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Dáil Éireann debate -
Tuesday, 28 May 1963

Vol. 203 No. 2

Committee on Finance. - Taiscí Stáit Teoranta Bill, 1963— Second Stage.

I move that the Bill be read a Second Time. The primary purpose of this Bill is to complete the arrangements necessary for the implementation of the revised scheme for the provision of finance for large-scale industrial projects The new grants scheme was given legislative sanction in the Industrial Grants (Amendment) Act 1963 and the Undeveloped Areas (Amendment) Act 1963 which became law on 20th February, 1963. These Acts lay down special conditions for cases involving grants by An Foras Tionscal in excess of £250,000. Included in the conditions are limits of up to 50 per cent of the cost of the fixed assets or £1,000 per worker employed in the industry, when in full production, whichever is the lesser. For projects of a high capital cost and relatively low labour content, grants within the limits I have mentioned might not in themselves be adequate to attract the industries to this country. On the other hand, it would not be desirable to give a grant of up to 50 per cent of the cost of fixed assets in every case regardless of the labour content as this could result in grants running into millions of pounds for some projects involving very little employment. The Government, having considered various possibilities, have come to the conclusion that it is necessary to make provision for supplementing grants, in cases involving very large expenditure, by making available other financial facilities, including loans on preferential terms.

There are good grounds for arguing that part of the financial assistance to be provided by the State in these cases should take the form of participation in the equity capital. Provision is being made in the Bill to facilitate arrangements of this kind. Equity participation by the State has been suggested to a number of industrialists interested in establishing factories here, but the response has not always been favourable. Insistence on a share in the equity capital in all cases where large grants are provided by the State might, as the Committee on Industrial Organisation recognised in a recent report on industrial grants, reduce the attractions of the grants scheme and this could hinder the efforts being made to attract really worthwhile projects to the country. The special loans scheme was accordingly devised as a partial alternative to equity participation. It implements one of the recommendations in the CIO report to which I have referred.

Deputies will recall that, in the course of the debate on the industrial grants legislation, the Minister for Industry and Commerce indicated that the Government had decided that a special Finance Company should be established to provide on preferential terms a proportion of any loan finance required to supplement a grant. The present Bill provides for the establishment of this new company. The Industrial Credit Company will continue to be available to provide loan finance on commercial terms.

The special loan scheme evolved is better in some respects than equity participation. These loans would rank before all shareholders in the event of a liquidation, and provision is being made for a sharing in the profits in so far as dividends in excess of 7½ per cent are paid.

Promoters will be required to provide at least one-third of the cost of fixed assets and the State agencies concerned will be in a position to provide the balance of up to two-thirds. This arrangement will mean that the promoter of an industrial undertaking will be supplying the entire working capital, plus one-third of the cost of fixed assets. Such an order of participation would be a guarantee of the promoter's confidence in the viability of the project and would be a strong inducement to make a success of the enterprise. Also, the scheme should ensure that no worthwhile industry will be lost to the State because of inadequate financial facilities.

Grants by An Foras Tionscal will, of course, be subject to the limits laid down in the relevant Acts. Any balance to be provided by loan from State sources will be partly by way of a contract loan given by the Credit Company at normal interest rates and repayable within a period of up to 12 years with no capital repayment for the first two years, and partly by way of an unsecured special loan provided by the new company, repayable only at the option of the borrower, and free of interest for a period up to 7 years. Thereafter the special loan would bear interest at the same rate as applied to the contract loan, plus additional interest at the rate of ½ per cent for each 1 per cent per annum paid by way of dividend on the promoters' investment in excess of 7½ per cent. Promoters can avoid the payment of this higher rate of interest by redeeming the loan. The arrangement ensures, therefore, that for successful projects the State will either participate in the profits or secure the return of the loan capital provided.

Deputies may wonder why it should be necessary to form a separate company for the purpose I have mentioned. There are two main reasons. First, it is outside the functions of the Industrial Credit Company to provide loans of the kind contemplated. The Industrial Credit Company operates in accordance with the normal commercial criteria of a finance house and it would not be appropriate to require it to engage in this new type of business. As Deputies are aware, the company provides special loans for re-equipment and expansion to meet conditions of free trade on terms which include waiver of interest and deferment of capital repayments for up to five years. However, these special loans are secured loans and are in a different category from the unsecured loans redeemable only at the option of the borrower which the new company will provide.

Secondly, the new company will have other functions which I shall refer to shortly. I would like, however, at this point to assure Deputies that the establishment of the new company will not complicate the grants and loans arrangements or add to the bodies that promoters have to deal with. To secure economy in administration, the new company's affairs will be managed by the Industrial Credit Company. Consequently, persons seeking loan facilities from the State will, as hitherto, have to deal only with that company. Subject to the necessary detailed arrangements being worked out, it is contemplated that the Industrial Credit Company, having satisfied itself as to the merits of an application, will divide the approved loan into two equal parts, one of which will be provided by the Credit Company itself in the normal way and the other half by the new company. Applicants will thus have no direct dealings with the new company and there is no reason to fear that the arrangements will complicate the work of industrial promotion. I should add that cases will be confined to the relatively small number eligible for grants from An Foras Tionscal in excess of £250,000.

Although it would not, as I have explained, be practicable in general to secure for the State an equity interest where substantial financial assistance is provided by the Exchequer, it is desirable to take power to enable shares to be so acquired in any case in which equity participation would be a desirable and acceptable manner of providing finance. The new company will be responsible for holding such shares on behalf of the State.

It is also proposed that the company will have the powers of—

(i) taking up shares and debentures in hotel companies to which a grant or guarantee of borrowing has been or is to be given under the Tourist Traffic Acts;

(ii) taking up shares in Aviation Development Limited, the development company established by the Potez interests in connection with the project to manufacture commercial aircraft in this country;

(iii) taking over from the Industrial Credit Company Limited the shares and debentures in Industrial Engineering Company Limited, Dundalk;

(iv) guaranteeing borrowing of companies to which An Foras Tionscal make grants.

In two hotel cases in which large grants were given, it was found desirable that the State should participate in the equity and this was effected through Aer Rianta and the Industrial Credit Company. It is now desirable to make specific arrangements to provide for any further cases that may arise.

