Dáil Éireann debate -
Friday, 1 Jul 1949

Vol. 116 No. 11

Committee on Finance. - Sugar (Prohibition of Import) Order, 1949—Motion.

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Cosgrave)

I move:—

That Dáil Éireann approves of the Sugar (Prohibition of Import) Order, 1949.

The Sugar (Control of Import) Act, 1936, empowers the Government to prohibit, by Order, the importation of sugar except under licence. Import licences may be granted to the sugar company only. The first prohibition Order on the importation of sugar was made in May, 1936, and since that time the importation of sugar has been regulated by an annual prohibition Order. The current prohibition Order, which is the 14th Order of the series, prohibits the importation of sugar during the period from the 1st May, 1949, to the 30th April, 1950.

Section 3 of the Sugar (Control of Import) Act, 1936, provides that every prohibition Order shall cease to have effect at the expiration of six months from the date thereof unless the Order has been approved by resoultion of the Oireachtas, passed before the expiration of the said six months. The current Order was made on the 22nd April, 1949, and consequently it will require to be confirmed not later than the 21st October next.

In normal times, when sugar is freely available in the world markets, it is necessary to restrict imports in the interests of the local sugar factories. The annual demand for sugar is at the rate of approximately 100,000 tons a year and the local factories have been able to supply about 80 per cent. of this figure. It is necessary, therefore, in the ordinary way to import about 20,000 tons of sugar per annum. This is imported by the sugar company. That enables the imported and the home-produced sugar to be sold at a uniform price. During the emergency, there was a world-wide shortage of sugar, and, consequently, a prohibition on the imports of sugar during that period was not necessary. Nevertheless, it was considered advisable to maintain the prohibition on the import of sugar throughout the war and only allow it in under licence.

There is an exemption from the prohibition in the case of sugar not exceeding 14 lbs. in weight which is intended for the personal use of the importer or of his household and samples of sugar. The quantities which it was possible to import during the war years were limited. In the last two years, 1947 and 1948, there has been a substantial improvement. Last year, 40,000 tons were imported. The total consumption last year was 101,768 tons which was the highest consumption since 1941, and which is little short of the annual consumption between the years 1938 and 1941.

Mr. MacEntee

Can the Parliamentary Secretary tell us what was the value of the sugar imported?

Mr. Cosgrave

I have not the figures available. Last year we imported 40,000 tons and the previous year 20,000 tons.

Mr. MacEntee

Surely we ought to know what that cost.

Mr. Cosgrave

I have not the figures, but I can get them for the Deputy.

Mr. MacEntee

It is essential, I think, that Deputies should have these figures before them if they are going to discuss the wisdom or otherwise of making this Order.

Mr. Cosgrave

From recollection, I think the c.i.f. price of sugar is about £38 per ton.

Mr. MacEntee

Of imported sugar?

Mr. Cosgrave

Yes. That is from recollection.

Mr. MacEntee

So that the total amount of money involved in this proposal is about £1,520,000, on the basis of the figure which the Parliamentary Secretary has given us. Am I right in saying that the import of sugar is a monopoly?

Mr. Cosgrave

I said that it was confined to the sugar company.

Mr. MacEntee

And that, in consequence, there is no real importer of sugar in this country except one, and that concern imports sugar to the extent of 40,000 tons per annum at a cost of about £1,520,000. Is it true that a considerable profit is being made upon that imported sugar? Is it true that a profit is being made on the import of that sugar which is not shown in the accounts of this company, and that that profit, by what has been described in this House as an irregularity, is being conveyed somewhat surreptitiously to the Exchequer, so that, in fact, the people of this country are paying a concealed tax upon this sugar? The normal ration, I suppose, for every man, woman and child for sugar is about 26 lbs. per year. The import of 8,960,000 lbs. of sugar per annum would be more than sufficient to provide a ration for 300,000 persons if we exclude children and sugar used for commercial purposes. We find that the production of home-produced sugar would probably more than supply the ration. We may assume, therefore, that as everybody takes his sugar, the home-produced sugar is sold at the ration price, and that the imported sugar is sold at a price which, I am told, considerably exceeds the price of the rationed sugar. People in this country who find that their existing ration of eight ounces of sugar is insufficient and who require to supplement it, purchase this 40,000 tons of imported sugar, which, I am told, is sold to the ordinary consumers at a price considerably in excess of the price of home-produced sugar. But only the price of the home-produced sugar is taken into consideration in computing the cost-of-living index—only the cost of the home-produced sugar on the basis that no one consumes more than eight ounces of sugar per week is brought into the calculation, and any person who finds it necessary to supplement his sugar ration by buying imported sugar in order to enable him to perform, say, heavy manual work, has to pay through the nose. In this way the people of this country are being misled. Perhaps that is an exaggeration. I think the people of this country are too intelligent to be misled by this trick, but, undoubtedly, an attempt is being made by the Government, by this and similar devices, to fake the cost-of-living index.

