will be holding debentures in the new company, will have to be provided for. There is, as I have said, £640,800 to be provided for redemption of debentures and £241,457 for interest. There is then a small amount to cover the 1 per cent. on common stock, amounting to £35,257. The company, therefore, would have to put aside £917,514 in its first working year. If page 139 of the Report of the Tribunal of Inquiry into Public Transport is looked up, it will be seen that the average net annual income of the Railways Company for the period dealt with there—1925 to 1938—was only £576,845. If we take the period from 1932 to 1938 the average net annual income was only £453,000. However, taking the average net annual income from 1925 to 1938, £576,845, it would mean that in order to make the payments of the provision that I mentioned in the first year, the new company would require £349,669 more than the net average income of these years up to 1938. But if the deficit for renewals which this transport inquiry report showed was so desirable and which was estimated at £216,000, were to be provided for as well, then the amount that would be required over the net adjusted income of £576,000, would be £565,000, so that in the first year this new company was created, there would be required twice as much money as was available for this purpose in the years preceding the war.

The Minister has given figures to show how enormously the receipts of the Great Southern Railways have risen during the war. Does he not know that he has a whole department built up on the definite understanding that during war-time anybody with goods or services can get anything he wants to claim for them, and that it requires the most elaborate machinery of government, with almost Gestapo methods, to keep the charges made for either goods or services within any kind of reasonable bounds? I do not think that, when we are considering what the future charges to be taken out of the people for transport of passengers or goods are to be, we ought to relate them to the war position but to the pre-war position, and I think it is essential that the Minister should take a period of, say, eight or ten years and sketch out in theory the payments which would have to be made for interest, the money which would have to be put aside for redemption, and some idea of the amounts required annually for renewals and which ought to be paid out of annual income, and let us know what payments have to be made or what moneys put aside for redemption, so that we could see how the income which had to come from the users of this transport compared with what we would regard as normal pre-war charges. But we are asked to face, completely blindfolded, what the Minister on the last occasion said was the principle he stood over; but if we are to use our intelligence on the question at all, on the figures and facts before us, we have to say that this scheme will impose on the people who use the transport system a burden which will choke them up and strangle both normal trade and the possible development of production. Dealing with a matter of such great importance to the whole economic future of the country and at a critical time such as this, it is not fair to leave Parliament, which has to take decisions, in the blind state in which the Minister leaves it. I, therefore, condemn the Bill on what is there implied.

Again, I condemn the proposals on the 3 per cent. for debentures provision. The price of money has very substantially decreased—certainly by much more than 25 per cent.—since these 4 per cent. debentures were first introduced—I do not know how long ago—and a scheme under which the Minister gives both debenture holders and stockholders 100 per cent. of their present holdings, and, in relation to that 100 per cent. of their present holdings, guarantees 3 per cent., I suggest to the Minister, completely ignores the whole trend of the money position, and the whole trend of the position with regard to interest in the world to-day. If we, particularly in a matter like this, which, if it is at all reasonably handled, cannot be regarded as piling up dead-weight debt—whether the company is to carry it out or the Government under a nationalised system— fix 3 per cent. as the guaranteed percentage of interest which we will give for money subscribed in large amount now, we are facing an impossible future from the point of view of the large amount of money which is to be spent in all kinds of other ways. We have heard of £8,000,000 for housing here and £25,000,000 for further housing, as well as £67,000,000 for something else. If we propose to start, at this hour of the day, with a 3 per cent. interest rate for work related to the transport system of the country, I do not know where we will stand. We are likely to choke off all development in the country.

Taking the position of money generally in the country, we find that the deposits in the banks have increased by £56,000,000, from £114,000,000 in September, 1939, to £170,000,000 in December, 1943, and that the total amount of money in the country has increased from about £18,000,000 to £36,000,000, or by approximately £17,000,000. The total circulation, deposits and money in the country have increased by almost 55 per cent., and if we are to accept a position in which we are to put all the increased money for housing, railways improvement, and any other development on a kind of dole of 3 per cent., then, so far as the houses we are to build for ordinary workers are concerned, we are going to put an unnecessarily increased rent on them.

Money was never available for house construction at as low a rate as 3 per cent. at any time in the past.

It ought to be available now. It was available for running the last war at 5 per cent. The present war is being run on something like 2 per cent. or less, and one of the things which the people who are running the present war are bewailing is the fact that they had not as much sense when running the last war and when working after the last war as they have now, as a result of their very costly experience. The point I am making is that the Minister is offering 3 per cent. to debenture holders who invested money at 4 per cent. when the last war was being run on a 5 per cent. basis. He is offering that 3 per cent. now as a great contribution towards saving the State money, when the cost of running a war has been reduced from 5 to less than 2 per cent. Do we accept the position that we are to hang all this new money which has been accumulated in this country around the necks of people who have to work and produce? Money has been increasing in the country, but the people who have to work and who will be the producers of the country have been fading out of it. What is being provided for here is that the money will have to be maintained, will have to be put on a substantial living, whether we call it a dole or anything else, and we are hanging an unnecessarily high rate of interest around all constructive effort in the country if we maintain the situation we are proposing to maintain in this measure of giving debenture holders 3 per cent.

