Electricity (Supply) (Amendment) Bill, 1953—Second Stage.

I move that the Bill be now read a Second Time. The Bill was circulated with a fairly detailed explanatory memorandum which will have informed Deputies of its main purposes. These main purposes are threefold. First, the Bill is necessary to authorise an increase from the present statutory limit of £65,000,000 odd to £100,000,000 in the expenditure which the E.S.B. may incur for capital purposes other than the rural electrification scheme; secondly, to authorise the board to obtain moneys required for these capital purposes and for the performance of its functions generally from sources other than the Central Fund and, thirdly, to authorise an increase from £8,000,000 to £16,000,000 in the statutory limit of advances which may be made from the Central Fund to the board for the rural electrification scheme.

Bills to amend the limit of capital advances to the E.S.B. have been submitted from time to time. It has been the practice of the House to deal with the capital requirements of the E.S.B. upon that basis and in that respect this Bill is no different from any other. The main change which it proposes is that contemplated in regard to the raising of money. It proposes to enable the board to raise capital for its development purposes other than from the Central Fund by the issue of stocks to the public.

The Bill also contains a provision for the exclusion of the board from the application of the Public Authorities Protection Act, 1893 and provides for an increase in the maximum pensions which may be paid on retirement to whole-time members of the board. The remaining provisions of the Bill which are complementary to the main financial provisions deal with such matters as State guarantee and underwriting of issues of securities by the board, the use of sinking funds which will be established for redemption of such securities and the investment of surplus moneys which the board may have on hands at any time.

Under the Electricity Acts passed from 1927 to 1952 the total amount of advances available to the board is £58,945,000 for its general purposes and £8,000,000 for rural electrification. There are two other sources of finance available to the board—I will refer to them again later—but the Central Fund has been the main source and, in fact, the use of these other sources of finance merely postpones demands on the Central Fund.

Section 2 of this Bill which provides for an increase in the authorised total of the board's capital expenditure is also designed to consolidate the fianancial provisions of all previous Electricity (Supply) Acts (including the financial provisions of the Shannon Electricity Act of 1925, as amended) and of this Bill. That has been done not only to make it clear that the figure of £100,000,000 now proposed is inclusive of the amounts authorised under all previous electricity legislation, but also to give the House and the public a clear picture of the various sources from which the board has obtained finance in the past and of the additional borrowing powers which it is now proposed to confer on the board. I think that in view of the magnitude of the board's undertaking and the large proportion of national capital expenditure which its development programme will absorb for a considerable time ahead, it is desirable that the House and the public should have as much information as practicable on the board's general financial position, of the nature of its development programme and on the methods by which it has been financed in the past and will be financed in the future.

I propose, therefore, to deal first in some detail with the various existing sources of finance as set out in sub-section (2) of Section 2 of the Bill and to explain the need for the new programme before dealing with the new borrowing powers proposed in Sections 3 and 4 of this Bill.

With regard to the general financial position, first, there is the sum of £6,030,066 which is described as the expenditure on the Shannon works for which the board became liable under the Act of 1927. That sum represents the agreed liability accepted by the board in respect of the Shannon scheme. It was the Minister for Industry and Commerce who was authorised by the Electricity Act of 1925 to construct the Shannon scheme. The moneys required for its construction were made available out of the Central Fund. The Shannon works comprise the main works at Arnacrusha, as well as transformers, distribution systems and lands forming portions of the Shannon works which were transferred to the board under the Act of 1927. In law, however, these properties remain vested in the Minister for Industry and Commerce and it is now proposed to invest them in the board. Under the 1927 Act, the board assumed liability for the repayment of the sum and, therefore, it is included in the £100,000,000 as being part of the capital expenditure incurred by the board.

Secondly, there is a sum of £38,094,570, which represents the total of repayable advances made to the board from the Central Fund for purposes other than rural electrification in the period from the establishment of the board up to the 31st December last. That amount has been expended on the various works which the board was authorised to undertake under the Electricity Acts. I may mention that of the total liability of £44,000,000 odd in respect of these advances and the Shannon works liability the board has already repaid £1,961,515, but for the purposes of this Bill no account is taken of such repayments in calculating the authorised total of capital expenditure.

Paragraphs (c) and (d) of sub-section (2) deal with the two other sources of finance available to the board, namely, the board's depreciation reserves and the superannuation funds. Under the Act of 1927 the board is under a statutory obligation so to adjust its charges as to make adequate provision not only for its day-to-day expenses but also for the repayment of moneys borrowed by it and for the renewal or replacement of its wasting assets. In accordance with that obligation to provide for the renewal or replacement of its assets, the board sets aside each year out of its revenue sums which, accumulating over the life of these assets, will, it is estimated, be sufficient to provide for their replacement when the assets have reached the end of their useful life.

Under the Act of 1941 the board was authorised to invest these reserve allocations in trustee securities or in such other securities as might be approved by the Minister for Finance. In fact, however, the board has not availed itself of that power but has used these reserves for the provision of new capital assets according as these were authorised under successive electricity Acts. In other words, the board's depreciation reserves have been invested in its own undertaking. That practice has advantages both from the point of view of the board and of the Exchequer. From the board's point of view it is more advantageous to invest these funds in new capital works rather than in securities which might be liable to fluctuate in value and which would probably give a net return somewhat less than the board would have to pay for advances from the Central Fund. It has also relieved the Exchequer, temporarily, at least, of demands which might otherwise have been made on it if these funds had not been available to the board.

It will, of course, be appreciated that all sums used in that manner must be included in the authorised total of the board's capital expenditure at any particular time and paragraph (c) of sub-section (2) of Section 2 of the Bill provides accordingly. At 31st December, 1953, the amount of these reserves which had been temporarily utilised to finance new capital projects other than rural electrification was £10,845,342.

Paragraph (d) of sub-section (2) deals with borrowings from the superannuation funds. The Electricity Supply Board (Superannuation) Act of 1942 provided for the introduction of superannuation schemes on a contributory basis for the board's employees and for the management of the superannuation funds by trustees. Under Section 8 of that Act the trustees were authorised to lend to the board such sums as they thought proper to lend and the board was authorised to borrow from these funds for any purposes arising out of the performance of its functions. These borrowings are repayable at 90 days' notice on either side. The provision is mutually advantageous. For the trustees it provides a convenient and readily realisable form of investment, the value of which remains stable and for the board it provides a convenient additional source of finance. At 31st December, 1953, the total amount borrowed by the board from superannuation fund trustees was £1,546,200.