We have been hearing ad nauseam that the cost of living has fallen. Well, the official cost-of-living index contradicts that assertion. The cost of living has not fallen, even having regard to the way in which the cost-of-living index is being fraudulently or deceptively manipulated by excluding from the items which make up the cost of living articles such as this imported sugar, which many people, let me repeat, find it necessary to buy and which is sold to them at a price far exceeding that at which the cost of sugar is taken for the purpose of computing the cost-of-living index. In this way an attempt is being made deliberately to deceive the people of this country. I do not think it is succeeding because, after all, the people do not live upon figures; they live upon commodities which they have to pay for when they go to the grocer, and they know what they have to pay for tea outside the tea ration.

An Ceann Comhairle

Tea does not arise—this Order deals with sugar.

Mr. MacEntee

I am speaking by way of example. The people know what they have to pay for flour.

An Ceann Comhairle

The Deputy seems to be attacking the cost of living figure which, in this instance, is relevant only to sugar.

Mr. MacEntee

Precisely, but sugar is not unique in being treated in this way; it is only one of a great number of commodities.

An Ceann Comhairle

It is the only one before the House.

Mr. MacEntee

Precisely, but I must discuss it in relation to other commodities. If I am going to discuss it in relation to the cost-of-living index I am entitled to consider the cost-of-living index as a whole.

An Ceann Comhairle

The cost-of-living index does not arise, unless in relation to sugar.

Mr. MacEntee

Very well, Sir. I think it cannot be gainsaid that there are two classes of sugar being sold in this country, native sugar which, as I have indicated, on a rough computation practically supplies the ration now allotted to each family and is being sold to them at a cheap price, and the imported sugar which, I am told, costs considerably more and with which we are concerned in this prohibition Order.

I have tried to indicate to the House, with the meagre information which the Parliamentary Secretary was able to supply me, how this reacts upon the cost of living of the ordinary people and how, because of that reaction, the cost-of-living index cannot be taken as in any way a reliable indicator of the true cost of living. But there is something more than that involved in this Order. Under the last Government a determined and, I should say, on the whole, successful attempt, was made to expand and develop those industries which use sugar as a raw material. When the last Government took office the sugar confectionery trade was in a very poor way indeed. One or two minor chocolate-making concerns were being hit savagely by outside competition which, if not encouraged by the Cumann na nGaedheal Government, was at least connived at by them under the guise of what they called selective protection. When Fianna Fáil took office one of the first things it did was to protect the Irish market for the makers of Irish sugar confectionery and, in consequence of that, not only were the existing concerns maintained in production, but new manufacturing concerns were established here and over the years these new concerns justified themselves in the public view. Of course, when they were first established the usual attempt was made by the then Opposition—the present Government—to vilify the manufacturers.

An Ceann Comhairle

What was done years ago with reference to factories then started surely is not relevant on this Order?

Mr. MacEntee

Except to this extent——

An Ceann Comhairle

To no extent.

Mr. MacEntee

Very well, then, you say I must not refer to the past. Let me refer to the present. Let me say that these concerns, which were established in the way I have indicated at the end of the war, found that there was a great opportunity for them to develop an export trade. We have been hearing a lot from members of the Government recently about the desirability of expanding our exports. We are told we have an adverse balance with sterling. We are told it is necessary for us to try to earn dollars by exporting products. Let us see how this Government, of which these Ministers are the spokesmen, try to encourage the export trade in sugar confectionery. Every manufacturer of sugar has to buy his raw material at a price which covers not merely the cost of the raw material as imported here, as processed here and as distributed to the industry—and, I presume, at a price which earns a profit for the sugar company in processing it—but also at a price which yields, I am told, something like £700,000 annually to the Exchequer. The competitors of the Irish sugar confectionery manufacturers have their raw materials which are used by them in manufacturing goods for export subsidised. Our native manufacturers have to buy their raw materials at a price which yields indirectly to the Exchequer a profit of several hundreds of thousands of pounds.