Would the Minister mind saying what the second case is? We all know the first is the Intercontinental. What is the second hotel?

The Hilton.

As regards the aircraft project, two companies have been formed, one a development company to be jointly owned by the Government and the Potez concern and the other a manufacturing company to be owned by the Potez interests. One half of the capital of the development company equal to the proved cost of the special tooling, but not exceeding £1.5 million, will be provided by the Government, and the special tooling will be the property of the development company. An equal amount of capital will be held by the Potez interests, representing the development work carried out by them, and the corresponding assets, including all the designs and prototypes, will also become the property of the development company. For the first ten years, half of the profits of the manufacturing company in excess of £100,000 a year will be paid to the development company and no dividends will be paid by the manufacturing company to its shareholders until the amount subscribed to the development company has been paid to it.

The Industrial Credit Company Limited holds shares to the amount of nearly £½ million and debentures totalling about £2 million in the Industrial Engineering Company Limited, Dundalk.

Nominal value.

The Credit Company' participation in the Dundalk under taking arose out of Government policy for the utilisation of the engineering works of the Great Northern Railway when these works became separated from the transport concern. It is considered in the circumstances that the new company, when established, would be the more appropriate body to hold the shares and debentures on behalf of the State.

The provision authorising the proposed company to guarantee borrowings by companies to which An Foras Tionscal make grants is complementary to the power to issue loans.

The Bill provides that the new company will not take up shares or give loans or guarantees of loans except on the direction of the Minister for Finance, given after consultation with the appropriate Minister and with the agreement of the companies concerned. The projects with which the new company will be concerned—with the exception of the Dundalk undertaking —will already have been examined by either An Foras Tionscal or Bord Fáilte as the case may be; in addition, projects involving special loans will have been examined by the Industrial Credit Company in connection with an application for commercial loans. The new company will thus be a channel for State investments undertaken on the basis of an examination of the projects by autonomous State agencies. It will have the duty of watching over the progress of concerns in which it holds shares, debentures or loan capital on behalf of the State and to bring to the notice of the Minister for Finance any development likely to affect those investments.

The company will have a nominal share capital; it is proposed to finance its operations by repayable advances from the Exchequer within a limit of £7½ million. A sum of £1½ million will be required for the investment in Aviation Development Limited and up to £2½ million in respect of the transfer from the Industrial Credit Company of their shares and debentures in Industrial Engineering Company Limited. This leaves a balance of about £3½ million for the other purposes of the company.

The facilities being provided under the Bill will enhance the attractive incentives now open to persons establishing new industries here and should reinforce the impetus given to industrial development by these measures. The availability of the company to serve as a holding body for certain State investments will also fill a gap in our financial institutions.

I recommend the Bill for the approval of the House.

Before the Minister sits down, could I ask him one question, please? The Minister stated, at the fourth page of his script:

I should add that cases will be confined to the relatively small number eligible for grants from An Foras Tionscal in excess of £250,000.

Can the Minister tell me where in the Bill is that limitation imposed, because, as I read the Bill, everyone who gets a grant from An Foras Tionscal, will be entitled to come within this?

Yes. It is just that if An Foras Tionscal gives more than £250,000, they may come under this Bill but, if they give less, they will not.

Where is that in the Bill? It is not in this Bill.

No, it is not in the Bill but that is the intention.

First of all, let me say that the manner in which this Bill was first thrown to the Dáil without any explanation or indication of its purpose on the day it was circulated is something that deserves criticism. Some few days after its circulation, there was a blurb in the papers which I expect was an inspired attempt to rectify the crude manner in which a Bill, which purely is an operating Bill, was put out without any indication or explanation of its purpose.

The more I see of this Bill, the more I feel that it is an attempt to cover up in a clumsy and crude way a few ghastly mistakes. The Bill, I had thought first of all, was an attempt to do something that I have been saying for a long time should be done. I believed and I had hoped when I saw the introduction of the Bill on First Reading here that it was designed to provide that the attempt that had been made to hide ghastly failures under the shadow of commercial viability service given by the Industrial Credit Company would end.

I have spoken on many occasions in this House on the desirability that something should have been done at the time in relation to the situation in the Great Northern Railway Works, Dundalk, when the Great Northern Railway folded up. I made it clear then, and I make it clear again now, that I accepted wholeheartedly that there was an obligation on the Government to take some steps to provide alternative employment for those concerned. Deputy Dillon on the Control of Imports Bill today made our view clear in relation to those employed in industry where industry is forced to fold up because of the wind of change now blowing across the world in relation to free trade. So, too, was our view in relation to those employed in the Great Northern Railway. The manner in which more than one Minister of the Government came in here and told the House that the loans made by the Industrial Credit Company to Dundalk were purely commercial loans is something of which the Government cannot now be proud. The manner in which a Minister of the Government came in here on many occasions and indicated that the venture in Dundalk was an entirely private enterprise venture and he was therefore debarred from giving any details in relation to it when, in fact, it was all the time a State-operated concern, is also something of which the Government cannot now be proud.

Later, in some detail, I shall expose the fake behind this Bill and behind the Minister's speech when he talks of transferring £2½ million from Industrial Engineering in Dundalk to the new company; £2½ million perhaps in nominal value, but I doubt if that £2½ million is worth, for reasons I shall give later, as much as £250,000. What has happened is that at least £2¼ million of the taxpayer's money has been lost, lost by wrong handling in the early stages of that venture; and the Minister is producing this Bill now as a means of covering up the mess made because of the obstinacy of the Taoiseach in insisting that one particular man should be left in complete and absolute control, notwithstanding that that man had been found out earlier as being a person with feet of clay where industrial management is concerned.

