We have had a fairly wide-ranging debate, I think, on this Estimate. I shall endeavour to deal with the major points which have been raised. I think I would find it impossible to deal with all of them. It seems to me that perhaps the first thing that should be said is this. It would appear from some remarks that have been made, including those we have just heard from Deputy Cosgrave, that there is a certain atmosphere of cold feet beginning to develop in regard to free trade and we ought now to take another look, it has been suggested, at the operation of the Anglo-Irish Free Trade Area Agreement because it is suggested that membership of the EEC is receding.
I do not accept either of these propositions. One thing that should be made perfectly clear to everybody in this country is that if we had no Free Trade Area Agreement and if we were not going into the EEC, whether under an interim arrangement or as full members, we would still have to live in a world of free trade and to survive, since we depend so much on external trade markets and on world markets to survive. We must reduce our tariff barriers in order to compete in a free trade area. The fact that we have a Free Trade Area Agreement with Britain is operating to introduce our industrialists gradually to free trade competition with Britain and perhaps for membership of the EEC, which I have no doubt we are going to attain.
I have no more information than anybody else has as to when that will be, but it still appears to me to be a not-unreasonable target, membership by 1970. I want to stress again, whether we achieve that or not, if this country is to survive, it must be able to survive in free trade conditions. Let us have no misleading of the people into thinking we can suddenly draw back from this. This is something that depends solely on what decisions we make. We can make the decisions as to how we will deal with the situation that arises but we must realise that we have to survive in an area of free trade.
Deputy Cosgrave, and indeed other members of his Party and members of the Labour Party, have been saying inside this House and outside it—in fact, they have been alleging—that there has been dumping of tyres in this country and that our footwear industry is suffering because of the advent of free trade under the Free Trade Area Agreement. Those things are wrong. I do not say they have been made by Members of the Opposition out of any sense of malice but I say they have been made in ignorance because they have not done their homework. This would not be the first time in which they failed to do their homework.
The position in regard to the footwear industry is this. The protection which operates in the footwear industry is such that there is a quota which allows in by way of imports less than four per cent of the output of our factories. This includes even types of footwear that are not made in this country at all. That level of protection has operated here for about four years and is still operating, so there is no question whatever as far as the footwear industry is concerned of free trade operating. This is not free trade. This industry is highly protected at the moment, nor has there been, to my knowledge, any allegation of dumping of footwear in our home market.
The truth of the matter is that in the footwear industry in this country, we have over-capacity as far as the home market is concerned and as far as export markets are concerned, particularly in Britain and on the Continent, and more especially Western Germany, there has been a considerable economic recession. This has reduced the market for footwear considerably and many factories in those countries have either closed down or are on short time, and if they are, the effect has been that their markets have become either difficult or impossible for exporters. Of course, this has thrown back on our home market. It is clear to anybody who knows the facts that the difficulties in the footwear industry, both in Britain and on the Continent, are due to economic recessions which have taken place in Britain and on the Continent, especially in Germany. It might be of interest to know that the latest trade statistics show that our imports of footwear in 1966 were valued at £.45 million while our exports were worth £2.4 million.
As far as the question of the alleged dumping of tyres is concerned, I think there ought to be a bit more care given to the use of words like "dumping" in this context. Dumping has a meaning which is internationally accepted and when we hear about the introduction of anti-dumping legislation—I will deal with that in a moment—we are talking about a specific thing which is internationally accepted and is two-fold in its constitution: firstly, that goods are being sold—let us assume they are being dumped here—at a price below that which they sell on their home market and, secondly, that they are causing serious disruption of the industry or economy of the country receiving the goods. As far as tyre imports are concerned, despite the fact that the duty operating to protect our tyre industry is 45 per cent flat, with a minimum duty of 11s 3d in the case of UK imports and 12s 6d in the case of others, the tyres which were coming in here and being sold were dearer than our home-produced tyres and were selling on the market here at a higher price than our tyres, made by Dunlops of Cork, were selling at.
In those circumstances, these excessive imports took place and it was in those circumstances that we, after consultation with the British Government, as we are entitled to do under the Free Trade Area Agreement, arranged to impose a quota which has been arranged in regard to imports from Britain. We imposed a flat duty of £3 per tyre on tyres from third countries which—we make no bones about it— is designed to keep them out. This, of course, is only a temporary arrangement. Let us be clear: there was no dumping of tyres in this country. There were excessive imports but these were selling at prices higher than the home-produced article. There is a lesson in this for all of us. I want to make it clear that I had consultations, and my Department had consultation, with the management of the Dunlop company in Cork when the quota was imposed. They also, I understand, have for a considerable time been in consultation with the trade unions concerned in their factory in regard to re-organisation and they have assured me that they are confident that, by the implementation of these plans, they will be able to succeed against foreign competition because the special protection by quota, and so on, is only temporary and they know this.