Summarised, therefore, the present position is that: (a) excluding the Shannon works liability, the authorised limit of capital expenditure is £66,945,000 of which £8,000,000 is for rural electrification; (b) the board has available to it three sources of finance, namely, the Central Fund, its own depreciation reserves and the superannuation funds; (c) at 31st December, 1953, the total of the board's borrowings from these sources was £58,486,112 (including £8,000,000 for rural electrification) or about £8,500,000 less than the total statutory provision of £66,945,000.

The difference between the amount authorised and the total of the amounts borrowed is due to the time-lag between commitments and expenditure which is inherent in the nature of the undertaking.

The appendix to the White Paper which has been circulated to Deputies with the Bill, gives a comprehensive picture of the existing installed capacity and of the board's development programme, including that part for which advances have already been authorised and which provides for an increase in installed capacity from the present figure of 377,000 kilowatts to 624,000 kilowatts; these new stations will be brought into commission in the period up to 31st March, 1958. The new programme which is outlined in Part III of the appendix to the White Paper provides for a further increase of 413,000 kilowatts, bringing the total capacity at 31st March, 1961, to 1,037,000 kilowatts, and part of this new programme will proceed simultaneously with the existing programme.

This new programme has two aspects. The primary object is, of course, to provide additional generating capacity to meet the growth in demand for electricity. The estimates of increased demand over the period to 1961 have been based on the board's experience of a doubling in demand in each period of five or six years. I am satisfied that there is considerable scope for development in the production and consumption of electricity in this country in which, despite the considerable expansion which has taken place, we still lag considerably behind other European countries with somewhat similar economic conditions. The results of a survey recently carried out by O.E.E.C. show that of the 17 O.E.E.C. countries, Ireland was in 15th place in terms both of installed generating capacity and production of electricity. If we are to maintain, much less to improve, our position in the increasingly competitive conditions which we may expect to experience in our export markets, it is vital that we should improve our productive efficiency and the measure of that efficiency will depend largely on the extent to which we apply modern methods to our productive processes. Electricity is recognised as one of the cheapest and most easily utilised forms of energy both in industrial and agricultural processes, and from the point of view of the national economy it has the further advantage that a large proportion of our requirements can be produced from native resources which we have in comparative abundance. I have emphasised to the board that its efforts should be directed not merely towards providing for the normal growth in demand, but that it should endeavour to stimulate demand by means of sales propaganda and demonstrations.

The other aspect of the new programme is that it is based almost entirely on the use of our native resources. It will be observed that the emphasis is almost entirely on turf-fired and hydro stations. In so far as the turf-fired stations are concerned, the new programme may be regarded as complementary to the Bord na Móna development programme which I outlined to the House last summer when the Turf Development Bill, 1953, was before the House prior to its enactment. When this co-ordinated programme has been completed the electricity generating stations fired with turf or native fuel will use annually at least 400,000 tons of machine-won turf, 120,000 tons of hand-won turf and over 2,500,000 tons of milled peat, as well as 45,000 to 50,000 tons of Arigna coal. The annual average output of all our native fuel stations will be over 1,500 million units which compares with an estimated total output of 1,300 million units from all the board's stations in the current year. Indeed, if past experience is any guide, these estimates may be exceeded. The requirements of the two existing turf-fired stations at Allenwood and Clonsast were originally estimated at 300,000 tons per annum and the annual average output at 225,000,000 units of electricity. In the year ended 31st March, 1953, fuel consumption was 395,600 tons and the output of electricity was 325,454,000 units. In the year ending 31st August, 1954, Bord na Móna has contracted to supply 410,000 tons to these two stations. There is also the possibility (mentioned in the appendix to the White Paper) that some of the additional capacity required may also be based on turf instead of on imported fuel. We will, therefore, have at least 63 per cent. and possibly more of our total installed capacity in native fuel or in hydro stations in 1961 and our dependence on imported fuels for our electricity requirements will be considerably reduced. In view of our experience during the emergency, and the increasing importance of balance of payments considerations I need not emphasise the desirability of this development.

With the exception of the Lanesboro' station and the four small stations for hand-won turf to be built in Kerry, Clare, Galway and Donegal, all the new turf-fired stations will use milled peat. The considerations on which this decision were based have already been outlined in the House. Briefly, they are that the necessary preliminary development work on bogs, being less elaborate, can be done more quickly; milled peat can be won by mechanical means and requires less man-power than sod turf, and it can be burned at a much higher moisture content, 55 per cent., than in the case of sod turf, which is 30 per cent. It is, therefore, a much cheaper fuel than sod turf. Deputies may be interested to learn that the board has already placed orders for three of the boilers which will use milled peat in the Ferbane station. This station, when completed, will be not only the largest in the E.S.B. system but the largest turf-fired station in Western Europe and will have an annual average output of 405,000,000 units.

As regards the four small stations, I think it should be emphasised that the primary object in establishing these was to provide an outlet in the areas concerned for hand-won turf. Normally the construction of stations of such a small size and with such a limited rate of consumption would not be considered as economic. In fact, these stations are directed more to serve a social than an economic purpose.

As explained in the White Paper, the total cost of this programme, excluding rural electrification, is estimated at £53,500,000, and a further £1,750,000 will be required to cover the increased cost of the existing programme, that is to say, the increase in the present estimate of its cost over that which was current when the programme was originally approved. If full provision were made now, it would be necessary to increase the authorised limit of capital expenditure from the present limit of £65,000,000 odd to approximately £120,000,000. It has been decided, however, that as an interim measure, it will be sufficient to increase the authorised limit to £100,000,000.

It is estimated that this will be sufficient to cover the cumulative total of the board's capital expenditure whether actually incurred or for which contracts wil have been entered into in the period up to 31st March, 1956, but excluding capital works which will at that time be still in the planning stage and will not yet have become the subject of contractual commitments. It will be necessary to make further legislative provision before 31st March, 1956, to increase the authorised limit of capital expenditure so as to provide for the completion of the programme. The House will regard it as desirable that provision should not be made too far ahead, so that it will have an opportunity periodically of reviewing the progress of the work on measures of this kind.