Now, if it were only one instance, we might grumble, we might criticise, we might complain. It would not matter if it were only one instance. But the significant fact is that this Bill is drawn on the basis of the future and the future will be cut on this particular pattern. I have always felt that any commercially viable proposition put forward should be handled as a purely commercially viable proposition by the Industrial Credit Company. That is accepted now. I am glad that the Government have gone as far as accepting that, but, where it is not a commercially viable proposition, one that cannot reach proper commercial standards, it is entirely wrong and improper for the Government to bring pressure on the Industrial Credit Company to make finances available. That the Government did that can be shown without question in relation to Dundalk. In fact, it has been admitted by the Minister in the speech he has just made. Where the Government feel it essential in the national interest that money should be invested in a concern which is not economically viable, there is an obligation on the Government honestly and honourably to say so, to state that they are doing this because they believe it is desirable in the national interest and not try to hide behind any cloak of commercial viability. The Government should state "We are doing this because we think the national interest demands that it should be done for reasons (a), (b), (c) and (d)."

In relation to Dundalk, having regard to the hardship involved on those employed there, there was undoubtedly a case for the Government coming out openly and saying they were going to take certain steps and they were taking them in the national interest. They did not do that. They said that this was a commercial proposition and it was being handled by the Industrial Credit Company as a commercial proposition. We know now that it was not a commercial proposition.

What are the Government doing in this Bill? They are providing through the medium of the definition of a State-assisted company a back door which will not be open to the glare of public opinion and, relying on anonymity and secrecy, they can take certain steps to deal with particular concerns. I, of course, accept the Minister's word when he says, as Minister for Finance, that it is the intention to restrict the operations of this Bill to those companies given grants of more than £250,000 by An Foras Tionscal. If that is the intention, then why was the Bill not drawn on that basis?

We are here setting up a statutory corporation. We are here giving a company that will operate within the four walls of this Bill power to say that it is operating within the provisions of this Bill. A State-assisted industry means an industry that has received at any time any grant from An Foras Tionscal. That will be the position under the Bill as drafted. If the Bill were drafted in such a way that its operation would be restricted to companies with grants in excess of £250,000, that should have been stated in the Bill. To bring the Bill to the House, without including that provision, is sloppy drafting and not the type of drafting one would expect from the Minister and the Department of Finance. I accept the Minister's word that that is his intention, but I suspect that the intention really is to leave the door open for a change at a later date, a change that can be made without the knowledge of the general public.

If the intention is—I accept the Minister's word—that the Bill will be restricted to companies with grants in excess of £250,000, then the Minister should have told us today what companies have so far got, or been promised, grants in excess of £250,000. He did not do that. We are apparently expected to pass this Bill blindfold. It is easy for a Minister introducing a measure such as this to say that anybody who criticises it is preventing employment, that anybody who criticises it is preventing expansion. I fully understand the ease with which such criticism can be made but when sums of taxpayers' money as large as are involved here are being expended and the means for their expenditure is being provided, somebody has a duty, no matter how unpopular it may be or no matter how much the Minister may be able to point a finger in relation to it, to come out and to state boldly the results of the mistakes of the past and how those mistakes of the past can influence the future.

I want to know what companies other than the companies named here have got grants in excess of £250,000. I want to know why there is no restriction in this Bill on the company giving the facilities where the amount is under £250,000 in grant and I want to know why there is no provision in this Bill prohibiting facilities where it can happen that there will be unfair competition with existing concerns.

I can see that there might have been a case for coming in here in relation to stated industries, naming them, putting them down bravely and bluntly on the face of this Bill, putting down on the face of this Bill, for example, Verolme Dockyard which already has, I understand, got facilities of over £2.3 million contractually and I suspect that one of the reasons behind this is that they will be given additional facilities by the Minister under this legislation. It is well known that they have applied for them. It is well known that some of the work they have done has been done by them in competition with another Irish similar concern, that it has been done at a loss and that it was taken at a loss by contract because the other concerns were contracting at realistic figures at which they knew it could be done. It was done by the concern in the South at a loss, and, having regard to the existing contractual arrangements that were made, it means losing taxpayers' money. Losing taxpayers' money is bad enough but when, as well as losing taxpayers' money, business is taken away from another private enterprise concern, it is worse.

I have had discussions here across the House in relation to Dundalk with the Minister for Industry and Commerce in regard to the fact that work was taken and staff were enticed from my constituency up to Dundalk with the assistance of the taxpayers' money. It will not improve our economy as a whole if work that was formerly done in one part of the country is merely transferred to another part, particularly when it means that it is being done at a very heavy loss of the taxpayers' money.

I do not know whether the Minister has ever personally examined the affairs and the balance sheets of the Industrial Engineering Company in Dundalk because there is in relation to his speech in reference to it a naivete or simplicity, and whatever other criticisms any of us may have about Deputy Dr. Ryan as Minister for Finance nobody could accuse him of being naive or simple. What is the position about this £2½ million it is alleged will be transferred to the Industrial Credit Company in respect of Dundalk? The Minister, I am quite sure, has later accounts than I have been able to get in the Companies Office in this respect but in relation to Dundalk, the pattern on which we were asked to pass this Bill is that the Industrial Engineering Company had had an authorised share capital of £1 million and an issued share capital of £500,000, of which all but some 502 shares are held by the Industrial Credit Company Limited. The 502 shares are held as qualifying shares by the directors and I suspect are held by them only as nominees of the Minister for Finance, but that is a matter on which anybody inspecting the documents in the Companies Office records is not able to judge.

Let me take the liabilities first. Capital of £500,000 was put in. There is a capital reserve of £19,262 in respect of the proceeds of the sale of assets taken over from the Great Northern Railway Board. There is a loss on profit and loss appropriation account of £49,966—call it £50,000. The Industrial Credit Company have lent £1½ million. When one adds that to the £500,000 in shares, one finds a figure of £2 million. I got those figures out of the Companies Office and the Minister himself acknowledges that this concern which is to be taken over under Section 3 of the Bill had £2½ million advanced by the Industrial Credit Company. Of that figure of £2 million at the date of the balance sheet I have in my hand, £143,000 had been given as an unsecured loan to the subsidiary associated companies; £470,943 had been given for shares in the subsidiary companies at cost; and there were sums due by those associated companies of £112,280.

