What shares would this cover? What shares are held by any person other than the Minister for Finance?
Committee on Finance. - Minerals Company Bill, 1944— Committee.
Of the total capital of £100 there were seven £1 shares held by subscribers to the memorandum of association. The subscribers were nearly all officials of Government Departments. The shares have now been surrendered to the Minister for Finance on the dissolution of the company.
I do not understand this new procedure whereby an Act is repealed wholly, and, notwithstanding that, sections of it are carried forward. That appears to be the case here. The whole Act is repealed, so it is no longer law, and yet it is proposed to carry forward Sections 10 and 11 of it.
I do not quite get the Deputy's point.
Section 8 (2) says that certain sections are carried forward—that two sections of the repealed Act are continued. How do you do that?
I presume this sub-section is intended to achieve that result. The purpose of the sub-section is to ensure that the amounts advanced to the dissolved company will be repayable by the new company.
Then you are not repealing the whole of the Act?
The Slievardagh Coalfield Development Act had for its main purpose the establishment of the Slievardagh Development Company. Now that Act is being repealed, and the company is being dissolved. All the functions of the company and all its assets and liabilities are being transferred to the new company, Mianraí Teoranta, which is being established under this Bill, and it is necessary to provide that the amounts advanced from the Exchequer to the Slievardagh Company, which were repayable by the Slievardagh Company, will continue to be liabilities of the new company; that the new company will be obliged to repay them to the Exchequer, and to pay interest on the advances until they are so repaid.
It is only a question of procedure. You, so to speak, kill the Act of 1941, and, notwithstanding that, you apparently carry forward two sections of it?
That is right.
Without incorporating them in the Bill.
Section 3 very precisely says that the whole Act has gone. Section 8 (2) says that that is not so.
That is true. I presume there is adequate legal justification for that form. I must confess that I am not in a position to explain why that form was adopted. I have indicated what the intention is, and I presume that the draftsman decided that this was the proper way to give effect to the intention.
Would it not seem to require that Section 3 should read:—
"The Slievardagh Coalfield Development Act, 1941 (No. 8 of 1941), is hereby repealed as on and from the transfer date, subject to anything contained in this Act"?
I will ask the draftsman to look into that point.
This is an enlargement?
This is an enlargement.
I have indicated the reasons in the course of the Second Reading discussion. The operations of the Minerals Development Company have been more extensive than was originally contemplated, and the limit fixed by the Act to the advances that could have been made to that company was amended on more than one occasion in the past couple of years by Emergency Powers Orders. It is now desired to regularise that position, and furthermore to provide for the new company the possibility of procuring the capital that will be required for the purpose of organising the workings of Slievardagh, and procuring the plant which is essential to the effective commercial operation of the Avoca deposits. Furthermore, the working of the phosphate rock in County Clare by mining will involve additional expenditure on equipment. It appears that it is only by mining that any substantial quantity of rock can now be acquired from Clare; the quarriable deposits have become almost exhausted. It will be necessary for the company to undertake in the immediate future certain additional capital expenditure, but the post-war activities of the company will involve substantial additional capital expenditure, because the equipment which will be required, and which cannot now be procured, will, we trust, then be available, and will be necessary for the proper working of the deposits.
How much has been advanced already?
A sum of £240,000 has already been advanced to the two companies and is included in that limit of £400,000.
I wonder is that right? I read as some part of the Order that the sum advanced cannot exceed £200,000.
There were two companies, the Slievardagh Company and the Minerals Development Company. The Slievardagh Company is being abolished, and the Act which established it is being repealed. The new company is taking over the functions of the Slievardagh Company and the limit is being raised to £400,000.
What is the financial position of the Slievardagh Company? Has it any assets or has it repaid any of the advances made?
None of the advances has been repaid.
So there is £200,000 of public money still outstanding?
Are there any assets against that?
What is the amount?
The balance sheet of the company on the 31st March showed——
Has the balance sheet been published?
