This amendment and amendment No. 21 are being taken together.
Industrial Development (Encouragement of External Investment) Bill, 1957—Recommittal (Resumed).
Debate resumed on the following amendment:—
In page 4, line 33, after "business" to add "or any manufacturing process which was or is in the ordinary course of such business or forms or formed part of such business or was or is a reasonable extension of such business".—(Deputy McGilligan.)
Last night, I made the point that unless some such phrase as I suggested is used in paragraphs (e) and (f), the interpretation might be that the same business had to be carried on. Saying "such business was carried on continuously in the State between the 2nd day of July, 1934" is the same as if one said such company carried on any business continuously.
Any manufacturing business.
Any manufacturing business? I want to know why was it necessary in the 1934 Act to extend the word "business" by adding in the phrase I have used? It possibly is not the same, but that is the gist of it. The phrase used in the 1932 Act was "business" and "business" had to be extended. If the word "business" simply means continuing business, being in business to do manufacturing process A at one time and continuing business by switching over to manufacturing process B and then continuing by switching over to manufacturing process C, why was it necessary, if that is permissible, why were these words added?
The term "reasonable extension of existing business" is in the 1932 Act, as well as in the 1934 Act. The intention in 1932 was to allow any company to continue in the business in which it was engaged or any reasonable extension of it. That position will continue under this Bill. Any company which was engaged in manufacturing business in 1932 will be entitled to continue in that manufacturing business, or any reasonable extension of that business, in the future. The only limitation which will be placed on that company is that the business must be a manufacturing business. In the case of 1934 Act companies which were entitled to operate without a licence before the passing of that Act, they were still entitled to continue in any business without a licence.
That position has been continued under this measure. The inclusion of these provisions is due to the desire to have in one section all the conditions under which manufacturing can be carried on. Provided that any one of these conditions is fulfilled, manufacturing operations can be carried on. There is no change in the position established under the 1934 Act. I think it might be no harm to insert the indefinite article "a" before the word business. As it is the intention to leave the position the same as it is, the same phraseology might be used. Whatever interpretation was put on the phrase in the 1934 Act will continue to apply.
With regard to the change in the 1934 Act, the matter was put negatively, but here the words are "It shall be lawful". That makes no change.
I am not suggesting that it does, it is only a change in the phraseology. What is intended is to put here in a positive way the conditions that obtain under the 1934 Act.
It does not seem to me to make any difference whether it is put in a positive or a negative way. It is not suggested that the putting in of the word "a" makes any change. That is only to say that it must be a business carried on by way of trade and what is aimed at is to carry on any manufacturing process. What is required is continuity, not in respect of business generally, but in respect of a business carrying on a particular manufacturing process. That is not contained in paragraph (e). It must be a business carrying on a particular manufacturing process. If it is a business carrying on any manufacturing process, my amendment might appear to be a limiting one.
In the 1932 Act, there is an extension of the word "business". It means that you look back at what is being done; but you look back at a business which. was in the same trade in 1932 and see that what has now been done is a part of, or an extension of, that business. It was necessary to put those words in the 1932 Act. They were carried forward in the 1934 Act and they are here again in this legislation. You have the phrase "such business" in paragraphs (e) and (f) and in (f) you find to a certain extent the extension I am looking for. If it is necessary to put these things in for some purpose or other, it makes me feel that the phrase "such business" is possible of definition as a business carried on on 3rd July, 1934. I do not think that the suggestion of "a business" would get over it. What do the words "such business" mean? Is it a business in which a certain manufacturing process was carried on or is it any business? Is that what is meant?
We are discussing only the question of drafting here. What we want to provide is that a company which was in operation before the 1932 Act shall be permitted to continue in the same manufacturing business as it was engaged in then, or any reasonable extension of that business. We also want to ensure that a company formed after 1932, but affected by the provisions of the 1934 Act, can continue to carry on any manufacturing business, provided it was qualified to carry on that business under the 1932 Act. Deputy McGilligan has some doubts as to whether the Bill achieves that and that is the only point between us.
That is the only point. I recognise that there is a big distinction between the 1932 type of business and the 1934 type of business. If the phrase "such business" refers to the enlarged business, why enlarge it any further? That enlargement is carried on here. As it stands, it seems to me that it is a matter which will call for interpretation. If any court came to construe this matter, it would take up the same line of construction as it takes in connection with any documents. If you suggest that a thing has to be enlarged in one way—say, in one sense of particulars—in certain circumstances, you are taking the meaning that you do not want that extension applied in other circumstances. That is what I am afraid of.
It is a drafting point. I shall have it looked into.
Could the matter not be dealt with in the manner the Minister suggested? Could it not be rectified by putting in "a" in front of "business" where the word occurs in this section?
I am prepared to do that. I do not know that it makes any difference. I think it is better to have the precise words used in the 1934 Act.
Paragraph (e) of sub-section (1) of Section 4 would then read: "such a business" and, to make the matter even more clear, add the phrase: "carrying on any manufacturing process."
I think we will put in the indefinite article.
That is the preamble of Section 9 of the 1934 Act. Notwithstanding that the term "a business" was used for certain purposes, it would be necessary to define "such business", meaning the business carried on at the earlier date or any extension or departure from it. Therefore, the word "a" did not carry the interpretation I am asking for in the 1934 Act.
It did.
In the 1934 Act, it has been found necessary, for some purposes, to define "business" as part of it or extension of it in respect of any business regarding which the phrase "such business" was used.
Not any business. There are three categories of companies——
If the Minister will allow me, I know about the categories. The only way in which I would be impressed by any recital of the categories would be if the phrase "such business or any manufacturing process" were used with some limitation in some or other of them and not in respect of the others. Here we get the words "such business" that fall for interpretation. It does not matter what the categories are, they have to be modified.
Amendment, by leave, withdrawn.
Several amendments are affected by amendment No. 18—amendments Nos. 19, 35 and 36. I suggest that they might be discussed together.
Amendments Nos. 35 and 36 might be regarded in a certain way as consequential but I think they have a point of their own distinct from amendments Nos. 18 or 19. Amendments Nos. 18 and 19 may be taken together. I move amendment No. 18:—
In page 4, line 35, to delete "and" where it secondly occurs.
I am also dealing with amendment No. 19 which reads:—
In page 4, to delete lines 36 to 38, inclusive, except "or" in line 38.
In other words, amendment No. 19 seeks to cut out sub-paragraph (ii) of paragraph (e) of Section 4 (1), it therefore being necessary to cut out the conjunctive which joins them. That would mean that one of the ways in which the company could be excluded would be if the business had been carried on continuously in the State between the 2nd day of July, 1934, and the relevant time. Why add "relevant time" in a qualifying business? These businesses have become qualified. Are they likely to lose their status? My suggestion is that, having started them under certain conditions—if they have started and have been run since 1934—why not let them run on and take away these conditions about a qualified business? I understand "qualified business" refers to the shareholding. If you have companies that started here and qualified, and have remained qualified for all these years, why not simply have a new start now and say that any business which has been in operation here since the 2nd July, 1934, will be allowed to carry on, no matter what its shareholding conditions?
There is more than shareholding involved. There is also the question of directorships. The Deputy is correct in assuming that this section continues, the same as that inserted in the 1934 Act, any business which had been carried on continuously since 1934 and which, at the time they were established, complied with the requirements of the 1932 Act in regard to shareholding and which now comply with that Act.
The deletion of the paragraph to which the Deputy refers—which requires that the business is, at the relevant time, a qualified business within the meaning of Part II of the First Schedule to this Bill—would mean the removal of the obligation to comply with the requirements of the 1932 Act. Then, any manufacturing company, conducted continuously since the 2nd July, 1934, would not be required to comply with these requirements of the Acts as regards either shareholding and directorships. I do not think that is desirable. I think the opening up of that channel by which external companies that did not wish to apply in any other way for authorisation to carry on business here or which were refused, on good grounds, the necessary permit or authorisation, could nevertheless acquire the authority to engage in manufacture by securing a controlling interest in the existing company. These companies were fully safeguarded under the 1934 Act. Their shareholding and directorship obligations were less restrictive than was required under the 1934 Act, but, nevertheless, they were allowed to continue and engage in any form of manufacture. The suggestion that they should now continue to enjoy that privilege, even if they sell out completely to external interests, is undesirable.
I do not know how they can retain an interest by selling out completely. Certain companies are mentioned in sub-paragraphs (a), (b), (c) and (d). We now come to sub-paragraphs (e) and (f). Under sub-paragraphs (e) and (f), one has to have these conditions: (1) the business must have been carried on continuously in the State between the 2nd day of July, 1934, and the relevant time—the time something is called for investigation, and (2) the business must, at the relevant time, be a qualified business within the meaning of Part II of the First Schedule to this Bill, that is, it must have been carried on between the 1st June, 1932, and the relevant time. I am collapsing, as far as the time is concerned. Since the 2nd July, 1934, continuously, it ought to be sufficient.
Even though they no longer have any Irish shareholders?
They have Irish shareholders now—they must have. If one takes in paragraphs (ii) in each of sub-paragraphs (e) and (f), there is a different type of shareholding requirement but they are there. You have existing businesses. They are here since July, 1934. They have a particular capital set-up. Say, why not let them carry on? If they are not the same business, then there will have to be a new application. That was my point about the "continuously". If they are in any business, but in any business having the required shareholding, they are here and have been here for some time. Are they likely to change their capital set-up? They are here doing business under the Acts. At least 60 per cent. of those affected by these Acts are not complying with the Acts in a real and proper way. There are all sorts of loopholes in the Companies Acts and many people have availed themselves of these ways of escape. Take the people who have abided by the Acts. Take one ruling date, 2nd July, 1934. Certain people have conformed to what is really required in the way of shareholding. They are established. Are they likely now to change over and have shareholders of a different type? Will they change the whole capital make-up? They have been able to pull along since 1934 under these Acts. They have gone through their qualifying period. Now the Minister should say to these: "We will let you carry on."
I suggest that should be done. Anyone who comes under Section 3, or who is doing business solely for export, is immediately outside the scope of the Acts. That is so in the case of any new applicant who does not fall under Section 3; but, in relation to those to whom I have referred, they have passed their qualifying period and they should be allowed to continue. The likelihood of their making a new arrangement in regard to shareholding and the number of directors of Irish nationality is very remote indeed. As these people have obeyed the law for so long, this gesture would be some recognition of what they have done.
