That a sum not exceeding £685,360 be granted to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Salaries and Expenses of the Office of the Minister for Industry and Commerce, including certain Services administered by that Office, and for payment of certain Subsidies and sundry Grants-in Aid.
Deputies will have noted that a revised Estimate for the Department of Industry and Commerce has been circulated. The revised Estimate provides for a reduction of £4,087,190 from the Estimate as contained in the Book of Estimates. That reduction in the amount required for the Department of Industry and Commerce in the year is, of course, due entirely to the elimination of the flour subsidy.
It is customary for the Minister for Industry and Commerce, when presenting his Estimate to the House, to review the progress of industry during the previous year. Outside the war years. I think it was always possible for the Minister to record some progress. It may not have been as substantial or as rapid as might have been desired in some years, but, nevertheless, there always was some improvement in the industrial position to record.
Unfortunately, that is not so now because industrial production and employment suffered a serious set-back during 1956. Comparing 1956 with 1955, the index of production of factory goods—"transportable goods", as they are called in the statistical returns—fell from 107.8 points to 102.4 points, a fall of 5.4 points. The production index for all industries and services fell from 109.4 points to 105 points, a fall of 4.4 points. During the year, the average number employed in industries producing transportable goods fell by 4,100, and the average number employed in all industries and services fell by 8,000. These figures which I have given compare the position in 1950 as a whole with 1955, but annual average figures of that kind, while they show that serious decline which I mentioned, do not reveal the much more serious trend which developed during 1956.
In the December quarter of last year, compared with the December quarter of 1955, the industrial production index had fallen by 11.6 points compared with 4.4 points for the year as a whole. Employment in manufacturing industries in that quarter had fallen by 7,000 compared with the average 4,100 for the year as a whole. Unfortunately, while that decline in industrial production and employment was taking place, there was no gain recorded on the agricultural front last year. The value of agricultural net output fell by £6,000,000 as compared with 1955. It is clear, therefore, that at the end of last year, the country was a great deal worse off than it had been 12 months previously. That is the situation which has to be faced and shared by everybody. Until it is rectified, it is clear that the people of this country cannot have, out of current income, the same standard of living as they enjoyed in the previous year.
The purpose of all the present efforts of the Government is to arrest that decline which developed last year, to restore as quickly as possible the previous levels of industrial and agricultural output and employment, and then to work on from there towards higher levels of production and employment. The situation which developed last year was, of course, foreshadowed in 1955 and indeed was largely consequential upon the rather serious deficit in the balance of international payments which developed in that year. Because of that serious deficit, and the loss of external reserves which was involved, severe restrictions upon the imports of certain goods and materials were imposed early in 1956. Of course these restrictions helped to accentuate the decline in production and employment.
Some improvement in our external payments position took place in 1956. The volume of exports in that year showed an increase of 2 per cent. over 1955, but, because the terms of trade moved against us, the value of our exports fell by slightly less than £3,000,000 to a figure of £107.4 millions. That alteration in the country's exports reflected a drop of about £10,000,000 in total exports to Great Britain, which was, however, offset to the extent of approximately £7,000,000 by increases in exports to other areas, notably a rather fortuitous opportunity of shipping cattle to France. During last year imports fell, mainly because of the import restrictions in operation and partly because of the decline in employment and in the level of industrial activity, by proportionately more than the fall in exports, so that the adverse balance of visible trade in 1956 was reduced to £73.5 million as compared with £94.4 million in the previous year. There still was, as that figure reveals, a very serious deficit in our visible balance of trade. A deficit of that order cannot be accepted with complacency.
It is obviously the duty of the Government to try to promote positive measures to reduce the gap between our imports and exports to more reasonable dimensions, preferably by increasing the level of exports. In this year, there has been a further and quite welcome recovery in the balance of payments position, but again it must be recognised that that is due almost entirely to temporary causes, principally because of increased shipments of cattle during the early months of this year, an increase of trade which cannot be continued. Deputies are aware that the number of cattle in the country is known, and having regard to the information which is available regarding the supply, it is clear that the higher shipments of cattle which have been responsible for the improved balance of payments position this year cannot be kept up.