Now, mark what would happen if this position were dealt with in a straightforward, honest way and if the taxes were openly imposed. The customs and excise law provides that where duties are levied upon the raw materials of an industry and subsequently those processed materials are exported the manufacturers get a drawback equivalent to the amount of duty imposed and collected on the raw material in the first instance. If this tax were levied in a straightforward way the manufacturers of sugar confectionery would be entitled to such a drawback and they would consequently be able to compete in the external markets in a much more favourable position than they can to-day, handicapped as they are by the excessive price which they are compelled to pay for their raw material. But, of course, if they did that the Exchequer would not be able to collect the surreptitious revenue which I have described. The relevancy of that to this prohibition is that under the prohibition Order there is only one processor and one distributor of imported sugar in this country and it is from that processor and that distributor that these several hundreds of thousands of pounds are collected. If it were not for this prohibition Order that could not be done. The Minister for Finance would be compelled to come into the open, if he wanted to get the several hundreds of thousands of pounds of additional revenue for the Exchequer, and tell the people that he proposed to levy a tax at a rate which would yield him the total amount of money he required.

The question has been raised, and I think it may soon be raised in the courts, as to whether in fact the present proceeding is not invalid and irregular. Of course the Minister for Finance is, I suppose, relying on the fact that if any person happens to go counter to him or if any person happens to win a case against him in the courts or before a tribunal, or appeals to a court or a tribunal against him, that person does so at his own expense and at his own risk.

Mr. M.J. O'Higgins

Is this a discussion on sugar?

Mr. MacEntee

Precisely. We have had in relation to another matter here——

An Ceann Comhairle

Which does not arise.

Mr. MacEntee

No, Sir, except that it is——

An Ceann Comhairle

It does not arise.

Mr. MacEntee

Very well. I was referring to the stamp duty on transactions involving the transfer of property.

An Ceann Comhairle

That does not arise in reference to an Order which is before the House annually.

Mr. MacEntee

No, but the only thing I want to say in relation to this Order is that what is being done under it would probably be challenged in the courts if the aggrieved persons had any assurance that, if they won there, the decision of the courts would be honoured. I am sure——

Mr. T.F. O'Higgins

It would be like the Limerick rates.

Mr. S. Collins

Or the Sinn Féin Funds Bill.

Mr. MacEntee

I do not know which of these interjections is seriously intended.

Mr. T.F. O'Higgins

They may be as relevant as your speech.

An Ceann Comhairle

Interruptions are very seldom relevant.

Mr. MacEntee

Many things are said here which I regard as silly and stupid. I think the interjection about the Sinn Féin Funds Bill is about the silliest yet because the courts decided there that those who opposed that should not go to litigation and that was proved to be right in the end. The only people who benefited from the decision of the Supreme Court were the lawyers.

Mr. Cosgrave

I must say that Deputy MacEntee's return has enlivened the Opposition somewhat. I notice that they were rather deflated as a result of recent events in West Cork. Deputy MacEntee has come back with a certain amount of enthusiasm, though that enthusiasm is slightly misplaced.

The value of the 40,000 tons of sugar imported last year was £1,468,492, over £36 a ton. It is not correct to say that the cost of sugar to the consumer has risen. The ration of sugar, which has remained the same, is still at the controlled price. Over and above the ration there is available for those who want it, sugar at a price of 7½d. per lb.

Mr. Aiken

How much is that a ton?

Mr. Cosgrave

It is true to say——

Mr. Aiken

Can the Parliamentary Secretary say how much is that a ton?

Mr. Cosgrave

You can reckon it up.

Mr. Aiken

Is it a profit of about £30 a ton?

Mr. Cosgrave

Not at all. The cost price of the imported sugar is approximately 6?d. per lb., so there is a very slight difference.

Mr. MacEntee

It is £70 a ton.

Mr. Cosgrave

The position is that there was a very heavy subsidy on sugar. This subsidy lay heavily on all sections of the community. It was necessary in order to make sugar available at the controlled price. To offset that subsidy and, at the same time, ensure that those who were entitled to cheap sugar would get it, the increased sugar at the higher price was made available. There is still available to all consumers the ration of sugar at the lower price of 4d. per lb. That is available to everyone. Over and above that sugar is available at 7½d. per lb.