When one examines the accounts of the subsidiary companies, whether it is the Dundalk Engineering Works, which has an operating loss of £278,854, whether it is Frank Bonser and Co. Ltd., which has an adverse balance on the profit and loss account of £4,479; whether it is Dealgan Steel Founders, Limited which also has a deficit balance on the profit and loss account of £105,963; or whether it is in respect of Commercial Road Vehicles, I defy any accountant to produce any real or tangible assets for the £2 million invested in that department by the Industrial Credit Company other than, perhaps, about £350,000 to £400,000. The same assets still remain but another £500,000 has gone in and it is true beyond doubt that the Dundalk operation has meant that the Government have lost £2 million of the taxpayers' money. In spite of the £2 million that has gone, the amount of employment given was something without any comparative value because the £500,000 that was not lost would have, adequately and properly, if it had been invested in a sensible manner, provided for the employment that is given in the works.

We all know of the almost-scandal that arose in respect of the Heinkel motor cars. The manner in which funds provided by the State were lost in that venture was common gossip. I believe that Commercial Road Vehicles, the subsidiary company in Dundalk, will prove a success and it is the only one that will. The others have meant the loss of £2 million of taxpayers' money and the tragedy is that it has been wasted in such a way that it has given no real permanent employment in return for the investment made. If the amount spent were going to mean permanent employment for those whose employment was jeopardised by the closing of the works, I am quite certain everybody on all sides of the House would have said: "That is worth doing."

Instead of doing it like that, the Government chose the backhanded way of pretending this was a commercial proposition, when in no circumstances could anyone have believed it to be such if he examined the matter in any detail. I urge the Minister when replying to this debate to tell us how much money has been lost in that venture and to provide by way of Estimate for the amount that has been lost to be paid back to the ICC, money that it should never, as a judge of commercial viable concerns, have been asked to pay, an amount that should have been provided by the Government in the ordinary way by Vote of this House. He should provide now to wipe out the loss and to give this new company at least a chance of starting off in that respect on the right foot, without being told that they are taking over an asset of £2½ million that I think would be generously valued at £500,000. That would be a better proposition and would make for better accounting in the future in the strict sense of the term in relation to the taxpayers' money.

Turning to the Bill itself, we are told frankly by the Minister—I commend him for his frankness in this respect—that the purpose, to a large extent, is the provision of £1½ million for Aviation Development Limited. I know nothing about that concern but I read in the papers that a man who has been able to make a great success of his own business and who with his own private enterprise, investment, drive and money has been able to further the company very largely that he controls, operates and directs, said in public—and was not afraid to say— that this particular industry had been hawked all around Europe. I should like to know, before this House concedes £1½ million to such an investment, whether that is true or not. I should like to know the exact terms on which those funds are being made available.

Some people say that when a person comes in with any investment here, he should not be asked, and Ministers should not be asked, to disclose the terms on which facilities are given by the State. I have never held that view, whether on this side of the House or the other. If a person wants to come in and start a business here, we should encourage him as far as possible. They are all welcome and nobody should pry into their private business but the day they ask to make their private business a matter of cashing in on the taxpayers' money for assistance, there is an entirely different standard to be used in judging the operation. Such people by their own act, in asking that taxpayers' money be handed to them as a grant, are themselves saying that they wish their arrangements to be open to the daylight of criticism. It is not then a matter of a Minister or a Government disclosing private affairs; it is the person who comes along and says: "I may be able to go into this on my own or privately but I want some of the general taxpayers' money as well as the money I am putting into it." Once a person says that, there is an obligation on the Minister concerned to say: "Certainly, but I am the guardian of public funds and as such I must be in a position to ensure that the light of public opinion is let into this operation involving the spending of public funds."

This does not do that; it provides by a veiled definition that State funds can be passed on, State interests taken over in other concerns without proper public examination. The very least that should be done in relation to Section 3 of this Bill is to provide that companies who are already named should be named and in addition, that any other companies who want to get help through the operation of this Bill should be named by ministerial Order tabled in the House. Short of that, there will be no way in which the public will know of what happens here. We will be faced perhaps in a few years time with the same story of heavy loss to which I have already referred and faced with it on the basis of: "Oh, well; it is done under the cloak of commercial viability."

The whole method of disbursement of public funds through State companies of one sort or another has now reached such a proportion of our total capital resources as to require new thinking as to its method of control. The Minister complained on Budget day that buoyancy of revenue was not sufficient to match the increased charge arising for the public debt. Why? Because the investments that had been made did not produce their returns. Is that of itself not a criticism of the selection of those investments.

Investments by the State can, of course, produce a return in two different ways. They can be self-financing, that is to say, they contain within themselves the seeds that will provide for the repayment of interest on the moneys lent and of the sinking fund. Therefore, in the method of financing provided by the Government it is little more than a loan in the true sense of the term. Apart from that, they can provide their desirability in the additional revenue or expansion they are likely to generate, not merely in the public sector alone but in the whole economy. That type of investment is, of course, sometimes a difficult one for a Minister for Finance to handle, but, nevertheless, can be an excellent one from the point of view of the national interest.

When we get a position, as the Minister said in his Budget Statement, in which the cost of financing an investment had not been met by the revenue coming in directly, on the one hand, or by buoyancy of general revenue, on the other, surely it is time for us to sit back and to think, criticise and see whether the manner in which those investments had been selected was one over which we would all desire to stand? Therefore, I would suggest to the House that at present, when investment of public moneys to State-sponsored companies of one sort or another has reached such fantastic proportions in relation to the national availability of capital assets, a case is now to be made for something equivalent to the Committee of Public Accounts for voted moneys. That Committee and the Comptroller and Auditor General operate in relation to the moneys voted by this Dáil to ensure that the instructions of the Dáil in relation to such payments are truthfully and faithfully carried out. It is not for the Comptroller and Auditor General to challenge in any way the policy of any payment. It is not for the Committee of Public Accounts to challenge in any way the policy of any payment. All the Comptroller and Auditor General, in fact, does is to see by his detailed accounting procedure that the instructions given by this House are not exceeded and that the funds paid out are paid out by the authority of this House.

In relation to the disbursement of ordinary governmental expenditure, be it on the Supply Estimates or in relation to the Central Funds, that procedure is perfectly adequate. It ensures that the Minister concerned must come to the Dáil and seek proper and adequate authority before he disburses public funds by way of Supply Estimates or otherwise. The Central Fund payments are, of course, made under statutory direction in the various acts. We have now arrived at a situation in which the role of the State-sponsored body takes up such a very large sector of the whole economy and such a large proportion of the available capital, that something must be done to ensure that the State-sponsored bodies operate within a system of proper and adequate control.

