It is a quotation from a booklet entitled "Blueprint for Prosperity." The speech from which I have culled was made by Deputy John A. Costello at the Fine Gael Árd Fheis in Dublin on February 18, 1953. That was the situation under the 1932 and 1934 Control of Manufactures Acts. Under those pieces of legislation, any slick merchant could certainly find ways and means of getting over the Acts. I do not say that I know 100 ways, but I know sufficient to get on with. I doubt if there is any member of the law courts engaged in practice or associated in any way with industry who could not have provided innumerable ways out of the two Acts. We are told this Bill will get over the main evasions.
I listened to what were called the main evasions and I do not rank them highly in the many legal ways of getting over the 1932 and the 1934 Control of Manufactures Acts. As far as the Bill itself is concerned, on my reading of it, Section 7 and onwards deal with the original Acts of 1932 and 1934. The early part of the Bill probably does represent new ground. I suppose Sections 2, 3, 4 and 6 represent the main items of novelty in this piece of legislation. Section 2 depends on the Minister. He may except commodities entirely from the scope of this legislation. Section 6 also depends on the Minister. Under that section, he may grant a certificate of exemption in respect of a particular manufacturing process in respect of a particular Irish company.
In the old days, there was tremendous objection to the ability of the monarch to suspend legislation in respect of certain people and to dispense with certain legislation. There was great objection and agitation against the view that the king should attract or arrogate to himself any such powers. That power was eventually taken away from the king and put into the hands of the people. In this new piece of legislation, we have two sections which are entirely at the Minister's mercy. A whole range of commodities might find themselves excepted entirely from the scope of legislation, not merely this Bill but from the scope of the 1932 and 1934 Control of Manufactures Acts as well.
In respect of a particular commodity or particular manufacturing process which an Irish company has as its main object of development, the Minister may grant an exemption from the scope of the legislation. One knows so well that one need not stress the dangers of these things. When elections were occurring, we got used to the letters being issued to protected firms asking for Party subscriptions. In future elections are we to have this practice extended to companies abroad or to companies here who were exempted so that there would be a small supply of foreign capital?
Sections 3 and 4 go together, but in so far as there is any indication of liberalisation of Government policy, it depends upon Section 3. Section 4 makes it an offence for people to carry on a manufacturing process "unless", and then are given the exceptions. The first exception is that the company carries on business solely for export. The second is that such company is an excluded company, which brings one back to Section 3. Does the first exception mean that if 1 per cent. of whatever is the output of the business carried on by a company is not exported, that company fails to get exclusion, that it is caught by the Act? If it does, we are back again at Shylock's pound of flesh. If anything is added in that is not completely an export—I am dealing with the use of the word "solely"—that will take away the exemption and the company will then be controlled by the Act unless they can get out as being an excluded company.
What is to be an excluded company? It complies with the following conditions: if it is a public company limited by shares and is an Irish company. An Irish company means that it is registered in the State under the Companies Act. That is very easy of accomplishment. The second clause is that it be managed and controlled in the State. I understand from previous speeches the Minister has made at other gatherings that that means that those who manage the company must be resident here. What the control means I do not know. It used to mean control of the voting capacity as indicated by shares but that apparently is gone from this Act under this clause.
The third sub-section in this section which enables a company to become an excluded company under the Act is that its memorandum of association must provide that the carrying on of a manufacturing process in relation to a commodity intended for export is a principal object. When the Minister was speaking he slipped easily over that term "a principal object". This means that for the future any person drawing up a memorandum of association for a company will be warned that he must put in amongst the object clauses one which will relate to the carrying on of a process in relation to a commodity and that one of the objects is to export it. It must be a principal object.
The ordinary memorandum of association usually runs to no less than 30 clauses; sometimes in big concerns it might extend to double that. The earlier clauses are always described as the object clauses. The principal objects are set out there. It seems to me that any company which hereafter inserts in its memorandum of association between clauses 1 and 6, a clause referring to exports, that company is qualified for exclusion. It may be that that is not meant but I want to know what is meant, and then we shall know whether this is really a liberalising piece of legislation or merely face-saving.
