Committee on Finance. - Undeveloped Areas (Amendment) Bill, 1959—Second Stage. – Dáil Éireann (16th Dáil) – Tuesday, 7 Jul 1959

Committee on Finance. - Undeveloped Areas (Amendment) Bill, 1959—Second Stage.

Minister for Industry and Commerce (Mr. J. Lynch)

I move that the Bill be now read a Second Time. The main object of the Bill before the House is to give effect to the policy outlined in the White Paper, "Programme for Economic Expansion", in relation to grants for industrial development outside the undeveloped areas. In the White Paper, it was pointed out that the improved facilities which the Industrial Credit Co. would be in a position to offer following the increase in the Company's resources should in general meet adequately the requirements of industrial promoters and that it was the intention that grants under the Industrial Grants Act, 1956 would in future be made only in exceptional circumstances and for projects of exceptional importance. It was also indicated that legislation would be promoted to transfer administration of the Industrial Grants Act, 1956, from the Industrial Development Authority to An Foras Tionscal, thereby enabling the Authority to concentrate on promotional activities.

The Industrial Credit (Amendment) Act, 1958, has substantially increased the resources available to the Industrial Credit Co. and another Bill to increase these resources still further has recently been circulated to Deputies. The Company is now in a position to provide finance required for industrial development on a liberal basis and in a variety of forms to meet the needs of the industries concerned. Industrialists can now go ahead with expansion plans in the knowledge that finance required for sound industrial projects will be readily available from the Industrial Credit Co. in whatever form is appropriate e.g. by way of long or medium term loans, hire purchase facilities, investment in equity shares or redeemable preference shares. However, in the case of projects of exceptional national importance, it may be necessary to supplement the capital facilities, which I have outlined, by grants.

Accordingly, the Bill provides that grants may be made for the establishment or development of projects located outside the undeveloped areas where there are considered to be sound reasons why the project cannot be established in the undeveloped areas, where the project is of exceptional national importance having regard to its size, character or export potential and where the need for financial assistance by way of grant, as distinct from other forms of financial aid, is established.

Under existing legislation grants for projects outside the undeveloped areas are limited to two-thirds of the cost of factory buildings or £50,000 whichever is the less amount. The retention of these limits would be inconsistent with the concept that in future grants outside the undeveloped areas will be given only for projects of exceptional national importance. At the same time, it is necessary that the grants available for projects located in the undeveloped areas should continue to be more attractive than those available for projects located elsewhere. Accordingly, the Bill provides that for projects outside the undeveloped areas grants may be given for up to two-thirds of the cost of buildings and services and one-third of the cost of machinery and equipment. The corresponding limits for projects in the undeveloped areas are the full cost of buildings and services and half the cost of machinery.

The Bill also provides for an overriding maximum grant in any one case of £250,000, unless the Government having regard to the employment likely to be afforded approves of the making of a larger grant. The Government would not be disposed to avail of the special provision for grants in excess of £250,000 unless in the case of a proposal offering prospects for the employment of, say, 2,000 or more workers. In the case of grants for undeveloped area projects, there is, of course, no overriding maximum.

The Bill also provides for the transfer of responsibility for grants outside the undeveloped areas from the Industrial Development Authority to An Foras Tionscal. The primary object of this transfer is to enable the Authority to concentrate on promotional activities. It has proved difficult in practice for the Authority to combine effectively the promotion of industrial development and the provision of financial assistance. The position is that on the one hand the Authority have had to seek out industrailists and persuade them of the desirability of setting up factories in this country and then to appraise critically and possibly refuse requests from the promoters concerned for the financial assistance which they considered necessary to enable them to start here.

The combination of these two functions can in these circumstances give rise to embarrassment and the feeling of the Industrial Development Authority is that the best results would be achieved by relieving them of responsibility for deciding grant applications. The arrangement will also have the merit that there will, in future, be one grant giving body instead of as heretofore one body dealing with the undeveloped areas and the other dealing with the developed areas for grant purposes. This should facilitate matters for promoters.

The total resources available under existing legislation for grants for industrial development amount to £6 million of which £4 million was provided for the undeveloped areas and £2 million for projects located elsewhere. Of the £6 million available for industrial grants over £2½ million has either been paid or approved for payment and the opportunity is being availed of in this Bill to increase the maximum aggregate of grants to £10 million.