The next matter to which I wish to refer concerns the proposals for the financing of that programme. I would inform the House that since its establishment, the board has financed its operations from three sources—from the Central Fund, from its depreciation reserve and from the superannuation funds—and from these only. These sources will still be available to the board but in Sections 3 and 4 of this Bill it is proposed to confer new borrowing powers on the board. Section 3 authorises the board to borrow temporarily. Temporary borrowing is a normal feature of commercial undertakings and its convenience and advantages need not be stressed. Other statutory bodies such as Bord na Móna and C.I.E. already possess this power. This provision will empower the board not only to obtain overdraft accommodation which may be required from time to time to meet ordinary revenue expenditure such as salaries and wages but also to obtain short-term loans for capital purposes from such sources of finance as may be available. The only limit on borrowing for revenue expenditure will be that approved from time to time by the responsible Ministers. Borrowings for capital purposes will, of course, count towards the authorised limit of capital expenditure.

The principal new borrowing power is that contained in Section 4, which authorises the board to borrow money by the issue of its own securities and thus enables it to obtain its capital requirements in future from sources other than the Central Fund which as I have made clear has heretofore been the main source. The total of £25,000,000 which the board is being authorised to borrow under sub-section (4) of Section 4 is estimated to be sufficient to meet the board's actual expenditure on projects other than rural electrification in the period 1st April, 1954 to 31st March, 1956. The terms and conditions of such issues will be subject to the approval of the Ministers for Industry and Commerce and Finance and the uses to which the moneys so obtained may be applied will be subject to the approval of the Minister for Industry and Commerce. These provisions are designed to provide an assurance that the board's development programme will be on the general lines which the Government has approved and that there will be no departure from this programme without the approval of the responsible Minister. In view of the magnitude of the proposed programme and the large proportion of national capital investment which it will absorb, the Government regards it as essential that such an assurance should be given in statutory form. From the investor's point of view I can see distinct advantages in the existence of a provision which will ensure that the programme for which he will be asked to subscribe has ministerial approval.

I think it will be agreed that the board's undertaking has now developed to the stage at which it should be possible for it to obtain its capital requirements for projects other than rural electrification from the investing public and that it need no longer rely on the Central Fund save in exceptional circumstances. I will explain later the reasons for the exclusion of rural electrification.

The financial administration of the board has been satisfactory and it has succeeded in complying with the statutory obligations imposed on it to pay its way and make proper provision for the repayment of its borrowings and for the depreciation of its wasting assets. Its liabilities are amply covered by its fixed and liquid assets and it enjoys the advantage of being the sole producer in a market which is constantly expanding and in which the scope for future expansion is almost unlimited. The board's capital requirements will be considerable for some years ahead, but in view of the growth in demand which has been consistently experienced and which may be expected to continue the investor can be assured that the moneys which he will be asked to subscribe will be remuneratively employed. A further attraction is that these E.S.B. securities will be trustee securities and that issues of them by the board may be underwritten by the Minister for Finance. Section 9 of the Bill empowers the Minister for Finance to guarantee the board's securities.

The financing of electricity development from sources other than the Exchequer is the normal practice in most European countries, in some of which, of course, private enterprise plays a considerable part. One of the reasons which made it necessary for the State to assume responsibility for electricity development in this country was that we lacked a tradition of industrial investment and of large industrial enterprise to which a task of such magnitude could be entrusted. Since then, however, thanks to our industrial development, we have succeeded in gradually building up an increasing investment in native enterprises, some of which are heavily capitalised and operated on a large scale. I am convinced that there is still available a large volume of savings which are not productively employed due largely to this lack of a tradition of investment, and I am hopeful that some of these savings can be attracted by the board's issues. I have in mind particularly the ever-growing number of consumers, particularly in rural areas, many of whom will have much more direct interest in the E.S.B. undertaking than previously because they will have constantly before them tangible evidence of its activities.

The issue by the board of its own securities has other advantages. To the extent that the board can obtain its capital requirements from sources other than the Central Fund, the Government will be correspondingly relieved of the necessity for providing for such requirements in its own issues of securities to the public. The House is aware that the capital requirements of the E.S.B. represented a considerable proportion of the moneys raised by the State for investment purposes. It will also make available on our rather limited security market a new and attractive type of security which it is hoped will attract an additional class of investor who might not normally invest in State issues but would be prepared to invest in E.S.B. issues. The type of securities to be issued will, of course, be governed by the statutory position of the board which does not permit for instance the issue of stock with voting rights, but the board will nevertheless have considerable freedom of action, and its issues should be of the type to make a wide appeal to investors.

In future, therefore, the operations of the board will be financed by long-term borrowings from the public and by temporary borrowing from other sources of finance including the board's own reserves and its superannuation funds. In connection with temporary borrowing of this type there is in paragraph (f) of sub-section (2) of Section 2 a proviso, the necessity for which may have to be explained. From what I have already said it will be clear that all temporary borrowing which is used for capital purposes other than rural electrification must count immediately towards the authorised total of capital expenditure. Deputies will appreciate that the use of borrowings from the superannuation funds or of the board's reserves for capital purposes is really just another form of temporary borrowing. Superannuation funds borrowings are repayable at 90 days' notice, and the reserves must be replenished when it becomes necessary to replace the assets for which they were built up. The object of the proviso is to ensure that if and when it becomes necessary to repay such borrowings— by funding them in long-term issues for example—new borrowings which are intended solely for the purpose of such repayments will not count against the authorised total.

I mentioned that Central Fund advances would continue to be available to the board and Section 5 of the Bill provides for the making of such advances to the board by the Minister for Finance within the authorised limit. I should explain, however, that the sole purpose of this provision is to ensure that the board will have available to it at all times the moneys which it will require so that the development programme may go ahead unhampered. The Central Fund will, however, be only a secondary source of finance and it is intended that in future advances will be sought from the Exchequer only for the purpose of tiding the board over periods during which it might not be thought convenient or desirable to seek capital from other sources. The Central Fund will, therefore, be the lender of last resort and is unlikely to be called on to any great extent. During the course of my remarks I indicated that in the various figures I mentioned the cost of the rural electrification scheme was omitted and that, in the matter of raising capital from the board by the issue of securities to the public, rural electrification is also excluded.