The fourth of these clauses—and the Minister made a very peculiar observation about it—deals with shares carrying voting rights. The Minister told us that it was this clause and the drafting of this clause that caused all the delay between the introduction of this piece of legislation and its Second Reading. Yet he told us that he did not think it would make much difference. The clause reads:—
"(d) That, of each class of shares carrying voting rights issued by it, not less than 50 per cent. have been made available primarily to Irish citizens or Irish companies which are managed and controlled in the State"
—how are they to be made available?—
"through being bona fide issued for public subscription in the State,”.
What does that mean? The control of this is not left with the Minister. The shares must get Stock Exchange quotation. If a company has asked the Stock Exchange for a quotation and claims that it has complied with paragraph (d) it must state so and then the Stock Exchange may require evidence enabling it to determine whether such claim is or is not well founded. What is the claim? The claim is that not less than 50 per cent. of the shares have been made available primarily to Irish citizens or Irish companies which are managed and controlled in the State through being bona fide issued for public subscription in the State.
There is no limitation about time. The shares are to be left open for subscription. I have known lists to have been opened at 10 a.m. and closed at 10.5 a.m. It is not unusual for a subscription list to be opened and nobody subscribing. As far as I can make out a company can claim that it has carried out the provisions of the Act in this regard and can show that no fewer than 50 per cent. of the shares have been made available through being issued for public subscription in the State. Until we get an explanation from the Minister as to what is meant by this clause or what will be written in by way of amendment to it, it is impossible to come to a conclusion as to whether this is a liberalising measure or whether it is the carrying forward of a few vague phrases from the old Acts of 1932 and 1934.
The provisions of the earlier Acts are to apply, as far as I can gather from the Minister's speech, to those who are still going to cater for home needs. This legislation is for those who are going to export but what "going to export" means is not easily discoverable from the Bill. If they intend to export, if they have that as a principal object and if they open their share list for subscription, apparently that qualifies a company under this Act for exclusion, which means that many of the companies at the moment are tied by the 1932 and 1934 Acts. Those who comply with the new provisions may swing over in a bona fide way by having as a principal object the idea of export. They can thus apparently qualify and become excluded companies.
I am one of those who did feel at the beginning that it would have been far better to have done repentance with regard to the old Acts and to have indicated that there was a new mood and a new approach to this matter of getting funds for investment in this country. I felt that we should have admitted that there were defects in the old Act even though these defects could be got over, as Deputy Costello said, by the slick merchant who wished to do so. But even with that the best advertisement surely is not to have foreign investors landed with a whole lot of indigestible matter contained in a technical piece of proposed legislation like this but to have a complete repeal of the 1932 and the 1934 Acts as long as there is what Deputy Costello called "regard to the maintenance intact of the Irish way of life".
In that connection I would have thought that the best way of achieving all that would have been to maintain the reserve commodity proposals in the old legislation and to have those apply to the companies already established here. We are aware of the dangers that might develop if some group coming in with bigger capital resources could swamp a company already established here in years gone by, as long as our view was that that company was doing good business, giving employment and producing Irish manufactured goods. The maintenance of our Irish way of life is a matter that will have to be looked to. After all the money that has been spent by way of increased costs and in protecting industry in order to give a better return, it would be desperate if, after 25 years, we were to abandon these people because of the new move.
With regard to gearing ourselves for the export business there has been, over the past 25 years, a record. In the case of many of the industries it has not been too good and not too curiously inquired into although the Tánaiste on occasion during the last seven or eight years spoke not exactly in those wheedling terms in which he is trying to present his new move. The continuous inefficiency of the Government and their persistence in a wrong approach to a great many problems do not put the Minister in a good position to lecture industrialists on inefficiency or bad practice.
The summer 1957 issue of Studies contained an essay by Professor Carter of Queen's University, Belfast, on “The Irish Economy Viewed from Without” and to it was added the commentaries of three or four people. Looking on this country from across the Border, Professor Carter was asked his views. There are certain views expressed there which I think anybody could contradict, for while his eyes are on this country, he cannot forget that his feet are planted in the Six Counties side. Nevertheless, there is this view which is one to be presented in contradistinction to the views given by the Minister for Lands and the Minister for Education, aided by the Tánaiste, in speeches throughout the country. On page 139 of Studies Professor Carter says:—
"But it is not in fact true that saving and investment are the fundamental things; the fundamental things are hard work, technical skill and good management, and they can often achieve a great deal without large capital expenditure."