The people who are to get this money are people whose property was in a condition which need not be elaborately described. There is a simple reference to it in a statement by the Minister. The Minister, as reported at column 1788, volume 93 of the Official Reports, said with regard to the Great Southern Railways Company:—

"It was unable then to find from revenue, that is, the income it obtained by the sale of transport facilities, sufficient funds to provide adequately for the maintenance and improvement of its equipment. It was incapable of procuring new capital on reasonable terms to finance new developments."

That was the position in which it actually was, but the work that required to be done is stated by the Minister in column 1798 of the same volume. He said:—

"The provision of cheap and efficient transport facilities in our circumstances involves, so far as railway transport is concerned, at any rate, over the greater part of the State, an almost complete scrapping of existing transport equipment. The railway equipment which Córas Iompair Eireann—the corporation which it is proposed to establish under this Bill—will acquire from the Great Southern Railways Company is very largely obsolete. Not merely is it largely obsolete, but it is to an entirely uneconomic extent unstandardised. It will be necessary, at the earliest moment, for whatever organisation we set up to take over the responsibility of transport operations, to replace the existing equipment with new equipment, designed to meet modern requirements, standardised to secure economy in maintenance and adequate to meet all the demands upon it. If our transport organisation, set up as a result of legislation enacted here, is to provide such new equipment, it must be able to command new capital freely and cheaply."

That was the condition of the property in respect of which the Minister is proposing to compensate the owners of debenture and preference and ordinary shares by a full grant, a grant at 100 per cent. of the shareholding that they had in the company before the war. I consider, again, that the giving of compensation of that particular measure is entirely unwarranted, and is one of the things which will tend to hang a load of expense around the new company if it is formed in the way in which the Minister proposes to form it.

Again, the Minister proposes that the ownership of this company should ultimately be in the hands of the owners of the common stock, and the owners of the common stock are going to be the owners of the ordinary stock, the owners of the 4 per cent. preference stock and, to the extent of one-half, the owners of the 4 per cent. guaranteed preference stock—the owners of £3,525,734 worth of stock in the old Great Southern Railways are going to be the real owners of the new company that the Minister is setting up, when the company has utilised whatever new debenture stock it is raising and has improved and developed the property, and has paid it back. An examination of the figures given in the Transport Tribunal Report would show that the owners of the common stock of the Great Southern Railways Company were paid in dividends moneys amounting practically to the full amount of their holdings, I think, during the period from about 1931 down to 1938, which had never been earned, because they had left the company in the condition described by the Minister for Industry and Commerce in the paragraph I read just now, on the one hand, and they had taken over £3,000,000 worth of money out of the company when, from the point of view of maintaining the company and carrying out the necessary repairs, that money should not have been taken out at all. It is not for us here, I agree, to say what should be given by way of compensation either to the debenture holders or preference holders or holders of ordinary stock in the Great Southern Railways Company, but on the face of it we would have to say that it is more than generous to give the compensation that is provided for in this measure here, and the result of that generosity on the part of the Minister is, in my opinion, hanging a serious burden of debt around the new company.

The Minister, in introducing his Estimate for the Department of Industry and Commerce the other day, advised us to read the British White Paper published recently on employment policy. I welcome the Minister's invitation, because it does give us an indication we had not got before to look to the world outside and to see what is happening in the world outside. I am grateful for the Minister's invitation, because I think it will help us to get something like a common language and to get something like a base line to which we can refer some of our discussions here. We have been very sadly lacking in base lines either of fact or of theory in any kind of a reasonable or reasoned way in this country, but outside, and particularly in Britain, over an enormous range of ground, examinations have taken place and facts and theories have been set out, which, while we need not necessarily say they are the last word in theory and facts which bear on this country here, nevertheless give us a kind of base line to which we can relate our line of thought, and even our smaller array of facts. When we do look outside and see what people are thinking of, we find that one of the things which are dominant in people's minds is that, whatever have been the achievements of the policy of free capitalism in years gone by, and they have been enormous—the population of Europe, I think, has risen in the nineteenth century from about 180,000,000 at the beginning of the century to something like 430,000,000 at the end, and all that increased population has been sustained at an increased standard of living in Europe as a result of the achievements of capitalism over the century—it is admitted that the policy of free capitalism cannot deal with the problems of the present time, and that in Russia, on the one hand, where over a particular period national income has been enormously increased, and in Germany, on the other hand, where over another period the biggest unemployment problem the world ever faced was fairly successfully dealt with, they have shown economic ways of dealing with things that have something in them which the modern world requires, and, while they have been associated with political movements and political actions of a kind we do not want here, nevertheless it has been insisted that we have to look to what has been happening in other countries which have solved their big economic problems, and that we have to do something to add to the general economic scheme that operated during the nineteenth century.

