Does the Minister intend that the terms and conditions which he will fix under section 24 will differ to any great degree from the terms and conditions relating to other State bodies?
Industrial Development Bill, 1969: Committee Stage (Resumed).
Question again proposed: "That section 24 stand part of the Bill."
No; on the basis that I mentioned the last day, I envisage part-time members.
Question put and agreed to.
SECTION 25.
I move amendment No. 1:
In lines 13 and 14, to delete "nominated either as a candidate for election to" and substitute "elected to"; and in line 15, before "as", to insert "is nominated".
I put down this amendment because I hold that it is unfair to a person who might seek office or desire to become a Member of the Oireachtas, that on nomination to either this House or the Seanad, he should be disqualified from being a member of the Industrial Development Authority.
In putting down this amendment, I adverted to the fact that under section 30 an officer or servant of the authority who becomes a Member of either House of the Oireachtas does not cease to be such officer or servant until such time as he is elected. I can understand that persons nominated to be Members of either House of the Oireachtas could be very good members of the Industrial Development Authority. Such a person could be defeated in a Dáil or Seanad election and, in fact, would then cease to be a member, or would have disqualified himself from being a member, of the authority. Fair play and justice in the ordinary approach to things would indicate that, if elected to either House of the Oireachtas where a person would have a compelling interest in political affairs, he should then cease to be a member of the Industrial Development Authority; he should not cease to be a member of the authority before that.
I am not without sympathy with the thinking behind this amendment. There are two points I should like to make in this regard. First, the section as drafted follows the lines of section 4 (5) of the Broadcasting Authority Act, 1960. Secondly, we should give careful thought to the situation that is envisaged here. A member of the IDA who would have been nominated for election to either the Dáil or the Seanad and who was unsuccessful but who then carried on as a member of the authority could be in a somewhat invidious position. In particular, such a person could be open, as the authority could be open then, to the suggestion that political influence would be brought to bear in the decisions of the Industrial Development Authority, particularly in regard to grants. This is something which we should take great care to guard against. It is true to say that, apart from the understandable excess of enthusiasm which might strike some candidates at election time, it has never been seriously suggested that the Industrial Development Authority has operated on a political basis. I am anxious to preserve that situation. For this reason I have considerable doubts about the wisdom of this amendment in relation to the IDA as distinct from many other State bodies which I can think of.
I would respectfully disagree with the Minister. We are far too gentle and solicitous about how we, as politicians, might, perhaps, affect other bodies outside if we are members of them. We are too quick to throw ourselves off everything. It should be sufficient that a man who was elected a Member of either House of the Oireachtas should cease to be a member of the Authority. I know of one unsuccessful candidate of the Fianna Fáil Party in this city at the last election who is now doing good work as head of a certain board which has direct connections with industry. I will not mention this man's name. I do not think he did anything harmful by continuing his work which he had been doing before he was a Fianna Fáil candidate. If elected, it would have been wrong for him to continue. I would ask the Minister to look at this amendment later on and see whether he can find some compromise.
I am not without sympathy with the idea behind the amendment.
I feel the Minister would do it but he is not let.
No. I came into the House with an almost open mind on this amendment. I had considerable sympathy with the idea behind it. I have spoken to the House about my reservations. It might be damaging ultimately to the Industrial Development Authority and to its standing and reputation for impartial operation if we were to accept this amendment.
I have no doubt that everybody knows the Industrial Development Authority and An Foras Tionscal have so far acted absolutely impartially.
Amendment, by leave, withdrawn.
Section agreed to.
Section 26 agreed to.
SECTION 27.
Amendment No. 1 (a) in the name of Deputy Cott is on the Order Paper. This amendment is out of order as it involves a potential charge on State funds.
Amendment No. 1 (a) not moved.
Question proposed: "That section 27 stand part of the Bill".
Is the superannuation proposed under the section to be in line with the superannuation enjoyed by the staff in other comparable State bodies?
Yes.
Question put and agreed to.
Sections 28 and 29 agreed to.
SECTION 30.
Question proposed: "That section 30 stand part of the Bill".
I should like to advert to the fact that where an officer or servant of the authority becomes a Member of the Oireachtas he ceases to be an officer or servant of that authority. This is the proper line in my view, and the one that should have been followed in section 25 in relation to politicians.
The Deputy will appreciate that there is a difference between officers and servants, who are carrying out policy laid down by the authority and a member of the authority itself.
I do. I accept that.
Question put and agreed to.
Sections 31 and 32 agreed to.
SECTION 33.
I move amendment No. 2:
2. To add to the section a new subsection as follows:
"(4) The Authority may make a grant, on such terms and conditions as it thinks proper within the limits of subsection (2) of this section, to a local authority, which on sanction of the proposed development by the Authority, shall have provided advanced factory sites in an industrial estate within such local authority area."
I move this amendment because, from my work as a member of a local authority and as chairman of a county council, I know it is emphasised under the Planning Acts that local authorities should set up industrial estates. In my own county we are setting up an industrial estate at Ardee. In the setting up of these estates, one could, perhaps, buy land and specify it as being for industrial development. One could go further. I have inquired about this from An Foras Tionacal and I find that grants are not available for the acquisition and development of sites. Where the Industrial Development Authority were co-operating with the local authority grants should be available to that local authority when, in their wisdom, the board of such authority wish to give grants for the development of sites and for the building of advance factories. This is the reason for this amendment.
The Bill makes a new provision for the building of advance factories by the Industrial Development Authority outside industrial estates. At the moment their powers are limited to advance factories within industrial estates. The provision we are introducing enables the Industrial Development Authority to build advance factories in different parts of the country and it goes sufficiently far having regard, first, to the fact that we obviously cannot have the country dotted with advance factories and, secondly, that the authority will be the best people to decide where this is the right approach. On the other hand, if the local authority or anyone else should decide to build advance factories and provide an industrial estate they are not precluded from doing so under this Bill. In the event of their letting or selling the factories they would, of course, be entitled to get the grants which are available under this Bill. Alternatively, the people taking the factories from them would be entitled to get the grants. The arrangements between the developers and those taking the factories would have to be adjusted accordingly. Either way, the benefits of the grants would accrue to the local authority which build advance factories. They are not precluded from availing of the grants. If we accepted this amendment we could not effectively guarantee that the benefit of the grants would ultimately go to a project which would be approved by the Industrial Development Authority. It is certainly conceivable that a grant could be given by the Industrial Development Authority to a local authority for the building of an advance factory which would ultimately be taken over and used by promoters of a project which would not be approved by the Industrial Development Authority. Whereas, as long as the overall control of this kind of building is in the hands of the Industrial Development Authority we can ensure that this does not happen. We can meet the situation which Deputy Donegan wants to meet under the provisions of the Bill without running the risks which would be inherent in accepting his amendment.