Let me not be in any way misunderstood when I say I know that the Minister for Finance and other Ministers do through their Departments keep some tag on the expenditure of those companies. But I do not think that is sufficient. We will have to provide something that is, if you like, a committee of this House dealing with State-sponsored bodies, whose task and function is to supervise their working, and further to have an equivalent to the Comptroller and Auditor General who will be able to ensure that the policy adopted in relation to those is the same as the policy indicated when the enabling Bill was going through the House.

I put it that way deliberately because the State-sponsored body always has its functions in relation to direct year to year policy laid down in this House but within the terms of an enabling Bill, enabling, perhaps, as in this case, the inauguration of a company under the Companies Acts or in other cases, a specific board to be set up. Once it has been set up, it does not come back again for review or it is never considered for public review unless further or additional funds are required. On the other hand, if there were some means of assessment, some means of criticism, without danger of preventing day to day administration, we would not be faced with the same problems as those with which we have been faced in relation to a couple of those concerns.

I believe it was wrong to get the Industrial Credit Company to deal with cases that were not commercially viable. That was prostituting the functions of the Industrial Credit Company. I believe it is right to provide that where something requires it to be done in the national interest the Minister and the Government should have appropriate power to direct such would be done, but it should be done properly, clearly, cleanly and above board by the Minister concerned. It should be done by naming the concern, scheduling it perhaps in an Order and putting that Order on the Table of the House so that if any Deputy, in relation to the disposal of taxpayers' money, believes something is not right, he can come in here and, by putting down the normal annulling motion, openly ventilate what has come to his ears.

We all hear from time to time rumours about one concern or another and we endeavour, in so far as we can, to see whether those rumours are with or without foundation. Nothing can do a company more harm than that rumours without foundation would float around about it day after day, week after week, perhaps month after month. The Minister must know as well as I do that, in respect to those companies who are assisted by Government directive and by an estimate of public viability by the Industrial Credit Company, those rumours will continue unless there is some method of ensuring a proper, competent and clear examination.

Any company worth its salt has nothing to fear from such an examination. On the contrary, any company worth its salt knows that the result of such an examination would be to put an end to rumours without foundation which might otherwise damage it. The Minister should know that far from harming our industrial structure in so far as the State sponsored bodies are concerned, it would give a sound basis to industry generally and would achieve public respect as well.

I support this Bill. I do not think that will be any surprise to anybody, in view of the oft-stated policy of the Labour Party of favouring greater initiative by the State in industry and the participation of the State in the industrial sphere in cases where private enterprise does not seem to be able to do the job or appears to be unwilling to do the job. For that reason, I welcome the Bill. I trust it is not the end of State participation in industry as described here in the Bill and as elaborated in the Minister's speech.

The Labour Party have advocated this for a number of years and whether that has been in the minds of the Fianna Fáil Government or not I do not know. The Minister will admit this is one of the things we have been advocating for a long time. We hope these proposals are designed to offset to the greatest extent possible redundancies that may arise with the dismantling of our tariff and quota systems, because it seems many of the captains of industry here at the present time who feel they cannot readapt themselves and change their industries to suit keener competition will go under, leaving a gap to be filled by somebody.

If private enterprise does not fill that gap, my Party believe it is the duty of the State to step in. We, therefore, trust that this measure is designed to provide against redundancy in the event of our becoming a member of the EEC, in the event of freer trade coming along, whether we are members of the EEC or some other trade organisation. Quite a number of factories have been established here in recent years with pretty valuable State assistance by way of loan and grant. While it is a good thing that industrial employment in these factories has increased to some extent, at the same time we must have regard to the type of person employed.

I have no firm figures available but it has been indicated to me that while male adult workers get valuable employment in these industries, in many of them the emphasis seems to be on juvenile female labour, one might say. I appreciate young boys and girls coming out of school are entitled to employment but our primary concern must be the provision of factories to give work to adult male workers. If we are to continue to lose the cream of our manhood through emigration it is a great tragedy.

I was pleased to note—and I trust this is not mere lip service—the Minister's seeming interest in the establishment of industries with emphasis on the provision of employment. The State have, through their agencies, given good loans and grants towards the establishment of new industries, and while I know these agencies have had regard to the employment content in such factories, I would suggest that the primary qualification for a grant or loan should be tied to this labour content question. Many industries have been opened by the various Ministers and invariably we hear that, though at the start the industries would employ only about 30, ultimately the employment content would rise to 300 or 400. I wonder if these objectives are often realised. They seem to me to have been very much exaggerated in many cases.

The Minister should here go much further than the Minister for Industry and Commerce did in the Industrial Grants (Amendment) Act and the Undeveloped Areas Act to ensure that the maximum employment possible will be given and that this will be the primary qualification for the payment of grants. I note in Section 3, which is the principal section, a list of the types of industry in which the Minister may acquire, hold, sell, assign and otherwise deal with shares and debentures. They are listed as follows:

(i) a state-assisted industrial company,

(ii) a company to which a grant or guarantee of borrowing has been or is to be given under the Tourist Traffic Acts, 1939 to 1961, in respect of the development of holiday accommodation,

(iii) Aviation Development Limited,

(iv) Industrial Engineering Company Limited,

I am sure the Minister has considered whether that list should be extended. If he has not already done so, he should give consideration to the extension of such investment as is described here, under which quite a number of other industries which would qualify would be assisted by this company. Those are the new industries that have been established over the past 20, 30 or 40 years. In the past two decades, we have had a system of State assistance either by loan or grant, and I think many of our existing industries would qualify.

There are many old established industries that have given, and continue to give, very valuable employment, industries that were established 50, 75 or 100 years ago, through private investment. I suggest that the possibility of their being assisted through this measure might be explored. I know the difficulties that might be involved, but surely, with the agreement of the owners or the directors who would invite the Government to participate, it might be possible to give those old established industries a shot in the arm, so to speak, to enable them to compete with those they will be selling against or with, with the advent of freer trade.

