Dáil Éireann debate -
Thursday, 20 Jul 1961

Vol. 191 No. 9

Committee on Finance. - Industrial Grants (Amendment) Bill, 1961—Second Stage.

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

I move that the Bill be now read a Second Time.

Its main object is to increase from £10 million to £15 million the aggregate amount of grants which may be made by An Foras Tionscal up to 31st December, 1963, for the promotion of industries, whether located in the Undeveloped Areas or in the rest of the country. Another object is to provide for the increasing of the number of members of the Board of An Foras Tionscal from three to five. Its remaining provisions effect comparatively minor changes in the Undeveloped Areas Acts, 1952 and 1957 and in the Industrial Grants Act, 1959, arising out of the experience of An Foras Tionscal in the operation of these Acts.

The present legislation relating to industrial grants will remain in force until 31st December, 1963. In directing attention to this, I do not want to give the impression that the grants scheme will then cease to exist. I do feel however that the time has come to undertake a comprehensive review of the present scheme. The objects of such Review would be to assess the extent to which the existing system has been successful and to see whether any modifications of the system are desirable: in particular, I feel we will have to give careful consideration to the question of whether the present concept of the Undeveloped Areas has outlived its usefulness.

As Deputies know, I am faced with a growing agitation for the abolition of the border between the Undeveloped Areas and the rest of the country; I am being urged to adopt some alternative form of definition of the term "Undeveloped Areas" designed to enable other parts of the country to qualify for the more favourable grants at present applicable to projects sited in the Undeveloped Areas. The reaching of decisions on these matters must, however, await the outcome of the review to which I have referred.

To pave the way for the review, An Foras Tionscal are at present engaged in a detailed study of grant aided projects, designed to assess the measure of success achieved by the existing grants scheme. Pending the outcome of the review and the enactment of any consequential amending legislation, it will be my general intention to continue to implement the policy laid down when the Undeveloped Areas Act, 1952 was before this House, of confining the scheduling of areas outside the Undeveloped Areas proper to "fringe areas" which are contiguous to the Undeveloped Areas.

The increase in the aggregate amount of grants which may be made by An Foras Tionscal to £15 million is necessitated by the fact that as at 31st March, 1961, grant commitments of the order of £8 million had been entered into as against the "ceiling" of £10 million provided in the existing legislation. Projects for which grants were approved involve an estimated total capital investment of over £26,000,000 and are expected to give employment to close on 15,000 workers. For details of particular grant payments made by An Foras Tionscal, I would refer Deputies to the report and accounts of that body for the year ended 31st March, 1961, which were recently presented to the House.

The House will be aware that the Industrial Grants Act, 1959, specifies that the maximum grant which may be given by An Foras Tionscal in respect of an industrial project proposed for establishment outside the undeveloped areas may not exceed £250,000 unless the Government, having regard to the amount of employment likely to be afforded by an undertaking, approve of the making of a grant in excess of that figure. When the Industrial Grants Act of 1959 was before this House, it was stated that the Government would not be disposed to avail of this special provision unless in the case of a proposal offering prospects for the employment of 2,000 workers or more. It is intended that this restriction shall continue pending the outcome of the review already referred to and the imolementation of any amending legislation which may result from such review. Notwithstanding this, I concede that an exceptional case might arise which would warrant An Foras Tionscal in recommending to the Government the making of a grant in excess of £250,000 for a project which might not have a minimum employment content of 2,000 but would be of major importance to the general well being and economy of the State. A type of project which might possibly warrant such an exceptional recommendation by An Foras Tionscal would be, for example, one involving an exceptionally large capital investment such as a chemical industry.

The reason for increasing the Board of An Foras Tionscal from 3 to 5 is that since the passing of the Undeveloped Areas Act, 1952, which limited the Board to 3 members, the responsibilities of the Board are being very considerably widened due to the extension of their activities to the whole of the country, instead of to the Undeveloped Areas, as previously, and due to the very substantial increase in the number and size of projects which have come forward as a result of the programme undertaken by the Industrial Development Authority for the attraction of external investment.