I do not know whether the Deputy fully appreciates what he is proposing. As the law stands, and will continue, any of these companies qualified within Part II of the Schedule of this Bill—companies set up in accordance with the provisions of the 1932 Act and continued under the 1934 Act—can engage in any manufacturing operation whatever without restriction. We will not put a restriction on them, except that the shareholding qualification to which they conformed when established under the 1932 Act shall be maintained. If we were to waive that, in view of the fact that these companies can engage in any manufacturing operations, then the whole Act would fall to the ground, because any foreign company could come into any manufacturing business here even to supply the home market alone.
In the ordinary course, they would not be given a licence on that ground, but, if we were to accept this, they need do nothing except get a controlling interest in some existing business and they would then be free to manufacture anything. The Deputy is putting it a little too simply because he is contemplating a business of the same kind carrying on and continuing. The fact is that any of these companies under this Act, so long as they continue to be qualified under the 1932 Act, can engage in any manufacturing operation whatsoever. The Deputy suggests they should not be subject to the restrictive qualification of the 1932 Act. That means we would be leaving the door wide open to a foreign manufacturer to engage in any kind of manufacturing operation and the rest of the provisions of the Act would become completely inoperative.
I do not extend the number of businesses of an industrial type in the country at the moment. I think the Minister understands that. The Minister makes the point that you might have a business for manufacturing process A., and it could switch over and do another manufacturing process. I did not think that was the interpretation given to "continuous", but even if it is, it does not make much difference. We have X number of firms here at the moment and they have been carrying on since a date in July, 1934, and have accommodated themselves in their requirements in regard to shareholding. I suggest we should say to these: "Since you have been here since 1934, you can carry on."
In the same business?
In any business, but, on my interpretation, it would be the same business. Even taking the wider connotation, in any business, I am sure the Minister is well aware that many businesses in operation here have qualified by date under the 1932 and the 1934 Acts and have since been sold to others. There is a traffic in these businesses. They change over to other things.
There is a matter in that connection in which I was personally interested, where there was a question of buying land on the outskirts of the south side of the city, and the company that bought that land was a company called "Steel Holdings, Limited". They were trafficking in land in order to escape the 25 per cent. and they were able to buy a company which had really gone out of business, but there had been such a company, and they were keeping up a sort of facade. That is what is happening under these old Acts.
But I am talking about the people who have qualified in the proper way and I say we should say to them: "If you have been here since a date in 1934 continuously, we will let you carry on." The Minister seems to think there will be a good deal of trafficking and a company doing one type of business will switch over to another type. Why should they? They have been engaged in business in a certain manufacturing process. Will they change to a different one? My suggestion is that we should simply wipe out all these old controls, as far as the people who are already here are concerned. For any people who want to come in hereafter, either the 1934 Act, as extended, will apply, or else this 1958 Act will apply. But I do not increase the number of businesses.
The matter to which the Deputy has referred—the acquiring of old companies for the purpose of buying land—has nothing whatsoever to do with the Control of Manufactures Acts. That arises out of the provisions of the Finance Act imposing stamp duty. Here we are dealing with something quite different. We say to certain companies: "Provided you were established in accordance with the provisions of the 1932 Act, you are entitled, notwithstanding the more restrictive provisions of the 1934 Act, to continue in business in any manufacturing process." We are not altering that. These people are still entitled to engage in any manufacturing business, provided they conform to the provisions of the 1932 Act. The Deputy says we should wipe out even that proviso. That means that any company now in existence is entitled to engage in any manufacturing business of any kind whatsoever even if it sells out to external interests. I think that would leave the whole situation wide open. There would be no regulation and no restriction of any kind.
Inside existing businesses?
No, no.
It would be wide open inside a group of existing businesses. That is all.
I think that even a company formed under the 1934 Act would, if that amendment were carried, be released from its obligations.
The door is wide open to people who are already in business—that is all—but not to newcomers.
Yes, companies already in business. Any new group that wanted to establish itself in a manufacturing business but which would not be given a licence, need do nothing except acquire a controlling interest in an existing business and then be perfectly free to manufacture. In the circumstances, we think that will not do.
They are either in business already or have taken the place of someone in business already.
Yes, but the person who is in business already, provided he conforms with the 1932 Act, can engage in any business. That is a considerable easement of the position for these people. To extend the concession further would mean that the entire structure of this Act would cease to be of any further utility whatever.
It is no good my arguing the whole point again. My suggestion would not enlarge the number of people. If X number are carrying on continuously since 2nd July, 1934, they will be allowed to continue carrying on. They might switch.
They are being allowed to carry on. There is no question of switching. They can carry on, but they must still continue to conform to the 50 per cent. shareholding condition.
Why insist on that? The Minister is not enlarging the number of people. He is allowing them to engage in a different business, on his own interpretation. I thought there was an effort to get away from even a semblance of rigid control in order to attract new capital.
That does not arise here.
No, but if someone reads this and finds he has to look for what is a qualified business and what is an exempted business, there may not be much attraction.
Clauses (e) and (f) are transitional provisions which will become less important as time goes on.
Section 3 is the liberalising section, if it is interpreted in the way in which we have interpreted it here. Section 4 is liberal as far as (a) and (b) are concerned. As far as the rest is concerned, there is nothing liberal about it. It is carrying on the same procedure.
You cannot have it both ways. We have just discussed the question of whether a company carrying on business can alter its process of manufacture from, say, soap to chocolate. At the same time, to allow an outsider to come in and acquire such a business with that proviso would negative the whole Bill. It would be far easier to withdraw the Bill and give carte blanche to anybody to come in. If we are to do as Deputy McGilligan says, we must depart from what we were discussing a few minutes ago, because the company cannot be given the right to alter the process of manufacture. It would be only too simple for a company, which wanted to compete with another existing company, or to keep out an outside competitor, to come in and acquire a company, change the process of manufacture, or go out of business altogether. It must be one or the other.
Amendment, by leave, withdrawn.
Amendments Nos. 19 to 21, inclusive, not moved.
Could the wording of 21 be used to clarify the point we were talking about?
I believe there is something there in the way of drafting in order to make clear what is said to be the intention.
Question proposed: "That Section 4 stand part of the Bill."
I want to find out what is intended. I can discuss this on the section, but I would rather discuss it on the sub-section.
It is embodied in the section.
I can discuss it on the section, if the Chair wishes.
That would be more appropriate.
Very good. I want to direct attention to the sub-section. Sub-section (3) was not in the original draft. It came in on ministerial amendment. Originally, it was intended to delete Section 9, but Section 9 still stands although I am not sure how much stands. Section 9 is amended from the words at the end of the preamble down all the paragraphs to (e). Section 9 of the 1934 Act states that "it shall not be lawful for any person to carry on business ..." and so on, "unless either," and there follows a series of paragraphs that run from page 11 to page 17 in my copy of the Act. I take it that the whole of that goes out? All we keep is the preamble stating it is not lawful to do certain things. Then we have the contrary to that, in the positive phrase in Section 4 that it shall be lawful to do all these same things, if these conditions are complied with, so that the whole of Section 9, sub-section (1) is abolished.
The next paragraph (d) abolishes sub-sections (2), (3) and (4). As I read the matter, the only part of Section 9 of the 1934 Act now left is the preamble and sub-section (5).
It is generally correct that the only effective provision left in Section 9 of the 1934 Act is the penalty clause.
That is the sub-section?
And the preamble.
All of Section 9 is gone, with the exception of the preamble and that part. In addition to that, the 1934 Act is amended by (a) which says: "References to a person shall be construed as references to a company and not to an individual." Any individual or group of individuals, so long as they do not incorporate themselves, can do anything. All persons may operate without any question of licences and so on. They can be in partnerships or any other set up, so long as they are not incorporated.
There is another matter in connection with shares. The only shares that are controlled by Section 3 are ordinary shares. Preference shares do not come into the matter at all. By definition of the 1932 Act, the term "share" includes either preference or debenture shares.
In addition, the manufacturing process is defined here. It means that the manufacturing process must include the mechanical power. Any business that does not use mechanical power is clear out of the Acts. Any people, whether they use mechanical power or not, are clear out of the Acts.
I notice also that Section 9 is amended in the following respects: "(b) the reference, in sub-section (1) to doing any of the specified things shall be construed as a reference to carrying on any manufacturing process." That is not for the purposes of this Act. That is generally. It is everything to do with manufacturing processes.
I may be wrong, but my judgment on this piece of legislation is that it is intended as a liberalising effort. The liberalisation really stops at Sections 3 and 4. Section 4 permits the doing of certain things, down to paragraph (i). One of these refers to a business carried on for export, that is, solely, but "solely" is defined as meaning that less than 10 per cent. was sold on the home market, and the company is an excluded company. That gets back to Section 3. Letter paragraph (c) gets back to ministerial intervention. It is the Minister who grants the certificate of exemption. Letter paragraph (d) refers to a qualified company within the meaning of Part I. That is the old system. Paragraphs (e) and (f) are definitely the old system—the capital set-up and the shareholding and the directors—(g)— the manufacturing licence—that is still the old arrangement—and (h) is somewhat new. I want to ask a question about that. Paragraph (i) is merely the matter of carrying on a business that is in the hands of a receiver. That is common to all these things.
As far as this is to be considered as part of the liberalisation process, that process is confined to letter paragraph (a) and letter paragraph (b). The rest is the old control all over again—the requirements with regard to shareholding, directors or, else, one goes to the Department to get a certificate of exemption or to get a new manufacturing licence. So that the whole liberal features of this now are narrowly confined to Section 3 and Section 4, letter paragraphs (a) and (b).
There is the liberalisation in the end in sub-section (3), that all people are out who are not incorporated, and that there has to be use of mechanical power before the old code of Acts grips anybody at all. How far that will make any change, I do not know. I do not know what business would have been caught by the 1932 and 1934 Acts who use something other than mechanical power.