Bearing in mind the possibility of our becoming a member of the EEC, the Minister should also consider the total acquisition of industries that do not seem to have either the intention or the desire to readapt themselves, to modernise their machinery, or to make improvements to meet the challenge. I do not know whether that is possible within the terms of this Bill, but I believe that unless it is done by the State in respect of private industries that have no intention or desire to do anything, we will have a lot of unemployment and redundancy.

The Minister may describe this as a beginning or an experiment. I appreciate that it is a beginning, and somewhat of an experiment, but there are industries in many parts of the country that never asked for "a bob" from the State which now feel they are in a pretty bad way and could do with a shot in the arm. I should qualify that by saying that the industry it is proposed to assist should satisfy this company that there is a desire and a firm purpose on the part of the owners or the management to make the changes they believe would make the firm progressive and maintain or increase employment.

I assume that in respect of an industry in which the State invests money or acquires shares, there will be some form of control—I do not suggest overall control—by the Government through their agency, this company, and that they will have some say in the determination of policy. That may be implicit in the Minister's speech, but I should like him to pin-point it and say whether what I believe is a fact. I do not want to flog this, but we have had the unfortunate experience of the St. Patrick's Copper Mines in Avoca to which the State advanced many millions of pounds. It may be true that over the past two or three years of the life of the St. Patrick's Copper Mines, the Minister for Industry and Commerce had an idea of what was happening, but up to a short time before the death of the copper mines, the Dáil and the general public had no idea that its death was imminent.

We had no direct representation in the St. Patrick's Copper Mines. We had no say in the formulation of policy, and we had no say in the administration of the affairs of the company. I have always believed, and I still believe, that where the State provides substantial sums of money by way of loan, and particularly by way of grant, there should also be some Government representation which will be conversant with the policy of the company, which will participate in the formulation of policy and which will, in effect, look after the interests of the people of the country, the taxpayers, who in the heel of the hunt are the only people who will lose if there is to be a loss. There have been losses in many of these concerns to which the State advanced money. People are beginning to resent the fact that they have no representation, through the Government, in concerns in which large sums of their money are involved.

The Minister for Industry and Commerce and the Government have always told us they have no function, An Foras Tionscal have no function, and the Industrial Development Authority have no function, in placing industries throughout the country. They will now be required to have a function in determining where an industry is to be established. If my memory serves me correctly, one of the general reports of the Committee on Industrial Organisation suggested—I forget the actual term they used—the regionalisation of industries. It is not unreasonable that when a big project such as the Minister envisages in the Bill is being established, the Government, through the company which it is now proposed to set up, should have not a vital say, but a say, in where that industry is to be established. That is very important, especially in view of the importance the CIO placed upon the proposal they made to the Government, which I think was more or less accepted in principle by the Government on consideration of the report.

There is one other thing I should like to know, if the Minister has the information available. I have always believed that the financial encouragement we give to foreigners to establish industries here is very generous. Maybe I am entirely wrong in that, but I wonder has the Minister any figures or information to demonstrate what inducements are offered, say, by other European countries to those who contemplate establishing industries there. I do not know what competition we have to meet in trying to induce people to set up industries here. It would be interesting and very informative to know how we compare with other European countries in the assistance we give by way of loan or grant to encourage the establishment of industries.

I should like to support Deputy Sweetman's plea that we should get more information in this House about investments by way of grant or loan in industry. The usual reply is to the effect that it would not be proper or usual to disclose the innermost secrets of a particular industry. One can see immediately the disadvantage at which an industry might be placed if information about its business were disclosed to the Dáil and, of course, to the public. But apart from the reports we get annually from An Foras Tionscal, the Industrial Development Authority, etc., with regard to grants, some system could be evolved such as the one we have at present in regard to the Committee of Public Accounts which would ensure that representatives of the House were satisfied that the money was being spent to the best advantage, that there were no scandals, and that there was no special preference for this person or that person, or for this section or that section.

As I say, I approve of this Bill and I would ask the Minister to say what conclusion he came to if he has considered my proposal regarding the investment by the State in ordinary industry where the industry wants the injection of new capital or where it is evident that a particular industry has no intention of changing its methods and machinery for the period which we are entering, when it is obvious that we are entering a period of freer trade, whether in the EEC or any other organisation. It is most important that that should be done and more important especially in our present circumstances that the State should, where private enterprise either fails or refuses to do the job, step in and as far as humanly possible ensure that industry will be built up and that we will not have redundancy but increased employment.

I did not intend to intervene in this debate but having listened to Deputy Sweetman criticising the Government for putting money into the Dundalk Engineering Works I feel I must say something on this matter. It is easy for Deputy Sweetman to see all the faults now and to criticise. I feel that if Deputy Sweetman, when he was Minister for Finance, had shown some foresight, we might not have been involved in the very difficult problem regarding the DEW which faced us in 1957. This money was used to save the employment of 1,000 men in the old Great Northern Railway works. Not only that, but it was used to save the economy of Dundalk town which everybody knew would have collapsed, were it not for the action taken by the Government then. I will go into what actually happened at the time very briefly. About November, 1955, Lord Glentoran, the then Minister for Commerce in the Six Counties, publicly stated that it was the policy of the Six County Government to close down the railway lines in the Six Counties. Immediately that statement was made, it was obvious to everybody, and particularly to those working in the GNR works, that there would be considerable redundancy in the works even if the lines in this part of the country were not affected, because the GNR works in Dundalk were doing all the maintenance and repair work for the whole GNR system, in the Six Counties as well as in the 26 Counties.

It was, also, obvious that if the Northern lines were closed down, the branch lines joining the 26 Counties main lines with those in the Six Counties would also have to close down and therefore there would be even more redundancy because the loss of traffic would affect the system here. That was the time in 1955 when the Government should have been doing something about the matter, when they would have had at least two years to take the necessary steps to provide alternative employment for the people in the works. That was the time when the Coalition Government had the time and the opportunity to make the necessary changes. However, the Coalition Government did nothing and in 1957 when we came into office the whole problem fell into our laps and we had to face this problem at once. The result was that the Government had no option but to endeavour as quickly as possible to establish whatever industry it was possible to establish in Dundalk to ensure that these people would not lose their employment. That was an exceptionally difficult problem.

