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Dáil Éireann debate -
Thursday, 13 Dec 1956

Vol. 160 No. 16

Committee on Finance. - Industrial Grants Bill, 1956—Committee Stage.

Section 1 agreed to.
SECTION 2

I move amendment No. 1:—

In sub-section (3), line 34, to delete "in considering" and substitute "shall not consider".

Amendments Nos. 1 and 2 relate to sub-section (3). The Minister implied, although I am not sure he said it specifically, that it was not intended to give grants under this Bill to concerns proposing to manufacture commodities where the home market for those commodities was being met already by existing concerns. The Bill, however, is very weak in its expression of that intention. It provides that the Industrial Development Authority will have regard to the extent to which the existing market is being met by existing concerns. I think it is far better that that should be stated specifically, both from the point of view of making clear the intention of the Bill and of giving the Industrial Development Authority the basis upon which to refuse to consider applications which are to be debarred on that ground.

That is why I think the drafting of the Bill should be such as to make it quite clear that the Authority is not open to consider applications where they relate to the manufacturer of commodities which are already manufactured by existing concerns in adequate degree. That is to say, when somebody comes to the Authority, the Authority can say that there is a section of the Bill by virtue of which it cannot consider the application. As it stands now, the Authority can consider the application and then it has merely to take into consideration the extent to which the existing market is met. I think it will remove a great deal of apprehension amongst existing industrialists if it is made quite clear now that a grant will not be given to bring a new firm into competition with existing firms which have had no corresponding aid and whose activities are at present conducted on a scale which means they are supplying the whole of the home market.

I think the Deputy is unnecessarily apprehensive as to the section as it now stands. This sub-section is based on a corresponding provision in the Control of Manufactures Regulations, 1932, which relates to the grant of new manufacture licences under the Control of Manufactures Act.

Surely the Minister sees that the circumstances are different?

Of course they are different, very much different; and the home manufacturer is very much more entrenched now than he was in 1932, when it was proposed in the Control of Manufactures Act to permit an outside body to come in here and operate under our legislation, by giving them a new manufacture licence. At that time, it was not decided that he could not come in at all; it was decided that, in considering the application, regard should be had to the extent to which the market was being supplied or was likely to be supplied by existing industry.

That is precisely the point. It was not intended then to exclude completely the possibility of giving new manufacture licences in those circumstances.

This position here is a considerable strengthening of the situation so far as the Control of Manufactures Act is concerned and it is a vast improvement on the Undeveloped Areas Act in that respect. The Undeveloped Areas Act contains no similar provision to what is in this sub-section, and so far as this Bill is concerned, it contains greater statutory safeguards for existing concerns. In practice, of course, before grants are made under the Undeveloped Areas Act, An Foras Tionscal has regard to the extent, and a similar operation will apply here. I think, it having been stated from both sides of the House that the intention is to safeguard Irish industries, safeguard the existing firms, and that point of view being well known to both the Industrial Development Authority and An Foras Tionscal, there is no likelihood in 1956 or 1957 that the legislation will be used to harm their position in any way or to encourage the establishment here of industries which would not make any great contribution to the strength of our national economy and would result merely in undesirable or, perhaps, cut-throat competition, to the detriment of the industrialists who have borne the heat and burden of the day. There is no intention that should be permitted.

The proposed amendment the Deputy has submitted would, in fact, place a statutory obligation on the Industrial Development Authority of satisfying themselves before considering an application that the requirements of the public were not sufficiently met by existing undertakings and we might very well leave the authority open to legal action by an existing manufacturer if they found the requirements of the public were already being met. If that possibility were there—and I am advised it is— it would tend to create difficulties for the Authority and for the administration of the Act, and might very well stultify the entire purposes of this legislation.

Another damaging consequence which would flow from the amendment is that it would preclude the Authority from considering applications for grants based on the export market unless the Authority were satisfied that the home market was not being met. I think it is only necessary to point out these shortcomings of the amendment to Deputy Lemass to convince him that there are adequate safeguards there and that the policy of all parts of the House is well known to the body administering the Undeveloped Areas Act grants and the body which will be administering these grants in order to ensure that the fears which he has expressed will not, in fact, really arise.

I think the Minister is misunderstanding the point. So far as the Control of Manufactures Act is concerned, it was never intended to legislate to preclude entirely the possibility of giving licences under that Act to a foreign firm coming into any industry here even if there were existing firms in that industry. What it was intended to provide was that the extent to which the requirements of the country were being met by existing undertakings manufacturing the same commodity would be taken into account. Indeed, there have been many instances of firms coming into the textile and clothing trades under certain conditions even though there were Irish-owned firms established in those lines already.

In the case of the Undeveloped Areas Act there was no such provision and it was not intended to exclude from possible development in the western areas industries which were already established in the east. The intention was to offset the competitive disadvantage of a western location, it being recognised that these firms would have to get their trade in competition with firms in other parts of the country.

I think the Minister may not appreciate that there is apprehension among existing industrialists because of this provision, and it is not enough to say that it is not his intention or my intention or the intention of anybody else to give grants in certain cases. The decision will rest with the Industrial Development Authority once the Act is there, and it is that Authority alone which will decide on applications. The Bill, as it stands, does contemplate the possibility of a new factory being established beside an existing factory with the aid of a Government grant, getting trade in competition with the older firm. I think it is unlikely that the Industrial Development Authority will give a grant in that case, but if somebody comes to seek a grant in such circumstances the Industrial Development Authority will be obliged to consider it and if they refuse to consider it or refuse to give a grant it will cause difficulty for the Authority and perhaps for the Minister. Is it not wiser now to put a provision in the Bill to make it quite clear so that the Authority can point to that provision and say that they are not open to consider such an application? I think it is far better to draft the Bill on that basis.