The object in providing that An Foras may make grants towards the provision of plant (e.g. items such as cranes, roof tanks for the supply of water, electric transformers for general use as distinct from ones for use in a particular industrial process) is that legal advice recently received by Foras Tionscal raised doubts as to whether An Foras Tionscal were entitled to make grants for plant, as distinct from machinery and equipment, as they had been doing.

The provision relating to restrictions on the sale of assets or shares in a grant aided concern does not introduce any new concept. It has in fact been the practice of An Foras Tionscal to write into the agreements concluded with promoters a clause that they will not sell the assets or their shares in the concern, without the previous consent of An Foras Tionscal, for a stipulated period. This provision is designed mainly to remove any doubts which may exist as to the legality of this practice of An Foras Tionscal.

The Bill provides a further step towards the implementation of the industrial expansion programme outlined in the Government's "Programme for Economic Expansion". I confidently recommend it to the House and I should be glad if it could be given an early passage.

Mr. Dillon

This Bill simply carries on the policy that has been operated by this Government and the previous Government in promoting industrial enterprises in the undeveloped areas of the country and outside it. I see the Minister now contemplates eliminating the differential that existed between the undeveloped areas and the rest of the country by bringing up the level of the grants available in the other areas of the country to the level at present available in the undeveloped areas and, I assume, widening the scope for which grants can be made in the rest of the country to the same dimensions as the scope at present available in the undeveloped areas.

Whether these increases in grants in the other areas should not be accompanied by some corresponding increase in the grants available in the undeveloped areas is something I am not at all sure of. Everybody was certainly enthusiastic for the idea that we should orientate some industry into the undeveloped areas. I should be glad to hear from the Minister how far that has proved successful and how far the industries that have set themselves up in the undeveloped areas have surmounted the transport and other difficulties that were taken to exist. I know there is a great deal of feeling and that the economist and technician is inclined to say: "It is all boloney trying to bring industry to people." But the same economic law should operate to bring people to industry. That is, of course, what is happening in many parts of the world. The relatively rural areas are becoming depopulated as the cities suck more and more population into them.

Simply because that is happening by the force of uncontrolled economic laws does not seem to me a good reason for our determining to expedite that operation in our own community. The situation in Australia is becoming positively desperate, where you have a vast country with the bulk of its population now resident in four cities and the whole rest of the country becoming almost depopulated. It is pathetic to see North and South Dakota in the Mid-West of America losing their whole populations as they stream out of the these states into the adjoining industrial cities, leaving the places of their birth virtually derelict. Nor am I at all convinced that the unrestricted operation of these economic laws is economically sound, quite apart from the social aspect of the question.

I draw the Minister's attention to the fact that 50 years' ago south of the Mason-Dixon Line in America industry was virtually unknown. It was a rural economy based largely on cotton and tobacco. Within the last 30 years, by a system of grants and inducements, the Carolinas, Georgia and other of the Southern States of America have drawn from New England a very considerable volume of the industry that used to be concentrated there. It is true that the Southern States had climatic advantages to offer over and above the fiscal inducements they were in a position to extend to companies which sought a new location. But, in fact, in many parts of the United States the practice of bringing industry to the people rather than the people to industry has worked.

The Minister should think well before he surrenders completely to the thesis that you ought to concentrate all industries in Ireland in Dublin and Cork. It is certainly true that, if you equate the fiscal inducements offered to industries, no matter where they are located in the country, the inevitable tendency will be to draw the bulk of industry into two or, at the most, three centres with corresponding migration of population from the rest of the country. I think that is an undesirable development.

There is another point in connection with this legislation which we should resolutely face. The Government have announced that if Great Britain enters the Common Market, we propose to enter it, too, because they have reached the conclusion, somewhat late in the day, that the economic survival of this country is indissolubly bound up with our access to the British market. I think their reluctant conversion to the realisation of that economic fact causes a Deputy like Deputy Faulkner considerable distress. He almost blushes every time it is mentioned. He will grow accustomed to it.