I can clearly remember the feeling of relief in Dundalk when the Government made a move and ensured the employment of those men. Despite what Deputy Sweetman says, they provided very considerable employment and are still providing it for the workers in Dundalk. I am perfectly well aware that the Fine Gael Party had been itching to make use of this matter for a considerable time and they have been wondering when it would be politically expedient to do so. I do not know if they reckon that this was the politically expedient time to do it but I am well aware of the fact that they were anxious to draw whatever political kudos they could from the difficulties being experienced in the works. Their hopes in that respect will misfire.

Deputy Sweetman has developed a certain technique recently in this House. He always tries to give the impression to the Dáil and to the country that there is something sinister behind whatever we do. Sometimes it catches on and people say: "Maybe there is something in it," but he knows there is no truth whatever in it. However, I do not expect honesty from Deputy Sweetman as a politician and therefore I have to put up with it. There is nothing sinister about this Bill. As a matter of fact, when the Minister for Industry and Commerce was dealing with the Industrial Grants Bill in February, he forecast the introduction of this Bill. He said the Minister for Finance would bring it in and he gave a short outline of what this Bill would deal with. That was the first mention of this Bill in the Dáil. The Bill has now come along and we are told that it is a crude attempt to cover up some ghastly failures and so on. He went on to point out that we are trying to hide the affairs of the Dundalk Engineering Works but then he went on to read all the figures himself. That was a silly sort of performance.

I am not going to let you hide them.

If he said he could not find these figures, there would have been some case but having made the accusation that we are trying to hide the figures, he then read them out. Somebody published them and Deputy Sweetman got them and read them out. Why then does he think that we are trying to cover things up?

Of course, he made the usual accusation—that the Taoiseach had appointed a friend to look after things there and that he was a failure. The Taoiseach appointed a man who had very large experience in transport matters. He is not there now. A few changes have been made in the meantime. It looks as if no man can solve the problem there in the way Deputy Sweetman would like it to be solved. It is a hard case to deal with. It is unfair to blame any man for not making a complete success of the whole thing.

The Industrial Credit Company have been examining the accounts of these various Dundalk companies. They intend to put them down at their present value before they hand them over to this new company. The new company will get the assets at a proper value handed over to them. The Industrial Credit Company will be relieved of any expenditure they made in the Dundalk factories so far. Everything will be cleared up. Nothing will be hidden from the Dáil or anywhere else.

If I come here and ask for money to pay what is due, I cannot very well hide it from Deputy Sweetman or anybody else. I would advise Deputy Sweetman to try to deal with these things in a straight and honest way. If he can help in solving the Dundalk situation, I shall be glad of his help. However, it will not improve matters to make accusations about hiding things and trying to conceal the facts by a Bill of this kind.

Deputy Sweetman's first point was that we gave him no explanation of the Bill. That is a fairly common occurrence. For many Bills which we circulate, we do not give any explanation. It is only when a rather difficult Bill is circulated that an explanatory memorandum is sent out with it. I do not think there is very much in this Bill that would need to be explained. It is a perfectly straightforward Bill. In fact, it could be read by a person who has no great knowledge of the law and be understood.

I gave the impression, I think, in my opening speech that this Bill was to cover cases where a grant of £250,000 or more would be given. When Deputy Sweetman asked about it, I understood that was the intention but it may not be in the Bill. As I explained in my Second Reading speech, where a large amount of money is being invested by a new company, we do not want to exceed a certain amount by way of grant. Let us say a person invests £10 million. We do not want to give half of that—£5 million—by way of grant. Where the cost of the factory will be, say, £50,000 the grant might be £25,000; that would be normal. When it goes into millions, we thought we should try to meet it in another way.

We thought of giving a loan on certain terms—equity capital, if the person would agree or, if not equity capital, then a loan at a favourable rate of interest where we would benefit if high profits were being paid by the company later on and where the company would be always free to pay us off and we would get our money back. We thought that type of financing might be useful where a big amount of money was involved. It is not likely, therefore, that it would ever be required for the smaller type of case where the grant would be less than £250,000. I cannot visualise at the moment that it would ever be required for a case of that kind. On the other hand, I do not know if the Bill should be amended to say that. I do not see what object there is in putting into the Bill that we must use this Bill only for cases for £250,000: however, it can be considered.

Deputy Sweetman also came back to one of his old bêtes noirs, the Verolme industry. I have never heard Deputy Sweetman say a good word about the Verolme factory. I think Deputy Sweetman kept me here two days because I wanted a guarantee for a loan when that factory was starting. Fine Gael fought it tooth and nail. We do not know why Fine Gael are so much against it. Verolme came here and started a good factory. Almost a thousand people are employed. Why we should not help him the same as any other industrialist coming into this country I do not know but Fine Gael think otherwise. I do not know why they are so much against him. Fine Gael now say that we are contemplating giving him big grants. I have not seen any grant going to him yet——

There may be grants going to him—I do not know. I am not saying that I would refuse a grant if the negotiations should go that way. It must be remembered that Verolme was building his factory in four stages: there was a financial consideration at each stage up along. I do not know whether he has reached the fourth stage and I do not know whether a grant would be payable. If there is, why this Fine Gael hostility to Verolme? Why should he not get a grant the same as anybody else? I do not know why there is such hostility to him by Fine Gael. I suppose the only reason is that he started under Fianna Fáil and it was a fairly big industry and, therefore, Fine Gael must try to give the people the impression that he got very preferential treatment, better terms than anybody else who came along, and so on—in other words, that Fianna Fáil got him along.

I do not think the Minister is doing a great service to the concern by saying that.

That it is a completely Fianna Fáil concern, and so on.

I am not saying that. I say that Fine Gael have adopted a certain attitude. I am saying that because it came along under a Fianna Fáil Government. He certainly did not subscribe to our funds, as far as I know. He came there under a Fianna Fáil Government and, therefore, some fault must be found with him. That is all.

The Minister is unfair. Where a big sum of money is involved, we are entitled to be critical and we should be so.