May I say, too, that the argument about the possibility of a legal action is not a very serious one? If there is such a danger I have no objection to putting in words to make it clear that the prohibition applies only when "in the opinion of the Authority" the existing supply of goods is adequate. If there is a desire to keep open the possibility of making grants to new firms to make commodities which are already produced by existing firms but where there is a possibility of export trade, that could be provided also. But that is a dangerous proposal because once a grant is given it is given and nothing more can be done about it. A firm could apply upon the basis of dubious prospects of an export market with no real intention of developing an export market at all and under the Bill there is no power by which the grant can be recalled if conditions of that kind are not fulfilled.

Might I ask the Minister a question on one point— what exactly is the meaning of the word "public"? Who are the public? As we stand, as far as I can gather, the home market here is shrinking every day for any particular industry. This Bill maintains, so far as this sub-section is concerned, that if the home market is being met by the industrialists at present operating you can still have a grant given to a new industry making the same goods provided it will have a substantial export market available.

I gather Deputy Lemass's point is that he is worried about the welfare of those industrialists who are already in existence, the men who have factories here. I think, if it is possible, the question of the external trade, that is sub-section (c) of Section 2, should be deleted from a measure of this sort and that other arrangements should be made to deal with enticing industrialists into the external market because there is a grave danger—I do not say that such a thing as graft will enter into it—that all sorts of pressure will be brought to bear on the Industrial Development Authority and subterfuges attempted regarding the desirability of giving grants under certain circumstances.

For instance an industrialist making a certain commodity, up to the present, may not have extended very far into the export market and it is quite possible that another man may decide to start, and for the purpose of getting a substantial grant, it may be possible for him to put up a very strong case that there is a first-class market in Canada or America that has not yet been probed and that he should be entitled to get a grant from the Industrial Development Authority to start that industry, whereas perhaps in 12 months' time the industrialist manufacturing the same commodity already would be able to expand his business and go into the foreign market himself. Is there not a danger there that grants will be given to men who are concerned purely with taking advantage of sub-section (c) in Section 2?

So far as this Bill is concerned, it is not dealing with the problem of the existing manufacturer. This is a Bill to provide grants for the establishment of new buildings to house new industries which comply with the provisions of Section 2. It is not dealing with the ins and outs of the export trade or the encouragement of exports, as such.

What Deputy Lemass's amendment, if accepted, would mean is that if somebody came here to establish an industry for the purpose of producing goods entirely for export, you could not make a grant to him unless you were satisfied that the home market was being met. As it stands, this Bill will enable us to make a grant to a person to engage entirely in the export trade without regard to the other consideration.

Deputy Lemass says that, in the long run, these grants will be administered by the body set up to administer them. That is so. He thinks his amendment would safeguard the possibility that they would make a grant for the establishment of an industry to supply goods which are already being supplied. That is possible under the amendment, too. With his amendment, the sub-section would read:—

The Authority shall not consider applications for grants under this section when the requirements of the public in respect of the commodities to be manufactured are sufficiently met by undertakings already established.

All the Authority has to do under that sub-section is to say: "We do not believe that" and in that case the grant is made.

Mr. Lemass

Where? I think the Minister has missed my point.

No. Look at your amendment. If your amendment were accepted, that is how the sub-section would read. All the Authority has to do under that sub-section is to say: "We are satisfied that these commodities are not being sufficiently manufactured here", and, if they say that, well and good. The Deputy referred to the main Act and said that once the Authority took a decision under the section as it stands, nothing could be done. You can take a similar decision under the section which the Deputy offers and nothing can be done.

This goes further than the Foras Tionscal provisions went. It goes further than the Control of Manufactures Act went. We have now pretty well cut out a pathway in relation to which we say: "So far as giving aid to industries is concerned, you ought not to jeopardise the legitimate interests of the manufacturer who is already here." This Bill is drawn in such a way as to give these necessary assurances. I have repeated the assurances here and Deputy Lemass repeats them for the Opposition.

I do not think you can frame legislation on the rather temperamental fears of people who can see no safeguard in assurances and who merely feel that there is always danger in them. There are people who go through the world always surrounded by wolves and crying "Wolf." You cannot get sane legislation if you cater for their tastes or views. This Bill takes the view of the sensible man. So far as the industrialist is concerned, his interests will be adequately safeguarded. If the board goes over the rails, there is a way of dealing with the board.

Obviously, the Minister will not listen to argument. I was thinking of trying to save him from difficulty. If the Industrial Development Authority turn down an application on the ground that existing firms are supplying the goods in sufficient degree, there will develop an agitation of a political kind. It has been my experience, as Minister, that whenever I rejected an application on the ground that it was not a sound business proposition, the next thing that happened was either that the application was amended or else I got a copy of a resolution from a political club concerning it. That is why I think it is far wiser to put in the Bill a specific indication that they are not open to consider such matters where, in their opinion, the market is already being supplied. However, I am prepared to let the Minister have it, if he is not open to conviction.

The Deputy's attitude makes me suspicious.

Amendment, by leave, withdrawn.
Amendments Nos. 2, 3 and 4 not moved.
Section agreed to.
Sections 3 to 6, inclusive, Schedule and Title agreed to.
Bill reported without amendment, received for final consideration and passed.

This is a Money Bill within the meaning of Article 22 of the Constitution.

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