If the Minister is not prepared to go as far as Deputy Donegan has envisaged in this amendment, he could, perhaps, go part of the way. My own personal belief is that we have never gone far enough in bringing local authorities into this whole business of industrial development and the establishment of industries. We must get local authorities interested if we are in earnest about this matter. They know exactly where industries should be located and where services are available. I understand the Minister's point in relation to the fact that Industrial Development Authority grants are only given on the basis of fixed assets, and are given to the industries concerned. Could payment of this grant not be delayed if necessary until an industry would take up this factory and then the portion of the grant relating to the fixed assets of the factory itself be paid to the local authority? That would be one way of overcoming the Minister's difficulty.
In effect, that position arises at present because if a local authority under existing legislation were to build an advance factory and prepared to wait for their money until somebody came along, took over the factory and got a grant, then they get the grant in that way and therefore we are not advancing the position. Deputy Clinton made the point about bringing the local authority into industrial development and I agree completely with him on this. What I said earlier in relation to regional development envisages bringing in the local authority much more than has been done in the past. The best example is to refer to what has happened in the Limerick/ Clare/North Tipperary region where there is very close co-ordination between the local authorities concerned and SFADCO. Deputies will have seen the draft plan produced by SFADCO which envisages building advance factories in certain places. I would visualise the same kind of approach being adopted in each of the regions and on a proper assessment of the region a decision made regarding the building of the factories. This will be done by the IDA at the instance of the regional group. What Deputies are trying to achieve will be achieved without running the risks I adverted to earlier.
Would the Minister say whether under the re-working out of the IDA there will be any change of procedure before grants are made payable? Does he contemplate increasing the technical side of the examination of the feasibility of the factory's performance? What in industrial terms would the IDA regard as a reasonably permanent future in which to invest cash? Nothing is forever, but is there any kind of guarantee to be sought before cash is given regarding the question of the length of operations?
I do not wish at this stage to tie the hands of the IDA by purporting to define what is meant by "permanent" but I could visualise that the interpretation of the word "permanent" in this clause might vary in different cases depending on the nature of the industry and its geographical location. I think the IDA should have sufficient flexibility in this matter. The Deputy referred to the growing degree of technological advance involved in industries being set up and this is true. Consequently, with this change the IDA find it necessary to make more detailed investigations and in some cases to call in expert consultants in relation to particular projects, both on the technical and marketing sides. While this policy costs money, nevertheless it is paying off. This is reflected in the fact, to which I have referred on another occasion recently in the House, that 60 per cent of our failure rates in industry relate to undertakings approved prior to 1960. The House can rest assured that the approach of the IDA is as rigid as the House would wish having regard to the necessity to get industries and to the fact that one must take risks.
I am sure Deputy O'Leary will not mind if I have a little joke on him when he said "nothing is forever". A young man of his marital status should remember the old words "diamonds are forever"——
You will not find diamonds over here.
On £2,500 a year you should be able to buy a good one.
However, reverting to my amendment, I wish to see more people involved with local authorities. The whole idea of the Planning and Development Act, 1963, of regional planning, of Buchanan and so on, is that we should try to direct our energies into the proper channels, into providing the necessary infrastructure. I would go a stage further and leave local authorities in a position where they can build factories as a further pledge of their belief in certain areas.
My amendment will show the Minister that there is no desire to do anything unless the IDA approve the project. The Minister is quite correct in saying that at the moment a local authority, if they desire to do so, can build an advance factory without a grant. I should like the IDA to give their blessing to the building of an advance factory in a spot selected by the local authority for an industrial estate or for industrial development which ipso facto had been approved by the IDA by the giving of a grant. The giving of a grant could be made conditional on the IDA approving of the eventual occupants of the factory and of the industrial undertaking, but the Minister will agree with me in my desire to involve local authorities to a greater extent. It is necessary that there should be in every area the desire for industrial undertakings, for industrial jobs, and this should relate directly to the local work in each area done by the county council. I would ask the Minister to reconsider his position.
There is an element of duplication of effort involved in this. It may surprise the Deputy to know that, while we are accused of being doctrinaire in such matters, we can also be practical in looking at a problem like this. Part of the problem before the IDA is enthusiasm which is not grounded on the possibilities of a going concern in any particular locality. We all know of the kind of report in newspapers regarding a factory employing 1,000 people which is started because some local person met a magnate abroad on holiday; unfortunately some cases have no foundation other than this.
I see a danger in this amendment that the IDA will find themselves embroiled in a local issue where the real problem may be that sufficient proof is not forthcoming of a worthwhile enterprise and the authority may find themselves becoming the political scapegoat in certain parts of the country, perhaps because of the enthusiasm of some of the local representatives. I can sympathise with what Deputy Donegan is trying to do in broad terms but I imagine that, if the IDA are doing their job and developing the regional side of their activities, there will be full scope for the involvement of local representatives in a project that is constructive and also possibly a good long-term investment.
As I have indicated, I visualise—as I think we all do—much closer integration of local authorities in industrial development but I also visualise it on a regional basis. Deputy Donegan correctly points out that his amendment is predicated on the assumption that any such grant would be given only when the IDA had actually approved the building of the advance factory. However, my point is that we are already giving the IDA power to build the advance factory on the industrial estate where in their opinion this is the right approach. We envisage they will do it themselves; it is not necessary for the local authorities to do it. However, this does not preclude the local authorities from participating and I envisage their being involved in regional organisation and in planning where the advance factory or industrial estate should be located. But, as I have said, in the case as visualised by Deputy Donegan, where the IDA is actually approving of the project, we are already providing in the Bill power for the IDA to have that work done.
The only thing I see wrong with the amendment is that it is too confined. The involvement of the local authorities could be most important throughout rural Ireland. I am not one of those who believe that in many parts of the country the only way in which small farmers can get any living is by part-time work in industry. If we are to have this, it cannot be confined to industrial estates. This is one thing that I dislike about the amendment. I would much prefer the words "a factory"—it might be a factory in a rural area where local enthusiasm, which I hope will be brought about when the local authorities are more involved in industrial development, might extend to looking for these industries.
There are local teams that have been established and that have been able to find industries to come to their areas. I would hope that such local teams would find more industries and provide more employment in this way. The amendment confines it to industrial estates. We can over-do industrial estates to the detriment of the rest of the country.
Amendment, by leave, withdrawn.
Question proposed: "That section 33 stand part of the Bill".
I should like to ask the Minister if he would explain the reasoning that led him to vary the proposal of the NIEC on this question of the size of grants in the designated areas, as they are now called, dealt with in subsection (2). I am not quarreling with the increase from 35 to 40 per cent but, clearly, the Minister must have had fairly strong reasons for feeling that the NIEC proposal provided an inadequate incentive and that it should be increased to 40 per cent. I should like just to raise—and this is more appropriate to a later section; I simply give advance warning—the question of whether, if the Minister feels it should be raised to 40 per cent here, it would not be appropriate to raise it also to 40 per cent in relation to adaptation grants. I think that particular part of my remarks is better confined to the later section.
The primary reason for departing by five per cent from the grant differential recommended by the NIEC was the furtherance of the Government's stated policy of providing the maximum possible incentives for the attraction of industry to the designated areas of the west of the country.