The amount was not as big as for the St. Patrick's Copper Mines and we lost that.

You gave—and we lost it.

Now Fine Gael will blame us.

Of course, it was your fault.

For the first two years after 1957, every Fine Gael speaker referred to the two big industries they brought to this country—the oil company and the St. Patrick's Copper Mines.

When we left office, St. Patrick's Copper Mines money was being used. You put taxpayers' money into it and took no steps to see that the money was properly protected.

The proprietors there said to us that they would like to try a little further, further and further. I thought we had gone too far. Some of my colleagues said, in effect: "If we close down now, Fine Gael will say we closed it down because of them." We should have done it, I admit, because it was not a viable proposition from the beginning. There were three propositions there. It had to have a certain percentage of copper; it had to have a certain output every month and it had to get a certain price for copper. Never in its whole existence did it fulfil any of these three conditions or had it any chance to succeed. However, we had to pay up.

Deputy Sweetman also spoke about Verolme taking a contract from another Irish firm. Verolme, under his contract here, cannot compete against an Irish firm unless with the consent of the Minister for Industry and Commerce.

Then the Minister must have given his consent.

He refused.

One of the Irish Shipping repair contracts.

What about it?

It was sent down there and tendered for by another Irish firm.

I do not know about that.

The Minister will have an opportunity before the Committee Stage because I will raise it again.

I should like to get more particulars about it. Deputy Sweetman wants to know if I could give a list of the companies that will come under this Bill. I cannot; I do not know what companies will come under it. I dealt with existing companies that are coming under it. They are named in the Bill. For the future, I do not know what companies may come in. I gave the type of case that may come under this Bill but I am not aware of any pending application at the moment and therefore I do not know what may be done. In any case, An Foras Tionscal publishes every year a list of grants given and there is no secrecy about it. Any Deputy can look at the list and see what grants were given by An Foras Tionscal in that year and can also read the annual report of this new company when it is set up and will be able to see what they have been doing. So there will be no secrecy about it, whatever Deputy Sweetman may say to the contrary.

Potez, the other company, have discussed their arrangements for coming in here. As I mentioned in my introduction, there will be a development company where Potez and the State will hold equal shares. Potez will supply the designs, the prototypes and so on, which will largely make up his contribution to the development company and the manufacturing company will be owned by Potez. For that, it gets a grant but it will be owned by Potez. He gets the grant but until he pays off our share in the development company, he pays no dividend to his shareholders. That is not a bad arrangement as far as we are concerned. I think that we could not be expected to do much better than that.

The last suggestion that Deputy Sweetman made is a suggestion, indeed, that has given me a lot of thought, that is, that a committee of the House should be enabled to examine the returns of these State companies. When I came into this office, I was very keen on that. I read a number of memoranda on the subject. The matter was considered also in the British House of Commons. They made various attempts there to deal with this matter also. I read of their recommendations and of their failures. I cannot get a good recommendation on this matter because the point is that you either go too far or you do not go far enough. It is very difficult to get a scheme whereby a number of Deputies can examine the affairs of a company, without giving them at the same time the power of being maybe a bit too vexatious or of creating trouble for the company concerned. I was trying to base it on the same system as applies in the case of shareholders at an annual meeting. Shareholders at an annual meeting can ask questions. I have had experience of being, as it were, on both sides of the table and I know that directors need not give their shareholders very much information, and they do not, but at any rate a shareholder can ask questions. It must be remembered that a shareholder in a company wishes that company well and does not want to do it any harm. He may want information. There might be a danger, if we appointed a committee to examine a State company, that a Deputy might have a grievance against that State company and might not care very much whether he did it harm or not. That is one of the troubles about it. I should like very much to get some system that would be workable and at the same time, would not involve the danger of any harm being done. I would welcome a scheme.

Surely a Deputy would last a very short while in public life if he tried to harm an industry in that way?

Some Deputies are lasting very well.

There is one over there, speaking, on his feet.

Deputy Corish made a plea that the list of companies that might be helped by this new Taiscí Stáit Teoranta should be extended. What he had in mind, I think, was that existing companies that wanted money to carry on should be brought in. I do not think they could be brought in because this company is not going to deal with the working capital of a company that is doing badly or taking them out of a bank overdraft difficulty, or anything like that. It is designed to encourage the establishment of new manufacturing companies. It could, of course, be applied to an existing company that is extending its business. Take an existing manufacturing company that wants to double its business. That is the type of thing that could come under this Bill, too, but not, I think, the type of case that Deputy Corish has in mind.

The Deputy thought the Minister for Finance had not sufficient control. He has, of course, because the Minister for Finance gives the direction to this new company to make the loan. He does not initiate, it is true. He does that when it is recommended to him by the Minister concerned—the Minister for Industry and Commerce in many cases or perhaps the Minister for Transport and Power, who may be dealing with these companies that they have taken charge of. If they recommend a loan from this new company and, of course, if the manufacturing company coming in is agreeable to the terms, then they will ask the Minister for Finance who, in most cases at any rate, will agree to it.

Deputy Corish also said that according to a recent report from the CIO, the Minister for Industry and Commerce now has power to direct an industry where to go. I think he is not exactly correct in that. The CIO, in their recommendations with regard to the establishment of industries, made one particular recommendation with regard to development centres. That was a controversial sort of question. Some think that all industries should be congregated rather close together rather than to have one industry in every little town in the country. They favour this scheme. They give very good reasons, I must admit, as to why they favour this scheme but the Government did not adopt it and therefore, so far as that is concerned, the Minister for Industry and Commerce is in the same position as he has always been; in other words, it is for the person starting an industry to decide where he wants to establish it.

I could not say, in answer to Deputy Corish's last question, whether our financial incentives here are more favourable than those given in other countries. It is impossible to make a comparison. There are incentives here by way of grants, favourable loan terms, income tax exemption for exports, provisions in regard to wear and tear, and so on. There are so many and various incentives to people to start industries that it would be impossible to compare those given here with those given in other countries because we might be better in one respect and might not be so good in another. All I can say is that on the whole our incentives are as good as those in other countries.

Question put and agreed to.
Committee Stage ordered for Tuesday, 11th June, 1963.
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