No doubt the opportunity of shipping these cattle and the satisfactory level of prices which prevails have brought relief to our situation, but it is relief only. There has not been yet any permanent cure of our economic crisis. For the time being, that economic crisis is not quite as severe as it was, but it is fundamentally just as serious as ever and will not be put right until we have expanded our exports on a basis which will ensure permanency. It is a situation which, as I and other members of the Government have been at pains to make clear in all our public statements, cannot be rectified either easily or speedily. It requires concerted effort by all sections of the people covering the whole field of economic activity.
We are concerned in the discussion of this Estimate with the industrial sector only. There, I think, it is possible to say that the process of recovery has started but not yet with sufficient vigour to enable us to face the future with confidence. From the day that the Government took office we have been discussing and arranging proposals and actions relating to industrial development. Shortly after the change of Government we decided that the circumstances were such as to justify the modification of the import levies which were imposed last year. In the first case these levies were removed entirely from materials and equipment required for industrial production. Some of the levies were removed in respect of other goods also and the position in that regard is being reviewed at present. The extent to which it may be found possible to modify or remove any of the remaining levies cannot yet be stated but I should hope it will be possible before the end of this month to give a clearer indication of the position that may prevail until the end of the year.
Having by that means endeavoured to remove some of the impediments to industrial activity which were in force, the next step taken was in connection with the preparation of the Budget. Deputies are aware of the proposals in the Budget Statement relating to tax reliefs and inducements designed to encourage industrial expansion and particularly industrial production for export. I have indicated in the course of various public statements that other measures are intended. In the first place, there is, as we see it, a need to improve and extend the facilities available to Irish industrial concerns to enable them to obtain capital, where necessary, for the expansion of their activities. Discussions in that regard are proceeding at present.
I am not in a position to indicate what measures may be adopted or even to say whether these measures may involve legislation. I think it is likely that they will, but that is not yet certain. If they do involve legislation I should hope to have it available for the consideration of the Dáil after the summer recess. I have indicated also that we have the intention of amending the Control of Manufactures Act. A Bill for the purpose will be introduced this week and I hope to have it circulated during the recess so that it will be available for the Dáil to consider when it reassembles.
Our industrial development has clearly reached the stage when export markets for industrial products must be the main target of future development. We are approaching the end of the process of developing industry for the purpose of supplying home market needs and if we are to get from industry that increase in output and widening of employment opportunities which the country needs, it will be only by means of securing expansion of business into export markets.
Most of the new proposals relating to industrial development which are now being submitted to the Department of Industry and Commerce or to the Industrial Development Authority involve export business. Declarations of policy which have been made, or indications that the main interest is now in proposals involving export, are less effective than the situation which confines scope for new industrial activity to projects involving exports. Some of the proposals involve the exportation of a high proportion of the production intended; others not so high, but in practically every case some expectation or intention regarding exports is expressed.
In the development of industry into export markets external participation is needed for a variety of reasons, not merely because access to export markets can be facilitated by such participation but also because the organisation of industry on the scale required to achieve success in export business requires it. It is therefore, in the view of the Government, necessary to re-define the conditions in which external participation in Irish industrial development is welcomed.
In that connection I should say that it has been suggested that the absence of double-taxation agreements in some cases has been an obstacle to the development of external investment here. So far as that may have been so, I wish to take this opportunity to announce that it is the policy of the Government to complete arrangements of that kind without delay with all countries where interest in investment here might develop or where it is clear that the absence of such an agreement is operating positively to prevent new desirable external investment.
I have indicated also the intention to introduce new prices legislation. While that would be necessary in any event because of the fact that the Supplies and Services Act is due to expire finally at the end of this year, I consider it as having a very definite bearing upon the prospects of expanding industrial activities. The rather makeshift and haphazard methods of price control which have been carried on since the war years, the emphasis which was necessarily placed in these arrangements upon the profits earned by the individual firm rather than the prices which they charged for their products, have been a deterrent to investment in industry. Whether there was proper understanding of what the prices regulations and Orders were designed to achieve or not, whether the deterrent arose out of a misconception of the intentions of the Government or too accurate an understanding of them, the position will undoubtedly be considerably improved if the intentions of the Government for the future in regard to price control are made clear and expressed in legislation the purpose of which cannot be misunderstood.