He continues:—
"I doubt if Irish workers are naturally particularly idle;"
I want to stress that because all the emphasis in after-dinner speeches for months past has been on the necessity for hard work, generally making out that our people are not producing enough and that what we require is to have working hours increased, or to work the present number of hours for smaller wages. Professor Carter's view is one I think with which we should agree. Our people are not noted for idleness or wasting time when they go abroad. Does this happen only when people who are born here remain here?
In any event, the professor continues:—
"I think that their work is often managed so that they waste their time. Bad management and technical backwardness seem to be the essential trouble. The first shows itself in working time wasted because materials are not there, in failure to do market research and find out just what the customer wants, in poor costing, bad layout of plant, absence of work study and many other things. Technical backwardness is seen in agriculture in such things as the shockingly low use of fertilisers, and in industry in the absence of staff trained to appreciate new technical knowledge (which must of necessity mostly come from abroad); in both agriculture and industry there seems to me to be a lack of research on special Irish problems, and of liaison men with the task of taking the results of research to the small producer."
He sums up thus:—
"Let us therefore put down in order the basic needs of a prosperous economy:—
(a) Improvement of management,
(b) The discovery, adaptation and spreading of new technical knowledge,
(c) Capital investment of a productive kind to back these up."
He then asks: "How is the process of recovery to begin?" and goes on to say:—
"It is tempting to say that the answer is better education and more saving, which amounts to saying that nothing can happen for a long time. But Ireland is an exporter of brains, although she is sorely in need of them; an improvement in education will not of itself stop this export. By far the most hopeful means of getting good management, technical knowledge and capital all at once is from subsidiaries of large foreign companies; and it would be worth very large inducements indeed, including complete exemption from taxes for a period, to get more of them."
That is an ideal of course and cannot be realised. He continues:—
"Unfortunately the execution of such a policy runs against a whole lot of favourite illusions."
They are the illusions from which the Tánaiste suffered during the past 25 years and I do not know if he has yet got rid of them. Professor Carter goes on:—
"One is that a locally-owned business is better than a foreign one; the opposite is the truth, for advanced technical knowledge flows readily from a great firm to its subsidiaries, and a plant which is paid for by foreign capital is a great deal better than one which has to be paid for from the scanty savings of the Republic. Another illusion is that there is a virtue in small business; so there is, for certain purposes, and given intelligent management, but it is quite clear that in many branches of industry (and those among the most rapidly progressive) large firms have immense advantages. They can support massive research and develop programmes which benefit their subsidiaries; they can buy the best in skill and technical knowledge and good management and diffuse its benefits throughout their empire; they can raise money more easily and on better terms; they can be more adventurous because they can spread their risks. The spread of good practices is much more difficult in industries, such as farming and building, which are necessarily organised in small units."
Professor Carter goes on to the third point and says:—
"The last illusion, common to most underdeveloped countries, is that foreign enterprises link you in bondage to the foreigner; in this case, to England. I suspect that this belief owes more to emotion than to reason, but the relations between the Republic and Britain do require little more thought, for at present they make the worst of both worlds."
Professor Carter then goes on to speak of monetary matters which bear no relation to the present legislation. At a later point, the Professor put in a note on the preference for locally-owned business which he says:—
"apparently arises partly from a laudable patriotism, partly from a fear of foreign domination, partly from a belief that a foreign-owned business will not be conducted in accordance with Irish interests for instance that it will close down first in a slump."
He continues:—
"The patriotism is ill-founded until Ireland can show that she has enough good industrial managers of her own; the fear of foreign domination seems to me of little substance; the third belief is contrary to common sense and experience—it is the efficiency of a business which determines whether it will continue in a slump, not the site of its head office."
That is a sane view.