Yes. The balance sheet on the 31st March, 1944, showed lands, buildings, electric power installation, plant and machinery, less depreciation, at £15,348—I am leaving out the shillings and pence—wagons, tubs, vehicles, furniture and equipment, less depreciation, £2,429; formation expenses, £34; stock in trade, £4,533; sundry debtors, £5,806; cash at bank and in hands, £1,872; development account, £18,799; and the loss shown on the profit and loss account as £26,965. At that date the total advances made to the company were £67,985 and the interest due was £5,632.
I understand from that recital of figures that £241,000 has been advanced, a quarter of a million?
The figures I have given relate to the Slievardagh Company.
What about the other company?
The balance sheet of the other company on the same date showed lands, buildings, plant and machinery valued at £44,997; wagons, tubs, motor vehicles, furniture and equipment at £11,092; formation expenses, £43; stock in trade, £7,441; sundry debtors, £9,512; cash at bank and on hands, £86; Avoca Mines development account, £27,184; Doolin Mines development account, £5,940; and the loss shown by the profit and loss account was £38,113. On that date advances made to the Minerals Development Company totalled £134,436 and the interest due was £5,951.
It would appear that advances of public money of about £250,000 were made and that the two companies showed a combined loss of £64,000.
As far as I heard the recital of the assets, they amount in the case of one company to about £26,000 and about £100,000 in the other. So we have advanced public money to the extent of £250,000 and we have rather doubtful assets of about £130,000, while in the year we have lost £64,000.
But the Deputy understands that these companies are at present working in accordance with Government directions in the production of certain minerals which are required in the present circumstances, the prices of which are fixed without relation to the actual cost of production. It was a deliberate decision to require these companies to work at a loss.
At whatever price they were fixed, they were not fixed in relation to the consumer's capacity to pay. This is spectacularly one of the types of company that the recent Vocational Commission reported against—the nominal company, the Minister for Finance holding the shares, and five or six dummy directors that, I gathered from the Minister, were members of the Civil Service.
No. I said the subscribers to the Memorandum of Association were.
I asked who were the people other than the Minister in that company. The only consideration that would qualify them for directorships was a nominal consideration. I assume they were the obvious type of dummy directors——
They were not directors of the company.
The people who hold these shares are the most obvious type of dummy shareholders. They hold no interest in the company, as the whole money was put up by the State. This is the most obvious type of company against which the Vocational Commission reported unfavourably. I also understand that this company falls under the criticism of that particular commission in that it is one of the companies in which there is no public accounting. The accounts of these companies do not come before the Comptroller and Auditor-General and, consequently, do not come before the Public Accounts Committee. The only occasion upon which anybody gets an opportunity of raising questions in regard to these companies is when some piece of amending legislation such as this comes before the House. It is proposed notwithstanding that, after that not very favourable development from the business angle, to provide this company with still further advances of public money. The Minister's peculiar excuse for the loss is that this company was operating under Government orders. I do not know whether we are to take that as suggesting that any company operating under Government orders should lose money, but this is spectacularly a case of losing money. We are now asked that the amounts advanced from public funds should be raised to the difference between £400,000 and the amount of the advances made to the dissolved company. What is the amount of the advances made to the dissolved company?
Has that been advanced to the dissolved company?
That is the amount of the combined advances to both companies—roughly £160,000 to the Mineral Development Company and £80,000 to the other company.
So we can advance up to £400,000 less £180,000?
Less £240,000. £160,000 has been advanced to the Mineral Development Company.
In the end it means that we are going to send another £160,000 in the same direction as we sent the £240,000.
I should hope that the activities of the company will grow to such an extent that we shall have to come to the Dáil for a further increase.
And on the extension of its business the Minister will have no scruple about it if it shows a loss?