The Bill also proposes to remedy a weakness in the existing legislation in that it does not permit of assistance to be granted to promoters in respect of the capital cost of electricity supply. It is the practice of the Electricity Supply Board to finance what might be described as normal capital costs of electricity supply where they are satisfied that these costs are justified in relation to the expected return. Substantial capital expenditure may, however, be involved in the provision of transmission lines, sub-stations, etc., for projects located in areas remote from the general transmission system, and the E.S.B. may not be in a position in some cases to undertake liability for total capital costs.

Provision has, therefore, been made in the Bill to enable An Foras Tionscal in such cases to provide financial assistance to promoters by way of grant to cover half the additional cost. In addition the Bill empowers An Foras Tionscal to guarantee in whole or in part that, where arrangements are made for spreading the capital payments over a period of years by addition to the charges for consumption of current, the capital charges will be met.

I should point out at this stage that I have had second thoughts about the title of this Bill. As Deputies will see, the Bill is an amending one, in so far as it amends the financial provisions of the Undeveloped Areas Acts of 1953 and 1957. In so far as it affects the Industrial Grants Act, it repeals the entire Bill and, in many respects, makes the grant provision more attractive and more extensive. It occurred to me that it would be anomalous if, say, in two or three years' time, an industrial undertaking qualifying for a grant under this Bill were to be located in Cork, Limerick, Dublin or Waterford; it would qualify for a grant under what is now described as the Undeveloped Areas (Amendment) Bill. I think, therefore, it would be more appropriate if the title were amended to Industrial Grants Bill. That will require an amendment at the next stage, and possibly one or two consequential amendments. In the context of the Bill before the House, I think Deputies will agree that Industrial Grants Bill would be a more appropriate title.

This Bill represents a further step towards the implementation of the policy outlined in "Programme for Economic Expansion" and I should be glad, therefore, if the House would give it an early passage.

Mr. Cosgrave

The Ministers concluding remarks find general acceptance. The title of the Bill should be amended. The title was, in fact, one of the first matters I intended to query. Undeveloped Areas (Amendment) Bill seemed inappropriate, except for one aspect of the matter. This proposed legislation marks the end of the Undeveloped Areas Acts policy as it has been implemented up to this. That may be contested, but I think that is the position, even though it is not so described.

The other point I wish to make on that, having listened to the Minister's speech referring to the various Acts dealing with industrial development and to the large number of bodies dealing with various aspects of industrial development, is: is it not time to consider if there are not too many bodies dealing with various aspects of industrial development and should there not be some effort to co-ordinate the activities of these organisations?

According to what was said by the Minister, as well as what is stated in the Programme for Economic Expansion, for the future it is proposed that the Industrial Development Authority will concentrate on promotional activities and other aspects of industrial development will be dealt with by An Foras Tionscal. The Minister, in the course of his introductory speech, referred to the fact that finance arrangements were now to be dealt with by the Industrial Credit Company rather than An Foras Tionscal. It may not be appropriate on this measure to discuss that aspect of the matter but certain matters arise out of that arrangement. One is that, under the existing arrangements which the Industrial Credit Company operate, the same information is not given to the Dáil as would be given in the case of a specific grant which was given in the case of trade loan guarantees or if the finance provided was directly voted to a statutory body.

While it is not desirable that undue publicity should be given to any financial arrangements which have been arrived at, nevertheless, there is a strong case for full disclosure of financial arrangements and I should like to refer to this matter subsequently on the other Bill dealing with industrial credit. But, under the changed arrangement which it is now proposed to operate, very considerable sums of money may be provided and, in fact, if the development which is contemplated is undertaken, money can be provided under an arrangement with the Industrial Credit Company without there being given anything like the full information which should be available when large sums of public money are provided. In the past, because of the somewhat restricted capital which was provided for the Industrial Credit Company, probably the same questions did not arise and, certainly, the extent of the financial provision did not make it as important to have the information which is normally given and which, in the case of statutory undertakings or in the case of trade loan guarantees, was made available to the Oireachtas.