I am not too sure what (h) means, at least, what the difference is. In the original Act it was the "assets of the company and used in the company". At any rate, the purpose of the amendment is said to be that it is the assets that are used and not the assets that are owned that is what is looked at. That is what I gather. It is the third of the Minister's amendments. The effect of the amendment was to allow paragraph (1) (h) to mean the assets used in a business. In the Bill as introduced this would apply to the assets owned by a company and used in its business. I do not accept that. The old phrase was that a company is a company the fixed assets "of which". Apparently that phrase "of which" has been interpreted "owned by which". Is that right? That was the old phrase which has gone. In the original draft the phrase was "such company the fixed assets of which used in its business do not exceed £5,000". Now we have got rid of that and put in "the fixed assets used", that is to say, whether they are the assets of a company or not. I take it "of which" was interpreted or intended to mean "owned by the company" and that that has now gone. If so, that to my mind, is going a little bit back on the liberalisation process.
Let me take a case. Supposing a company leased a factory premises, say, paying £500 a year rent. On a ten-years' purchase of that, the property leased in that way would be worth £5,000. Suppose they get machinery which was worth, say, £2,000. Am I to take it that both the premises and the machinery used are now to be looked at for the purpose of calculating whether the assets exceed £5,000 or not? Are we finding it entirely on the assets used as opposed to what the company owns, so that anything a company hires or pays money for, as long as it uses it, will all be brought into this calculation of whether there is an excess of £5,000 or not? If so, then I, personally, would have preferred the other phrase but I had not known the "of which" would have drawn down this interpretation of "owned by the company". Apparently, however, that is so.
If that is the position, there may be some very difficult situations arising as there is quite a number of companies in the country that do not operate in buildings which they themselves own; they get a lease of buildings. I presume now that there is some calculation made of the value of the building, not the amount paid by way of rent for a lease, but the value of the building will be taken in and then that and the machinery will be added together for the purpose of seeing whether it is £5,000 or not, the aim being that if the company's fixed assets are not in excess of £5,000 the Acts are not going to bother about it. It is only companies over £5,000. There may be a lot of companies dragged into this unintentionally by this very big enlargement of the phrase "the assets used in the business". The company might get machinery, even, on lease to themselves. They might hire machinery for a number of years and pay a rental for it, but all these things, as this new paragraph is, will all be counted for the purpose of finding out whether there is an excess of £5,000 or not. That being the case, there is not any great liberalisation in this.
I criticise Section 4 on the basis that the only two good parts of this Bill are Sections 3 and 4. The virtue of Section 4 stops at paragraphs (a) and (b). It might have stopped at (h) if the old phrase was allowed in, namely, that you measure the assets by the ownership and not by the use. There is then the better, certain, liberalisation in sub-section (3) so far as individuals are left out and so far as the manufacturing conditions that are necessary in connection with any of these manufacturing processes.
Taking the points to which the Deputy referred in sub-section (3) first, it is correct that the Acts will not in future apply to any business carried on otherwise than by a company. A business carried on by an individual or partnership will be outside the scope of the Acts. Also, manufacturing operations which do not involve the use of mechanical power or which do not involve operations, such as are indicated in Section 2, are outside the scope of the Act. Thirdly, companies which are set up here to do mainly export business, companies which are interested in the home market only incidentally, are excluded and, of course, also, companies which are engaged in the production of commodities which are excepted by ministerial Order under Section 2. In so far as liberalisation means putting manufacturing operations outside the scope of the 1934 Act, it is correct that it is only in respect of these matters that there is complete exclusion from the scope of the Act.
I do not agree that Section 5 does not represent considerable improvement on the present position. We can discuss that when we come to Section 5. But, it is, I think, generally realised that most companies starting up in business are not in a position to finance themselves by public issues of shares at that stage. The normal commercial practice would be for a company to finance itself in other ways and then to seek to make a public issue of its shares only when it has established the success of its enterprise and its profitability. At that stage, a company which was established otherwise than in accordance with the requirements of Section 3 can apply for and get a certificate exempting it from the Control of Manufactures Acts, an irrevocable certificate, at least, a certificate that cannot be revoked as long as the company remains in business or unless it itself asks for revocation.
Similarly, an existing Irish company with shares quoted on the Stock Exchange, which is now required to check every transfer of its shares in order to ensure that it does not infringe the provisions of the 1934 Act, can be exempted from the requirements of that Act so that its shares can be freely transferred and so that it can, if it proposes to extend its operations for export, obtain new capital from external sources by a transfer of shares.
Paragraphs (c) and (f) of Section 4 are, as I said, merely designed to deal with the situation that exists at present and paragraph (h) also represents another relaxation of the conditions of the 1934 Act. It exempts from the Act small businesses, but it is necessary when doing that to make sure that exemption does not become a loophole for the evasion of the Act. It is essential that the words used in the paragraph should be those which are in it, that the reference should be to "assets used in the business" because otherwise there would be the danger that companies would evade the obligations of the Act by presenting that they did not own the assets they are using. That, as it is well known, I think, has been a device not infrequently used in the past to evade the necessity for seeking a licence under the Control of Manufactures Act.
We are, therefore, as I said, exempting from the Act manufacturing enterprises which are not owned by companies, manufacturing enterprises which are small in their scale of operations, which are financed by the offer of shares to Irish shareholders subject to the conditions set out in Section 3 which are primarily concerned with export business; or which are engaged in the manufacture of commodities which can be exempted under Section 2. In respect of all other concerns we are making arrangements in Section 5 which will be more satisfactory than the existing arrangements of the 1934 Act.
The certificate of exemption provided for in Section 5 cannot carry any conditions except two; it will specify the commodities in respect of which exemption is given and it will require the commencement of operations within a specific time. But there can be no other conditions attached to these certificates which when given are irrevocable and operate to meet the particular problems to which I referred, that of the company which intends to finance itself by the public issue of shares at some stage after coming into operation and the existing Irish company which wishes to have freedom to transfer its shares even to an external concern so that it can extend its capacity to go into the export business.
I do not know if it is possible to go any further except to the extent of repealing the Control of Manufactures Act altogether and I do not think that would be desirable as it would be a breach of faith with many existing Irish firms and clearly so in respect of a number of firms to whom fairly specific undertakings were given by various Governments during the past 25 years.
I think we must protect the position in respect of manufacturing operations which are solely intended to supply the home market and where existing firms are already meeting the full needs of the country we should prevent the incursion of wholly foreign-owned companies coming into that field. They are certainly welcome to come in with any manufacturing operation here so long as by doing so they will add to the industrial development of the country either by meeting the home market requirements of goods now imported or adding to our exports.
I can understand the submission of an argument, with which I would have some sympathy, in favour of the complete repeal of the Control of Manufactures Act in present circumstances but I think it would be a dubious and dangerous course to follow because one could not see exactly the possible repercussions on existing enterprises or their development.
I already mentioned, arising out of the possibility of agreement for a Free Trade Area in Europe, that the matter may have to be reconsidered, because one of the likely provisions of that agreement will relate to the right of companies in one European country to establish themselves in another. That is still somewhat uncertain but until that obligation is forced on us by international convention—assuming that we adhere to it—I do not think we should go the whole way to repealing the Control of Manufactures Act altogether. In any case I think we would always require that external companies should be registered here, managed and controlled in the country and that they should be, in that sense, separate enterprises which could pursue their activities with regard only to the possibilities that are open to them and not be dependent upon decisions taken by boards of management located abroad.
I have always held the view that industrial development by way of branch factory under external control would be a very undesirable type of development because these branch factories would always be the first to go in circumstances of trade depression and would never be allowed to develop beyond the limits determined by people who are not concerned with the interests of this country, but only with their own particular interests. I believe that in another part of Ireland they are already experiencing some of the problems associated with industrial development by way of branch factories that are externally controlled. I feel we can reasonably require that companies proposing to manufacture here, especially where they are receiving assistance in the form of protection, grants or otherwise, should at least be Irish companies in the sense of being managed and controlled within the State. Therefore I do not see the circumstances arising in which we would think it good policy to legislate otherwise than on that basis, but in present circumstances I think this Bill represents the limits to which we can go. As I already indicated in the course of the Second Reading debate, I am prepared to consider practical proposals to go further provided we do not go to the extent where it can be alleged that we are defaulting on our commitments to other enterprises already established.
I am quite satisfied with, and I would agree with the desires expressed by the Minister in regard to this Bill but I think that the first paragraph (a) which says "such company carries on business solely for export ..." would be a deterrent; I do not think it has the liberalising purpose desired and departs somewhat from the objects of this Bill. I would like to see the word "mainly" written in instead of "solely", and I would like that the qualifying section on page 5, sub-section (2) on page 5 should stop at the word "commodity". In other words, it would read: "such company carries on business mainly for export" qualified by paragraph (2) on page 5: "... any manufacturing process are incidental only to its export trade in that commodity ...", and stop there. I think that would be real encouragement to outside capital to come in and to my mind it would clarify the position completely rather than by retaining the word "solely", which does not mean solely when you depart from 100 per cent. by having 10 per cent. allowed for the home market and 90 per cent. for export.
If the Deputy's anxiety is about the possible misunderstanding of the word "solely" I would be prepared to consider changing that word, but the definition of whatever word we use instead would be the same as it is now in sub-section (2).
That is to define "mainly" as being 90 per cent.
I would agree with the Minister. I appreciate, as the Minister does, that many of these firms are there over the past 25 years or more and it would be wrong to take a radical step which might injure them severely. However, there is every prospect of the Free Trade Area coming into being in Europe in the years ahead and now is the time to prepare for that. Personally speaking, I would welcome the influx of a greater number of efficient foreign companies who would be prepared to establish plants here to engage mainly in the export trade. As regards "mainly in the export trade" I would say anything over 50 per cent. would be reasonable. It would be a good thing for the country generally, from the point of view of the export potential and of employment. I see no point in changing the wording unless the 10 per cent. is also liberalised.
I would like to support Deputy Russell in his remarks. I still feel that a further liberalisation would not be as damaging as the Minister fears. I cannot see that any industry set up under the existing Control of Manufactures Act would be as greatly prejudiced as he envisages. If a new foreign competitor wanted to come in to deal in the home market and found an existing industry here I cannot imagine that his first reaction would be to establish a brand new factory and plant when all he would have to do would be to make a reasonably attractive offer for the taking over of the existing company here.
To say that this is any great liberalisation is an exaggeration. Admittedly the individuals and partnerships are now excluded. Admittedly also you are excluded if the fixed assets in the business do not exceed £5,000 in value. However, that seems to apply only to back-street businesses. There is no business of any value to the country which could work on fixed assets of less than £5,000.