This Bill provides for an increase from £8,000,000 to £16,000,000 in the total of advances which may be made for the purpose of the rural electrification scheme from the Central Fund. The reason why the rural electrification scheme will continue to be financed by the Central Fund is that it is a service which is being subsidised and will continue to be subsidised by the Government and it was thought preferable, therefore, that it should continue to be financed exclusively by the State. Aside from the fact that it would obviously be inappropriate to seek money from investors for a subsidised service the continuance of the present arrangement is more convenient and simple from the administrative point of view.

In the matter of rural electrification, the House should be informed that there have been two important developments in that sphere of the board's activities. The first is that the basis on which the order of priority of areas for development under the scheme was determined has been altered. I found that, in practice, the former system under which priority was determined solely on the basis of the ratio of fixed charge revenue to capital cost led to inequities in some cases because it did not give sufficient recognition to the percentage of the residents in the area willing to accept supply. I found that cases existed in which there was no prospect of development taking place at an early date despite the fact that a very large percentage of the people of the area were willing to take supply while areas with a relatively low percentage of acceptances were being developed simply because their financial returns happened to be better. I discussed the matter with the board and, as a result of our discussions, a new system of selection has now been introduced which gives due weight to the percentage of acceptances in each area. The effect of the new system is that in future the prospects of an area being selected will depend to a great extent on the number of residents in the area who agree to take supply. I think the House will agree that it is only equitable that those areas which show the greatest enthusiasm for the scheme and in which the greater proportion of the population want the scheme should be the first to benefit from the extension of the scheme. The revised basis of selection will not affect the ultimate cost of the scheme.

The second and perhaps most important development is that the rate of construction on the scheme has been accelerated by 50 per cent. and that a still further increase of 50 per cent. on this rate of development will commence to operate in the very near future. Up to recently the rate of construction was retarded by shortages of materials and as a result the number of areas completed in any one year did not exceed 49. The supply position has now improved and the number employed on the scheme has been increased. At 31st January, 1954, the number employed on the scheme was 1,800 as compared with 1,220 on 31st January, 1953, and the board estimates that this will enable the number of areas completed in each year to be increased to 75. As soon as this has been achieved a further increase is planned to bring the number of areas completed to 100 annually. At 31st December, 1953, 265 areas had been completed, construction work was proceeding in 30 areas and preparations for commencing work in a further 27 areas were under way. The total of 322 areas developed or in course of development at that date represents about 40 per cent. of the total number of areas and the board now hopes that it will be possible to complete the scheme in about five years from now.

The Government, as the House knows, attaches particular importance to the development of rural electrification and I can assure the Dáil that nothing will be left undone to bring the scheme to completion as quickly as possible. The fact that the sum now being made available to cover the period up to 31st March, 1956, is equal to the total amount authorised since 1945 is sufficient proof of this resolve. I have, moreover, told the board that if any difficulties are experienced which could be solved by Government intervention there should be no hesitation in approaching me for assistance.

There are some other provisions to which I should refer. Section 17 provides for the exclusion of the board from the application of the Public Authorities Protection Act, 1893. Legislation to amend this Act is at present under consideration by the Government but it has been decided that the position in so far as it affects statutory bodies such as the E.S.B. should be dealt with in legislation dealing specifically with these bodies. Advantage is being taken of the enactment of this Bill to provide for the exclusion of the board from the application of the Act.

I think that the only other provision to which I need refer at this stage is Section 19, which provides for an increase from 20 forty-eighths to 24 forty-eighths of salary on retirement in the maximum pension which may be paid to whole-time members of the board. Each of the three whole-time members has now service of over 23 years and I think it will be agreed that they should receive credit for their service in excess of 20 years sufficient to permit the payment of a pension to them equal to half of their salaries on retirement.

The programme for which approval is now sought is the largest ever undertaken by the board, and taken in conjunction with the co-ordinated programme being undertaken simultaneously by Bord na Móna, represents the greatest and most ambitious programme of national development which has ever been undertaken in this country. Its importance, not merely in the economic field but also in the social field, cannot be exaggerated. From now onwards, the greater part of the activities of both boards will be in areas which, because of their remote and desolate state, were in danger of being regarded as permanent "distressed areas" which were not only incapable of making any contribution to our national wealth but were likely to constitute a permanent burden on the whole national economy. When this programme has been completed these areas will be one of our most valuable national assets. In the 60-70,000 acres of bog which will be developed for electricity production, about 4,000 men will be permanently employed and about 7,000 will be employed in the peak periods of production.

The construction of the stations and of the transmission and distribution systems which will radiate from them will also provide considerable employment and, when all the native fuel and hydro stations are operating, about 1,000 men, many of them skilled, will be permanently employed in the stations themselves. All this additional employment will be available in areas where opportunities for productive employment have hitherto been almost non-existent and in which depopulation and emigration have been the chief features. The construction of the stations will also facilitate the extension of rural electrification to these areas and provide a much-needed amenity which might not otherwise be made available for some considerable time. There is no doubt, therefore, that the effect on social and economic conditions in these areas will be considerable.

I feel sure that the House will join with me in paying a tribute to the directors and staff of the E.S.B. for the energy and enthusiasm with which they have tackled and overcome the problems and difficulties which they have experienced in the design, construction and operation of the generating stations and of the transmission and rural distribution network. I think that we can take considerable pride in the fact that all these new stations will be designed by the board's own staff without any outside assistance. The success which they have already achieved is a tribute not only to their professional skill but to their appreciation of the national importance of their work. It is these qualities which have made the board one of our greatest national undertakings and which will, in the future, enhance the good reputation it already enjoys.

The enactment of this Bill is essential to enable the board to go ahead with its task of developing further our national energy resources and of bringing to the rural community a modern amenity and an important aid to increased production. I, therefore, confidently recommend it for the approval of the House.

Before the Minister sits down, I would like to ask this question: what amount of money known as repayable capital has been advanced to the board up-to-date?

I gave that figure, Deputy. The total amount authorised under various Acts to date for advances to the board is £58,945,000 for general purposes and £8,000,000 for rural electrification.

What amount of that £58,000,000 is known as repayable capital?