In connection with this proposed amendment of the Industrial Grants Act and the changes which are foreshadowed here—I take it from the Minister's concluding remarks, that all that is contemplated is a change in title and some consequential changes— Section 2 of this Bill provides:

(1) Whenever the Board—

(a) are of opinion that there are sound reasons why an industrial undertaking cannot be established or developed in the undeveloped areas and that the undertaking is, having regard to its size, character or the probable extent to which its products are likely to be exported, of exceptional national importance, and

(b) are satisfied that financial assistance by way of grant is necessary to ensure the establishment or development of the undertaking and that the undertaking will be of a reasonably permanent nature and will be carried on efficiently,

the Board may—

(i) for the purpose of providing or facilitating the provision of sites or premises for the establishment or development in an area other than an undeveloped area of the undertaking make grants, on such terms as they think proper, to aid persons to——

and so on. It seems to me, as I said at the beginning, that that marks the end of the policy enshrined in the Undeveloped Areas Act, in fact, if not in name. Again, I do not think there is any objection to that change. In fact, this matter received close attention at page 160 of the publication entitled Economic Development, paragraph 13 of which states:—

Since the home market has been largely catered for, further industrial development must depend largely on exports. Tariffs and quota protection are at best only of limited use in this context. A realistic appraisal indicates that if we are to have any hope of success and, indeed, are not deliberately to add to our already severe handicaps, we must site our industries at, or convenient to, the larger centres of population where internal and external transport facilities are best and supplies of skilled and unskilled labour, fuel, water, etc., are readily available. This is not to ignore the possibility that there may be special economic advantages in doing otherwise in certain cases...

In the next paragraph it says:—

In our present circumstances, with virtually the whole country undeveloped, it seems wasteful to subsidise remote areas specially by providing more extensive grants. Special subsidisation of this kind entails additional burdens on the community as a whole and retards progress in the most suitable areas where concentrated effort could give better results.

I should like to know from the Minister if the views expressed in those paragraphs are in line with the policy enshrined in this proposed amending legislation because it seems to me that that is the case, when account is also taken of the reference in the Programme for Economic Expansion.

I understood from what the Minister said that the total sum already paid in connection with the grants either actually paid or approved under An Foras Tionscal is £2½ million. I should be glad if he could give some information, when replying as to the employment content which has been provided as a result of these grants and also as to the extent the undertakings concerned have succeeded in exporting their products. The Minister need not name specific undertakings, but could give a general picture of the results of this policy to date. If it is possible to do that, it might be possible to consider on a more realistic basis the change which is enshrined in this legislation and which, if I understand it aright, marks the ending of the provision in the Industrial Grants Act, 1956, and the transfer of those functions and also the financial arrangements to An Foras Tionscal or the Industrial Credit Company. Would it be possible, furthermore, to see what defects there were in the policy as it had been operated since the commencement of the activities of An Foras Tionscal and also what defects existed in the operation of the Industrial Grants Act, 1956?

Mr. Norton

It seems to me that the purpose of this Amendment Bill is to collapse the Industrial Grants Act, 1956, and to merge portion of that Act with this Amendment Bill, the whole scheme to be administered in the main under the machinery of the Undeveloped Areas Act. I am sorry I did not hear the Minister's introductory speech. I was delayed by a deputation. However, I take it that that is the main purpose of the Bill.

You have to reach this Bill through Section 2—Grants for Undertakings not in undeveloped areas. As I read this section, it seems to me that the main purpose of this Bill is to abolish by repeal, and that is done in the Schedule on page 6, the Industrial Grants Act entirely and to rely on the machinery of the Undeveloped Areas Bill when enacted, for any grants which in future may go to areas outside the undeveloped areas.

Section 2 of this Bill is heavily weighted in favour of the undeveloped areas. It provides:—

(1) Whenever the Board—

the Board may—

(I) acquire land,

(II) construct and adapt buildings and other works, and

(III) provide services and facilities in connection with land, and

(ii) make grants, on such terms as they think proper, towards the provision of machinery and equipment for the undertaking.

The present position is that if a person decides to establish an industry in this country and complies, so far as the industry is concerned, with the terms of the Industrial Grants Act he may start an industry in any place he likes. He can decide that a particular town in the country outside the undeveloped areas has no industry and he can go in there and establish an industry. If he does, he complies with the requirements of the Industrial Grants Act. Then he may get a grant not exceeding two-thirds of the cost of the factory.

If there is a local development committee in any town, say, 50 miles from Dublin and it raises, say, £10,000 of local money to establish an industry and if they can contact an industrialist willing to start an industry in that town, then, by an amalgamation of his technical know-how, the local capital of say, £10,000 plus the knowledge that they can get a grant under the Industrial Grants Act of two-thirds of the cost of the building, they can establish an industry in that place. The main thing to ensure is that the industry is manufacturing goods that are not now made here or goods that are being imported here.