If the Minister is prepared to amend paragraph (a) of sub-section (1), as he has expressed that he is probably willing to do, I am still not quite happy about sub-section (2) on page 5. While I can see the desirability of giving some definition of what "mainly for export" would be, I foresee a tremendous amount of difficulty in deciding the exact proportion. Ten per cent. of the quantity of the commodity is what is set out in the Bill, but from the interpretation point of view, I do not know what that means.
A commodity may mean anything. Take, for instance, that there is a new factory being set up for the manufacture of cranes down in Kerry. These cranes might be enormous cranes valued at £5,000 to £10,000 each. They might at the same time be manufacturing some workshop hoists worth £50. Of their output of cranes what would 10 per cent. mean? Would it be 10 per cent. of the number of units or 10 per cent. of the value of the total output? I can see a tremendous amount of haggling and dodging through loopholes by anybody who wants to do it.
A commodity to my mind in this context is not something like matches, cigarettes, and so on. It could cover anything manufactured by a certain manufacturing process. You could have somebody manufacturing steel tanks. These might be open steel tanks of enormous capacity or cylindrical steel tanks of 5,000, 10,000 or 15,000 gallons capacity. It might mean that by the same manufacturing process you could have very small tanks made for domestic use. In this case also, is it the number of tanks regardless of size that is to be taken into consideration or the total value of the output? I heard one of the leading solicitors in this city expressing the view that this Bill would produce further wasteful expenditure on legal interpretation. It does not appear to be spontaneously attractive to the foreign investor on that account. Granted sub-section (3) does mean a liberalisation, but there again bits of other sections and subsections have been taken out which makes interpretation extremely difficult and clumsy.
I would have hoped we could have produced a much more clear-cut Bill so that anyone who wanted to carry on a manufacturing process could do so unless it could be certified by the Minister that the home market was already catered for in that regard. This constant concern for safeguards seems to make any expansion of industry almost impossible. As a result, I cannot see that our trading position will be any better and I certainly cannot see that this will have any great impact on the unemployment situation.
If there were no law there would be no need for legal interpretation and, therefore, no need to spend money on legal interpretation. Let us not lose our heads in this matter, as there seems to be a tendency to do, by arguing that there can be no industrial development in this country unless we can get foreign capital in for that purpose. It is still true, and will continue to be so, that by far the greatest force behind Irish industrial development is Irish enterprise. Now and in the future those companies promoted by enterprising businessmen in this country will be the spearhead of any industrial expansion we achieve. They may have to get associated with them companies abroad who have got technical knowledge they cannot command themselves or access to markets they cannot otherwise enter but, nevertheless, it is their enterprise which will be the force behind all our progress.
What is likely to stop that enterprise from continuing? One thing would be the feeling that, if they undertake a new manufacturing operation, as soon as they have established themselves in it, some big international cartel will set up a branch factory here to put them out of business. It was the recognition that that danger was so real 25 years ago that produced the existing Control of Manufactures Act. That danger has not yet passed and unless we are prepared to wipe out altogether the possibility of industrial development by Irish enterprise then we have to make some law which will give us the right to say to a firm that is embarking on such an undertaking that if they do so and make a success of it we will ensure they will not be subjected to that type of competition in the internal market. We know that has happened in other countries. Why do we think it could not happen here? We, therefore, have to keep on our Statute Book some law which will ensure that in relation to operations of that kind the Minister for Industry and Commerce can have a look at what is proposed and give it his approval or disapproval in accordance with his judgment. What are we doing here? We are saying: "We are going to keep that power of regulation in relation to industry, but we are going to strip ourselves of it in certain cases." We will strip ourselves of it in the case of industry which is not concerned with the home market and obviously there is no need for us to retain power of regulation in relation to an undertaking of that kind. That is paragraph (a). If a new industry is not concerned with the home market, it can go ahead and has no need of a licence and does not have to go near the Department of Industry and Commerce.
It is only when it is concerned with the home market that we have to think in terms of safeguarding Irish enterprise and possible future undertakings promoted by Irish enterprise. Even in relation to them, we say: "Provided you give Irish investors a reasonable opportunity of investing in your concern you are still free to go ahead without authorisation or permit." We have also this power of exempting certain commodities the manufacture of which is not being done here at the moment. I am not very confident that that power can be widely used, but it is there. The rest of this Bill is merely getting rid of difficulties of which we have had experience under the Control of Manufactures Act.
We realise now that it was not necessary to have kept control over manufacturing operations that did not use mechanical power, manufacturing operations carried on by private individuals or limited partnerships. It was a bit preposterous that a foreigner coming in here, as some refugees did, and setting up watch-repairing in a back room, had to get a licence from the Department to do so. We are stripping away all these unnecessary regulations and confining this legislation to the type of manufacturing concern which we all have in mind when we talk of a manufacturing business—the factory run by a company of a reasonable size, using mechanical power and producing goods in bulk for sale. We are confining it to those.
One other thing we are doing is this. We are dealing with the particular position of existing or future Irish companies which are established in accordance with the provisions of the Control of Manufactures Act, which have initially got the two-thirds capital subscribed here but which at a later stage want to issue those shares, or have already issued shares, to the public and wish to allow those shares to be dealt with freely in the market without keeping this continual watch which they must exercise now, upon the transfer of those shares to make sure they are not getting into a position where they are in breach of the provisions of the Act. It is also to meet the other problem of the existing Irish concerns which have the intention of extending their business into export and where to permit that they wish to bring in as shareholders in their concern certain external interests which can help them in their plans. That is what we have been trying to do.
Let it be quite clear that we are not trying to strip away all the regulations that we used in the past. Some of those regulations which were necessary in the past are just as necessary now. We are retaining those which will help industrial expansion and not impede it.
If the Minister believed half of what he says, he should not have introduced this Bill at all. If Irish enterprise and Irish capacity for investment is as much to our hands as he says what is the good of having this couple of exclusion clauses. I thought the whole idea was that we were not having enough capital here to satisfy our needs. That is always letting the Minister away with the £100,000,000 he has in the heel of his boots and which he announced as his plan years ago. Let me keep that for another occasion and discuss it at another time. If people are losing their heads and getting a wrong idea about the necessity to attract foreign capital here, who is responsible? It is the Minister.
I have one lecture of his here. I suppose that at the half a dozen dinners he has attended since last autumn he has been preaching eternally on the question of foreign investment. Here is one occasion, where he spoke at the meeting of the Wexford Chamber of Commerce. The headline given to it in the Irish Independent of the 28th January of this year was: “Is Internal Capital not Sufficient?” The content is given here. He said that:
"...capital within the country was not nearly sufficient to give the rate of investment in industrial expansion for which the economic position called".
That was quoted from the speech of the Minister for Industry and Commerce at the dinner of the Wexford Chamber of Commerce.
It was regarded as so important that this yellow sheet which the Department of External Affairs produces gave it a special number. It said:—
"Campaign to Attract U.S. Investment.
A publicity campaign to attract investment of U.S. capital in Ireland has been begun, Mr. Seán Lemass, Tánaiste (Deputy Premier) and Minister for Industry and Commerce, announced recently. It will be directed particularly to attracting participation of U.S. investors in new industries or in those with export possibilities. The campagn will publicise the advantages and facilities which Ireland has to offer, and may be extended to other countries later."
The Minister for Defence, speaking at the Irish Auctioneers' and Estate Agents' Association meeting at the Gresham Hotel, reported on the 15th November last, made another comment. I am sure what he knows about economics could be written on the back of a big postage stamp; he said:—
"If the home supply of capital is not adequate for the needs of an expanding economy, it is surely desirable to open the door to outsiders who are prepared to risk investment here."
He continued:—
"It is obviously much better to do everything possible to attract foreign capital to aid us in our effort to provide full employment here, than to be forced to acquiesce in the flow of emigrants leaving for want of work at home."
That is exactly what Deputy Booth has put. What is the great danger in bringing in foreign capital? If we are told the capital we have at home, the internal capital, is not sufficient, why should we not look for foreign capital? If one has to balance a risk with regard to capital entering into the country, as against the continued flow of people out of the country, I suppose the human exports we have are the next biggest thing to cattle exports over the years.
Recently, during the St. Patrick's Day festivities, the Minister for Education went off to some place in England—I forget where—and he made a pathetic plea over there, to our folk, people of Irish birth, people born here and who had gone off to England. He told them that they had certain obligations towards the country—I think he said "the country of domicile" but he obviously meant "the country of choice"—and he asked them would they not send back some of their savings for investment here. He asks our exiles, he makes this pathetic appeal to them, to pack up some of their savings and send them over here. The poor man obviously does not know what happens to such savings as they may have over here—in the ordinary way, the Central Bank would get hold of them and the greater part would be financed back to the British banks for their investment at whatever they think good possibilities, and they will take our capital if they can get it.
The Minister says, with regard to the phrase "the assets used in the business"—let me get that off as a small matter—one has to get a phrase like this because of the purported use of business which is not owned by the company. In so far as that has been so already—he is speaking from his experience, the phrases appear to come from past experience of his under the 1932 and 1934 Acts—one of the devices, and there have been many devices in order to cut through the Act, was in regard to hiring equipment instead of owning it. That will go on still. This phrase with regard to capital being used or fixed assets being under a set figure, applies only in respect to the section. As far as the other two devices are concerned—whatever they are, making a change as between ownership and the use of assets—they are still possible and will still go on.
Deputy Russell has spoken of that also. The Minister is getting a new education over in Paris these days, with regard to free Europe. As Deputy Russell said, the Minister realises there has been a big change. It is a change which other people saw ahead of him and which is now recognised widely all over the world.
Is freeing Europe anything more than a complete retreat from economic nationalism? Economic nationalism has been found to be a thing that has obstructed efforts to raise the standard of people generally in Western Europe and now they are trying to get the benefit of this common market. The Minister, a great tariff reformer, says we must prepare for free trade and for the free trade era. I understood that one of the many technical matters that had been discussed at these conferences in Paris were the various devices with regard to restricting the use of capital and the restriction of investment. If there is to be freedom with regard to the movement of moneys there must always be one objection to the Free Trade Area. That, however, is a good bit off. All the results of our activities since 1932 with regard to high tariff walls and developing our industrial activities are about to end. All that is now in such a state that as one of the undeveloped countries it will take us 15 or 20 years to get out of our position. Our industries cannot stand the strain and we are still trying to hang on to the outmoded devices of the 1932 and 1934 Acts.