All of it is repayable.

But the money advanced for rural electrification is not looked upon as repayable?

The £8,000,000 I am referring to is capital advanced to the board. In addition to the capital advanced the board gets a subvention from voted moneys of an equivalent amount.

The measure before the House brings to an end one period of development associated with the E.S.B. I believe that the E.S.B. has been a unique success and that the development which began with what was then known as the Shannon scheme reflects credit on all those associated with it. It reflects credit on its sponsors, on the board, and on the administrative and technical staff who have since developed it.

The decision to allow the board in future to make its own financial arrangements is one which may be welcomed. In fact, I believe it is a decision which might have been implemented before now. The E.S.B. is probably the greatest example—in fact I think it can be said without qualification that it is the greatest example—of State investment in this country and has to its credit the best return of State investment for any undertaking of this nature. Some years ago an examination of a return of State investments was made and while the return showed a profit, if the E.S.B. venture were excluded from it I believe the profit would have vanished as well. So that from every point of view the money invested in the development of our resources which has been made in the case of the E.S.B. has benefited the community as well as reflecting credit on those who are responsible for it.

The development of electricity supply which the Minister referred to was in a unique way based on native resources. There are in the provisions contained in this Bill references to stations other than the hydro stations and the peat stations, but in the main the scheme which was developed in the beginning under the Shannon scheme —subsequently acquired by the E.S.B. and extended in other schemes—is entirely based on the development of native resources. That in itself is a most desirable development, one which has meant not only power and light but substantial extension of employment.

The references which the Minister has made to the financial provisions and which have been fairly fully set out in the White Paper go into figures and details which enable Deputies and the people in the country generally to get a full picture of the total development up to date and a picture of the proposed development for the future. The success which has attended the development of the electrical supply system has meant throughout the country reforms of a type that were only dreamt of before. It has meant in rural areas light and power, but it has brought with it one of the aims of national policy, and that is to brighten the lives of the people living in these areas and to make life easier for them by providing amenities and the means whereby employment can be provided either directly or indirectly.

This Bill, which consolidates the financial position and which will enable the board itself to raise money for its own purposes, is, as I said at the beginning, the culmination of the development of the electricity supply system up to the present. I have no doubt that the success which has attended the development associated with the E.S.B. will continue to attend its extension in the future. That it should have no difficulty in raising capital for these purposes need not be stressed. The success which has attended the E.S.B. is recognised throughout the country and is, I think, agreed by all who have watched its development over the years or who have in some way or other taken an interest in the various schemes and have been touched by the effect which the development has meant in all parts of the country and, I think, for all citizens.

There are no objections now, I think, to the scale of the proposed development. It was not always so. In the beginning when the E.S.B. was established and when the proposed development was undertaken a great many people thought it was too big for the country and that its rate of development was too great for the demand. The passing of time and subsequent demand has nullified all the doleful prophecies then made. The fact is that since the work was commenced, I think in no year—or certainly only for brief periods—was the supply adequate to the demand and in recent years the demand has grown on a much larger scale.

I believe the proposed financial arrangements enshrined in the Bill will meet with the general approval of the House. The Minister did refer to the fact that in Section 4, which provides for the general borrowing powers of the board, the board would have to get the sanction of the Minister and that that sanction would in itself carry a better guarantee because of the Government authority behind it than if the board had undertaken the proposals on its own. While in some cases that may be so, the fact that the Government sponsors a particular investment is no guarantee that it will provide any return or an adequate return. It may be necessary to consider that on the Committee Stage.

With regard to the provision for a variation in the maximum rate of pension, I believe that every member of the House will welcome that. The directors of the board, and some of them I believe have been associated with the undertaking from the beginning, deserve the best thanks of the House and of the country. The staff, both administrative and technical, also are entitled to the highest praise which the House and the country will give them for the magnificent work they have done since the scheme was started almost 30 years ago.

I am sure everyone will agree that the work done by the board is a grand job, and that no more important work could have been undertaken for the country. I cannot support the method suggested of financing this undertaking in the future. Neither can I follow Deputy Cosgrave when he says that the financial arrangements in this Bill will meet with the unanimous approval of the House. He says, as regards the money that is to be borrowed, that the fact that there is a Government guarantee behind it will encourage people to give the necessary money for the electrification of the country. What I want to know is why should we borrow money at a high price if the credit of the Government and of the country is behind the undertaking? If the credit of the country and the resources of the people are behind it, why should we have to pay interest on the money that is required for the development and electrification of the country? Deputy Cosgrave says that a change in the financial arrangements is long overdue. Is it not a fact that we are trying to carry on the same system of financing anything that is worth while for the country? We use the credit of the country and we pay people interest on the money that they give us on that credit. We pay it on the credit that belongs to the people.

I have always been interested in the E.S.B. because of the importance of its undertaking to the country. I was reading recently the chairman's statement at the last annual meeting. He pointed out that the gross revenue of the board now was £7,670,103, and that the working expenditure, including depreciation, amounted to £6,592,088. He said that the interest and repayment of capital advances came to £1,566,288, leaving a deficiency of £488,213. Here we have an undertaking of these dimensions with the backing of the credit of the country behind it. Why, therefore, should we have a system of having to borrow from the people, while we have the resources of the nation behind the undertaking to give us whatever capital is necessary to develop the electrification of the country?

Deputy Cosgrave says that a change in the financial arrangements is long overdue. I want to submit to the Minister and to Deputy Cosgrave that there is a big job, which is long overdue, that requires to be done, and that is to adjust the financial backing of the country for its development. I was looking up some figures recently and I saw where the chairman talked about the rate of annual interest charged by the Minister for Finance on repayable capital advances. I found that it had been increased from the 7th October, 1952, to 5¼ per cent. He went on to say that the higher interest rate would, by reason of the high capital expenditure at present in progress, have a material effect on the board's expenses.

I want to ask Deputy Cosgrave is it necessary for us, for the Government elected by the people, to have to pay 5¼ per cent., or even 2 per cent., on money that is borrowed on the credit of the country by the E.S.B. for the electrification of the country. The revenue from the undertaking is now over £7,500,000. I have looked up the accounts, and I find that the total repayable capital advanced to the E.S.B. for the last 23 years amounted to £35,177,557. Over the same number of years the E.S.B. paid to the Government in interest £15,412,743, which is the equivalent of 44 per cent. of the repayable capital advanced, while over the same number of years the repayments of capital to the Minister for Finance was only £1,687,390, or less than 5 per cent. of the repayable capital. Surely the time has come when we should consider whether that system is to continue.