They have to streamline their production and make themselves very competitive and, of course, make their products capable of selling, at least when they are selling at the same price as others. I believe they can do this and will succeed in doing so. Let us not talk about this as if it were something like tyres being dumped on this market.
Another matter which has been raised by some Deputies relates to the car assembly industry. I have informed the House on a few occasions in response to Parliamentary Questions that negotiations were taking place designed to ensure the continued existence of the car assembly industry in this country, at least at the level at which it has been operating, and I would hope, an increased level. These negotiations, which were involved, required negotiations with a number of parties, with the assemblers in this country, the British manufacturers in particular, the assemblers of cars originating in places other than Britain, and the trade unions. It required a lengthy amount of negotiation and, indeed, not just lengthy but some difficult negotiations were involved.
I am not in a position at this moment to say that the matter has been finally completed, but I hope to be in a position to say that, if not within a matter of days, at the outside, within a matter of weeks. I am quite satisfied that the arrangements that have been made will be very much to the benefit of our car assembly industry, and, in particular and especially, to the many thousands of workers engaged in that industry. Indeed, it was only to protect the employees that this effort was made.
There has also been some criticism of the fact that we have not yet introduced anti-dumping legislation. There are a few things I should like to make clear about that. Firstly, under the protection regulations which we have at the moment, the devices against dumping are, in fact, more effective than those we could have under any anti-dumping legislation. Reference has been made to fears that have been expressed from time to time, sometimes with a great deal of shrillness and publicity, about dumping but you will find, if you investigate any of these cases which received so much publicity, that the dumping has not, in fact, taken place and that our industry has not suffered as a result of dumping.
I want to make this quite clear. It is sometimes represented that we are wide open to dumping at the moment, in the absence of this legislation. That is not true. In regard to the legislation, the white print of the Bill had in fact been prepared, as far as I can recall. The terms of the Bill had not been approved by the Government when further negotiations took place within the GATT relating to anti-dumping regulations. The effects of the negotiations which took place and changes made in those regulations were to strengthen the anti-dumping measures we should introduce. We, therefore, were obliged to re-draft the Bill but it was well worth while because it will be a stronger measure than we would otherwise have been able to have. I hope to have this Bill before the House shortly, certainly in this session.
There has also been reference to the increase in the interest rates of building societies. I have made it clear before, and I should like to make it clear again, that I am very well aware of the hardships involved for a number of individuals as a result of the increases in those interest rates. It was with the greatest reluctance that I came to the conclusion that it was necessary for me to agree to these increases. The House will recall that the building societies postponed the operation of the increases at my request for a period of three months to enable me to have the matter examined in the greatest detail. I had that examination made. Incidentally, this examination was not carried out by officers of my Department but, in fact, by an investment counsellor and accountant from another State body who have a good deal more expertise in this matter than is otherwise available anywhere else in the State service. The conclusions to which they came and on which they advised me were that I would not be justified in refusing to agree to these increases.
One of the things one must remember in regard to the rates of interest charged by building societies is that if one were to artificially depress or keep down their interest rates, the result would almost certainly be that the funds available to them would diminish substantially, with the result that the financing of their building would come to a stop as far as their operations are concerned, and my recollection is that building societies provide for the greatest proportion of housebuilding in this country as between local authorities on the one hand, insurance companies, and so on, on the other. If interest rates were to be kept down, you would have a very serious stoppage in the building of houses and the very serious unemployment which would result from this. To have such a stoppage could not benefit the country in general, the building trade in particular, nor would it benefit the people who are getting loans from now on. Indeed the only way the building societies could have dealt with it was to step up very considerably the rates of interest charged to new borrowers, so that in effect they would get them to subsidies borrowers who had loans at lower rates of interest for some years past.
I do not know what happened overnight to Deputy O.J. Flanagan. I think somebody must have spoken to him or he must have spoken to himself because last night he made what I told him across the floor of the House was the most constructive speech I have ever heard him make. I do not say his speech today was unconstructive but there was a very different note in it. One of the things he said today was that in the operation of price controls, I as Minister for Industry and Commerce had caused the cost of living—I do not remember his exact words—to soar completely out of hand.
The facts of the matter are that the consumer price index shows that between mid-May, 1967 and mid-August, 1967 there was no increase in the index; and that of the 3.24 per cent increase recorded in the mid-February-mid-May period of 1967, 1.99 per cent was attributable to the Prices Advisory Body's recommendation on flour and the Budget taxation on cigarettes and beer, the balance for all other items being only 1.25 per cent. Whatever else may be said, this clearly indicates that to suggest that the operation of price control as administered by me and the Department has contributed to a substantial increase in the cost of living is a statement not in accordance with the facts.