Once a reasonable proposition is put up, the projected industry could get a grant equivalent to two-thirds of the cost of the building. With local capital and extraordinary technical know-how, an industry could be established in a place 50 miles from Dublin. How many places 50 miles from Dublin or within 50 miles of Dublin have no industry whatever? In many cases, a number of them have fewer industries than many towns in the undeveloped areas.

You can go through Leinster, through Munster, through some of the Northern counties, through some of the midland counties and you can find there towns in which no new industry was established over the past 30 or 40 years. You can find places where there is no industrial employment of any kind. In the future, if anybody wants a local development committee in these places to contact a person who is willing to establish an industry to produce goods which are not made here and he says: "I have some capital; the local committee has some capital; I have the technical know-how; I have the export markets to which I can send my goods;" it is not good enough to ensure that an industry will be established in that town in Leinster, Munster, the midlands or in the Northern Counties.

If that industrialist makes an application to the Board, it is processed in such a way as this:

"Whenever the Board

(a) are of opinion that there are sound reasons why an industrial undertaking cannot be established or developed in the undeveloped areas..."

Therefore, the first thing that the potential industrialist meets with is that he will be asked: "Why will you not go to the undeveloped areas?" It is not necessary for him to say: "I do not want to establish an industry 150 or 170 miles from Dublin. I have found a town 50 miles from Dublin, near an eastern port. I would prefer to establish my industry there. I can supervise it better there. It does not involve the long haul of raw materials to the West and the long haul of the processed article back. I want to establish the industry 50 miles from Dublin. I have found a town where there is no industry, where there is an enterprising local committee, where there is an availability of labour and local capital. I want to go there."

That is not good enough. There is no provision in this Bill that he will be allowed to establish an industry there. It says he has to go to the Board. The Board will say to him: "Why can you not start in an undeveloped area?" He then has to prove that, for a variety of reasons, all of which he has to think up for himself, he cannot work satisfactorily in the undeveloped areas. But, if he cannot work satisfactorily in the undeveloped areas, he will not get a grant for the establishment of an industry outside the undeveloped areas because the Board will say: "The undeveloped areas are the place for you."

In other words, quite clearly this Bill not merely puts its thumb on the scales in favour of the undeveloped areas but puts its foot as well to make sure that only in very exceptional cases will it be possible to get the approval of the Board to establish a project in an eastern area. Probably the case that would get through would be the case where the potential industrialist would be in a position to say: "If I cannot establish it there I will not go anywhere else." If he is the kind of person who does not feel he has that strength, who feels he is committed to doing something here, for one reason or another—must do something here—the Board will say: You will proceed to the undeveloped areas. You will not be allowed to establish your industry in the eastern part of the country." That apparently is what this Bill is intended to do.

In other words, this Bill is a very substantial step down from the Industrial Grants Act. Under the Industrial Grants Act once a person established a useful industry—by that I mean an industry manufacturing goods not produced here—he could decide where he would locate the industry and then work it out with a local development committee. He could get a maximum two-thirds grant towards the erection of the building subject to a maximum of £50,000 and could operate in an eastern county where it might suit the industrialist, for a variety of reasons, to establish it, where he might feel the labour available was better and more suitable or that the facilities in the way of water supply, land and facilities for export were all preferable to those offered at distant places elsewhere. Those considerations will not matter under this Bill. He must go west, or south or north unless he can show clearly that it would be impossible for him efficiently and effectively to manufacture in the underdeveloped areas.

This Government did not like the Industrial Grants Act. They thought it was something that would interfere seriously with the Undeveloped Areas Act. I do not think it did interfere seriously with the Undeveloped Areas Act. Useful work is being done in the undeveloped areas and industrialists who wanted to go there have got very substantial grants. They get a grant for the entire cost of the building. They get a grant of 50 per cent. of the cost of machinery whereas in the non-underdeveloped areas the maximum grant is limited to two-thirds of the cost of the factory building with no grant for machinery. It is true that in this case it may be possible to get a grant for machinery if you get through the sieve which is set up under Section 2. Under Section 2 you can get a grant not exceeding two-thirds of the cost of the acquisition of the land, the construction and adaptation of the building and other works, and you can get—and this is new so far as the non-underdeveloped areas are concerned—a grant not exceeding one-third of the cost of machinery and equipment. But that is a small concession compared with the obstacle which any new industrialist will have to overcome in getting through the Board in relation to the establishment of an industry in a place outside the underdeveloped areas.