I may say that the Bill to provide for the new and permanent arrangements for price control will also be introduced this week and circulated shortly. The intention is that the powers of price control will be exercised only in three sets of circumstances; first, where there is in existence something which could be described as a monopoly, whether it is a monopoly arising inevitably out of the circumstances prevailing here or one brought into being by the coming together of the traders in particular commodities, and provided it is established on inquiry that the operations of the monopoly are detrimental to the public welfare.
The second case will be where, in a protected industry, prices are unduly high because of inefficiency, because of causes within the control of those engaged in the industry, whether as owners or managers or workers. Deputies know that in such a case in the past, apart from price control which was not effective so long as it was mainly profit control, the only power of the Government to deal with evidence of inefficiency in any industry was to threaten to withdraw the protection afforded to it and that threat was never very effective because it was not believed it would be put into effect. But it is obvious that so long as we continue to protect the industries by tariffs or quotas, there is an obligation on us to see that these industries are carried on with efficiency and that where prices are unduly high because of inefficiency, power to control that situation should exist.
The third circumstance in which price control will be exercisable will be where factors arise to cause temporary scarcities, where the Government has decided that special measures are necessary in order to prevent a position of temporary scarcity being improperly exploited.
There are other measures under consideration which, however, have not yet reached the stage at which it is possible to refer to them. The question is whether the measures already taken, or which have been announced, are producing results. I think sufficient has happened to justify cautious optimism. There is a number of proposals, some of which are quite important by our standards, coming along for consideration. Nobody knows better than myself, perhaps, the tremendous distance there is between the submission to the Department of Industry and Commerce of a proposal for a new industry and the turning of the switch that starts the machinery working in a new factory. Yet I think it would not be inaccurate to say that the number of proposals justifies some confidence that industrial progress will resume. Certainly there are as many of them under discussion at the present time as at any time in the history of the Department while I was connected with it.
If any substantial number of these proposals come to maturity, then we may hope that we are at the beginning of a new period of expansion. As I have said, however, on more than one occasion, I think everything depends on how things go this year. Expansion in the industrial field is as much the fruit of psychological conditions as of tax changes and other arrangements. If there is evidence that the country wants to get ahead, that all sections of the people are prepared to combine to get ahead, then I believe that progress will come. We are, of course, whether we like it or not, now entering into a new phase in our economic development. That is probably highlighted by the proposals for a European free trade area which were formulated at the conference in Paris in February of this year. There is nothing much I can say about these proposals at this stage which is not already known. The matter will, however, be discussed upon a motion which has been tabled by the principal Opposition Party and for which time is being allowed to-morrow.
I do not want to cover now the ground that will be covered then and I think it will suffice to say that it is now clear that the timetable contemplated in February last for bringing that free trade area into operation will not be maintained and that the element of urgency which was so prominent a few months ago has now tended to decline.
Before leaving that aspect of the work of the Department, it is perhaps desirable that I should make some reference to particular sections of it. The Undeveloped Areas Act which was passed in 1953 for the purpose of encouraging the location of new industrial concerns in western seaboard counties and areas west of the Shannon generally is due to expire in the near future. The Act was framed as a temporary Act and, unless continued, will cease to operate. I am bringing before the Dáil a Bill to continue that Act and that also will be introduced before the recess.
On the whole, I think it is fair to say that measure has been successful. It may not have brought about spectacular results in the first couple of years of its operation, but nevertheless some results were secured, and I think it is remarkable that many of the proposals for new industries which are being submitted to the Department and to which I have referred are being attracted, by reason of that measure, to western locations. Up to date, the grants paid out to new industrial concerns under the authority of that Act total £1,241,000. These grants induced a total investment in new industrial equipment in these western counties of something over £4,000,000. That is not bad, in my view, even though I hope that in a year or two it will be possible to mention a more impressive figure.
The employment now being given in the concerns, which were established in the western counties under the inducements given by the Act, is just slightly under 900 and the total employment which will ultimately be given by these concerns, when they have reached their full development, will be 2,500. That is a small contribution to the unemployment and emigration problem of the West of Ireland, but it is a contribution. Perhaps more important from the point of view of the results achieved to date is the indication which it gives that the policy of the Undeveloped Areas Act is likely to succeed in time in altering the balance of industrial activity in the country in favour of the West.