This undertaking has been a real salvation for the country. One may say that it has brought new life into the country. It provides us with light and heat and other amenities. Why, therefore, should we have to borrow money on the credit of the country and of the people and pay that high rate of interest on it for the development and electrification of the country? I should like to hear Deputy Cosgrave later on that, especially when he says that an adjustment of the financial arrangements is long overdue. Surely since, as he argued, the Government guarantee is behind it, the people will give us the money. Of course they will. The banks and others will also give it, because the Government guarantee is there, but why should we pay interest for the money that is required when the credit of the people and the country is behind the undertaking? Why should we allow anyone to charge interest on that credit?

I suggest to the Minister that, in my opinion, there is a need for a small body of men to throw a searchlight on the working of the E.S.B. I could not say enough by way of appreciation of what the E.S.B. has done for our cities and towns. As far as we are concerned, we want to see its work advance more and more. We want to see that it is given every co-operation. I cannot agree, however, that we should be using the credit of the country to enable some people to draw heavy sums of money by way of interest payments on the capital which the board requires. I have already pointed out that over a period of 23 years a sum of over £15,000,000 has been paid by way of interest which is equivalent to 44 per cent. of the capital invested in the undertaking, while only less than 5 per cent. of the redemption charges were met in the same period. Does Deputy Cosgrave agree, or will anybody agree that such a system as that should continue to prevail? What it amounts to is this, that out of every £ that I pay for light or heat in my house, 7/- or 8/-of that £ goes to meet the interest charges on the money borrowed, from whom and for what? I am not suggesting that a change can take place suddenly. But something has to be done about that. I again suggest to the Minister that there is a need at the moment for a small body of capable men to go into these matters, to put a searchlight on the working of the E.S.B. and the method that has been adopted of financing it. Why should we fear using the credit of the nation to provide the system of electrification that we need for our requirements?

Are we not guaranteed a refund of that capital as time goes on? We have power. We have heating and lighting. We have everything we can ask for. Why then should we allow people to use a creditor country and pay interest on borrowed moneys? I suggest that before we proceed any further with this Bill we should provide for something better than increased borrowing, with a Government guarantee for the moneys borrowed. Is it not time we sat down calmly and deliberately and gave to the Central Fund the necessary power to provide whatever moneys are necessary for the electrification of the country?

Deputy Cosgrave supported the Minister in relation to the provision of proper superannuation for the directors of the company. By all means give the directors decent pensions, but is it not strange that we all seem to forget about the ordinary men who are doing equally important work, the men with the pick and shovel? Why should we not give them the same consideration when they come to retire? Is there anything wrong in giving them more than half their wages by way of pension? Why confine it to the directors? Have the directors not good salaries out of which to make provision for themselves when they retire? I am not objecting to giving them a decent pension, but is it not strange that we should have so much sympathy for the men with the big salaries who can provide for their own future and so little sympathy for the men who are out in the cold and the wet and the muck and slush bringing electricity all over the country? Is there any reason why we should differentiate as between the directors and the ordinary employee when we come to deal with pensions? The time has come when we must change our views as to what should be done for the men at the top and for those at the bottom of the scale. Those at the bottom of the scale are not paid proper wages for the hard work they have to do week in and week out throughout the year.

I have a strong objection to casual employment in connection with the E.S.B. It is easy to carry 1,000 men on a week-to-week basis and cast them off whenever the board thinks it can do without them. The question of security of employment enters into the matter here. When we have an undertaking in which the wages bill amounts to over £7,000,000 it is time we made up our minds that the credit of the country is sufficiently sound to give the board all the money it requires to electrify the country and provide those services for our people that they are not getting at the moment.

Mr. A. Byrne

The Minister's review has been very edifying. Because the Government intends to underwrite the requirements of the board will the members of this House in future be able to ask the Minister questions in relation to the working of the E.S.B.? Will we be permitted to question changes in the method of charging for electricity? In the City of Dublin the two-way tariff about which there is some talk at the moment is meeting with a certain opposition. Those in the cottage type house, flats and so on believe it is the intention to take an average of £1 or £2 from them under the new method of charging. When questions have been asked in the past the Minister's invariable reply is that he has no function in the matter and cannot interfere. Are we to have no power to ask the Minister to put a break on the activities of the E.S.B. if that body increases its charges?

It is very proper that there should be electrification and I think some tribute should be paid here to those who laid the foundations of the scheme. The Minister in his very edifying statement did not mention Deputy McGilligan, the man who founded the Shannon scheme. The Minister did not mention Sir John Purser Griffith who experimented at his own expense in the utilisation of turf for the generation of electricity. Some of his dreams are now coming to fruition. The Minister did not mention Michael Moynihan, borough surveyor of the City of Dublin, who had advanced ideas on electrification and who found it very hard to get people to accept his ideas. The Minister did not mention Larry Kettle, one of the finest engineers this country has ever produced, who advocated the utilisation of turf for the generation of electricity.

The Deputy seems to be getting away from the Bill.

Mr. A. Byrne

The Bill is very general. Due tribute must be paid to the Dublin Corporation which built the Pigeon House. I doubt if people know that some years ago during a drought the whole of Ireland was provided with electricity by the Pigeon House. The year that the Minister for Industry and Commerce took over the Pigeon House the Dublin Corporation was able to put £60,000 received for electricity towards the relief of rates generally. I want to put these matters on record.

This Bill is a step in the right direction. I have not the ability to give much thought or consideration to the points advanced by Deputy Hickey in relation to the financing of this project. I know very little about money matters but I know one gets very little for a pound these days. I expect that affects all of us.

The point I want to get at is this. Will the Minister be able to tell us that in the near future the E.S.B. will not be permitted to increase their charges or to alter their method of charging?

That does not seem to arise on this Bill. The Deputy is dealing with administrative matters.