Deputy Russell has talked about the difference in eras. All the reading that I have done on the subject has indicated that there is a general alteration in periods as between those in which a country is saturated with capital with no outlay for investment and other periods in which there are capital starved eras. We are in such an era at the moment. We want capital in this country particularly, and all undeveloped countries want it. We probably want it more than anybody else. In these circumstances we are presented with a piece of legislation for the purpose of attracting American investment. If the Minister is right in what he says we should not need this at all.
I dealt with the question of branch factories on the Second Reading. I gave statements of Professor Carter of Queen's University which appeared in Studies. He referred to the old fears, fears that never had been realised, in regard to the closing down of branch factories, during a slump, by the parent factory, because they did not feel they were based on any real foundation of economic thought, and certainly not on experience. I do not know that we have any experience of that here. Certainly there has been no observable swing in that regard.
With regard to Sections 3 and 4, I asked myself again what is the purpose of this Bill. I understood it was the same as in America, that we are trying to attract business here, trying to get new business open here and for that purpose we are saying to American investors and to others: "You can come in here and you need not go crawling to any Department. There are no controls and you are free to operate as you do in America." I asked myself if this piece of legislation, and the Minister's Second Reading speech, were both sent off in a packet to, say, the legal adviser of any American business firm, if that legal adviser were asked to go through the Bill and the Minister's speech and were asked did they represent control or the removal of control, what would be the answer? There are only two parts of this Bill, about one and a half pages, that have anything to do with liberalisation; the rest is screwing down the controls.
The free business man in America who is accustomed to dealing with industries is not going to have anything to do with this. He will not go to Government Departments and get licences, exemptions or this, that or the other thing. He wants to know can he come in and enjoy the full rights of free competition with export market possibilities open to him. I do not believe that anybody in America getting this piece of legislation will find any proof that it represents any big effort in the way of freeing controls of the old type.
Look at the fatuous and futile thing that has happened. It was introduced as the Control of Manufactures Bill. Now we have changed the title to the Industrial Development (Encouragement of External Investment) Bill. I cannot see where the encouragement is. What sections deal with encouragement? I do not think that we make enough use of the savings for capital investment, but even if they were used to the full I see no immediate prospect of having such a situation where they will help the 80,000 unemployed and the 50,000 people who emigrated in the last year. These are very serious problems and to produce this Bill now is certainly fiddling while the State is on fire.
If we, in this country, have to seek in the negotiations in Paris some extra time in which to develop our economy before we can meet the impact of the Free Trade Area, we can count these as disastrous years. When Deputy McGilligan was Minister for Industry and Commerce that is the time we lost. It is significant that nobody ever suggested putting him back in that Department.
The Minister does not know.
It is all very well for Deputy McGilligan to enjoy himself, being mischievous at the expense of this country. The purpose of his effort is to ensure that the attempt we are making to develop industries and attract external capital into industry will not succeed. He can shed crocodile tears about emigration and unemployment, but what he is trying to do is to make sure the Government will not succeed in its efforts to solve these grave social problems.
I believe this Bill will be effective in what it sets out to achieve. What does it hope to achieve? Its object is to attract external capital into new industries, and into industries with export possibilities, and in that way to put more people into employment. It is not to put existing factories out of business but to ensure that the capital which can be attracted will be channelled into the activities which we want to promote. Apart from being mischievous, I think it is just nonsense to talk about American firms crawling to Government Departments. In practice, no American firm would think of engaging in an industrial enterprise without coming to the Department of Industry and Commerce to acquire all the information it thought it needed regarding legal requirements, taxation arrangements, local administration practices and matters of that kind. Indeed, I have never known in any country any important industrial enterprise financed by external capital being started without contact being made with the Government Departments of that country. We have here, perhaps, a greater need than some other countries to secure external aid in our industrial development programme because, as I have said, we have not merely an insufficiency of locally generated capital to give us the rate of progress we require, but we have also got certain deficiencies in technical knowledge and access to external market contacts which can be made good most speedily by association with external companies.
The purpose of this legislation is to proclaim what our policy is in that regard, that our policy is to invite and welcome external capital into Irish industry where it is bringing something new to Irish industry, where it is giving us types of manufacture which we were not able to develop heretofore, or the possibility of increased export trade in any class of industrial production. The purpose of the legislation is to make it quite clear that in so far as capital comes in from other countries with those aims we will be prepared, not merely to give it a welcome but to provide all the facilities which it might reasonably expect to obtain.
It is, however, necessary to keep in mind that there are two sides to this problem. There is first the side of new development for export, and the production of commodities that we have not yet been able to get produced by Irish industry. The other side is to help to foster and encourage the development of existing Irish enterprises, which offers the most immediate prospects of general industrial expansion. If we are to succeed in that second aim, fostering development of existing Irish enterprises, then we have to retain some system that will enable us to give them an assurance that their growth will not be wrecked by an intensification of competition on the home market sponsored by external firms.
My purpose in framing this Bill was to give us the minimum measure of control which would enable us to preserve these safeguards. Behind this Bill, and all the other Bills which the Government has produced, is the one aim of expanding the number of jobs available in the country so that these two social problems, unemployment and emigration, can be relieved in our time.
The only interpretation I could take out of Deputy McGilligan's contribution was that he would not be anxious to give any protection to the Irish industrialists who had already invested money in this country and who had started factories in it over a generation back. He would allow foreign capital to come in ad lib to compete where we have already enough production to supply the home market. Deputy McGilligan's line was apparently to allow any foreign capital that comes in to compete against people already established here and give those people, who have already put money into the country, no protection at all. I do not see any sense at all in the learned Deputy's contribution this morning. If we are to take him literally, what he has stated is that the Minister for Industry and Commerce is to say to any foreign capitalist who comes in: “We have enough production in certain lines for the home market but, if you do wish to come in and compete with the Irish industrialists who are here already, put them out of business by all means if you can under-sell them.” That is really what the learned Deputy conveyed to me. I am sorry I have to interpret him in such a way because that is the only way he could be interpreted.
I see nothing at all wrong with the Bill, I think it is a protection to foreign investors coming in here. The Minister for Industry and Commerce can tell any foreign capitalist who is going to come into the country: "The home market is supplied with a certain product. If you come in and wish to get a very limited corner of the home market, and if your firm is able to produce and sell for the foreign market, that is what we want." If our economy is to survive that is what we require.
I do not see anything in the Bill which would deter anybody from coming in. It is an encouragement to foreigners. It is an honest-to-God effort to point out the situation as it stands so that they will not be coming in under false pretences. On the other hand, we have a duty to the people who have money already invested in the country. We are honestly trying to get into the export market and to invite foreign capital into the country but we want to invite it in under decent conditions—to give foreign capital an opportunity of doing the things we want done here by creating employment for our people.
I was pleased that the Minister for Industry and Commerce referred to our branch factories. The only factories in my constituency that are really standing up are the old-established factories which have a tradition behind them, and which did reasonably well, even during the recession in trade during the last few years. There is one question I should like the Minister to answer. I am told, I have no reason myself to make this statement, that certain branch factories are established here specifically to supply the home market.
If branch factories are established here for that sole purpose, their functions are limited considerably. They cannot go into the export market, if their parent companies in outside countries say they will supply the export trade and the branch factories must only supply the home market here in Ireland. We had a lot of unemployment in certain branch factories. Though we were very pleased to see such firms coming in, taking the long-term view, they are not such a great help to the nation. We want manufactures who will come in and say the whole world market is their aim and they are not going to be tied. If they can under-sell their product against competition in the world markets, that is what we want. Unless we get people of that type coming in here we shall not achieve what we set out to achieve.
I compliment the Minister for Industry and Commerce on that section because it will save our Irish investors and foreign capitalists who may be anxious to start factories here. It will do the reasonable things that we require should be done. Surely the ex-Minister for Industry and Commerce knows very well that certain statements he made in his contribution to the debate are not true. He must know very well that if he made these statements outside the House, in any of the areas where there are factories, and if he told Irish industrialists: "I have no regard for you at all; all I am anxious for is to bring in foreign capital and if such capitalists are able to put you out of business more power to them", it would not go down very well. That is the interpretation I took of his speech here this morning.
To me, it seems a matter of degree. The Minister impressed me with his desire to encourage outside capital to come in. How much encouragement are we to give to outside capital, having regard to the necessity of maintaining the position of industry which has grown up here over the past 25 years? If I felt as strongly on the matter as the Minister did when he spoke a few minutes ago, I would not have Sections 3 or 5 as they are in this Bill. Indeed, it is very doubtful if I would have brought the Bill to the House in its present form. It seems to me to be too easy to evade the Minister's purpose in Sections 3 and 5. If we are to have absolute regard to the position of Irish industrialists, those two sections, to my mind, would have to be radically changed. It is not sufficient to put in the Bill that the sole purpose of a company is to export and leave it at that. By doing that you create loopholes.
It is far better to say openly that we want outside companies to come in to establish plants and engage mainly in export. I think we have exaggerated the importance of the home market to any substantial outside firm coming in. We have overlooked the fact that over the past 25 years most of our Irish firms have had an opportunity to bring their factories and plants to a high degree of competence. I think the Minister himself paid a tribute to the efficiency of Irish manufacturing units on many occasions. The fact that some of these units are at the moment engaged in export is sufficient proof that they are not sitting to be knocked down like shuttlecocks, if we open the doors to outside firms. I do not think that situation will arise.
If this is a Bill to attract outside capital we should make it as attractive as we possibly can, and give concessions to these larger outside corporations, and, at the same time, not tie them down, as the Minister has, with 10 per cent. of the home market and 90 per cent. of the export market. It would be far better to leave the thing open. I do not think it will endanger the Irish manufacturer who has become solidly implanted in this country. He is sufficiently efficient to carry on and certainly to maintain his place in the home market.
Several references were made to branch factories. I know it is quite on the cards at the present time that it might be very attractive for outside concerns to establish branch factories in this country to export back to the country of origin. That is very much on the mat at the present time, due to the conditions in England and the difficulties there. Having regard to the shortage of capital and labour there, it would be very attractive to establish a branch factory here which would export back to England. We should not overlook that. I see a danger that that might be a passing phase. The Irish company might be closed down. In the interest of employment, we should take cognisance of that development.