That does not really explain the thing. The 35 per cent figure was suggested. The Minister should indicate why he feels that 40 per cent is necessary and, perhaps, he might at the same time deal with this point in regard to re-equipment grants as to why they were not increased or, would he prefer to postpone that to section 38?
I am sorry. Would the Deputy repeat the last part?
The Minister has increased it from 35 to 40 per cent here. He has not increased it in relation to re-equipment grants. The Minister will recall the great emphasis by the NIEC on keeping these two schemes in line so that nobody could say that if you were a new firm from outside you would get more than an Irish firm re-equipping. The Minister, by increasing this to 40 in this section and not increasing it by the equivalent figure in section 38 has maintained a differential which effectively lies between foreign firms—because almost all foreign firms are new firms —and existing Irish firms—because existing Irish firms in most cases get re-equipment grants. I am prepared to debate that further on section 38. I merely draw the Minister's attention to the fact that in raising it in section 33 and not in section 38 he has maintained the very position that the NIEC very strongly recommended him to eliminate.
I should like to point out that the reason why there was no amendment down in relation to this matter from this side of the House is that this is a Money Bill and if we put down an amendment that might impose a potential charge on the Exchequer we might find ourselves in the position of Deputy Cott who had an amendment disallowed for that reason. We will debate the matter on section 38 and make our point but I am now stating the reason why there is not an amendment down to deal with this matter. It is that such would not have been allowed in the proper discharge of his duties by the Chair.
Would the Minister like to comment on this point?
I am in some difficulty because, obviously, we are going to have all this again on section 38.
Leave it until section 38 is being discussed.
Question put and agreed to.
SECTION 34.
Question proposed: "That section 34 stand part of the Bill".
In subparagraph (a) certain criteria are laid down for the giving of an extra grant under the section. It appears to me that subparagraph (a) opens up totally the area in which this extra grant may be given. In subparagraphs (b) (c) and (d) other criteria are referred to for a grant to a new industry. It appears to me that subparagraph (a) will in practice mean that all such industries will be getting the maximum figure rather than the figure mentioned in section 33. Would the Minister like to comment on this aspect? There is now a differential between section 34 and section 33 but the terms of section 34 leave it very open, indeed, as to the basis on which the IDA would make the extra grant.
Subparagraph (d) says:
the industry in which the undertaking is engaged is likely to have an exceptional growth potential.
This is a very wide criterion to use. That comment refers especially to subparagraph (a) which says:
the significance and character of the employment likely to be provided by the undertaking warrant the making of the further grant.
The Minister in this section appears to put the authority in a rather impossible situation when it comes to giving grants. It appears that the person seeking such a grant will be able to turn to section 34 and say: "You have there all the authority in the world to give me the maximum".
Could I come in on this and press it further? The actual criteria are, as far as I can recall, very close to those suggested by the NIEC but what I think the NIEC had in mind—I cannot off-hand recall if this emerges explicitly in their report—was that while the criteria would be laid down in legislation in what, as Deputy O'Leary very properly said, are general terms, it would be proper and, indeed, desirable that the IDA should in applying these criteria lay down publicly at any given time in specific terms just how they intend to apply them with, of course, the right to vary that interpretation as a result of publicly given notice.
I think the feeling of the council was that it would be wrong in legislation to tie this down in very precise terms, that it would be equally wrong to leave it very vague so that discretion was so wide that the whole purpose could, in fact, be undermined because, the Minister will recall, in the Little Report there was very proper emphasis on the need for people to be absolutely clear as to what they are and are not entitled to, that the discretionary power is something which confuses and bothers people and undermines confidence both on the part of domestic public opinion and on the part of industrialists seeking grants. I think the council thought that the Little approach of seeking this specified in very concrete terms is something which, if it were intended that that should be in legislation, is going too far, that the legislation must be in pretty general terms.
The council felt it was very important that in the actual operation of the scheme the manner of the application of these criteria should be specific, should be laid down in very concrete terms, indeed, and published by the IDA, subject to their right to modify them at some point in time. For example, if they felt that a particular scale of employment which might bring it within (a)—say, industries which would be employing 500 male workers, or something like that—if that were the criteria laid down publicly, and if at some point they thought that should be varied, they would have power to vary it; but that at any given point everyone applying for a grant would know precisely and clearly and without any ambiguity whether he was or was not entitled to 20 per cent at that point. There should be no question of any doubt in people's minds, the damaging effect of which is dealt with in the Little Report.
Therefore, I would ask the Minister in support of what the Deputy has said and in further development of it, if it is, in fact, his intention to proceed in this way; if it is his intention that the IDA should specify publicly how they propose to apply this criteria subject to amendment from time to time so that this element of uncertainty which is regarded by the A. D. Little people and the NIEC as being so undesirable would be eliminated while not trying the authority down in the legislation and while leaving it with flexibility to be exercised at any time.
We shall have to be rather pragmatic about this. It is very difficult to define these criteria more clearly. After a year or so they will have had some experience so that criteria can be more clearly laid down.
I suggest that it will be laid down publicly and that the IDA could change it at some subsequent point when experience would show that this criteria needed to be amended at any given time. What is important is that every applicant would know clearly whether he was or was not entitled so that he would not be in the position of going cap in hand to the IDA and wondering whether he was as much entitled as somebody else who had not as good a case. That would undermine confidence and it is that undermining of confidence about which the A.D. Little people and the NIEC were concerned. Therefore, while I agree with Deputy Lenihan and I would particularly envisage changes in these public statements of the application of the criteria at any time, it should be clear as to what the criteria are so that people will not be left in doubt.
May I ask the Minister to explain why this sort of grant is related, as is the previous one, to fixed assets? Fixed assets might not necessarily reflect the full value of an industry in many ways. I would also ask the Minister if both these grants in section 33 and 34 apply to the expansion of existing industry also or only to new industries?
In regard to sections 33, 34 and 38, it is difficult just to talk about one without talking about the other but I should like to refer to what I see arising from section 34. The further grants added to the grants under section 33 give in the underdeveloped or specified areas as we now call them a maximum grant of 60 per cent. On the east coast and in the more developed areas there is a maximum grant of 45 per cent. I should like to point out that this is a reduction and that the old system gave a maximum of 50 per cent and in the underdeveloped or specified areas as we now know them there was a maximum of 66? per cent. In fact, the maximum was very often the one that was applied. This meant that in many cases the desired situation which Deputy FitzGerald has referred to, namely, that people knew what they would get, would occur.
In this case, they must first of all jump one hurdle in section 33 when they get 40 or 25 per cent and they will then have to jump another series of hurdles as in subsection (3) (a), (b), (c) and (d) to get their extra 20 per cent. In any event, the total maximum grant will in one case be 6? per cent less than the previous maximum and in another case it will be 5 per cent less. Deputy Clinton has quite properly asked if this refers to existing industries. I know of one or two cases in which, under the old legislation, existing industries would get a grant comparable with that afforded to new industries.
Reference has been made to the fact that we intend to debate this on section 38. It must fall somewhere and I think, with respect, that the proper place to discuss it would be under section 38 but if we allow section 34 to pass without referring to this great failure in the legislation which we could not deal with by amendment because of the rules of the House, we might find ourselves in the position of not being able to discuss it in detail except by way of a short contribution on Report Stage.