That will depend entirely on the circumstances. The Slievardagh Coal Mining Company Board reported to me that if commercial considerations were to predominate, the proper course was to close down the mine until the machinery they required for working it was obtainable. I asked them not to close down the mine, to work the deposit with whatever equipment they could procure, with whatever secondhand plant they could construct out of materials available in the country, to utilise semi-skilled or unskilled labour where skilled labour was not available, and to make the production of the maximum quantity of coal their main objective, irrespective of the financial results.
Similarly, the Minerals Development Company reported that the proper method of working the Avoca ore was to establish a flotation plant. A flotation plant could not be procured, but the need for making available sufficient quantities of pyrites for superphosphate manufacture induced the company to work the deposit there, even to the extent of hand-picking the suitable ore from the ore mined, and they effected delivery of quantities so picked to the fertiliser manufacturer. If commercial considerations were in operation, this course would not have to be adopted. The mining company is different to any other type of producer in so far as it is working a wasting asset. Every ton of ore produced and sold at a loss is a ton less that might be produced at a later stage and sold at a profit. Therefore, while it might be correct, from the point of view of an ordinary commercial undertaking, to suggest that this working should be suspended until proper equipment has been procured, that would be undesirable because of the need for what is now being produced.
My chief point is that it would be more desirable to have this matter developed before the Committee of Public Accounts rather than have it examined in this casual way here. Is there any reason why it should not be developed before the committee?
It would be impossible to carry on a commercial enterprise in that atmosphere.
If it was a commercial enterprise, one could understand, but it is not. There is no secret to be hidden except the secret of how they can lose so much. I suggest that is one of the things that should be inquired into. If the Minister has a case for the expenditure of public money, surely it ought to be made to some body examining this matter quietly on behalf of the Dáil.
This is not a commercial company of the ordinary type. The Minister says that this was done on account of the emergency. He says he is not looking for profits in the ordinary way, and the prices quoted are fixed without any regard to the economic development. The Minister should look at the other side of it. What has been got out? The Minister will understand that the working of these two companies has caused complete dissatisfaction all over the country. We get our pyrites from Wicklow and our phosphates from Clare. Neither of them is regarded as very good; both are regarded as very dear, and when they make a fertiliser, or palm something off on the farmer as a fertiliser, it is regarded as very lowgrade stuff, but they have to put up with it in the circumstances. Nobody can be happy with what is produced, with where it is being brought out, or the price at which it is being sold.
The taxpayer has a right to grumble that so much of his money is being scattered and there is no real accounting for it. I think it is considerations like that that brought the commission, which was set up with so much pomp and ceremony, to the conclusions in which they very seriously criticised this type of organisation. It is not too late in the day to pay heed to the people who reported in that way. It does not seem to hold out much encouragement for people to sit on commissions if the recommendations they make are to be thrown to the wind and no argument given as to why their conclusions were not soundly based.
With regard to pyrites, it is a completely wrong assumption that the pyrites produced in Wicklow are excessively costly in comparison with what is procurable elsewhere. Even with the loss in production, and even with the small subsidy which is given to encourage the production of pyrites, to be used as a fertiliser, the cost is very much less than the pyrites we import and on which a very heavy subsidy has to be paid in order to enable it to be sold reasonably to the farmer.
As regards the wasting assets, that is one of the factors that distinguish one mining operation from another. The Minister might put that point of view very strongly to his colleague in the Department of Finance. In the consideration of the Finance Bill last year it was urged, in regard to certain commercial exploitations in the country, that some heed should be given to that aspect and to the procedure adopted here and in other countries.
What is the reason for the extension from "ninety" to "one hundred and twenty" days?
The company experienced some difficulty in having the balance sheet and the profit and loss account prepared within the 90 days fixed by statute, and it is considered desirable to extend the time. The section merely gives discretion to extend the time.
If they could write up the affairs of the company a bit better in the extra 30 days, we would have no hesitation in agreeing to it. Is not the period of 90 days the ordinary period?
At the moment I could not say.
Question agreed to.