When that Act was being submitted here I argued strongly that such a policy was not merely beneficial to the West but would be beneficial to the country as a whole. I still believe that to be true and I hope that nobody will feel that any part of the country is losing anything by reason of the giving of these special inducements towards industrial development in these areas because, if we can build them up economically and help to retain in these counties the people who are available and who are seeking work, that will help to minimise the corresponding problems of other areas.
Last year, my predecessor introduced a Bill here called the Industrial Grants Act. I expressed some criticism of that Bill on Second Reading. The future of that Act is being considered at the moment within the context of the general plans for the financing of industrial development. While it is attractive to anybody holding the position of Minister for Industry and Commerce to have the power to help on particular industrial projects by the offer of free money, it is a power which I believe should be exercisable only in very special circumstances. Up to the present not many grants have been made under that Act—I think I am correct in saying that only two have been approved to date—and there is a great deal of misunderstanding abroad as to the limits imposed upon the Industrial Development Authority which is the administering authority under the provisions of the Act.
The Act makes provision for the giving, on the decision of the Industrial Development Authority and without reference to the Minister for Industry and Commerce, of grants towards the cost of industrial buildings where there is a proposal to establish a new industry and where there is a project of a substantial size involved or where export trade is intended. The great majority of the applications which have been made to the Industrial Development Authority under the Act are outside its scope and cannot be considered. It is perhaps necessary, therefore, to get it more widely understood that under its terms grants cannot be given for the extension of existing concerns or to help existing firms out of financial difficulties.
My predecessor took a decision, with which I agree, to exclude Dublin and Cork from the provisions of the Act. The Industrial Development Authority has been told that they are not to consider applications from industrial firms proposing to build new factories in either Dublin or Cork. That decision is causing some difficulty in its application, but nevertheless I think, on the whole, it is a right decision and where firms are seeking for an exceptional form of State aid represented by the grant of free money, they should conform to the general policy, now accepted by all Parties here, to promote and encourage the decentralisation of industrial activity. I do not wish to say anything more about that Act at the moment because the subject will inevitably come up again when I come here to explain the result of the discussions which are proceeding, as I have said, in relation to the improvement and extension of the facilities for the financing of industrial development.
The House is, I think, aware that the ramifications of the Department of Industry and Commerce extend over a very wide field and that it is only possible for me to refer to certain aspects of it which I think require comment. I must necessarily leave out of my remarks references to matters in which some Deputies may be interested, but that position can be remedied later.
The Fair Trade Commission has been operating during the year in accordance with the terms of the legislation which established it, and has submitted reports containing recommendations for the making of Orders and their confirmation by legislation. One of these reports applies to the grocery trade. I have considered very carefully the Order which was made by my predecessor and I have come to the conclusion that amendments of that Order are desirable. I have accepted the report of the commission that an Order should be made. None of the amendments will be of very great consequence. They will, I think, improve the Order and bring it more closely in some respects into accord with what I believe to be the correct interpretation of the findings of the commission.
A Bill to confirm an Order relating to the grocery trade will be produced in the winter Session. That Bill cannot be introduced now because of technical objections. The introduction of the Bill is not possible until the actual Order has been made and the Order, as amended, has not yet been made, but I hope that that position will be remedied soon.
The other report of the Fair Trade Commission dealt with the chemists' trade. The Fair Trade Commission recommended the making of an Order there. I have read the report. It has not yet been published. Having read it, I came to the conclusion that the investigations carried out by the commission did not disclose a situation which required the making of an Order. In accordance with the procedure— perhaps not quite in accordance, but as near as it is possible to get to the procedure laid down under the Act—I shall make a statement of my conclusions to the Dáil.
The report is being printed and will shortly be available. I hope that Deputies who read it will come to the conclusion that my decision is justified. While some aspects of the trade might have given cause for concern, there were not revealed any general practices requiring legislation. The fact that no Order is being made, following on the publication of the report, does not, of course, mean that the commission is not free to re-investigate the trade if at any time it thinks it necessary to do so. Neither does it prevent the making of an Order at some subsequent date should the situation require it.