I should also like to ask the Minister if in future many people will not get the maximum and how this will be applied. I am utterly pragmatic about this and as I said on the Order of Business today, there is a debt on the part of the Government in capital moneys of £24 million for grants for new industries and for equipping existing industries. That is a huge sum and I know that it strains every effort on the part of the Government and the revenue people. I am not saying, as some politicians might say, that we should open the floodgates and give £100 million but I would ask the Minister if the criterion will be, as it usually has been, that the maximum is granted for any good industry, even for an industry employing girls.
I know of many instances in which industries employing girls in places where female labour was scarce got the maximum. I am not objecting to that but I should like to know whether the policy as laid down by the Government to the board of the IDA will indicate that in future in most cases the maximum will be afforded because after all it is not an autonomous body. Popo the Puppet can do anything if somebody else pulls the string, and if the Minister for Finance indicates a certain course of action to the board through his colleague, the Minister for Industry and Commerce, based on the availability of capital moneys, I have no doubt but that the board would have regard to information given to them by the Minister for Finance and the Minister for Industry and Commerce.
In that situation, under the new system, an average grant would be given to new industries in the specified areas of, perhaps, 40 per cent where, under the old system, the average would have been about 60 per cent: most of them got 66? per cent. An average grant of, possibly, 30 per cent might be applied to the east coast and the more developed areas, whereas in most cases in the past it was 50 per cent and the average was probably about 45 per cent. If the Minister has these percentage averages, I should be glad if, when he is replying, he would give them to us but I do not think I am far wrong.
In this, Deputy FitzGerald seemed to be on the same line as I except that I do not go as far as he on the pinning down of the board of the IDA. They must go with the times and if there was a credit squeeze at a certain stage it might be possible to be more generous.
I should like the Minister to refer to the level of criteria and I would like him to tell us what he means by fixed assets. If one were doing an accountants examination, one would have an answer to that but I should like to know how the term will be interpreted by the board of the IDA and if instruction has been given to that effect or if it is intended that such instruction will be given.
Deputy Clinton raised the question as to whether the criteria here were the same as the criteria applied for re-equipment grants. In fact, they are not. The criteria for re-equipment grants are set out in section 38, subsection (1), and I do not wish to go into them now but the criteria for re-equipment grants from the point of view of applicants are very much easier to meet than the criteria for new industry grants and this is as it should be.
On the question of fixed assets, which was mentioned by both Deputies Clinton and Donegan, I am not quite sure what they have in mind. It is intended that fixed assets will be interpreted, as they have been interpreted in the past, by the IDA, An Foras Tionscal——
Buildings and machinery.
Yes, buildings, plant and machinery. Perhaps there is some point involved which has not been mentioned by the Deputies.
There is no secret weapon as far as I am concerned.
All I can say is it is intended to follow the practice that has been followed heretofore.
Is it not the easy way out, in the case of the further grants, to assess them on the basis of the fixed assets, as the grants under section 33 are assessed? It is simply because it is easier to find what 20 per cent of the fixed assets is than what a good or proper grant would be, having regard to all the circumstances.
I am not too sure what the Deputy has in mind but I should perhaps refer him to section 2 which defines "fixed assets" as "machinery, plant, equipment, land, buildings, services and other works of or for an industrial undertaking".
But they are related to employment. They are not related to whether the raw material is entirely Irish or anything of that kind.
No, because what is taken into account there is the level of grants given but the grant must be related to the actual cost to the promoter of putting up the plant and getting it off as a working operation. Whether the grant should be 20 per cent, whether it should be the grant provided for in section 33, or whether it should be higher on foot of section 34, would be determined by such factors as those mentioned by Deputy Clinton, that is whether the raw material was wholly or mainly Irish, the level of employment given, and such things. That is taken care of in that way.
I should point out that section 34 is an enabling section under which the IDA may make a further grant. Secondly, I should point out that there are the criteria mentioned in subsection (3), of alternatives. I do not know if this is clear to all Deputies. The drafting in that way means there are alternatives.
It means if anyone applies he can get his grant. Is that correct?
That is correct. On the question of those grants being less than those formerly applying, the position is the maxima which are provided for here correspond generally with the maxima which have been paid. Deputy Donegan is misinformed in regard to the maximum grants paid before. As far as I am aware, apart from small industry cases which are a separate issue, the maximum grants have not been paid in any case, whether in the developed or undeveloped areas, as they were under the previous Bill.
If you reduce your maximum perhaps it indicates to a person applying that you intend to reduce the amount you mean to give as well.
That is one way of looking at it. On the other hand, you can look at it this way. If you have a maximum which you never give it may also lead to somebody believing you are misleading him.
Is it the Minister's intention that the grants will be at as high a level as heretofore?
That is correct.
That helps.
Am I wrong in thinking the NIEC proposal was for those specific amounts to be paid not as maxima but as definite amounts with a view to getting away from uncertainty?
No. I was about to deal with that. The NIEC and the A.D. Little reports all dealt with this point which is of course basic to the whole problem of industrial development. The problem we have here is we are trying to meet two requirements which are basically contradictory. On the one hand we want to provide a degree of certainty which will ensure that a potential promoter will know where he stands and employees of the IDA, whether at home or abroad, will be able, straight away, to say to potential promoters: "Well, you would be entitled to a grant of so much" and there could be no argument about that. That is one side of it. We would also have to provide, on the other hand, for what is a somewhat contradictory requirement. There may be cases where, for a number of conceivable reasons, it would be necessary to measure the level of advantage of a particular project coming in and if you were to apply fixed amounts of grants, or fixed percentage grants, to every project then obviously you would be giving too much to some. Indeed, the NIEC, in dealing with this, stressed that on the grounds of economy, the maximum rate of grant should not be given in every case. We have endeavoured to meet this problem in a way which I do not claim is by any means ideal, but since the two things are contradictory there is no ideal solution to it. The way we have endeavoured to meet it is that under section 33 we have laid down the first tier of grants. Those are in fact going to be regarded as fixed level grants. I might put it this way. If an industry is of any interest to us at all——
If it is basic.
——it will qualify under section 33. If it is of much more interest than merely that it meets our criteria under section 33, then that is where section 34 comes into place. In other words, we try to get the question of a fixed definitive level of grant covered in section 33 and we try to meet the flexible requirements under section 34.
Could I ask the Minister then why section 33 is drafted the way it is? If in fact an industry is of any interest to us and is going to get this amount why use the words "shall not exceed"? I can understand it being used in section 34 from what the Minister has said. You are backing the horse both ways.
Yes, I had some reservations about this point for the reason the Deputy has indicated. Nevertheless, I suppose it is a question of trying to cover every contingency in legislation which we are unlikely to amend in the near future. The contingency that is sought to be covered is the possibility that there could be an industry, which would perhaps be of minimum interest, either because of the nature of the industry or because of its proposed location, but which really could not justify a 20 per cent grant, or whatever the appropriate level of grant is, depending on where it is located. In fact, the way it will be administered and the way in which the IDA staff at home and abroad will be instructed to operate, will be to say: "If you comply with the requirements of section 33 you will automatically qualify for the grant indicated in that section".