The provision we have made for the underdeveloped areas is generous, exceedingly generous. I do not think anybody has attempted to say it is not generous. It means that in the establishment of an industry in the underdeveloped areas you could hardly ask for any more and still pretend to own the factory and the machinery, because the factory is erected by the State; fifty per cent. of the cost of the machinery is paid for by the State and there are State grants for training the personnel for the industry. Therefore if any employer wants to say: "That is my factory", with the State paying the entire cost of the building and half the cost of the machinery he can hardly at the same time say: "I think I should have got a larger grant." The grants for the underdeveloped areas under the Undeveloped Areas Act are generous grants, but there are places outside the undeveloped areas, towns in my constituency, that have not seen an industry in the last 35 or 40 years. They are just the same as they were 40 years ago from the point of view of their industrialisation. There are towns, I am quite sure, in Wicklow, Meath, Laois, Offaly, Wexford and a variety of places around the country where there has been no industrial development at all. They stood to benefit by the Industrial Grants Acts inasmuch as an industrialist could secure a grant equivalent to two-thirds of the cost of the factory if he established an industry there.

In the future such an industrialist cannot of his own volition decide that he will establish an industry in any one of these places. He will have to go to the Board and convince the Board, biassed in favour of the underdeveloped areas, that it is physically impossible for him to establish his industry in the underdeveloped areas. If he does then he gets the benediction of the Board to start presumably outside the underdeveloped areas and, having got through that mesh established by this Bill and operated by the Board, he will get a grant equivalent to one-third of the cost of the machinery. He was already getting and can still get two-thirds of the cost of the factory under the Industrial Grants Act.

Mr. O'Malley

Subject to a maximum.

Mr. Norton

Subject to a maximum of £50,000. That was a pretty good beginning to make in that case. However, so far as this Bill is concerned, the tendency will be to stultify development in the non-underdeveloped areas. There will be a preference for those underdeveloped areas and you can presumably go into any one of these areas even though there may be two or three industries already established there by grants under the Undeveloped Areas Act, while there may be no industry or a very small industry not giving very much employment in an area where the industrialist proposes to go. So far as the underdeveloped areas are concerned, this Bill may well strengthen the position but it is doing so at the expense of areas in Leinster, in Munster, in the midlands and in the northern counties.

It is true the board have power to consider these applications and the board's decision in the matter is final but there will be no doubt in the mind of anybody who looks at this Bill that the real intention is to put back the emphasis on the Undeveloped Areas Act and on the establishment of industries under that Act in the undeveloped areas only. It will be exceptional if you get a commission to establish an industry outside that. Section 2 makes it clear you must prove certain things to be impossible of operation in the underdeveloped areas before you will be allowed to operate outside. That is a blemish on this Bill. I do not know for what purpose it is being done except to stunt development in areas outside the underdeveloped areas.

The Taoiseach

I wish to say a few words on this Bill and it is particularly desirable I should do so before any wider misunderstanding of its provisions is created as a result of Deputy Norton's remarks. Deputy Cosgrave said this Bill marked a wiping out of the policy which the Undeveloped Areas Act of 1952 began. Deputy Norton regards it as the reinforcement of that policy. Deputy Cosgrave was more nearly right than Deputy Norton.

Mr. Norton

We shall see.

The Taoiseach

It is correct that the introduction in 1956 of grants for industrial enterprises outside the undeveloped areas had the effect of weakening the inducement to industrial development in the western counties. Anybody who gives it a moment's thought will realise that that must be so, and clearly, therefore, any enlargement of the grants, or any extension of the conditions under which grants can be given in the rest of the country, must also have a similar effect. Our difficulty in framing this Bill was to devise a method by which the need for increased inducements to industrial development in the country as a whole could be met without, at the same time, reversing the policy which we began in 1952 of giving special encouragement to projects launched in the western seaboard counties and west of the Shannon.

I am afraid that Deputy Norton will have to face up to the fact that the Industrial Grants Act, 1956 was not very successful. There are a number of reasons why that was so. One was the provisions of the Act itself, the limitations that were placed upon the Industrial Development Authority in its administration. Secondly, here was the fact that so much greater aid could be given to industries located in the western part of the country. Thirdly there was the special difficulty created by the provision that new projects launched by existing concerns could not qualify under it.