A matter that has been raised by Deputy Sweetman, by, I think, Deputy Dillon and later by Deputy Cosgrave, is the question of the proposed operations of Ceimicí Teoranta—the proposal to produce potable alcohol and to sell it. There are a few things that must be made clear about this matter. First of all, it is clear from the legislation that Ceimicí Teoranta are legally entitled to make this product. It is also true to say that they have in fact done this and did it for some years; and when they did it, there was no evidence whatever to show they interfered with the reputation or the good name of the spirits produced by the Irish distillers.
I think Deputy Sweetman suggested that if Ceimicí Teoranta knew of a market for this product, it was their duty to reveal it, presumably to the whiskey distillers. I do not accept that. First of all, the market available to them for the production of alcohol from potatoes would almost certainly not be available to the distillers for the production of spirits from grain. Secondly, I do not accept that it is the duty of Ceimicí Teoranta to produce information to the whiskey distillers about markets of this nature which they may discover and I want to explain to the House the background of this kind of operation on the part of Ceimicí Teoranta and to make it clear that this also applies to certain other State companies.
The context in which this debate has taken place has been devoted largely to the question of the provision of employment throughout the country. There are various aspects of this and methods by which we can increase employment; but one of the ways in which it can be done and should be done, in my opinion, is to utilise the expertise and the knowledge, and indeed the capital, which is now available in State companies which is not being used to the full at the moment. In pursuance of that idea. I instructed Ceimicí Teoranta to examine the possibilities which exist for the expansion of their activities into activities which would be viable in a free trade context and which would provide further employment in this country. This is the obligation of every State company of that order who are capable, by their nature, of doing this kind of thing.
On the other hand, I do not say State companies should rush around wildly into activities of this nature which would have the effect of wiping out private enterprise. There is no net gain to the economy in that. However, I believe firmly that every State company which can do so should expand and diversify its activities and provide further employment, always providing that doing so will not have the effect of wiping out private enterprise. I have no information available to me to suggest that if Ceimicí Teoranta carry out this policy in respect of potable alcohol, they will damage the reputation of Irish spirits abroad, but I want to say this much: if I had such information, I should certainly look again at this programme. I do not wish in any way to have the activities of Ceimicí Teoranta result in damage to the distillers of this country but I am not satisfied at all on any information I have that the proposed activities will have this effect. If the reverse can be shown to me, I am prepared to talk again to Ceimicí Teoranta about the proposal.
Talking about the distillers brings me to the contradictory views expressed during the debate. On one hand, we had Deputy O.J. Flanagan who seemed to think that the whiskey distillers have been doing a great job. Deputy Cosgrave also, to some extent, seemed to be of the same opinion. On the other hand, Deputy James Tully said he was not at all convinced they were doing a good job. Let me say quite frankly that in this argument I agree with Deputy Tully. I wish to make it clear that I am speaking of past performance, not the present, which I shall speak about in a moment.
If one looks at the figures for Irish whiskey exports in the past, one can only conclude that the results have been piteous. It is a strange thing that almost any Irishman in any part of the world will mention Irish whiskey first. Yet if we look at the figures, we find Irish whiskey far down in our export lists. Almost everyone gets on to the subject of Irish whiskey and some of the most vehement arguers are non-drinkers. Having said that, I believe our distillers in recent times, having got together, have embarked on a sensible, aggressive policy of expansion. I wish them every success in that and I am willing to give every help I can in achieving the objectives they are trying to achieve. However, in all fairness, it should be said that this operation probably would have been very much easier if it had been embarked on some years ago when everybody else in the country was advocating it.
I do not know whether Deputy Sweetman was suggesting that I or some other people were decrying the value of profits. I do not decry the value of profits at all: in fact, I am quite convinced that within the obvious limits all of us would lay down, the more the businessmen of this country make money, the better it will be for all of us because as they make money, they build up their businesses, build up employment, and that is what we are all interested in. I do not wish unduly to restrict the profits businessmen can make, but in this whole context of free trade, there has been a suggestion from some Deputies that the Government are doing nothing to prepare industry for free trade, that they are providing no leadership in this matter.
I do not wish to give the House a litany of all the things the Government have done during the years to prepare industry for free trade. The House is well aware of the grants which have been given—half the cost, the consultative reports which is the first step we have to take and a grant of 25 per cent for implementing those, as recommended by the consultants. These are only the basic ones. There are all sorts of supports available for exporters.