The fact remains that we are moving into the Common Market if, and when, Great Britain does. What impact will that have on the industries we contemplate setting up under this amending Bill? I say deliberately "under this amending Bill" because we have set up certain industries, the grants are paid and that is water over the fall. There is no use chewing the rag about it. But what are we going to to do hereafter? Are we going to make somebody a grant of £250,000 or £500,000 to set up an industry which manifestly cannot survive, if and when the 10, 15 or 20-year period we get under the Protocol of the Common Market Agreement for the reduction of our tariffs system is exhausted?

Have we any policy in regard to that or has it been examined yet? I have reason to believe that certain of the industries we have set up here, or rather that were set up by foreign interests, even with financial help from An Foras Tionscal, have been largely moved to establish themselves here in order to get access to the British market in the favourable conditions obtaining under our trade agreements with Britain and that after Common Market conditions come to operate between us, and if our joint entry into the Common Market alters the terms of our agreement on the industrial side, these countries might lose interest in the facilities available here.

Have these matters been considered? I have always taken the view that if we can get foreign, domestic or state capital to set up an industry here which can survive and provide good employment for our people in their own country, that is something worth doing, but I think we ought to consider very carefully the prudence, in the fluid situation in which we now find ourselves, of committing large sums of capital to new firms, unless we have some evidence from them that, in the new situation, they will continue to function, if and when this country and Britain are members of the European Economic Community.

There is one last matter on which I think it necessary to comment. If the Minister thinks it right to introduce a Bill which increases the capital available for free grants from £10 million to £15 million, does he not think he has some obligation to tell us how the companies which have got these grants to date have done? I think he has, and I should like to have it made clear that grants under this legislation are not contingent on the subscription of foreign capital. I think I am right in saying that every foreign firm that sets up in business here is eligible for these grants and that every Irish firm contemplating the establishment of an industrial project here is entitled to exactly the same grants as any foreign company could claim. I do not think that is sufficiently emphasised. I think it ought to be emphasised on the occasion of a Bill to increase the authority of An Foras Tionscal to distribute public money by no less than 50 per cent.

Mr. Corish

There is no objection by our Party to the main objects of this Bill, that is, to increase the membership of An Foras Tionscal and to increase the amount available for grants from £10 million to £15 million. The Minister some time ago said, and he has repeated the statement in his Second Reading speech, that the time has come to undertake a comprehensive review of the present system of State aid for various industries established in this country. I want to make my position clear so far as the whole project for State assistance to industry is concerned, because on a recent occasion the Minister for Finance, who is a colleague of mine in Wexford, seemed to misrepresent my view.

I have not the slightest objection to assisting the establishment of industry here. On the contrary, I approve of the idea of State assistance for the establishment of industry. I do not object to special assistance being given to establish industries in the West but I suggest that the gap between the assistance given to industries in the West and that which may be given to industries in other parts of the country is too wide. The Minister has, indeed, by inference in his speech and in recent statements, given me the impression that he also believes that consideration should be given to the closing of that gap. I hope I interpret him correctly. In the West, I suppose, there is and has been greater unemployment than in other parts of the country. We are led to believe by Deputies on both sides of the House that emigration from the West is higher. I applaud the efforts of this and of all Governments to assist the establishment of industry, the grants for which, I believe, are, and have been, generous since the scheme was established.

On occasions, I have tried to impress on the Minister and other members of the Government the vital necessity, in my opinion, for the Government to have a financial interest in these industries for somewhat the same reason as Deputy Dillon mentioned. It seems to me and to other people in the country that the reason for the establishment of foreign industries in various parts of the country, and particularly in the West, is the relative ease, the real ease, with which they can export their products to the British market. But if the situation is to change on our entry into the Common Market, on Britain deciding to do so, I wonder what will be the fate of those industries in the West? I trust that many of them will remain and continue to make progress but I greatly fear that there will be a situation, not created by the Government or any Minister, which we should try to guard against, and a situation against which we might have taken some precautions at least in the past two or three years.

