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Dáil Éireann debate -
Thursday, 2 Dec 1954

Vol. 147 No. 10

Committee on Finance. - Trade Loans (Guarantee) (Amendment) Bill, 1954—Second and Subsequent Stages.

I move that the Bill be now read a Second Time.

The Bill is entitled: "An Act to amend the Trade Loans (Guarantee) Acts, 1939 to 1953". Since 1924 there has been legislation enabling the Minister for Industry and Commerce to provide guarantees for loans to assist in industrial development both for new industries and for established concerns wishing to expand their activities where the granting of guarantees was calculated to promote employment. The legislation also provided for the actual grant of loans for similar purposes although in fact this power has never been used.

As a preliminary to the guaranteeing or granting of any loan under the Trade Loans Acts it is necessary to consult an Advisory Committee and the sanction of the Minister for Finance is also required before facilities can be granted by the Minister for Industry and Commerce.

The first legislative provision was made in the Trade Loans (Guarantee) Act, 1924, which provided that guarantees or loans might be granted to companies and public authorities for the purpose of meeting expenditure on buildings, plant and machinery and other fixed assets. The operation of this Act was limited to one year, but by a series of amending Acts from 1925 to 1932, inclusive, the Minister's powers were continued.

In 1933 the scope of the trade loans scheme was extended by the Trade Loans (Guarantee) Act of that year which enabled loans to be guaranteed or granted for the provision of working capital in addition to the acquisition of fixed assets. At the same time individuals, as distinct from companies, became eligible for trade loan facilities.

The duration of the Trade Loans (Guarantee) Act, 1933, was limited to five years and on its expiry the Minister's powers in regard to trade loans were renewed for another five years by the Trade Loans (Guarantee) Act, 1939, which also fixed £1,000,000 as the total of guarantees and loans which might be granted under that Act. These powers were renewed for further periods of five years in 1944 and 1949.

The Trade Loans (Guarantee) (Amendment) Act, 1953, increased to £1,500,000 the total of guarantees and loans which might be granted and also removed the limitation of the period during which grants or guarantees might be given.

Of the £1,500,000 provided under the Acts of 1939 and 1953 the Minister has given his guarantee or has indicated his willingness to give such guarantee to the extent of £1,241,000 and further applications in respect of substantial amounts are under consideration. Inquiries are constantly being received regarding the provision of financial assistance for industry by way of trade loan guarantees, and I am satisfied, therefore, that it is desirable, at this stage, to increase the existing limit of £1,500,000.

The purpose of this Bill is, therefore, to increase by £1,000,000 the aggregate capital amount of loans which may be granted or guaranteed.

It is very desirable that some machinery should continue to exist to enable me, with a view to the promotion of employment, to afford financial assistance for industrial development which might not in the ordinary way appeal to the banks or to other financial institutions, including the Industrial Credit Company, Limited. The advantage of the trade loans (guarantee) system, as compared with ordinary commercial banking facilities, is that it provides a fixed long term period of repayment for which industrialists can budget in their costings. Banks normally require loans to be repaid over a short period, usually less than five years, while the Industrial Credit Company affords financial assistance to industry mostly in cases of large amounts where public issues can be arranged.

Under the Trade Loans (Guarantee) Acts from 1924 to 1953 guarantees were given in the case of 117 undertakings amounting in the aggregate to £2,191,411. In addition, guarantees have been promised to the extent of £202,000 in six cases in which certain legal and financial arrangements have yet to be completed by the firms concerned. In the case of 71 undertakings the loans totalling £761,411 were fully repaid by the borrowers while 19 undertakings, two of them public authorities, are actively operating at present with the assistance of guarantees totalling £827,500. In the case of 27 undertakings involving guarantees totalling £602,740 it was necessary to appoint receivers and some of these companies ceased to operate. Repayments to the Exchequer in cases where receivers were appointed amounted to £157,500. Total losses to the Exchequer were £443,786, including interest.

The purpose of the Bill, as already indicated, is to increase by £1,000,000 to £2,500,000 the aggregate capital amount of loans which may be granted or guaranteed. I trust that the House will see its way to approve the Bill as an agreed measure.

Question put and agreed to.
Agreed to take the remaining stages now.
Bill put through Committee and reported without amendment, received for final consideration and passed.

This Bill is certified as a Money Bill in accordance with Article 22 of the Constitution.

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