Will they be entitled to say that under the legislation?
They will if the IDA so decide. I know it is the intention of the IDA so to decide.
We accept that.
Question put and agreed to.
SECTION 35.
Question proposed: "That section 35 stand part of the Bill".
Does this section cover the practice of the IDA in providing leases, fixed assets, or taking shares in industrial undertakings? Could the Minister explain it in some detail?
This is to provide a new power for the IDA to make it possible for them to give a package deal which might be more attractive to a promoter. They did not, in fact, have power up to now to give a grant on the basis of, say, machinery being leased. This would enable them to do so.
And convert part of the grant that was being afforded into payments against the leasing of this machinery?
Yes.
Or the diminution of interest?
That is correct.
May I ask the Minister to explain subsection 5 which reads:
Where a grant under this section is payable by instalments over a period of years, the amount of the grant shall, for the purposes of subsections (2) and (4) of this section, be taken to be the capital value of such instalments as determined by the Authority.
What is the intention here? Supposing there are 15 instalments of, say, £10,000, is it the intention that that would be counted as £150,000 or will some abstruse mechanism be employed to calculate it differently on the basis of present value or something like that?
The Deputy will appreciate that since there are maxima laid down for the level of grants or the percentage of grants it is necessary where the instalment grants are being given to be able to determine whether they come within the criteria or not. Therefore, it is provided that the IDA may determine and will determine what the value of it is. I cannot say with certainty the particular practice they will follow but I rather suspect it will be on the basis of present value which would seem to me to be the correct one.
I would have thought that where, for instance, such a split up grant was taking place that they would produce some actuarial computation which would provide for the amount of principal paid each year and the amount of interest and that they would relate it to that, but, perhaps, in leasing that would be difficult.
As Deputy FitzGerald said, they will probably indulge in some rather abstruse calculation to arrive at——
They will use a sinking fund probably.
Yes, I think so but it is important that somebody, and I think it should be the IDA, should determine that the grant given does not exceed the level that would be available if, for instance, the assets had been purchased.
If they produced an actuarial computation to be applied to all grants would that be available to Deputies for study?
I am sure it would, because their line of approach will have to be the same in every case so it is a question of making a determination in principle, I think, and then it will be available for everybody in every case.
To be fair they would have to do that.
Yes.
Question put and agreed to.
SECTION 36.
Question proposed: "That section 36 stand part of the Bill".
This is the same line of country?
This section and the following sections are not covered by the limitation of the percentage under section 41. Is that right?
That is correct.
This means that, in addition to getting up to 60 per cent from the Government, an industrial undertaking could also borrow other money elsewhere, could, in fact, get a Government guarantee for that money under section 37 and get a grant to pay the interest on it under section 36, that is over and above the 60 per cent?
That is correct. As the Bill is drafted this could happen but administratively it is very unlikely to happen. Any such schemes as this will, of course, be on the basis of arrangements made between the Minister for Industry and Commerce and the Minister for Finance and it is not envisaged that, in fact, the total incentive given will exceed the maxima laid down even though the Bill does allow this to happen.
I have an idea that the NIEC thought that there should be some flexibility on this point. My recollection is not quite clear on this.
Flexibility with regard to——
The maximum percentage limit.
I think the Deputy is correct in that.
Subsection (2) of this section is quite clear on this. It says that it has no bearing on the grants already secured, that it is not to be reckoned in that way. The Minister more or less gave the impression that the amount of the grants secured under sections 33 and 34 would be borne in mind in arriving at a decision as to whether there would be a further grant towards the cost of interest payable on loans.
If I understood the Deputy correctly he is referring to a statement of mine in regard to infrasubsidies in which I indicated that it was visualised that this would apply only in a very small number of large and important projects. Is this what the Deputy has in mind?
It may be.
I do not think there is anything contradictory between what I said and what is in this.
On this question of the diminution of interest and grants towards interest, there has been a record in this country of criticism of State and semi-State bodies who do not include in their accounts the amount of interest which they should have paid to the Minister for Finance and in some cases did not pay. We have a Bill before the House at the moment under which shares are being issued to the Minister in respect of interest not paid in the amount of £1.2 million. Does the Minister not think that in the Seanad he should introduce an amendment whereby the extension of further grants, over and above the 60 per cent here, by way of diminution of interest, would be a subject for Cabinet decision and that such decision would be made public so that people would know exactly what the position is? It becomes difficult for Deputies to ask questions about individual industries and very often they are told that they cannot get an answer because it is not the practice to give it. It would be a safeguard if, as is envisaged in section 38, the Cabinet would make the decision to give this extra grant over the figure of 60 per cent and would publish it and lay it before the House.
In support of that may I say that this is a new provision which involves a current subsidy to an industry? Hitherto, although there have been one or two exceptions such as Verolme, we have stuck to the principle where capital grants will be given to get industries under way and to help them to expand but we will not give a current subsidy to defray current expenses to any industry. We are now departing from this in a particular and limited way and while I do not dissent from that, because there may be certain circumstances in which this might be desirable, I think it is something that should be covered by very special sanction. I consider Deputy Donegan's point a good one, except if he leaves it to the Seanad the Minister will be telling the Seanad that he cannot accept any amendment when the Dáil is in recess and the Bill must go through. It seems to me that if we are to amend this is should be done on Report Stage rather than leave it to the Seanad.
I should say that if there appears to be a departure from the practice we have adopted up to now of not giving a continuing subsidy it is more apparent than real because, of course, any infrasubsidy would be calculated as to value. I would visualise it continuing over one, two or whatever number of years it was but it would be calculated at the beginning and its present value would be calculated and assessed. Therefore, it is a misnomer to regard it as a continuing subsidy in that sense, any more than an instalment payment of grant in respect of a leased asset would be such.
On the overall question raised by Deputy Donegan, the position is that if a decision is made to give a grant, a portion of which consists of an interest subsidy, which exceeded the limits laid down—and I have already indicated that this is not visualised—but if such were to happen, this would emerge from the annual report of the IDA which is laid before both Houses of the Oireachtas, and it would be open to any Deputy to question the matter. Any provision whereby such a thing had to be disclosed there and then would run completely contrary to the necessary practice of the IDA with regard to confidentiality, but such grants would of course appear in the annual report and be open to question if they were to occur.
Would the scheme agreed between the Minister for Finance and the Minister for Industry and Commerce be laid before the House?
No, that would be an internal matter.
While I take the Minister's point about the confidentiality and not publishing immediately, I shall deal with the whole question of the manner of publishing grant payments later. With regard to the point about Government approval, hitherto if current subsidies were to be paid— and despite the Minister's somewhat specious reasoning this is a current subsidy—this could only be done on a Vote or in legislation. This is the first occasion, of which I am aware, where a current subsidy can be given in the industrial sector without Government approval. I think this is an undesirable precedent.