There are two specific industrial projects I intend to refer to, not because I think it is desirable to deal with individual concerns in the course of a ministerial statement of this kind, but because these two concerns did come into political discussion to some extent. One is the mines at Avoca and the other is the proposed refinery at Cork.
So far as the Avoca Mines are concerned, the development operations there are proceeding according to plan. I have no reason to think that any departure from the development schedule as originally drawn up is contemplated. I have had no indication of any difficulties from the company concerned. I feel that I personally was responsible for the commencement of the Avoca development because it really began in 1947, when the Minerals Development Act of that year was passed, and when the money was provided for the commencement of the exploration work at Avoca.
That exploration work took longer to complete than was contemplated in 1947, for reasons which it is not necessary to go into now, but it was completed by 1954. I have already indicated that in so far as concerns the agreement that was made with the company to whom the mines were leased, they can be assured of my goodwill and of any practical support which they may require.
During the course of the past year or so, a number of prospecting licences was given for very wide areas of the country to a couple of Canadian groups of prospectors who interested themselves in the mineral resources here. Whether that type of interest will be forthcoming in future from Canadian sources or not, I cannot say. A couple of years ago there was a tremendous surplus of capital available for all purposes in the Canadian stock markets. There was very lively public interest in mineral shares because of evidence that some people had hit the jackpot following the financing of prospecting operations and because Canadian tax laws exempted from taxation profits earned by mineral prospectors.
That situation has changed completely. The credit squeeze in Canada has deflated the stock market considerably. The shares in the Irish companies that were floated there, which at one time were quoted at very substantial premiums, have since, fallen in value, like the shares of all other mining concerns, and it may be that the conditions in Canada which produced that interest in Irish mineral possibilities do not now exist. Nevertheless, the development and exploration work is continuing in some of the areas in respect of which prospecting leases were given.
I think it is right that I should say that these prospecting operations have not, so far as I know, been brought in any area to the point where they have revealed prospects of commercial development on anything like the Avoca scale or, indeed, have disclosed the existence of minerals in commercial quantity, except in areas where minerals were worked previously, such as Avoca, Allihies, Silvermines. I suppose the gypsum deposits in Monaghan were well known and had been fully explored. It is, of course, known that base metal prices have dropped seriously. Both copper and lead prices are now not much more than half what they were only a year ago, but that fall in base metal prices has not yet had any discernible effect upon the operations of any Irish project.
Mianraí Teoranta, the company which was set up by the Act of 1947 to carry out investigation of Irish mineral resources, has been inoperative for some time past and it is not yet certain that it will be revived. There are activities in mineral exploration now about to start. In particular, the investigation of the coal deposits of the Leinster area is about to be undertaken, but it will be undertaken by the geological branch of the Department of Industry and Commerce operating through specialist contracting firms. The future of Mianraí Teoranta is under consideration. The company has not been formally wound up, but, as I said, it is in a state of suspended animation and is costing nothing.
So far as the Cork oil refinery is concerned, Deputies will have seen the Press announcement that construction work will begin in the second half of this year. I have studied the agreement, as far as it can be so described, made between the Industrial Development Authority and the three companies which are promoting that refinery and I have had discussions with some of the companies concerned and I have no adverse observations to make in the matter.
Again, the establishment of a refinery represents the fulfilment of an effort which began long before the war. The pre-war plan contemplated a refinery in the Port of Dublin and the circumstances under which that plan was brought to a stop are known. The post-war effort to get a refinery started bogged down for a time, but ultimately got going. I cannot find any reason to believe that the decision originally made to promote the establishment of a refinery through the companies which were engaged in the distribution of petroleum products here was not the best decision. The possibility of further industrial development in that area, consequent on the establishment of the refinery, is under examination.
Deputies will be interested in the E.S.B. programme because it is also a matter upon which we have had previous discussions. The report of the board for 1956 is being printed and will be available shortly. So far as the generation programme is concerned, no change has been made in it yet. I have not yet received all the information which I need, nor indeed have I absorbed all the information which I have got, to enable me to undertake the discussions with the board which I intend to have. Perhaps, when the Dáil has adjourned, the opportunity for these discussions will present itself.