In looking into the future, thinking people indicate that there is definitely a clear dividing line between private enterprise on the one hand and Government activity on the other. It is implied that the Government will have to interfere with and control more and more the general atmosphere in which economic business is carried on, that there will be directions in which, say, the Government will have to take complete control. We are heading for disaster of one kind or another if there is not a clear line drawn somewhere between Government responsibility for carrying on work on the one hand and private enterprise on the other, because various statements made by Ministers will show how they are agreed on that. I think that the main spring we require in the development of our national work is individual incentive which to a certain extent, arises out of this problem, and that it is only where there is work to be done, or projects to be placed, that are outside the capacity of the individual or combinations of individuals to achieve, the Government should step in, or where social interests of one kind or another are involved. But, at any rate, it is being more and more appreciated that the profit-interest must be left clear inside its own definite sphere, and that the social interest must be left clear on the other side. We must fix responsibility on the Government side and leave people who are carrying on private industry perfectly clear.

The Minister is proposing in this Bill to have complete Government control. He talked about the Bill wiping away archaic controls over the railway company. I would like to know what they are or what disabilities any company would suffer from with a shadow over it of the controls that the Minister proposes here with regard to the appointment of his chairman with the control of rates and charges and the right to dictate how certain services will be run, and, generally, that the public interest or general Government policy will be served. A native speaker of the English language called a scheme somewhat similar to the Minister's scheme, when it was proposed some time ago in Great Britain by Mr. Herbert Morrison, "bastard socialism"—a scheme under which private owners owned property but were not allowed to run it.

Hitlerism!

He was a native English speaker, talking in his native language. I suggest to the Minister that the proposed control in this scheme is utterly absurd; that it shows a lack of faith and confidence both in Parliament and in the Government to propose such a scheme as this. The people the Minister would make owners of the new company are those who let the old Great Southern Railways Company sink to the low position it reached. It is the representatives of the stockholders who owned that company in the past and let it sink that he is going to put in under this Bill with a Government-appointed chairman to provide the stimulus and initiative which will be required in the future and which the Government cannot be expected to give. The chairman, appointed by the Government, will have complete powers to run everything in his own way: to be a quorum and to ignore any recommendations put up to him. The stimulus required is to come from the representatives of stockholders, and we know what they have shown themselves to be in the past. The Minister thinks they are the people to advise the captain in the ship how he is to get 6 per cent. profit out of the undertaking. I think the scheme is fantastic and entirely unwarranted. Why should there be provision for ownership, and especially for the people for whom it is made? I think that the railway situation—I am taking it that it has been properly described by the Minister— has been brought to its present position by private management. It is such that the Minister cannot find any other way of dealing with it except for the Government to take over control. Whether that is to be done on the Electricity Supply Board model, or by a Government Department, is a matter for consideration. I do not think that in the present circumstances, with the type of contribution that has been made to maintain transport by private persons, that private persons can do that job to-day, working from that foundation and particularly into an unknown future.

The Minister tells us that this is his first post-war measure. He gave us the financial side of things first. What we really want first is the economic side, and particularly the technical side, of things. We all admit that no one is quite clear as to what form of transport the technicians will declare to be the most suitable type for this country immediately after the war. Even highly developed countries are not able to say that at the moment. With the difficulties that we are labouring under at the present time, we might very well get our technicians to help us with our present system until the situation, from the technical aspect, clears a bit. For that reason, I think the situation is such that the Government should take over the railways directly.

There are a number of other things that ought, perhaps, be discussed. It is difficult to do so satisfactorily, except in Committee. I suggest two things. The first is that the compensation to be paid to the stockholders of the Great Southern Railways Company should be fixed by a commission set up for the purpose. The second point is that, in the condition in which the railways are and with the work that will be required to be done by the new capital as well as the cheapness of the transport that we will require in the future, it is inequitable to the public, in my opinion, to give full compensation to the stockholders in the way the Minister proposes. If the Minister, on taking over and buying out the stockholders, gave full compensation to the debenture holders and half compensation to the other stockholders, and borrowed the money to do so, he would have to borrow £11,574,000. Paying off the debenture holders in full and the other stockholders in half, he would have something like £2,250,000 left, which could be added to carry out the improvements and renewals that the Transport Inquiry Report suggested should be carried out at the present time.