While I accept the Minister's statement that it is something which could not be published, except in the ordinary way, I think it is desirable to have Government approval. The Minister has said this will happen rarely and I accept him on that, but I think the principle that no Minister should be enabled to give a current subsidy without Government approval is one that should be adhered to.
The fact is that this is a grant-in-aid of the current outgoings of a firm, which is quite different from a grant enabling the capital payment of that firm to be defrayed either immediately or in one lump sum over a period of time. If we depart here from the clear distinction between current and capital, we are going to find ourselves in great difficulties not only here but in many other areas of public expenditure. I think perhaps the Minister was being incautious in trying to equate the two and I would ask him to consider an amendment here which would require grants of this kind to be sanctioned, not just by the Minister in concurrence with the Minister for Finance, but by the Government.
It may be, as Deputy Dr. FitzGerald, has said, that my reasoning in this regard was specious. I do not think so. It seems to me that the real test is whether this is to be a continuing subsidy or a subsidy the terminal date of which is determined at the beginning, which is what is involved here. If it is to terminate on a particular date then when you calculate its present value, it is the same as any other form of grant. The only reason it would be given would be if it happened to suit the particular circumstances of a particular promoter, but it would be the equivalent of the cash grant which is given to every other promoter.
On the question of Government approval, I think there may be some misunderstanding about this. While the scheme governing the making of these grants has to be sanctioned by the Minister for Industry and Commerce, with the concurrence of the Minister for Finance, nevertheless the actual decision to make such a grant is not that of the Minister but that of the IDA unless the case is of such dimensions that it would come before the Government. As I have already indicated to the House, it is visualised that these grants would only be payable in rare cases and in respect of very large undertakings. One can take it as almost certain—in fact, as quite definite— that any case in which this would be required would automatically be coming before the Government because of the size of the grant involved. This does not affect the issue that notice should be given publicly that such a grant was made. As I have indicated, this will happen in the normal way with the publication of the report of the authority.
If the Minister says that it is almost certain and quite definite—a very interesting combination of words—that such a grant would come before the Government——
I do not think I said "and".
I think the Minister did. I cannot imagine what other conjunction would have fitted in.
I think I may have said—I am speaking from recollection —"it is almost certain, indeed it is quite definite". I was thinking as I went along.
The grammatical subtlety of that escapes me at this point, but if it is almost certain, indeed quite definite, I think we might make it certain by putting it in legislation. I think we should put down an amendment on Report Stage for this purpose.
I believe we have the right to put down written amendments at the end of Committee Stage for Report Stage.
Question put and agreed to.
SECTION 37.
I move amendment No. 3:
In page 13, line 12, after "moneys" to insert "(including moneys in a currency other than the currency of the State)".
Amendments Nos. 3 and 4 may be taken together.
On the basis of legal advice received some years ago it was held that a reference to money means money in its ordinary sense, and that is interpreted to mean a reference to the currency of this State, unless it is otherwise clearly stated or implied in whatever enactment is involved. As some industrial undertakings are likely to borrow in foreign currency and to seek a guarantee from the IDA in respect of such borrowing, I think it is necessary to make such an amendment.
I must say I am very pleased to see this degree of flexibility in legislation.
Amendment agreed to.
I move amendment No. 4:
In page 13, to delete subsection (3), lines 22 to 26, and substitute the following:
"(3) Moneys required by the Authority to meet sums which may become payable by the Authority under a guarantee shall be paid out of funds at the disposal of the Authority and shall not be reckoned in the calculation of the maximum grants payable to the undertaking concerned for the purposes of sections 33 (2) and 34 (2) of this section.
(4) In relation to a guarantee under this section in a currency other than the currency of the State, the reference to moneys in subsection (3) of this section shall be taken as referring to the cost in the currency of the State of the actual moneys payable by the Authority."
Amendment agreed to.
Section 37, as amended, agreed to.
SECTION 38.
I move amendment No. 5:
In page 13, subsection (3), line 39, to delete "£350,000" and to substitute "£250,000".
Amendments Nos. 5 and 6 may be taken together.
As I understand it, the purpose of this section is to create a situation whereby when the grant is above £350,000 such a grant should be subject to Government decision. As I understood the old legislation, the figure was £250,000. When we are dealing with such sums of money I think the Government of the day should decide, basing their decision on a knowledge of the area and on the special information given to them, whether or not such a grant should be given. I do not agree with taking any powers away from the IDA until we come to deal with figures of that sort. Notwithstanding inflation, which is presumably the reason for the increase, my argument is that the decision should be subject to Government approval once the figure of £250,000 is reached.
Deputy Donegan is correct in assuming that the main reason for the change has been the fall in the value of money, and, if Deputies will look at the last report of An Foras Tionscal, they will see that there certainly is a tendency for grants very much in excess of this figure to become relatively common. In other words, not alone the fall in the value of money but the nature of the projects coming in and the greatly increased amount of capital involved ensure that large projects have to go to the Government anyway. It is a question then of trying to meet, on the one hand, the necessary requirement that the Government should be concerned about large grants and, on the other hand, the necessity of trying to ensure that the promoters have as little red tape to deal with as possible, and as little hold-up, something on which great stress was laid in the A.D. Little report and in the NIEC report. In the light of these two requirements, it is not unreasonable, I think, that the former ceiling of £250,000 should be raised by £100,000. It does seem to me that there is some contradiction in Deputy Donegan's proposal to limit the amount for re-equipment grants, unless he wants both to be the same. Is that what the Deputy has in mind?
No. As I see it, when dealing with the IDA loan one is bound by section 38 (3) to a figure of £350,000 but the following subsection provides that notwithstanding anything in this section, the Government may come along and give a larger grant and my purpose in tabling the amendments was to bring both into line. The Government would have to make the decision on any figure above the limit.
What is the position as regards ordinary industrial grants? Does the earlier limit still exist or has it been repealed? Is the limit in the absolute amount of grants, other than for re-equipment grants, still £250,000?
It is £250,000 at present.
In respect of industrial grants?
Yes.
And that is not being changed in this legislation?
It is being brought up to £350,000.
Where?
In section 42.
Then the position will be that the maximum will be £350,000 and that falls into line with section 38 (3) and (4). Is that the position?
Yes. I should point out that, under the adaptation grant scheme, the absolute ceiling was £250,000. What is proposed here in relation to re-equipment grants is the raising of the ceiling to £350,000, but in order to enable the higher re-equipment grant to be given the Government will have to agree. We are raising the figure for re-equipment to £350,000 and removing the absolute ceiling.
In that case I withdraw my amendment.
Amendment, by leave, withdrawn.
Amendment No. 6 not moved.
Question proposed: "That section 38 stand part of the Bill".
There will devolve on the IDA again the great responsibility, especially on the technical side, of seeing that re-equipment and modernisation are both correct and necessary. There have been reports of firms obtaining re-equipment grants and the re-equipment not being of the best possible order. There have been reports of foreign firms bringing in obsolete machinery to the Irish branch factory. The IDA will have to have the very best technical advice available. They will need people who know the business. If necessary, they will have to employ consultants from outside. With grants of the scale mentioned here we cannot afford to make any mistakes.