I have already indicated that I am now in full agreement with the assertion that the experience in the growth of demand for power in the years up to 1954 would be too optimistic a basis upon which to plan development in the future. I am equally convinced that the experience of 1956, when the increase in the demand was only 4.7 per cent., is far too pessimistic a basis upon which to plan for the future. Indeed, if we cannot get a rate of industrial progress which does not require or bring about an increase in the demand for current at a greater rate than that, I think our efforts must be regarded as a failure.
However, it is not too soon, apart from any estimates we may make now as to the course of events in the next few years, to sketch out the tentative plan for the five-year period from 1960 onwards. It takes a long time from the decision to build a new power station in any locality to the erection of the station. If the plan for the period 1960 to 1965 is to be properly prepared, then it is now that we should be trying to estimate requirements in that period and deciding the manner in which these requirements will be met.
In the case of the rural electrification scheme, the position, as the House knows, is that last year a decision was taken to taper off the rate of activity in rural electrification development. Of course, this decision involved the cancellation of contracts with firms supplying materials and other changes of that kind, including changes in the staff of the E.S.B.
Such a decision cannot be easily reversed, nor do I think it is desirable to reverse it as far as the firms supplying materials are concerned. They have devoted part of their plants to other activities and I do not think it is desirable to ask them to go back again— even if they were willing to do so and I doubt if they would—because in any event the completion of the rural electrification programme will take place within four years. There are 240 areas yet to be connected up with the network and, at the rate of 60 areas per year, that task will be finished by 1961.
Of course, it is to be recognised that the financial problems associated with rural electrification have become very acute following the decision to withdraw the subsidy for it. The E.S.B. lost £500,000 last year on the rural electrification scheme, and they are standing to increase that loss at the rate of £20,000 per year for each additional area connected. For that reason, it is to be understood that enthusiasm for the completion of the rural electrification scheme is not very pronounced amongst the people responsible for the financial management of the E.S.B.
It is also to be recognised that the board selected areas for development upon the basis of picking the most economical areas first, and we are now at the final stage of development when the least economical areas are coming up for selection. However, I hope that there will be no difficulty and I am sure there will be no unwillingness on the part of the board to accept the decision to maintain a rate of development which will complete the scheme by 1961.
The development of Bord na Móna must inevitably march with that of the E.S.B., at any rate, so far as the production of turf fuel is concerned. Last year saw a rather historic occasion when for the first time milled peat was used as fuel in an Irish power station for the generation of electricity. The very satisfactory reports submitted were a source of very great gratification to me because there was a long struggle before the possibilities of milled peat were generally accepted. I am glad to be able to say that Bord na Móna have informed me that all the technical problems associated with the production of milled peat for power stations are solved and that, as a result, milled peat is being delivered to power stations at a price which represents far lower fuel costs than are involved with any other type of fuel.
Indeed, it probably would be correct to say that in these milled peat stations the E.S.B. are having delivered to them cheaper fuel than is being delivered to any other power station in Europe. I have not carried out any detailed investigation to establish that, but the indications are that it must be so. Therefore, there is a very strong financial reason why the future development of power stations should be based to the maximum extent upon the utilisation of milled peat.
May I say also that the price which is being charged for milled peat by Bord na Móna to the E.S.B. yields a very nice profit to Bord na Móna? Now that we can feel that the skill of Bord na Móna engineers has solved all the technical problems associated with that stage of national development, we can regard it as completely outside the range of any possible controversy. Of course, this year has been an exceptionally good year for the production of peat fuel. Indeed it is clear that the output of Bord na Móna in the various bogs supplying power stations is likely to be in excess of the requirements of the E.S.B. That is not a very grave problem, but it has brought Bord na Móna to the point where they are considering extending the market for sod peat by propaganda among industrial and other users of fuel. At my request, the Minister for Health has reiterated to health authorities throughout the country his appeal to utilise peat fuel for their boilers and other operations to the maximum extent possible.
It might have been possible some time ago to argue that there would be some saving in cost in switching over to fuel oil. That is no longer true and I believe that every industrial firm which is located within a reasonable distance of a source of supply of sod peat, and every local authority similarly situated, can effect quite a saving in costs by going back to the utilisation of peat instead of oil. By doing so they will be contributing to the wealth of the country in two ways— utilising an entirely home produced product and avoiding the importation of an entirely foreign product.