This is the kind of scheme in which the Minister should face up, with a fresh mind, to what the future financial policy of the world is likely to be. With the enormous increase in the amount of money that has arisen during the war, and with the changed relations of the banks to Government, there is another theory developing in the world outside—that is, that the joint stock banks are beginning to have the same relation to Government as the Bank of England has to the Treasury, and that in the future the function of the banks will be to hold and receive the savings of the people and to lend them to Government. I think the Minister should be able, under present conditions, to approach the banks here and get the £11,500,000 from them at 2 per cent., and so lay a foundation for a correct modern financial policy in the country.

Unless we examine the financial theories upon which we are going to face the future, and do so in relation to the Bill before us now, we will miss one of the greatest opportunities of putting our whole national house in order that is likely to arise in our generation. In dealing with one of the most important services in the country, which is vital to our people and to the development of our national resources, we are driven to deal with our whole outlook on national policy, and we are also driven to deal with the other question—that, in our organisation in the future, we must have a clear line of demarcation between Government responsibility for carrying out certain classes of work and where private initiative and energy will have full and free place.

These are matters in which, I suggest, the Government is as interested as any Party or individual Deputy. It is because there are these important matters to be dealt with that we object to the tendency to force this measure through the House that characterises the Minister's attitude so much. We earnestly plead that these matters be given full attention, so that, in the autumn, when the House is discussing the Committee Stage of this Bill, we will be informed in every possible way that the Government can inform us on the situation. The Government must encourage us and help us to get our facts and our theories right, so that, in a matter that is of vital importance and that affects the country in so many different ways, we will at least have the benefit of knowing that every aspect of the matter will be thoroughly discussed here in Parliament, with everybody so assisted in every way and so assisting one another in every way, that we will see clearly the problem that is before us and bring the best possible solution to bear on it.

I do not propose to take issue with Deputy Mulcahy as to whether the eventual ownership of the new company shall be invested nominally in the stockholders of the £4,000,000 capital—the common stockholders—but I do seriously suggest that the new company means that the taxpayers of this country will have to pay £16,000,000 plus the interest on that for the next 16 years, to a total amounting to £20,000,000 for the next 20 years, apart from the cost of materials, labour and other expenses to meet the dividends due to this venture.

In launching this project, the Minister seems to be very enthusiastic about present conditions. From long experience of railway life, I do suggest that the present is very false material to go upon, in trying to decide what the future may hold. He would be a complete dud in railway control who would not make a success of rail transport at the present time, when the difficulty is not to find traffic but to find vehicles to carry it.

I would like to deal with the origin of the Dublin United Transport Company, which is the other component part of the new company. Inside the past ten years, the Dublin United Transport Company was in sore financial straits. The present wizard who is to take control of the joint company, and who is performing extraordinary miracles at present in the Great Southern Railways, was one of those who opposed the Dublin United Transport Company as controller of the General Omnibus Company. There were various contending interests at that time which made it impossible for the Dublin United Transport Company to be a success, and these contending factors had to be fought on the prices dictated by the contenders. The present chairman was one who successfully fought his own corner.

This is not an inquiry into the history of that gentleman.

If I am not in order, I will sit down, but I am trying to make a case.

Is the Deputy not sounding too personal a note, in going into business dealings of years ago?

I have mentioned no names.

It would be superfluous.

The General Omnibus Company was one of the contenders against the Dublin United Transport Company, with several others, and it was up to them, in view of their business capacity, to make the business good. They were eventually absorbed into the Dublin United Transport Company, and were brought in at their own price. Then we had prosperity in the Dublin United Transport Company. A similar procedure was adopted in the Great Southern Railways. They bought all and sundry of the contenders who came up against them and then, with the existing position, they were successful and prosperous, with the absence of competitors, as traffic is driven to the Great Southern Railways. I suggest that that is a very false basis on which to build our future hopes regarding transport.

The Minister paints a very roseate picture of the future in this matter, but when we are committing ourselves to expense we should have regard, in retrospect, to the history of transport both in the Great Southern Railways and in the Dublin United Transport Company. We have been trying for a long time to overcome transport difficulties in this country. The Minister himself has contributed very largely and enthusiastically, and has given of his best since he became Minister, in trying to overcome the difficulties of the transport industry. We had experience of the position in 1924 and 1926, and when the Minister came in in 1933. With all these efforts he has not been able to make a success of it.

We are asked to believe that this Bill is the be-all and end-all of a transport millennium in this country and we are entitled to be somewhat sceptical on that point. We want to know whether the Minister is warranted and justified in committing the nation to the expenditure of this £16,000,000, with its consequential expenditure, I suggest, of £20,000,000, to be paid out in the next 16 years, apart from the cost of materials and various other things. I am not satisfied that it is warranted expenditure and, if it is to be embarked upon, I say it should not be on behalf of a private company. I think the owners should be the nation and then there would be no objection to it run as a national entity, but there is certainly objection to it being run in the interests of any private company. I move the adjournment of the debate.

Debate adjourned.
The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, the 21st June, 1944.