The Deputy is misinformed. My information is that secondhand equipment is never accepted in respect of grants of any kind, whether re-equipment, adaptation or new industrial.
We had, I think, some material in Potez that was not of the highest order.
There were arguments to that effect but it was not, I think, argued that the machinery was secondhand.
Subsection (4) provides that the Government may in respect of a particular industrial undertaking permit the making of grants under subsection (1). Now, there are two stages in this. One is approval of the grant and the other is payment of the grant. I should have thought that "make" in this context would refer to the payment of the grant rather than to the approval of the grant. I do not think any reasonable interpretation of making a grant could include approval. I should like to hear the Minister on that. It seems to me that the point at which the Government should become involved is in approving the grant. Payment arises at a later stage and, once it is approved, it surely must be paid when the firm concerned have carried out the work in respect of which the grant is payable. I am just wondering whether this is not a case of putting the cart before the horse. There would seem to be a certain contradiction in the section as drafted. As far as this subsection is concerned the Government have to approve only the making of the grant, which is the payment of the grant, and the grant could have been approved without Government permission.
Subsection (3) seems to reinforce this because it says that the total amount shall not exceed £350,000. Are we talking here merely about Government authority for the payment of the grant? If one reads the two together it seems clear that that is what is involved. Are we, in fact, governing the right part of the transaction at all? It seems to me we should bring the Government in at the point of approval and not at the point of payment. There is a slight absurdity in the IDA approving a grant of £1 million and the Government subsequently holding up payment when, in fact, the direction to pay is clear. There is a contradiction here. A good deal hangs on interpretation.
The word "make", that is, in the context of making a grant, is used in previous legislation of this type, for instance, in section 8 of the 1952 Act. I am not aware if there has been any interpretation by the courts of the word but I think it would refer to both processes, that is, the approving and the paying. Suppose the Deputy's interpretation were correct and that it refers only to the actual payment of the grant, then the position is that if the authority were to find itself in a position in which it would have approved of a grant of, as he said, £1 million but had not got the authority of the Government to pay the grant, this would be an utterly impossible position and it would not get itself into that position. So that, in practice, even if the Deputy's interpretation were correct, there is no danger but I think the correct interpretation is that the word "make" covers both processes which are inherently the one. They must go together.
If that is the case what is the word "paid" doing in subsection (3)? This seems to make nonsense of the Minister's statement and possibly of mine also. Perhaps, it makes nonsense of the Bill because the limitation that is imposed there is on payment of a grant exceeding £350,000. That specifically does not say anything about making a grant and, therefore, it seems to me that if the authority has power either to approve or pay a grant under the Minister's interpretation of subsection (1) and as its power is limited only in respect of payment in subsection (3), therefore, it has, under the legislation as drafted, the power to approve a grant in excess of £350,000. The Government then have power to permit the approval of payment although, in fact, in regard to approval, their approval is not required under the terms of subsection (3).
It seems to me that the Minister might like to look into the drafting again. There is some confusion of thought here. If the Minister's interpretation is correct it is a very odd one; I have not heard of a word being used to cover two quite different processes occurring at quite different times in respect of the same transaction. This is a new development of the process of ambiguity and it bothers me a little. But even if the Minister were right in that it seems to me that in subsection (3) the use of the word "paid" makes nonsense of the Minister's thesis. He might like to reconsider it and perhaps use the word "made" there or introduce this concept of "make" or "made" at that point also.
Without Deputy FitzGerald's subtleties, as an ordinary layman reading the section, I take it that the authority approves and pays but the Government—to use the word used here—makes, directs or makes... and that covers the approving and the paying of sums over £350,000. That is the way I read it.
If the Deputy would read these things in consecutive order he would find that in subsection (1) the authority may "make a grant" and, of course, the Minister would interpret that as saying that they may approve or pay a grant. Subsection (3) limits them, not in regard to the approval but only in regard to the payment of a grant. Subsection (4) goes on to give the Government the power to go beyond that £350,000 limit even, in fact, where the limit does not apply—that is in respect of approval on which there is no limit in subsection (3). There is a rather nonsensical sequence there that would need to be tightened up.
I should like to address myself generally to the section and advert to the fact that on this side of the House we are discussing certain aspects of this legislation on sections 33, 34 and 38. The maximum for the equipment grants is 25 per cent. We are restricted in our opportunities because we could not put down an amendment to a Money Bill which would possibly have caused a charge on the Exchequer but, as I understand it, we are in order in discussing this matter on section 38.
Again, I want to advert to the fact that it is not the policy of this party that there shall be as great a re-equipment grant in a business which is quite small in relation to the amount of capital involved as there shall be for a new factory but that where the amount of re-equipment is so large as to constitute a major improvement, the grant shall be as great as that to a new industry. If, for instance, the amount of capital involved in a factory and business was £100,000 and re-equipment went on to the extent of expenditure of £70,000, then we on this side are quite clear that this existing industry that has been employing people so long is entitled to a grant at the full level of the grants afforded to new industries. We believe it is a mistake on the part of the Government where this capital expenditure on re-equipment is so large in relation to the amount of capital employed in the industry that there should be this disqualification.
I am aware of one or two cases where there were very large grants under the old legislation. The other system applied and they were given larger amounts than the old adaptation grants which can roughly be compared to the present re-equipment grants which embrace a wider sphere but at the same time we want to make it clear that it is our policy that existing industry where it makes a major re-equipment shall have the same opportunity for a high-level grant as a new industry. In making that statement we do not say that if the industry to which I refer had £100,000 of capital employed and made a re-equipment effort in one year costing £10,000, this would be a reason why you would give the full scale grant as for a new industry. We could not afford that: that is why. The Government at the moment owe £24 million on these grants and we must be sensible. We on this side have tried to be extremely sensible in our approach to these matters. But where an existing industry make a major step forward they are fully entitled to as high a level of grant as those who come from abroad or within the State to start a new industry.
I want to indicate one of the instances that brought about the policy my party have pursued in this regard. I know of a case of an existing industry employing approximately 300 girls who were in a leased factory premises. They moved to a site in the same town and used an existing building merely as offices and built an entirely new factory on space existing there. They received and adaptation grant of £16,000 because they were involved in export. I do not grudge the new industry that came in only a half-mile away and that employs only 200 girls the grant it got of £168,000 to produce the same product, and less of it than the existing industry was doing, and export it just as the other did. That and five or six other instances is why this party say that existing industry is not getting its fair cut under the new legislation or under the old legislation. Where a major step forward is made in relation to the total capital employed in the industry the Government should have afforded to the existing industry the same level of grants as afforded to new industries, whether produced from within the country or from abroad.
I make this point seriously and as a strong criticism of the Government and of the Minister. It is not a personal criticism, of course, because the Minister is a personal friend of mine. I make the criticism on the basis that this is wrong and I want existing industrialists in the country to know that they are not getting a fair deal in regard to expansion when it is a major expansion. I am afraid to admit that where you have minor expansions in existing industries these would be so numerous and there would be so much capital involved that we could not afford to give the high level of grants you give for new industries whether home-based or not.