If anybody can have any complaint not only against me but against my predecessors in this connection, it is probably that we seldom seem to talk about anything else except the necessity for adaptation for free trade and urge and spur on industry to prepare for this. I think we should face up to the fact that we have a difficulty there. On the one hand, we have certain sectors of our industry which have not done their jobs so far in preparing for free trade. We do not want those sectors of industry to have any sense of complacency. Undoubtedly, if they do not take steps, they will be wiped out in free trade. On the other hand, to harp all the time on this creates a sense of pessimism and gives the impression that Irish industry as a whole has not a hope in free trade.
I believe that very large segments of our industry will not only survive but will do very well in free trade. The evidence I would give of that is that if you look at the performance of our industry in recent years, you will see that it has been spectacularly successful on the export market, and this is the real test of ability to survive in free trade. Very many of the new industries which have been set up in this country in recent years have been geared specifically to the export market and are already operating in markets all over the world and making good profits. Many of our older firms have adapted and are already being phenomenally successful in export markets all over the world. A number of them are selling their goods in EEC. The amounts involved, relative to our whole trade, are not very large but some of them are operating in that market. If you take the common external tariff and freight charges, some of them have to face up to 40 per cent on their goods before they can get into EEC but they are still selling. Industry which can perform in that way will obviously, with free trade, do extremely well. It will expand and also expand its employment. Even if we are not in EEC, as a result of the Kennedy Round over the next three or four years, the level of tariffs in EEC will be reduced, on average 35 per cent. I feel that, on performance, a great segment of our industry will compete, and compete very successfully, in these conditions.
It is important that we should not create an undue sense of pessimism in our people in regard to industry and its ability to compete. Having said that, let me say again that there are still sectors of our industry which have not adapted to free trade and which, if they do not, will not survive. I gave a great deal of thought to this problem after I took up this Ministry. I came to the conclusion that one of the problems was that we had a failure of communication, that numerous exhortations were being made by Ministers, by the Taoiseach, by business leaders and trade union leaders but that we were not getting through to the people to whom the message was vital and these were perhaps in some cases smaller firms. Many of the ones that really were adapting to free trade might have adapted, anyway, without any exhortation because they were that kind of firm.
The problem of communication is not easy to solve, but, in an effort to do so, I have arranged meetings, some of which I have already had with the chairmen of the adaptation councils for various sectors of industry. I have asked them for reports on their respective industries in relation to the CIO reports, how far they have progressed with the recommendations of the CIO reports in implementing them and, if they have not done so, why: what have been the difficulties and, in so far as the situation has changed and requires different measures, what are these measures. I have got reports from most of them by now. I shall have a further meeting with them shortly to go into these items in great detail. I have already had a meeting with the Irish Congress of Trade Unions. I hope to have a further meeting with them in the not too distant future. I am having meetings with various sectors of industry. I am hoping to get through this communication barrier which does exist. In these circumstances, anybody who suggests that the Government are not alive to the dangers of free trade or are doing nothing about them is really not himself aware of what is happening.
Reference was made by Deputy Mullen and, I think, others to the Institute for Industrial Research and Standards. Deputy Mullen gave what I consider some very well-earned praise to that Institute. It is doing a great job. Deputy Sweetman said the Government are not doing enough to encourage research industry. While I myself should like some more progress in this field, nevertheless I should like to remind him that most of our firms are medium or small and could not, of themselves, afford to carry out research. In the circumstances of this country, most of them are forced to rely on the Institute for Industrial Research and Standards. The Institute has been making a considerable amount of progress in contacting industries. They have been holding open days at which, this year, a number of industries were represented. They have had various sectors of industry in. They have gone out to meet them in the factories and on the workshop floor. The Industrial Reorganisation Branch of my Department is, all the time, where appropriate, drawing the attention of industry to the services available from the Institute and these services have been availed of to an increasing extent. We should like to see more of that. I think it is quite clear that we are on the right lines. To the extent that the Institute needs strengthening, I shall try to assist it in that regard but the lines along which we have been moving have been the right ones and have been shown to be the right ones, having regard to the circumstances of this country.
There have been a few references to the Potez factory in Baldonnel and I want to say a word about that. I did promise the House that I would, when I was in a position to do so, make a full statement about the whole history of this project. Unfortunately I am not in a position at this stage to make that statement, but I can say this much, that not so very long ago the number employed at Potez in Baldonnel was 40, and today it is 140. That employment figure is going up and it is going to go up fairly steadily. The work involved is largely the production of components for aircraft. A great deal of progress has been made in establishing the suitability of the premises, of the equipment, and of the workers in relation to the aircraft companies which would be giving orders to an operation such as this. The action that is taking place now, which has led to this increase in employment, is on the right lines in regard to what is required to get this factory operating at full pitch and with very considerable employment.