What is the view promulgated here? I shall give some quotations from speeches made by the Minister for Lands—who appears to be the Government's mouthpiece in regard to policy —the Minister for Education and the Tánaiste. On the 23rd January of this year, the Minister for Lands told us that one of the necessities was to get capital from every source to invest in new industries and agriculture. He then spoke of taxation. Taxation was so high that anything which might increase it was to be deplored, such as, for example, granting new wages to the employees of Government, State personnel or local authority employees. The public would have to accept lower export prices for other commodities besides wheat. Costs would have to come down and profits at a lower rate be accepted for commodities where only competitive drives for sales would succeed. For many products greater sales at lower profits would add to the seller's income.
Four days later, speaking at Mullingar, the Minister for Lands said that the country had to face a stern competitive struggle for export markets. Costs must be brought down, and, in the case of some commodities, sales increased to make a lower profit margin more remunerative. The wages and salaries of all the community must be related to competitive selling. Extra costs of production had to be met and after a bit we might get our living standards increased, thus enabling production to be increased by modern methods. That was to come later, he emphasised in the following month. He also said in Mullingar that the success of the agricultural export drive depended on making marginal profits where necessary, on reducing costs and increasing yields. On the whole, he contended that we have to sell more goods at lower prices.
On 6th of February, speaking at Castledaly, County Westmeath, the Minister for Lands said it was impossible to make any declaration of policy on the amount of capital that could be raised until the whole financial position could be examined. As far as putting a date upon the period of modest living, as his colleague called it, he said about ten years were needed to ensure real progress in expanding output. It took time to build up confidence, find capital and secure new export markets. That is what the Minister now says is of extreme urgency to deal with the problem of unemployment.
The Minister for Education, speaking in Cork as reported on 18th February, 1958, said it had been contended that the wage increases recently given to many workers had not fully kept pace with the rise in the cost of living since the fifth round. There was a necessity to offset the increases in wages by increased productivity. The whole theme has been based on the increase in wages, whereas what has been sought through the Labour Court recently is to bring wages back to the level of what they were before they were cut by the taking away of subsidies by the last Government. The Minister added with regard to the wages of local authorities that any increase would place extra demands on the ratepayers and that was going to bring down the whole country. While everybody looked for a reduction in taxation, there seems to be no prospect of lowering taxation. The prospects of holding it at its present level were not bright.
The Minister for Lands said—and I am taking it out of chronological order because it seems to be the aim of all these speeches to build pressure up to this—at the annual meeting of the Wicklow Chamber of Commerce, that we would have to accept a more modest standard of living until production increased and laid down for that period a term of 20 years. He said that Scotland was doing very badly with regard to emigration. Apparently he was there recently because he wished to tell us about Scotland. He added that capital was beginning to flow back into the undeveloped areas of the world because industrialists looked for more loyal and hardworking operators, and more reasonable costs of production. The towns of Ireland offered suitable facilities for industries seeking exports to the British Commonwealth, Britain and Europe. He went on to say that the best production might have to be reserved for export and that profits on many exported commodities might yet have to come down in the new world.
I take that as the climax of all the speeches which these two Ministers made, speaking for the Government, since last autumn. They painted this as an undeveloped country because industrialists would look for more loyal and hardworking operatives here. What does that mean? In other well-developed industrial countries, the industrial organisations of the workers have kept pace with the development of business and when they see it advance to such a point where they can make demands on business, they do so successfully. Here, having cut wages in accordance with the national agreement, the workers have to accept those lower wages and a more modest standard of living for the next 20 years, according to the Minister for Lands. Both Ministers have emphasised the danger of increasing wages. Right through their speeches, the emphasis is on the employee having to work harder and there is very little about the deficiency on the management side in all of its branches.
I take it that Professor Carter represents a more humane view in these days than one would get from the speeches of these Ministers, who are apparently those who promote Government policy. Speaking at a dinner of the Insurance Institute of Ireland, the Minister for Industry and Commerce, as reported in the Bulletin of the Department of External Affairs, stated:—
"We think that, with the European Free Trade area negotiations reaching their final stages, it is probable that United States industrialists are now giving consideration to the advisability of servicing the European market from plants located in European countries. We aim to convince them that Ireland is the best possible location for such plants. We have many and very weighty arguments to advance in support of that contention. These include not merely the geographical advantages of this country, its attitude to private enterprise and the stability of its political situation, but also the availability of intelligent and highly adaptable labour which has been shown capable, after training, of achieving productivity levels as high as in any other country."