Mr. A. Byrne

The Minister did touch in the beginning of his review on every activity of the E.S.B. I merely want to remind the House that the Dublin Corporation at present is the largest landlord in the country. At the moment the corporation have 30,000 tenants and each of them is going to be mulcted to the extent of £1 or £2 per annum under the new method of charging for electricity. I wish to protest strongly against the E.S.B. having power to do that. From Dublin Corporation tenants they will take at least £30,000 per annum.

That question does not arise on this Bill. The Deputy can raise it another time.

Mr. A. Byrne

If I did not get the opportunity under this new scheme which is altering every rule of the E.S.B., I do not know of any other method of drawing the Minister's attention to the matter which I am protesting about, namely, the extra charges for electricity owing to the new method of charging.

Not on this Bill. The Deputy can raise it some other time.

Mr. A. Byrne

That some other time never arises. I want to support Deputy Hickey in his references to the retired men who went out some years ago on pensions based on the rates of wages which they had at that time and who have got very little increase since. While I agree with the Minister that the men at the top in the various grades should get sufficient reward for what they have done for the country and the way they have managed it, I support the appeal made by Deputy Hickey that it is time to review the case of the men at the bottom and those in the middle also.

I had not the pleasure of hearing the Minister's entire statement and therefore I intend to be very brief. I merely intervene to compliment the Minister on the two changes which have been made in regard to rural electrification.

It is a very good thing that absolute priority is now being given to rural areas which have the highest percentage of acceptances. We had the position in many areas where a very high percentage of the people contracted to accept the current but were debarred on economic considerations. That has been overcome, and I think it is a good thing because it does give encouragement to progressive areas and to people in those areas who are anxious to be the pioneers and initiate the work of getting the scheme under way.

It is also a good development that the rate of progress in rural electrification has been accelerated very greatly over the past couple of years. I think the Minister stated that it has been increased by 40 or 50 per cent., with the result that the entire work of rural electrification will be completed inside five years. That is a very welcome announcement. No matter what people may say about the unprogressive and backward nature of our rural population, there is no doubt that our rural people have responded very readily to this new development and have taken to it in a very progressive spirit. Rural electrification, although it is heavily subsidised by the State, does entail considerable cost on the consumer. In the case of the small farmer with a limited income or an agricultural worker with a small wage, it does entail having to undertake a liability which he had not heretofore experienced. But in this, as in other matters, our people are progressive and are prepared to weigh up the advantages of this new amenity against its cost. Regardless of how limited may be the resources of people in some areas where the land is poor they cheerfully undertake it.

It is a matter for congratulation that there has been such a spectacular development in the generation and production of electricity over the years since it was first introduced. I am interested in and of course approve of hydro-electric development, but it is also a matter for congratulation that there has been so much development in our bog areas which, as the Minister said, were regarded as depressed areas. As a result of this, they can be looked upon as centres of progress and employment and centres of industry.

This Bill simply seeks to ensure that the E.S.B. can obtain their necessary capital directly from investors. I do not think there are many people qualified to go as deeply into the matter of finance as Deputy Hickey. He has expressed his profound disagreement with both the Minister and Deputy Cosgrave in regard to how this whole project should be financed. He has suggested that it is time to sit down and settle this whole question. I assume that this whole question will be settled within the next couple of weeks, particularly as between his Party and Deputy Cosgrave's. While it is right and proper to emphasise the high cost of interest in regard to the capitalising and financing of work of this kind, it is of course necessary also to weigh up all the implications of the complete change in the financial system which Deputy Hickey advocates. I have often wondered how a complete change such as he advocates would affect our entire economic position, how, for example, it would affect our external trade and our large export trade in agricultural products and how these matters could be adjusted in a small country such as this, particularly in a country which is divided at the moment geographically and which is very closely linked with the Six Counties and with Great Britain. These are all matters which I trust will be investigated and settled in the next couple of weeks.

I should like to make one remark in regard to this matter. While the State has got to pay a very large amount of money to investors, whether they be banks or citizens, I assume the State also collects a very substantial amount of revenue from those investors in income-tax. It would be no harm if Deputy Hickey were investigating this matter if he weighed up how it would react in that way.

Did you read the accounts of the board?

You will get it all there.

I am anxious to know exactly what the total recoupment is by way of revenue from direct and indirect taxation. This matter, of course, is far too deep to be introduced on a Bill such as this although I suppose it is relevant. It is rather a deep question to be settled in the next few weeks. However, I think that whatever about the financing of the project the House and the country generally feel a considerable amount of satisfaction in regard to the success of this whole development. The fact that we as a nation have been able to harness our resources efficiently and effectively is something to boast of. There were people, before we became independent, who said that the Irish people were incapable of managing any large or important concern. It has been proved that we have the engineers, the experts and the directors of the board who have been able to harness our great rivers, and we have been ahead of most countries in the development of our peat resources.

It would be necessary to harness the credit of our country as well.

If it could be done effectively without endangering some other important resource of the nation I would welcome it. We have also, as I say, shown that a big concern such as this employing a very large number of workers has been efficiently run. It is extraordinary how little is the volume of criticism one hears in regard to the manner in which this very large concern operates compared with the local authorities and county councils, that are frequently criticised in regard to the manner in which they carry on road construction and other work of that kind. We do not hear the same volume of criticism in regard to the manner in which the E.S.B. carry through their work. In the rural areas they have shown themselves highly efficient. They have to employ a great volume of casual labour and, nevertheless, their plans are so well laid and their scheme of work so well organised that there is not, as far as the ordinary citizen can see, any inefficiency or any volume of waste. I think that that is the best tribute one can pay to this large concern. There must be business minds and a capable, hardworking executive at the head of this organisation to carry out this work so efficiently. I think the country owes a debt of gratitude to the men who control this concern.

Deputy Cosgrave described this Bill as a new stage of the development of the E.S.B., and I think that is not an inaccurate description. He referred to the original decision to establish a single undertaking to produce, distribute and sell electricity. I think that was a good decision. It is true that the scale and the character of the operations of the E.S.B. have changed out of all recognition since then, but when the big development came later it was decided to base it upon the organisation which was already there, and that decision has also proved sound.

When the E.S.B. was set up originally the consumption of electricity in this country was very low and almost stagnant. The first big development came with the growth of industry following 1932, and the spectacular increases in the sales of electricity for industrial power purposes recorded after that year were at the time regarded as the measure of our industrial expansion. The first big stage in the E.S.B.'s development was, in fact, that rapid growth in the industrial power load in those years immediately before the war and which opened up the need for the development of a very big new generation construction programme.