It would be a regrettable thing, a disaster, if our entry into the Common Market meant that many of these people to whom we gave substantial sums of money to establish industries here were to pack their bags, so to speak, over-night and set up their factories in Europe, in Britain or some other part of the world. I do not know what the Minister can do about that situation but, at least, that aspect of the matter should be considered.

I believe that in the establishment of industry here we should, when determining the amount of the grant, have regard to the numbers who will be employed in the industry. There should be a greater emphasis on the relationship between the amount of free money the Government are prepared to give to industrialists and the numbers to be employed. I assume it is the main concern of the Government and the main concern of this House as a whole, first of all, to provide employment and, secondly, to produce goods for sale preferably on the export market.

Our problem is to provide employment for our people. We have a high rate of emigration and we have a high unemployment rate. That is the reason I hold that we should insist, when granting moneys for the establishment of industry, on those moneys being related to the amount of employment that will be given. I also think that An Foras Tionscal—primarily I admit this is a matter for the trade union movement-should concern themselves with the types and conditions of employment in these industries. I do not wish to put that burden entirely on the Minister. I would not put it on him at all except that I believe that An Foras Tionscal should in negotiating for assistance to industry bear these important factors in mind. Let us be frank about it. There have been allegations that industries have been established in the West with generous grants from the Government and they employ young girls of 15 and 16 years of age. These girls do not find it profitable to stay in such employment after 16 years of age. The management then bring in a new batch of 15 or 16-year-olds and, indeed, sometimes some of the former employees who left are re-employed.

The Minister says: "The House will be aware that the Industrial Grants Act, 1959, specifies that the maximum grant which may be given by an Foras Tionscal in respect of an industrial project proposed for establishment outside the undeveloped areas may not exceed £250,000 unless the Government, having regard to the amount of employment likely to be afforded by an undertaking, approve of the making of a grant in excess of that figure." I wonder if the Minister has any information as to what projects, if any, have been assisted under these particular terms.

The Minister also states: "When the Industrial Grants Act, 1959, was before this House it stated that the Government would not be disposed to avail of this special provision unless in the case of a proposal offering prospects for the employment of 2,000 workers, or more." That was a pretty rough condition. Two thousand is quite a formidable number of workers. Outside the very big firms, and there are not very many, I do not know of any that would employ 2,000 workers. Certainly one would not find any industry with an employment content like that in any of the provincial towns. One may, perhaps, find them in Dublin, Limerick, Galway and Drogheda, but I cannot visualise an industry being attracted to this country that would, even in the initial stages, take on 2,000 workers.

"It is intended that this restriction shall continue pending the outcome of the review already referred to and the implementation of any amending legislation which will result from such a review." The Minister says that particular condition imposed under the 1959 Act still stands. However, he goes on to say: "Notwithstanding this, I can see that an exceptional case might arise which would warrant An Foras Tionscal recommending to the Government the making of a grant in excess of £250,000 for a project which might not have a minimum employment content of 2,000 but would be of major general importance to the economy or this State." There is nothing very positive. We are told, on the one hand, that the condition imposed in 1959 is to be continued until the review is completed.

On the other hand, the Minister says that in certain circumstances we can override that rule and give a grant of £250,000 for the establishment of an industry which would employ 2,000 people outside the undeveloped areas. I would urge the Minister to make this promised review as quickly as possible with a view to amending the Act, with a view towards reducing the gap that undoubtedly exists as between the assistance given for the establishment of industries west of the Shannon and the assistance that may be given for the establishment of industries outside that particular area.

Mr. Ryan

I support Deputy Corish. He is quite right in his approach to this matter. I do not think it matters one iota whether an Irishman works in Mayo, Donegal, Cork or Dublin, so long as he works in Ireland. We want to keep our own people together socially. It may be more desirable to have our people spread thinly across the country, but we must face economic facts. Where a town is centred at a railhead, on a canal, or a river, at a port, it is better equipped to meet the fierce competition of this modern age. While the Undeveloped Areas Act was socially desirable it has been economically disastrous. I believe a proper examination was not given to the most advantageous siting of industries. That is true, too, of the undeveloped areas.