If the Minister, mainly in touch with labour through his Department, thinks that we have achieved productivity levels as high as in any other country, why all this pleading about the necessity for higher work output from the employees and no emphasis on the necessity for better over-management?
Elsewhere in his speech he went on to say that misunderstanding of the policy behind the Control of Manufactures Act, and of the general attitude to external investment in Ireland, had been fairly widespread. It was now very important that this misunderstanding should be removed. That was why proposals to amend that Act had been announced. He added:—
"There was equal misunderstanding with perhaps even more seriously deterring effect, arising out of the retention of war-time price control and from some much publicised statements it was assumed that the official attitude was hostile to profits. Nobody will invest in Irish industrial development unless there is a prospect of profits commensurate with the risk involved. We have dismantled that war-time price controlling mechanism completely and substituted on a permanent basis a very modified power of supervision, and we want it to be known generally that we regard the successful industry as the profitable one. Protected industries supplying the home market only must expect that the way they meet their obligations, in return for protection, will still continue to be examined, but in the case of firms which go into export the more successful they are, and the more profits they make, the better we will like it. In the case of new export trade developments we have legislated to exempt these profits from taxation."
Where is the truth? Where is Government policy? Is it this clamour for harder work? Does harder work mean a longer working week? Does it mean the same working week at less wages? There is an emphasis laid on productivity. Is it now accepted that the only way one can get extra production is by having people develop more physical labour, either through longer hours or else through working overtime in order to bring their wages back to the old standard? Is that it, or is the Tánaiste speaking the truth when he says our people have achieved productivity levels as high as any other country?
The Minister for Lands tells us we shall have to look forward to 20 years of a more moderate living, that prices will have to come down, that profits will have to come down, and that dividends will have to be looked into and controlled. Is that in line with the policy that boasted to the insurance companies that we had dismantled our war-time price control mechanism completely and substituted for it on a permanent basis a very modified power of supervision? Is it to go out to the Americans that they are to come here with the inducement: "You can make whatever profits you like and they will not be examined into curiously and you will get labour as good as anywhere else"? Or are they going to get the impression from these speeches, which represent in the main Government policy, that labour here is either idle or inefficient, that higher work for lower rates of pay is what is required in order to put this country on its feet?
Last night, Deputy Booth could quote here what he thought a great tribute paid to this country. It was a comment by O.E.E.C. that we had contracted purchasing power and a stern budgetary policy. I am sure that would appeal to Deputy Booth as a businessman. By a stern budgetary policy is meant, in effect, a cutting of wages. That may be one way—it may be the only way—in which the business of this country will survive, but it is certainly not in the trend of modern development. The idea of constricted purchasing power is completely out of the ordinary run of countries trying to develop themselves and trying to use either resources they have or can get from abroad.
In another speech which the Tánaiste made at the Wexford Chamber of Commerce, he said that capital generated within the country is not sufficient to finance the industrial expansion called for by the country's economic position. That note crept into the Tánaiste's speech to-day, that home capital is not adequate, that there is a shortage of capital at home.
Let us get a declaration with regard to the £100,000,000 plan. The Irish Press produced a supplement on the 12th October, 1955. It was taken up by the other papers who spoke of this as the new plan for employment. The Irish Times phrase about it was that it was a new Fianna Fáil five-year plan for full employment that would undertake a positive spending programme to be financed on a scale which would utilise the whole of the labour available and that the national income would have to be increased by £100,000,000 to bring full employment in five years.
The Irish Press headlined it: “Fianna Fáil's Aim Is Full Employment” and in lower grades of headlines “An increase of 100,000 jobs in five years—or an average rate of 20,000 jobs a year—would result in full employment here as normally understood and would mean the end of abnormal emigration. This is the proposition on which Fianna Fáil bases its draft proposals for full employment. The proposals were outlined last night by Mr. Seán Lemass when he addressed Comh-Chomhairle Atha Cliath.”