The number of enterprises which qualified for assistance under the Industrial Grants Act was disappointingly small. Indeed, the existence of that Act, having regard to its provisions, did to some extent operate even as a deterrent to progress. There is need to revise that Act, anyway, both for the purpose of removing some of the limitations upon the powers given to the Industrial Development Authority under it and also to provide greater inducements for the types of industry which we must now seek to establish.

When Deputy Norton spoke as he did, I think he was leaving out of account the fact that, in the present state of industrial development, the scope for new concerns geared to supply home market needs only is very limited. One could argue that, in relation to projects of that kind, there is no need for giving money in the form of free grants provided under legislation. No doubt, there may be some new enterprises of that character started, in competition with existing enterprises already established, which may because of their character or their location be entitled to some assistance in their financing. I think that need can be met in circumstances where no export is contemplated and where competition with existing concerns is involved, by the loan facilities available from the Industrial Credit Company.

In our present situation most new industrial undertakings if they are not to be in competition with existing concerns must have export possibilities. As was pointed out in the Economic Development Report, concerns that are seeking export openings must be located where no disadvantages in the export market are involved. Of course the undeveloped areas, as defined in the Act, include many large-sized towns some of which have first-class port facilities through which an export trade could certainly be channelled.

The Undeveloped Areas Act does not require the same care in avoiding competition with existing concerns as is necessarily involved in the case of the Industrial Grants Act and which will be involved in respect of grants given under this Bill to projects located outside those areas. The aim of the Undeveloped Areas Act was to offset any commercial disadvantage associated with a western location and Foras Tionscal measured their grants with that in view.

As Deputies know, some of the concerns which qualified for grants under the Undeveloped Areas Act are competing, or could possibly at some time come into competition, with existing undertakings. If, however, we accept the basic conclusions upon which the Government framed this Bill, new undertakings which qualified for grants in the sense that they will be additions to the country's industrial organisation, and do not compete with existing concerns, and have export possibilities must be located wherever is most advantageous, from the point of view of developing the export trade, then the obligation placed on Foras Tionscal to consider whether there are sound reasons why these undertakings should not be established in the undeveloped areas gets its proper importance and full significance.

There is also this fact which I want to mention because it is important. A main difficulty in administering the Industrial Grants Act was that it did not provide for the giving of grants to existing concerns even where they were embarking on a new development which represented new enterprise. Our experience has shown that industrial progress is more likely to come through the growth of existing concerns than through the establishment of new concerns. Where some established firm proposes to embark on some new line of production at the same location, involving the extensions of its premises at that place, then it should qualify in the same way as if it were a completely new enterprise. The fact that it was already established would be a very sound reason why it could not transfer to a new location in an undeveloped area. One of the most important changes proposed in the Bill is the bringing in of the possibility of grants for the extension of operations into new lines by existing firms. I think the withdrawal of that limitation under the old Industrial Grants Act will have a very important effect.

The policy of giving grants out of public funds to private firms to engage in a commercial enterprise for their own profit needs justification. Our main justification is our need for industrial development at a much more rapid rate than we have achieved it so far. Secondly, there is the fact that as we have now to consider industries with export possibilities we are to a greater extent than heretofore in competition for those industries with other countries. In framing our legislation, and deciding on the extent to which it is desirable for us to give grants for industrial expansion, we have to take into account what is being done in the North of Ireland, Great Britain and many European countries. We must not fail to secure the development we need by reason of a reluctance on our part to do what we know is being done in these countries in circumstances not dissimilar to our own.

Deputies will note that one of the provisions of this Bill provides for the possibility of the maximum grant being exceeded in an individual case on the decision of the Government. The circumstances under which that provision went into the Bill will, perhaps, illustrate our difficulty in that regard. When the Bill was being framed, it happened that the representatives of a very large American Company, who had been sent by their directors to Europe to consider locations in Europe for a large extension of their undertaking, came to Dublin. They had been to Holland, Britain, the North of Ireland and certain other countries. I do not know yet what their decision may be. That particular project may or may not be located here.

If I were asked to guess at the moment I would say it is not likely to be placed here but it did bring to our attention the possibility of circumstances arising in which the operation of the limitation proposed in this Bill could prevent our getting some important factory in this country as compared with somewhere else, that the situation could repeat itself again and that by reason of an unduly cautious policy in framing our legislation and restrictive limits imposed upon the grant-giving powers, we might lose out upon a good prospect of an important industrial development.