Consider the position of Galway City. It is adjacent to a harbour, beside a railway. There is a good deal of land close by, suitable for industrial development. Recently, a grant was made available for the building of a factory some miles from Galway City and several miles from both the harbour and the railhead. To my way of thinking that is the State subsidising economic inefficiency. It is not the kind of economy on which public money should be wasted. We have in Dublin a large labour force which is not being used. The result is that our labour force, which has a tradition of industry behind it, is being forced to emigrate. The rate of emigration has been increasing steadily from Dublin over the last five to eight years.

Some years ago the figure for the surrender of Corporation houses was running about 300 to 400 per year. Last year the figure was 1,400. I give this as an illustration of the fact that the labour force in Dublin is not being used. In Ballyfermot there are some 14 or 15 acres earmarked for the last 12 years as an industrial site. This site is close to a main line railway, right beside Inchicore, which has a tradition of industry. It is beside the canal. It is beside the largest parish in Ireland, a parish constituted of people who have gone out there from the back streets of Dublin, who were born and reared beside factories, who worked in factories long before there was a factory chimney outside Dublin. Those 14 or 15 acres have over the last 10 years been grazed by thinkers' horses, while we are subsidising heavy industry in the Galway mountains around the lakes of Kerry and throughout the length and breadth of the land.

My remarks may be used by some as an indication of hostility on my part to my country cousins. It is not so intended. I am endeavouring to say that while it may be socially desirable to distribute industry evenly throughout the country, when there are places like Drogheda, Wexford, Dublin, Cork, Mullingar and other large towns which have some industries, it might be better to establish industries around such places rather than try to establish heavy industries in single villages or small towns. While it may be socially desirable, in the long run it would be unwise. We are facing the keenest competition. We have always had to face it but we shall not have the same protection in future. In regard to the matter of reviews between now and 31st December, 1963, I take it the Minister is not tying himself to that date and that if the need for change occurs in the meantime as a result of such review, that change will be brought about.

The main point to bear in mind is that if one can develop industries in the right place, in time the benefits of that industrial development will flow into the undeveloped areas.

As far as the labour force is concerned, there is very little emigration from the industrial labour force from the West to Dublin. Emigration is right out of the country altogether or it is confined to the professional or better-off classes. Therefore, you will not be drawing away from the West to industries in Dublin people who otherwise might stay in the West. If encouragement is given to the setting up of new industries in any large centre—I am not referring to Dublin only—it will result in keeping the labour force in Ireland and the benefits will flow to the undeveloped areas in the long run. It is a long-term programme which will be of benefit to the economy as a whole.

Mr. J. Lynch

Deputy Dillon asked me to what extent the industries established in the West have been successful. The answer is that of roughly 61 industries now in production—there are 29 or so not yet in production but which will be after a short time—there have been only two failures, one in Portumna and one in Tralee. As far as I know the rest are doing well. Most of them employed a minimum number initially and went on to increase their numbers as they increased their production. In fact all of them have been quite successful; I certainly have heard no complaints that any of them are in any great difficulty.

As regards the suggestion that the main attraction in the past had been ready access for industrial goods to the British market, I do not think it could be described as the main attraction. It certainly was an outstanding attraction to foreign industrialists but, as Deputy Dillon observed some days ago, another attraction was the availability here of an intelligent and adaptable labour force. That is one of our outstanding merits and one of the attractions there are for people coming from the highly industrialised countries of Europe to set up industries here.

As regards the effect of the existence of Common Market conditions here if we joined or became associated with the Common Market, let me say that even still, with the intimation by the Government that in the event of Britain's joining the Common Market Ireland would propose to apply for membership, we are getting inquiries from industrialists from other countries. Not only that but we have proposals actually under examination by Foras Tionscal from industrialists who do not seem to have any regard to the fact that the Common Market conditions will affect the carrying out of their proposals for the setting up of industries.