If we had adequate capital, if we had adequate industrial tradition and if we had adequate technical skill, we would not need to bring in a Bill of this sort. The Minister and his predecessors have admitted that it is because we lack the technical skill and capital after 25 or 30 years of protection that this Bill is being brought in to encourage outside capital to come in, primarily for the purpose of establishing plants to engage mainly or solely in the export market.
The only point I am trying to argue on this Bill is that if we want it that way, we ought at least to make it as attractive as we can. I can appreciate the Minister's point with regard to the undesirability of doing anything to injure Irish manufacturers, but if we want all these things from outside, we have got to make the Bill attractive. I do not think that would injure the home manufacturer whose degree of protection over the past 25 years has made him, in the main, a competent and efficient unit in this country. Perhaps, that does not apply to all of them.
Deputy Burke, after his foolish interruption, left without waiting for any reply. I used no phrase in this House which can be interpreted as meaning that I want Irish industrialists put out of business. I used a phrase with regard to people coming in. I feel that the Control of Manufactures Acts of 1932 and 1934 would have prevented a vast amount of capital coming into this country by devious ways. It will continue to come in by ways which are perfectly legal, but that was not the intention of these Acts. The piece of legislation before the House contains 13 pages or leaving out the Title, 12 pages. A page would contain all the liberal concessions in the whole Bill. The rest screws down the community and ties them up. What I called crawling to the Department was the case of people who have to look for licences and certificates. Apart altogether from what will happen in the near future with regard to free Europe, we will be able to see the results of 25 years of protection.
At the moment, we are faced with two things. Internal capital is insufficient for our needs, either for export or for the establishment of new industries. That is generally accepted. We are still waiting for the production of the £100,000,000 which the Minister promulgated as his plan a couple of years ago and has never talked about it since. The second thing is a terrific combination of unemployment and emigration.
Deputy Briscoe went off to America recently. The Minister went down to see him off and complimented him on being an unofficial emissary of this country. Deputy Briscoe's first statement in New York was that unemployment here was very severe. It ran at 12 per cent. of our labour force. He added that emigration was at a peak point and gave the surprising statistic that were it not for emigration, unemployment would be equal to 50 per cent. of our labour force. That force must be the 700,000 people mentioned recently in a question as being employees, people working on the roads and so on, but not proprietors. That is about 700,000 people. The 12 per cent. measures up to 84,000 people. That was an outrageous figure for him to promulgate—that if there was no emigration, our unemployment would reach a figure of 350,000. That is trying to get people into this country by false pretences. It is saying to American industrialists that there are people in this country hungry for employment and that they can come into this country and get people to work for them for any price they themselves like. That means obedient labour.
If that is the sort of development we are encouraging here, if we are trying to get people in here on the grounds that there is no way in which we can provide employment for our own people, then it is not the sort of development that is wanted here. We have not yet used the phrase "coolie labour", but that phrase was used on a memorable occasion in Great Britain.
However, if we leave out these fantastic figures of Deputy Briscoe's altogether, we find that the situation here is still very serious and, being serious, the internal capital is not sufficient. Yet we offer as an inducement one page out of 12 pages of legislation, the remainder being a screwing down of controls.
Question put and agreed to.
SECTION 5.
I move amendment No. 22:—
In page 5, line 28, to delete "satisfied" and substitute "of opinion".
I have noticed that in the first sub-section of the Bill the Minister has to be satisfied and, in the next section, the Minister has to be of the opinion. I want to know what is the difference, if their is a difference. In the first Offences Against the State Act, it was held by one judge, and it did not go any further, and no further opinion was taken on it, because the appeal did not lie, that the use of the word "satisfied" meant that the Minister had to act judicially. He has to hear evidence and act as a result of that evidence. To say that the Minister is of opinion means that he could only conclude. The word "satisfied" was used in the first offences Against the state Act and it was held that the Minister was administering justice and that that was wrong. The Government of the day changed "satisfied" to "is of opinion" and that changed was held to be lawful. I do not knows why the word "satisfied" is used in sub-section (1) and the phrase "is of opinion" used in sub-section (2). If there is any reason for the use of the word "satisfied" instead of "is opinion" I should like to knows what it is.
There is a difference between the two expressions and there is a difference between the two subsections. One section deals with the issue of certificates of exemption to externally-owened companies and the other, sub-section (2), deals with the granting of certificates of exemption to existing Irish-owned companies whose shares have been quoted on a stock exchanged for a period of five years. It is quite clear that there is a difference between the two expressions. The company covered by sub-section(1) is a new, externally-owened company proposing to engage in some manufacturing process here. If its export expectations do not materialies, the products of that company can be, and will be, sold on the hame market.
In the other case, there is an established Irish company seeking access to new capital to develop exports, and if that export expectation is not realised, the consequences to other Irish concerns are not likely to be so severe. It is desirable that the Minister be satisfied of the bona fide intentions of the first type of company to engage in export trade.
Sub-section (1) is in respect of any Irish company which is managed and controlled within the State and carries on a particular manufacturing process. That is an existing company carrying on a manufacturing process. It is a company whose shares have been quoted on the Stock Exchange for a period of five years and it proposes to carry on and develop an export trade. Sub-section (2) deals with a new Irish company which seeks capital also for the purpose of carrying on an export trade. Both of these result in the same thing. But in one case the Minister has to be satisfied about an existing company, while in the other case he "is of the opinion". In sub-section (2), the Minister "is of the opinion" that a company is completely exempt from the Act and in this instance the Minister uses the lighter phrase. I think it would be better if "satisfied" or "is of opinion" were used throughout. This is the kind of thing in which courts ask why one phrase is used in one sub-section and another phrase used in the next. Being "satisfied" would mean a heavier type of decision. If it is thought better to use the phrase "is of opinion", I think that phrase should be used in all cases.
I think it is desirable to use the stronger phrase in sub-section (1) and say that the Minister has "to be satisfied that a main object of the company is to engage in the export trade."
Then, would it not be better to have the word "satisfied" in all cases?
In Section 2, it is a decision on fact and in the other case, it is a decision on the intention.
"Satisfied" is the heavier word and I think that the lighter word should be used in all cases. If satisfaction is required in sub-section (1) of Section 5, a weightier phrase still would be required in sub-section (2), instead of a lighter one.
Will the Minister say if he would be satisfied with both?
There is a difference. I do not pretend to be an expert in legal interpretation but I am told there is a difference. In one case, the Minister has to satisfy himself that a company has the main object of developing exports. In the other case, there is an application from an existing company, already operating on a substantial scale here, with share quoted on the Stock Exchange, who say: "We desire this exemption because it will help us to develop exports." If the Minister is of opinion that it will help exports, he will give it.
In the first case, if the main object of the company is not as they stated— the Minister although satisfied it proves to be wrong—the effect upon existing Irish concerns could be serious because the company set up to do export business might intensify competition in the home market. In the other case, the existing concern already supplies the home market and if it fails in its export drive then that is its own affair. The point is that it is not doing damage to anybody else. There is the case. I am for using a stronger phrase in one case than in the other.
Would it not be equally good English to say that the Minister has to be "satisfied" or "or proposes to carry on"? I would agree in the opinion that you are carrying on. But this case ought to say "or proposes to carry on." To my mind, that brings in something stronger than the word "opinion".
It is hardly worth arguing it.
It is a statement of fact. However, because a person proposes to do a thing, it is not a statement of fact.
In respect of both, there can be an existing company. The only difference between sub-sections(1) and (2) of Section 5 is that, in one case, the company has to be in existence for five years.
It must have the main object of export.
Both companies may be carrying on business. In one place there is a reference to a company which is carrying on business and, in the second, there is the addition about a company which has been in operation for five years. That is the one difference with regard to the carrying on. The company referred to in sub-section (1) of Section 5 might be there for 20 years. Might it not? Therefore, there is no difference, really, on the point of the length of period they are operating here. If necessary, you could put in the five-year period in the other matter.
What is to be decided? The Minister is satisfied in regard to sub-section (1) that the main object is to develop export trade. In regard to the section, the Minister has to be of the opinion that the purpose of the company is to develop an export trade. You have to consider, then, the two things. The Minister is of opinion that the purpose of the company is to develop export trade whereas, up above in the other one, he has to be satisfied that the main object is to develop export trade. Is there any such difference as requires the use of the weightier term in one case and not in the other case?
If the purpose is export trade, one is satisfied that the main object is a main object. It may be one of many. We will get away from the principal object, which will lead to the other types of interpretation in respect of Section 3. However, here the difference is whether the purpose is to develop an export trade or whether a main object is to develop an export trade. There is to develop an export trade. There is not much in it.
Amendment, by leave, withdrawn.
I move amendment No. 23:—
In page 6, line 41, to delete "such times as the Minister may direct" and substitute "all reasonable times".
The term usually used in most of these cases where things are open to inspection is "all reasonable times". It has occurred from time to time and even recently on the Prices Bill, and so on. That is in connection with inpectors going in. This sub-paragraph (c) of paragraph (8) of Section 5 provides:—
"The register shall be kept at the office of the Minister in Dublin and shall be there open to inspection by any interested person, on payment of 1/- at such times as the Minister may direct."
Why not say "at all reasonable times"? It has been the standard phrase for years.
The intention is that the register will be available in the offices of the Department of Indutry and Commerce during the official hours.
That is "reasonable time".
There might be a question of what is "reasonable time".
Nobody would call it reasonable if one went to the offices after closing-time or at 12 o'clock at night.
Yes, or on a Bank Holiday.
That would not be a reasonable time.
Does the Deputy want an argument about it?
Everybody knows what "reasonable time inspection" means.
The register will be there for inspection at all hours while the Department of Industry and Commerce, Kildare Street, Dublin, is open.
The expression "as the Minister may direct" is also here. it seems to be giving rather a futile type of power to the Minister.
Amendment, by leave, withdrawn.
I move amendment No.24:—
In page 6, between lines 41 and 42, to insert the following:—
(9) A notice of each certtificate of exemption granted under this section containing the particulars set out in sub-section 8 (b) of this section shall be laid before each House of the Oireachtas as soon as may be after it has been granted.
I suggested this point in regard to another matter, which the Minister accepted. This is an important matter I suggest that the Dáil should be notified simply that the certificate of exemption has been granted. The register has to be retained. However, the attention of Dáil ought to be called to facts that the exemption has been granted. Then, if anybody wants to investigate further, he may do so. This is merely a notification to the Dáil that matter such as a certificate of exemption is being given.