The second important stage in the board's development was, I think, the decision taken in 1938 to base new development upon native resources as far as possible, and particularly the decision to organise the production of machine turf for the purpose of providing fuel for power stations. That was at the time an experimental development, and the practicability of producing an economic fuel from Irish turf bogs by mechanical means had not been established. I think it is a source of great satisfaction to all of us that not merely was that work successfully begun but nobody would now suggest seriously that we should think of any other method of development apart from water power until the fullest development has been secured in the utilisation of our turf bogs.

I think it would be true to say that the next main stage in the development of our electricity programme was the decision to embark upon a rural electrification scheme. When the Act which launched that scheme was introduced in the Dáil in 1943 the war was at its height. It was fully realised by the Government at the time that no work on the scheme could be done until the war was over, and that Act was one of a series produced then to provide a legislative basis for a postwar development programme. The importance of that scheme to the rural areas of this country is now generally recognised, and it is a happy moment for me to be able to announce now that the rate of development is going to be doubled and that we can see the completion in five years of the programme which was only a sort of dream for the future when I brought the Electricity Supply Act of 1943 before the House.

I think that another and very important stage in the E.S.B.'s development was the decision taken in 1952 to embark upon the development of milled peat. It is true that there is no station yet fired by milled peat. The Ferbane station, as I have said, will be the first. But all the indications are that through the utilisation of milled peat we will have our fuel costs of electricity generation down as low as any other country in Europe. The authorities of Bord na Móna say that they will be disappointed if when these new milled peat stations come into operation they cannot demonstrate that units of heat are being put into the boilers of those stations located on Irish bogs at prices as low as, or lower than, at any power station located at the pit head of a coal-mine in England. If their achievement reaches their hopes in that regard, I am sure that the decision to change over from sod peat to milled peat will become another landmark in the whole history of electricity development here.

This Bill provides for a change, not so much in the construction or development programme as in the methods of financing it. We contemplate that from now on the E.S.B. will be responsible itself for raising from the public, through the issue of its own securities, the money required for development. The position up to the present was that the Government undertook to find whatever capital the E.S.B. required within the limits authorised from time to time by the Legislature. When the Minister for Finance floated a loan last year, he included in the amount of the loan the capital requirements of the E.S.B. The money borrowed from the public by the Exchequer was in part passed on to the E.S.B. on the same repayment basis and at a rate of interest which enabled the Minister for Finance to pay interest to those who had lent the money to him and to cover the administrative costs involved in the transaction. In future, the Exchequer will not have that primary responsibility for finding the capital required by the E.S.B. The E.S.B. will issue its own securities to the public, securities based on its own revenues and guaranteed by the State. That will enable it to raise money upon the most advantageous terms possible and will relieve the Exchequer of the responsibility for finding resources for the board.

I am not going to argue with Deputy Hickey whether it is possible to borrow money without incurring an obligation to pay interest. All I can say is that we believe that a development of this kind should be financed by attracting the savings of our people for that purpose. We believe that people will be prepared to make their savings available for national development purposes if they are given the same payment for the use of their savings as they can get by making them available for some other purpose or by transferring them for investment in England.

And the State stands behind it to the guarantee it.

I do not think the people would lend their money free of interest.

The State should be master of the situation.

It is a question of how best the national resources can be allocated for development purposes. The resources required for this purpose will be made available——

Based on the credit of the country.

Based on the actual material wealth of the country. I do not want to get into an argument with the Deputy on that subject because I do not think I could ever please Deputy Hickey. The Deputy referred to the proposal to provide pensions for whole-time members of the board. I think he misunderstands the position concerning members of the board's staff. I introduced some ten years ago a Bill which provided for the setting up of superannuation funds and pension schemes. A worker joining the board's service and undertaking to contribute in accordance with the pensions scheme will get a 50 per cent. pension on retirement after 40 years' service. The Deputy has, apparently, in mind certain difficulties which arose in the case of a number of people whose service was less than the maximum contemplated by the scheme. In their case some relief was given by the Bill introduced some time ago.

Deputy Byrne referred to the case of men who retired some time ago and who got pensions related to the actual wages in operation at the time which were less than the rates paid now. In their case also there was legislation which authorised an increase in the amount of pensions payable. Whether that increase was enough or not, we can perhaps discuss on some other occasion but it would not arise on this Bill. There was a special Pensions Act which provided for these charges.

Deputy Byrne asked—and this is an important matter from the point of view of the House—whether it will be possible to ask questions here on the administration of the board and its charges. It will not. When the E.S.B. was set up almost 30 years ago, the House decided that the board should have a free hand in the matters of the charges made, subject to the condition only that it would make no profit and that these charges would be so fixed as to bring in enough and only enough to meet the outgoings of the board and its capital liabilities. The board has been carried on on that basis ever since. That clause in the Act of 1927 which gave the board that freedom and which put the Government in the position of having no function in regard to the charges of the E.S.B., has remained unchanged since. The various Governments which have come into office since did not think it desirable to change it. I do not think it would be possible to set up an organisation of this kind and keep it on a string. If the day to day details of administration are going to be the responsibility of the Minister, then he might as well scrap the board altogether and accept full powers.

He could control policy.

It is not a question of policy. I know nothing about the proposed new charges except what the board themselves have said. What they said was that they proposed to change their method of charging because they felt that the new method would be fairer to consumers. They added that they would not get an additional penny of revenue by reason of the change. The board does not have to seek increased charges for the purpose of getting in more money. It is merely making certain changes in the system of charges which will mean a fairer basis of charging as between the various types of consumer.

I brought this Bill to the Dáil knowing that, by and large, it would be welcomed by the House and that Deputies would be glad to see the very comprehensive programme set out in the White Paper which the Bill is designed to implement. Everybody will be glad to know that this work is going ahead far more rapidly now than ever before and that the growing demand for electric power in this country will be met under this programme within the period to which this Bill relates— that is, between now and 1961 and that is about as far ahead as we can plan in these matters at the present time.

Question put and agreed to.
Committee Stage ordered for Wednesday, 31st March, 1954.