At the same time the Bill had to be framed so as to make it clear that the limits could not be exceeded at the discretion of the grant-giving body or even by bringing pressure to bear on the individual Minister supervising its operations. That is why we decided to require that the limits could be exceeded only where the Government, having regard to all the facts, considered that to be justified and of course information of any such decision, if it is ever made, will be given to the Dáil in Foras Tionscal's annual report.

By and large I think the new limits on grants, and the removal of the other limitations imposed in the Industrial Grants Act, will tend to encourage industrial expansion, particularly the development of new enterprises by existing firms in the eastern part of the country while, at the same time, the wider powers and the absence of limits in regard to the undeveloped areas should operate also to encourage new enterprises there, provided they can be successfully located there, and at the same time develop the export possibilities which I believe they must have, if in the present situation they are to be permanent.

Deputy Cosgrave expressed the view that we have, perhaps, too many bodies dealing with industrial development matters. That is an aspect to which I have often given attention. The Industrial Development Authority frequently asked to be relieved of these grant-giving powers because they found themselves embarrassed when people whom they sought to get interested in some industry, which was not already developed, came back to them looking for grants in circumstances or of a size which they did not think they would be justified in making. They urged that the grant-giving authority should be distinct from the promotional authority. The Industrial Development Authority is the promotional authority. It deals with all activities directed to securing the establishment of industries which are on their list for development and also with projects for new industries with which external companies are associated.

The function of Foras Tionscal will be to receive proposals relating to the financing of new enterprises, the establishment of which is desired, or already sanctioned by the Industrial Development Authority for the purpose of measuring the assistance to be given to them. I do not think we can operate with fewer bodies than exist at the moment. There are three such bodies apart from the Department itself. Each has clearly defined functions—the Industrial Development Authority, which is the promotional body, Foras Tionscal which is the grant-giving body and the Industrial Credit Company which is concerned with the provision of capital, either by investment or by loan, and it is not concerned with grants at all.

The arrangements for ensuring effective liaison between these bodies are adequate and no difficulty has ever arisen by reason of the absence of liaison. There is no problem in that respect, nor do I consider that it is feasible to operate on any other basis. Our experience has shown the necessity for keeping each of these three functions in separate compartments and where a particular project has to be organised in a way which involves some decision by each of these bodies joint meetings can be arranged without any difficulty.

——but I think the case for the development of the undeveloped would stand better, and would meet with greater success without the introduction of such a Bill as this. This Bill is intended to weaken the 1956 Bill by amending it and, as I said, its amendment provides a loophole whereby an industrialist will not go to the West. I am surprised that the Minister who comes from a Western area should introduce such a Bill.

Mr. J. Lynch

The people of Cork city would not agree with the Deputy there.

Mr. Coogan

I suppose this is the new policy of the Government and if the Minister can explain to me that Section 2 is not contrary to the development of the undeveloped areas he will have enough to do. I should like to warn the Minister that this Bill is not acceptable to us in the West. That is the only comment I should like to make upon it.

Mr. Corish

We shall come to that. have never been enthusiastic about the Undeveloped Areas Act and I could never understand the petty reasons put forward by people in the West as to why a group of Galway men, Mayo men or in some cases Limerick men, who banded together to establish a factory could get grants that could not be got by a similar body of men from Meath, Dublin, Waterford, Wexford and Cork.

Mr. Russell

Limerick men?

Mr. Corish

Parts of Limerick. I suppose it all arises out of the fact that Mayo has a big population——

Mr. Dillon

It arises out of the fact that the Government lost many seats in the Province of Connaught in 1951. I remember it well.

Deputy Corish is reading into this Bill that where there are good reasons for establishing industries in the West they will not be allowed to come elsewhere. That is not the position. If I were an individual starting a new industry, knowing I was limited to the maximum of £50,000 in the East and knowing there was a greater maximum in the West I would go to the West rather than to the East. The change proposed here is that grants are to be increased also in the East.

Mr. Norton

The Taoiseach will admit there is the other problem of getting through the mesh of the net to establish an industry in the East.

The Taoiseach

Even the mesh of he net is being widened.

Debate adjourned.

The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 8th July, 1959.

Dáil Éireann debate - Tuesday, 7 Jul 1959

Committee on Finance. - Undeveloped Areas (Amendment) Bill, 1959—Second Stage.

Dáil Éireann debate -
Tuesday, 7 Jul 1959