I would not agree. I am prepared to meet circumstances in Section 2 where the Minister makes an Order in relation to the exception of commodities. Here, however, we are dealing with an individual firm. It could possibility lead to a debate in the Oireachtas on the affairs of an individual private firm. I do not think that that procedure, or the remote possibility that that might happen, could be regarded as conducive to encouraging external investment.
There is provision that the certificates will be entered on the register and that the register will be open to public inspection. That is adequate. That is continuing in this Bill the practice which has prevailed heretofore in respect of new manufactureing licence under the Control of Manufactures Act, 1934.
The Minister thinks a company would dislike notification? Yet the company will not object to a register with full particulars in the Department, which is open to inspection.
In one case it is giving notice to the Dáil. It would create in the minds of manufacturers abroad the idea of a political debate.
What is the idea, then, of having a register which anybody may inspect on paying 1/- and have it raised in the Dáil? What is the difference?
And give notice to the Dáil.
A mere notice.
I think it is precisely the type of thing that external firms would be frightened of.
Frightened of? Frightened of a statement made to the Dáil which eventually can be made to the Dáil somebody who may inspect the register and ask questions about it? The Minister thinks the company would be afraid in the one case and complacent in the other case. Is that so?
This proposed sub-section may imply the expectation that a certificate of exemption would be the subject of debate.
The fact that particulars are contained in the register, which is open to inspection, and that the matter may subsequently be opened in the Dáil——
It does not carry that implication.
The public will think that, on the one hand, things may be done in the dark. In any case, it is bone fide and above board. Why should the Minister be reluctant to say: “I have granted certificates of exemption in respect of certain things”? He should tell the Dáil that, as part of the parliamentary control over these matters.
Amendment No. 24, by leave, withdrawn.
Question proposed: "That Section 5 stand part of the Bill".
On Section 5—this gets back again to departmental control—there is a power given to the Minister and, under it, as far as paragraph (1) is concerned, if the Minister is satisfied that the main object of the company is to develop an export trade he may exempt it from the general provisions of the Act. Under the second sub-section, where in respect of an Irish company whose shares have been quoted for a period of not less than five years, the Minister again grants an exemption. That may be altered or revoked, but only on the application of the holder and there are various very lengthy provisions as to when the certificate of exemption will cease to be in force. The first is if the company ceases to carry on such manufacturing process, even though it may be a temporary cessor, it will have to go through the performance of coming along and getting a new certificate.
Ceases to carry on— not ceases to manufacture.
Ceases to carry on the manufacturing process. If the process is for the purpose of developing an export business and the export market ceases to be very rosy, then the manufacturer clearly has to show that the carrying-on of that process is no longer for the purpose of developing an export business and the certificate of exemption ceases. Subsequently, if prospects brighten, the certificate will have to be applied for again. The revocation and transfer are matters subject to the control of the holder; they are all right. Under (d), "if the certificate was granted subject to the condition that such company shall commence, before the expiration of a specified period, to carry on such manufacturing process and such company has failed to comply with such condition—on the expiration of such period" there, there is a limitation put upon the time on which the manufacturing process starts and not the time the exports develop.
It is laid on the Minister to establish and maintain a register, and so on, and the people who inspect will be in a position to know the name of the company to which the certificate relates, the commodity and the process authorised to be carried on. The amendment has been withdrawn. The Minister gives Parliament notification that he has granted these certificates. That is supposed to induce fear in the minds of the people looking for certificates because of their fear of an inspection, whereas if there is an inspection, followed by debate in the Dáil, there would be no such fear.
I object to the section because it does not liberalise. Again, there is control by the Minister for Industry and Commerce, and I object to that. It may be regarded as something in relief of the more rigid sections of the 1932 and 1934 Acts but, in so far as it is relief, it depends upon the individual view of a particular Minister. That, I think, is wrong. If all this were rolled into paragraphs (3) and (4), then a complying company would be automatically exempted. Similarly, under sub-section (2) there would be liberalisation. But, holding that section as it stands over any group of foreign industrialists and telling them that these are the conditions, is not liberalisation. One firm may be given a certificate and another may not. They will not like that. They will regard that as extended control, control extended in a bad way because it allows for differentiation as between firms.
Can the Deputy suggest a better way of dealing with it?
There was originally another Section 5 which has disappeared from this Bill. I suppose that is just another of the peculiar conditions under which this Bill has been dealt with. The old Section 5 has gone and there is no section upon which I can discuss its disappearance. That is, because of the particular procedure we have gone through. It was a section upon which the Minister founded some strength in his remarks to the Dáil on Second Reading. Yet, the simple statement I got merely says that it was decided not to proceed with the section. I would ask for permission to discuss the disappearance of that section now. I want to know why it has disappeared. It was a section putting the onus of proof in relation to certain matters on a company which claimed that it had complied with certain conditions and Deputy Norton raised the point that there have been no prosecutions under the earlier Acts.
The Minister said that this was a completely new situation because now the onus of proof is put upon the company where there are proceedings under Section 4. All that has now gone and the simple statement offered to me is that it is decided not to proceed with the section. It was thought that it gave more strength. There were likely to be more prosecutions. There was a possibility of a better effort to prevent evasions. But all that is simply taken out and we are told it is decided not to proceed with it. Why?
A change of opinion about its value.
The Minister will agree he emphasised on Second Reading that this was a good section and would give him more strength as a potential prosecutor. The, he suddenly drops it.
What exactly is meant by manage and control?
It means nothing.
It means that its head office must be established within the country and that the normal work of management and control is conducted in it. The meetings of directors must be held here, and the books and records must be maintained here.
In sub-section (1) does the phrase "the Minister is satisfied that a main object of such company... is to develop export trade" need clarification?
It does not need clarification. We discussed that in connection with Section 3. The Minister has to be satisfied, because here it is question of individual judgement, and he can give this exemption if he is satisfied. It does not require any clarification.
Is there any difference between main object and principal object?
That is far too subtle for me.
The Minister is the person who has introduced legislation with these two phrase in it.
Speaking as a layman, I would say there is no difference.
The Bill necessitates certain changes in the memorandum. There may be some conflict as to whether they have a main object or not?
In practice, sub-section (1) will apply only to new companies getting into business for the first time. They will come seeking a certificate of exemption and will be given it provided the Minister is satisfied that the main object of the company is to develop exports.
Does "main" mean 51 or over?
Even there I would not like to lay down a percentage. It would depend entirely on the position in regard to the particular classes of goods they were to manufacture.
There should be no question of any percentage or probability. Deputy Russell asked a question about the memorandum and articles of a company. That might have to be done if there was included in the object clauses the right to export.
But it must be a main object.
The Minister is not concerned with the memorandum and articles of association under this section.
He could not grant a certificate to a company which had not permission to export.
I see no reason why he could not. They would have to regulate that matter themselves. If they could not do it, he certainly could not be satisfied that that was their main object.
Section 5, sub-section (6), line 7 states:—
"... the Minister shall, if he is of opinion that such transfer will result int he maintenance or development of the export trade ..."
In that case I that you would be justified in using the word "satisfied." Surely there is as good an argument for suing it there as there was in the previous section? You have got to be sure the transfer will result in the maintenance or development of export trade.
That is purely a drafting point and I will have it looked into.
Question put and agreed to.
SECTION 6.
I move amendment No. 25:—
In page 6, line 47, after "consent" to insert "but this provision shall not authorise the Minister to add a condition to a new manufacture licence after it has been granted".
It has happened that new manufacture licences under the original Acts have been given with conditions attached that certain processes named in the licences would not be begun without the consent of the Minister. There is some doubt about the legality of that provision in the licences and the purpose of this section is to remove that doubt. I want to make it quite clear, however, that no power is being taken to add a condition to new manufacture licences already granted.
Amendment agreed to.
I move amendment No. 26:—
In page 6, to delete lines 48 and 49.
Possibly, what the Minister has just said makes the point I was at here. As the section stood, the Minister could grant licences subject to conditions.
Some licences had been granted with that condition attached. It is only now that there is doubt about the legality of that limitation.
It looks as if there is no authority to add a condition to a manufacture licence if it had been granted. There are licences in existence since 1932 on which no such condition can be imposed?
It cannot be imposed retrospectively.
Supposing a person has a new manufacture licence dating from 1932. Can the Minister now come along and impose a condition on that?
No.
Very good.
Amendment, by leave, withdrawn.
Question proposed: "That Section 6, as amended, stand part of the Bill."
Is it possible to simplify the terms used there? I find some difficulty in understanding exactly what the section means. What does it man in effect?
Having got the licence, he will set up his company and start manufacturing a range of goods. He does not extend into other ranges of goods without seeking the authority of the Minister.
He must come back?
Yes.
Do you think that is necessary or desireable?
It was necessary in a few cases in the past and was accepted by the companies concerned.
I am just looking at it from the point of view of encouraging outside capital.
In the cases that arose there was no argument about it.
There was another section to this legislation, Section 8, which has disappeared completely. It was simply wiped out. I wonder why? I am told int his this that offences under the Bill were related to sub-section (10) of the Act of 1932 and that the deletion of this section was consequent on amendment No. 1. That is not very illuminating. I am in the difficulty of trying to discuss a section that is not there. I am trying to discuss the withdrawal of it. It was allowed previously. I merely want to get an explanation of it. The matter was galloped through the House on another occasion.
The answer is that there are no offences in the Bill now.
We have incorporated sub-section (5) of Section 9 of the 1934 Act. We have reinstated Section 9 as far as the Preamble and sub-section (5) are concerned.
But Section 9 has been changed around. Section 9 of the original Act said "it shall not be lawful for the company to do things except ..." and then there was a penalty clause. We have now altered the Bill so that Section 4 set out "it shall not be lawful for the company to do certain things" and there is no penalty clause. The penalty clause in the 1934 Act, referred to in the original section, is not in this Bill.
I thought the Minister said there are no offences under this Bill. There are.
There are no offences under Section 4.
Question put and agreed to.
SECTION 7.
I move amendment No. 27:—
In page 6, to delete line 50 to 57, inclusive, and in page 7 to delete lines 1 to 57, inclusive.
This is amending Section 14 of the 1934 Act. Why is the amendment required? Section 14 of the 1934 Act runs over many pages. It is proposed to insert a new sub-section in the seven pages. I thought the seven pages would have been sufficient. What is the purpose of this addition?