Deputy MacEntee seemed concerned about the fact that this is an imposition on those who use sugar for confectionery. He referred to the difficulties which these people encounter. He referred in particular to the fact that by reason of the higher price for sugar they were not able to compete successfully either here or abroad. He omitted to mention that in the last year of the Fianna Fáil Government sweets and jam amounting to over £1,000,000 in value were imported here at a time when their import became such an embarrassment that a number of confectioners and sweet manufacturers, particularly the smaller ones, were put out of business. Not only that, but the jam became such an embarrassment to those who had it that if facilities had not been provided for its export the jam would have walked out of the premises. That was the situation which faced this Government and they had to find a remedy for it.

I should say that amongst those who were most seriously affected were a number of ex-Army men who, after having entered the business of manufacturing confectioners, could not find a market for their sweets. That situation no longer exists. There is now no danger to home manufacturers from imports of that character. As I said at the outset we propose to continue this Order which enables the sugar company only to import sugar. It is necessary in order to protect home manufacturers that this Order should be available. While imports vary over a number of years, the imports of sugar have remained fairly constant. Last year home production of sugar was exceptionally high. It amounted to 83,000 tons as against 64,000 the previous year. It fluctuates considerably as between one year and another. The highest production arose I think in 1941 when it reached 95,000. It dropped in 1942 to 49,000 tons. It is necessary in order to protect the sugar beet industry that we should restrict imports of sugar and it is for that reason that I move that the Order be confirmed.

Mr. Aiken

Would the Parliamentary Secretary say whether it is true that the Government are making a profit of about £30 per ton on sugar sold to jam and sweet manufacturers?

Mr. Cosgrave

There is a difference of slightly over 1d. a lb.

Mr. Aiken

They import it at £36 a ton and they sell it at about £70?

Mr. Cosgrave

The cost price of imported sugar is approximately 6?d. per lb. and the price of sugar, not controlled, is about 7½d. It amounts to something over £12 a ton.

Mr. Aiken

To whatever extent it may be, the sweet manufacturers have to pay a profit to the Government on the sugar that they buy. They have to sell any confectionery they export in competition with people who are getting sugar at the world price. Is that not an export tax?

Mr. Cosgrave

We saved them from the heavy imports you allowed in in 1947. We succeeded in putting them on their feet again. You allowed in over £1,000,000 worth in 1947.

Mr. Aiken

People are not living on what was let in during the war.

Mr. Cosgrave

1947—during the war?

Mr. Aiken

They are not now living on what was allowed in in 1947.

An Ceann Comhairle

The Deputy did not realise these points when he had an opportunity.

Mr. Aiken

I am asking the Parliamentary Secretary a question.

An Ceann Comhairle

The Deputy is making a speech. He had his opportunity.

Mr. MacEntee

May I ask the Parliamentary Secretary a question? I think the Parliamentary Secretary, who is a fair-minded man, will be the first to admit that we here in opposition are trying to discharge our statutory functions, and generally facing some disadvantages——

An Ceann Comhairle

That is not a question.

Mr. MacEntee

I am merely putting it as a preliminary to the question which is as follows. Am I correct in saying that the total production of home-produced sugar last year amounted to about 72,000 tons?

Mr. Cosgrave

83,000.

Mr. MacEntee

Am I also correct in saying that the amount required to provide the weekly ration would be about 35,000 or 36,000 tons?

Mr. Cosgrave

The annual consumption of sugar in pre-war years was anything from 107,000 to 112,000 tons. It dropped during the war.

Mr. MacEntee

I am not talking about the total consumption. I am talking about the consumption of rationed sugar, the consumption of subsidised sugar.

Mr. Cosgrave

It would be in or about 54,000 tons.

Mr. MacEntee

So the position is really that one half of home-produced and imported sugar is sold at the controlled subsidised price and the other half is sold at 7½d. per lb.

Mr. Cosgrave

Do you want to deny people sugar?

Mr. MacEntee

No, but I want to ensure that the cost-of-living index will be corrected.

Mr. Cosgrave

It has not been interfered with. It is the same as when the Deputy was there.

Question put and agreed to.