I wish to emphasise what Deputy Dillon suggests has not been sufficiently emphasised so far. I have used every occasion to say categorically that no facilities available under the Undeveloped Areas Act or the Industrial Grants Act are also not available to Irish interests. In other words, these facilities are equally available to foreign or Irish interests or a combination of both. I cannot say that too strongly and the fact is that in many cases there has been a very welcome combination of foreign and Irish investment in these new companies.

Deputy Corish and Deputy Dillon mentioned the proposed review. I am sure Deputy Dillon appreciates there are many places throughout the country which have conditions akin to those in the undeveloped areas. Parts of the country, for instance, Cavan and even the midlands, have a record of emigration we would not like to see continued. If, by reason of the more attractive grants available to areas west of the Shannon, these other areas find difficulty in attracting people to set up industries, my intention would be, in any amended provisions we shall effect, to treat such areas as special development areas and to extend the discretion now given to the Minister on the recommendation of Foras Tionscal to schedule fringe areas contiguous to the underdeveloped areas to these other areas whose economic conditions are much akin to those within the undeveloped areas. I do not think it would be justifiable to give the same consideration to more populous and more industrialised centres such as Dublin and Cork. They have other attractions. They have industrial tradition, population and are situated at highly developed ports. These advantages would outweigh the disadvantage they might suffer in the amount of grants that would be available.

In reply to Deputy Corish, while on paper the difference between the maximum grant under both Acts might appear to be substantial, even on paper it is not substantial: 100 per cent. for buildings and 50 per cent. for plant and machinery in the undeveloped areas; two thirds for buildings and one third for plant and machinery outside the undeveloped areas. In effect the difference is not so great. The amount of grant is usually related to the type of industry to be established, the amount of employment to be given and also, which I think is an important factor, to the amount of capital to be invested by the promoters. These grants are not given as freely as to suggest that promoters of industry do not have to show the colour of their own money. Indeed they do, and in that respect I could reply to Deputy Corish by saying that, by reason of the amount of capital investment in these promotions, it is hardly likely they will abandon that capital investment and leave very lightly the factories they have built here.

In regard to the minimum of 2,000 workers in connection with which the Government might, on the recommendation of Foras Tionscal authorise a grant in excess of £250,000, may I say to Deputy Corish that is not a statutory condition. It was mentioned here during the passage of one of the Undeveloped Areas Acts as an indication of the type of industry the Government would be inclined to assist in the event of an application being made for establishment outside the undeveloped areas.

Mr. Dillon

Can the Minister say offhand how many industries there are in Ireland which employ 2,000 people?

Mr. J. Lynch

I suppose hardly more than two or three. I mention that it was only a suggested minimum because at the time there was the prospect of a very substantial industry coming here. It was only a prospect— the prospective promoters had travelled many parts of Europe—but we wanted to ensure there would be no limitation on the kind of assistance we would give which would put us at a disadvantage with other countries in Europe. It was in those circumstances the power was to be used. In fact where some proposals had been made to the Government for the use of this power no such grant has been given.

There were many other points raised to which I should like to reply if I had more time. However, may I say that the example taken by Deputy Ryan, namely, Galway, in regard to lack of industry, was a bad one. As far as I understand, the number of industries to be established in Galway will about take up the potential employment available there. It would be, perhaps, unwise to establish a major factory in Galway having regard to the number of projects already established and the number of proposals which are more than likely to come to fruition. Incidentally the difficulty about employing girls in industry in Dublin is that there are not sufficient of them for many industries. Therefore there are no economic reasons why girls should emigrate and seek employment elsewhere. I am sorry I have exceeded the time. I should like to have had more time to reply.

Question put and agreed to.

Committee Stage ordered for Tuesday, 25th July, 1961.

The Dáil adjourned at 11 p.m. until 2 p.m. on Tuesday, 25th July, 1961.