One of the reasons for this provision in the Bill is to examine companies that are not using assets in the business of more than £5,000 in value. There is no power to acquire the information which would enable us to check exactly the position in any particular company and this sub-section is intended to enable that inquiry to be made. That is the sole purpose. Without this sub-section, the Minister just could not make the inquiry which would enable him to fulfil his duty in that regard.
This is certainly going to be very difficult legislation by reference. You dig in quite a number of matter into a section running over six or seven pages.
I do not think so.
We are, in fact, keeping Section 14 of the 1934 Act and adding this to it.
Yes.
Section 14 runs to an enormous number of pages about all that may be demanded—seven pages.
It is not the quantity; it is the quality that matters.
The quality is a bit suspect too. However, if you want another page and a half to be added to it, well and good, this being a measure to attract foreign investment.
I do not suppose there will be much foreign investment in these £5,000 companies.
Amendment, by leave, withdrawn.
I move amendment No. 28:—
In page 7, lines 33 and 34, to substitute "Industrial Development (Encouragement of External Investment) Act" for "Control of Manufactures Act".
This is a consequential amendment.
As I read this, it is an amendment to a certain part of paragraph (v). Does it mean, "exempted from the operation of Section 9 of this Act, as amended by Section 4 of this Act"? Is that what it means?
"The amount of any loans——"
Are exempted from the operation of Section 9 of this Act?
Of this Act.
That is the one we are dealing with?
That is the 1934 Act. This is an amendment of the 1934 Act.
So that this Act refers back to the 1934 Act?
Yes.
As amended——
By this Act.
By Section 4 of this Act?
Yes.
WHy not say so?
That is what it says.
You say "the Control of Manufactures Act", as if it were something remote from you.
This section must be read as if it were part and parcel of the section of the 1934 Act and, therefore, it must refer, I think, to this particular Bill, when it becomes an Act, by name.
In any event, what we are now faced with is that amongst the matters that may be required is the amount of any loans, for the time being unpaid, made to it by Irish citizens, or bodies corporate which at the date of the return are exempted from the operation of Section 9 of this Act, as amended by Section 4 of the COntrol of Manufactures Act, 1958, by virtue of paragraph (d), (e) or (f) of sub-section (1) of the said Section 4. Is there no simpler way of getting that expressed other than all this reference back and forward to two Acts?
I would have thought so but apparently not.
May I query "the Control of Manufactures Act" which is now to be amended to the "Industrial Development (Encouragment of External Investment) Act"? That is the new title of this piece of legislation. I want to query that title. When our savings go abroad they are generally referred to as the pile-up of external assets and when we invest in companies outside the State it is generally referred to as external holdings of ours. That would be regarded as external investment from our angle. This is to encourage external investment, that is, looking at it from the point of view of the investor, not from the point of view of this country. I would have thought the Minister would have said "Encouragement of Export" or "Encouragement of Export possibilities" or something like that but, when you use the phrase "External Investment", anybody reading that from an Irish point of view would begin to think in terms of our investing abroad whereas what is really referred to is other people investing here but how that is called "External Investment" beats me.
I recognise that if you take, say, your stand in New York and think of an American company going to invest over here, it is external investment from the point of view of the American but in an Irish Act, when we view things from an Irish centre, I suggest the phrase is badly used. "Encouragement of External Investment" to anybody here means encouraging our people to invest abroad whereas this has clearly another meaning.
Would you not put the word "Export" in brackets?
Or "Encouragement of Export". The trouble about that is that so much of the Bill has nothing to do with export or, indeed, with external investment. Is there any explanation of that phrase "Encouragement of External Investment" that we are putting in this section? It is only in because there is a change of title.
If the Deputy can produce a better title, we can change it again.
Deputy Russell has suggested "Encouragement of Export Act".
That has a different purpose altogether and would be most inappropriate.
Or "Industrial Development (export) Act". Does not the Minister agree that, to anybody here, viewing from our angle, an external investment is investment made by us abraod?
No.
"External investment" means something else than that?
This is Industrial Development External Investment.
Whose investment and to whom is it external? Not to the Irish people.
The opposite of external is internal. If you made it "Encouragement of Internal Investment", it would have a different meaning altogether.
It is encouragement of internal investment by externs.
We could say that but I think it would be the most unwieldy title.
The United States will think it is going to encourage Irish investors to invest abroad.
That would be very interesting.
Amendment agreed to.
I move amendment No. 29:—
In page 7, to delete all words and figures from and including "in", in line 46, down to and including "(ii)" in line 52.
The section standing, the verification that may be required is to be verified in such one or both of the following ways (as may be specified in the notice), (i) by a statutory declaration made by a person having personal knowledge of the fact, (ii) by a certificate signed by such a person having personal knowledge of the facts. Why insist on a statutory declaration? These are notices that are to be sent in. One does not look so much at the status of the person who verifies the particulars as to the fact that there is a verification. If the verification is wrong, the whole matter would be as much open to objection as if it is verified by the statutory declaration. I suggest that we should take only one of these things. It would be enough to have verification of the return by a certificate of a person having personal knowledge of the facts. It ties the individual.
I think it is better to have means of getting an independent verification of the statements made in the return by the company. I see no advantage in the amendment.
How is independent verification got?
By the statutory declaration.
A statutory declaration is made by a person having personal knowledge of the facts. It is the same person who will sign the certificate. There is no question of independence. Maybe the Minister thinks that when an individual goes to make a statutory declaration the individual before whom it is made investigation the matter. That is not so.
The certificate will be signed by the auditor or the valuer. The statutory declaration will be made by the person representing the company.
Both have to be made by a person having personal knowledge of the facts. In one case it is a certificate. In the other it is a statutory declaration. Why insist on a statutory declaration?
It is not an unusual practice when the manager of a firm makes a statutory declaration regarding certain aspects of the business to require certification by the auditors.
People might do that but you do not impose that on them.
We do not.
The person who has to verify is somebody having a personal knowledge of the facts. The only difference between the two bits is that on the one hand he certifies and signs a certificate, and on the other he makes a statutory declaration. There is no question of any other person coming in on the matter. It is somebody having a personal knowledge who makes the declaration.
The intention is to give power in certain cases where it is not necessary to require a declaration which would in the first instance be supported by the auditors' certificate—
That is not here.
That is what is provided for.
It is not provided here.
I think it is.
There is nothing here about an auditor's certificate unless it is thought that every statutory declaration has to be verified by an auditor, which I think any business man will tell you is not so.
No, but it can be.
All that the notice may require is that the return is to be verified in either one both of the following ways and in each case it is the person who has a personal knowledge who verifies in one case by certificate and in the other by statutory declaration. There is no question of verification by an auditor. If you want that it should be stated.
Amendment, by leave, withdrawn.
Amendment No. 30 not moved.
Section 7, as amended, agreed to.
Section 8 agreed to.
SECTION 9.
Question proposed: "That Section 9 stand part of the Bill."
This was newly introduced. I know the general purpose is to allow an application to the court but in what respect is it sought to case the situation? I am told there is a restriction in Section 9, but that it is only in the latter part of it that the proceedings may not be taken so long as there is an application made. What is the purpose of this?
The purpose is, if there is any question about the status of the company, the company can, if it chooses to use this procedure, obtain absolute security by itself by going to court, submitting there evidence of its constitution and getting it established that it is carrying on manufacturing operations in conformance with the Act. It is to give the company, particularly a company thinking of raising new capital or extending is operations, the ability to get its status— assuming that status is questioned by anybody—put beyond doubt. It provides that while it is doing so it cannot be subjected to any prosecution by the Minister for any default under the Act. I expect the normal practice that will arise, if there is any doubt about the status of a company is, that the Minister will convey that doubt and naturally examine the situation to see if there is need for further action by him, perhaps leading to a prosecution. Once that atmosphere of doubt begins to surround a company the company can resolve it completely and absolutely by this procedure.
Yes, but does this operate only where, so to speak, proceedings have been more or less institured against the company?
No, the need for the company seeking this declaration of the High Court might arise perhaps from an inquiry from the Department of Industry and Commerce, but it could also arise from some query from a banker or somebody the company was trying to borrow money from or do business with. If any doubt arose regarding the legality of its manufacturing operations it can take this means to resolve that doubt.
But it all turns on the phrase, "in respect of an alleged contravention". That is in line 20. Proceedings will be in respect of that. But it is contemplated that the company will, so to speak, in some way sense there is to be an allegation against it and then runs to court——
Or, alternatively, it may be entering into business with somebody else, who may say: "Look here, we have some doubt about whether you are lawfully carrying on this manufacturing having regard to this Act." If the company then takes the procedure provided, the Minister cannot prosecute.
I understand the latter part of it, but I wondered under what circumstances a company would be driven to go to court. There was an old Section 11 which was taken out What was it about? Or rather, why was it taken out?
I think it is consequential upon the change in Section 4—the fact that there is no offence under Section 4.
That is what I cannot understand. There is no offence under Section 4?
There is no offence under Section 4.
In Section 4 we still retain the reference to Section 9, sub-section (5) of the 1934 Act?
Yes.
Very well. That is the one which talks of offences and breaches and penalities?
That is still there. It is the 1934 Act.
And it is carried in as part of Section 4?
That is right.
Therefore, by reference, there are certain offences under Section 4?
But you do not need to make provision in this Bill for the prosecution of offences.
Because Section 9, sub-section (5) is there?
Yes.
That is not so stated.
Question put and agreed to.
SECTION 10.
Question proposed: "That Section 10 stand part of the Bill."
Under this section "neither the Act of 1932 nor the Act of 1934 nor this Act shall apply to the process of milling wheat or the adapting for sale at a mill of any product of wheat ..." As the Minister knows, it is a common practice nowadays for a mill and bakery to be linked together—would that be covered?
The reason why all these processes are excluded from these Acts is that there are special Acts of the Dáil which deal with them.
Question put and agreed to.
Section 11 to 13, inclusive, agreed to.
FIRST SCHEDULE.
I move amendment No. 31:—
In page 9, line 28, after "if" to insert "it then complies with both the following conditions".
This is a drafting amendment and it makes no change at all.
What is the necessity for it?
To improve the drafting.
As it states a company shall be a qualified holding as (A) and (B), surely that applies both conditions to it?
It is purely drafting. It is a better form of wording but it makes no difference.
(A) and (B) apply on the one hand and the two conditions apply on the other hand.
Progress reported; Committee to sit again.