Mr. J. Lenehan
The Deputy is completely wrong.
That is the case I want to make. We cannot put down an amendment, as I have explained, because of the rules of the House to which I have referred.
I should like to support Deputy Donegan but before doing so I want to refer back momentarily to what we were discussing before that and to say that, with a view to tidying up subsection (3), I propose putting down an amendment on Report Stage. The amendment would be—I mention it so that the Minister could just think about it in the meantime—the deletion of the words "moneys paid in grants" and the substitution of the words "grants made". This would bring that subsection into line with subsections (1) and (4) and get over the difficulty I pointed out. I shall not pursue the point further at the moment. It is a matter that can be pressed on Report Stage.
In support of Deputy Donegan, let me say that the problem here arises because of the Minister's decision—it is a decision we respect because he knows more about this than we do, necessarily—to increase the recommended figure of 35 per cent for industrial grants in designated areas, as they are now called, to 40 per cent. We asked him on that section why that was necessary. He simply said that the experience of the IDA and the Department was that it would be necessary to be able to give this higher level in order to encourage industry to go to those areas. We certainly would not quarrel with that.
We are aware that the flow of industry to these areas, although it has certainly been improved by the grant system, is still quite inadequate for the need to create industrial employment there. The growth of industrial employment in these areas is only a fraction of what would be required to absorb the movement out of agriculture. Therefore, we do not oppose that. We are in the difficulty, however, that we feel very strongly that the NIEC recommendation—which has the full support of the Federation of Irish Industries and of the Irish Congress of Trade Unions, as well as of the relevant civil servants, the secretaries of the Departments of Finance and Industry and Commerce and other representatives of the public interest on the council—which expressed in very strong language indeed that there should be no discrimination between grants paid to existing industries re-equipping and to new industries coming in, or industries expanding on a large scale, should be adhered to. If the Minister feels it necessary to increase this amount to 40 per cent in the case of new industries or major developments in underdeveloped areas, he ought to make the change we suggest. The Minister may say: "No, because the cost involved is such that we cannot sustain it." Even at the price of rejecting this important recommendation and of perpetuating this belief, which has this little bit of foundation that new foreign industries are favoured over existing industries, we cannot do it because of the cost.
I would appeal to the Minister to look at the Foras Tionscal report. I have not got it here today. I had it the last day because I thought this matter would come up: the debate took longer than perhaps any of us expected. My recollection is that the amount of adaptation grants—they are the grants we are talking about now, effectively, under a new name—paid in the designated areas is extraordinarily small. The sums of money involved are tiny. I remember working out what the extra five per cent would cost. It would be a drop in the bucket —a fraction of a fraction of one per cent of the total amount paid in industrial grants. In those circumstances, when the amount of money involved is extremely small, five per cent on to that would be a very small sum. I would ask the Minister to give us the figure, as I have not got it with me. Perhaps his advisers can give him the figure for the amount paid in re-equipment grants and adaptation grants in the designated areas for the last financial year. I think it is a very small figure indeed.
It seems to me a very serious mistake. I would appeal to the Minister to reconsider this between now and Report Stage. We are in the difficulty that we cannot put down an amendment as it involves a charge on the Exchequer. If he changes this to 40 per cent, it will cost him virtually nothing. The sum involved is minimal. For that, he may encourage some more re-equipment in these areas but, even if he did not, it would be a price well worth paying to be able to say to Irish industry, as NIEC recommended should be said to Irish industry, that anybody who re-equips will be on the same basis as a foreign firm coming in.
There are the special provisions under section 34—up to 20 per cent extra for projects that meet certain specific criteria. Subject to that exception—which is fully acceptable to the Federation of Irish Industries; it is one that everybody will understand and accept—for the ordinary run of grants for ordinary projects, the Irish industrialist re-equipping will be in the same position as the foreign industrialist. It is a great mistake to fail to grasp this opportunity of achieving that, for the sake of a few thousand pounds. I have a vague recollection that the amount of money involved would be about £16,000. I could be wrong. I have not my papers with me here but that is what I seem to remember from the calculations I made at the time. For the sake of a sum like that, to reject the opportunity of being able to put Irish industry on a par with foreign industry would be very short-sighted.
I do not myself understand fully the nature of the distinction made between sections 33 and 38. If one reads section 33 and if one did not know about re-equipment or adaptation grants, if one did not know they existed, if one did not know there is a section 38, I think the reading one would give to it would be that anybody who seeks to maintain or develop an existing undertaking is entitled to the grant under that section. If you look back at section 33, it speaks of the authority making a grant for an industrial undertaking to which this section applies. To what undertakings does the section apply? It applies to an industrial undertaking—section 33 (3)—in respect of which the authority is satisfied that (a) it would be likely to provide and maintain employment in the State— that is true of any existing industry adapting or re-equipping—(b) financial assistance is necessary to ensure its establishment and maintenance or development. It specifically includes not only major developments of a new industry but anything designed to maintain it in existence—which would be the purpose of any adaptation or re-equipment grant and—(c) it is of a reasonably permanent nature and will be carried on efficiently. That is a minimum requirement for the giving of an adaptation grant anyway. Therefore, there is no problem there.
May I put this to the Minister? In what way is section 38 necessary? Is it the case that anybody who applies for a re-equipment or adaptation grant under section 33 can be given it and get the 40 per cent—in which case, what is the point in having another section for re-equipment grants with a limit of 35 per cent? Either they are two different things—in which case the wording of section 33 does not make it clear at all or they are the same thing in which case section 38 is not necessary. I have two separate points here. The first is that it seems to me it is arguable that section 38 is inoperative and that every industrialist can apply for an industrial grant for re-equipment under section 33—in which case, the problem is solved: we can just delete section 38. Alternatively, if section 33 contains something, which is lost on me, which inhibits an industrialist seeking to re-equip applying under that section, then I think it essential, in section 38—at the small cost of a few thousand pounds—that 35 per cent should be increased to 40 per cent in respect of re-equipment grants in the designated areas. The Minister will then be able to say to Irish industry: "You are on exactly the same basis under sections 33 and 38 as foreign industries coming in here".
I hope the Minister will see the force of what I am saying. My contribution is intended to be constructive and helpful. I am not sure whether, in making this change—increasing the 35 per cent to 40 per cent in section 33 and not increasing it in section 38—the Minister was aware of the small cost involved. Did his civil servants draw to his attention the fact that the amount of re-equipment or adaptation grants in the designated areas is so very small that a five per cent addition to them would cost very little? I know the Minister is properly sensitive to the issue of Irish industry being put on a par with foreign industry. However, I feel that, had he been fully aware of the fact that it costs so little to do this, he would not have made this mistake of increasing it to 40 per cent in one case and not in the other. If I have drawn it to his attention or reinforced whatever impression he had formed of it, I would ask the Minister to consider making this amendment on Report Stage—he can do it: we cannot—in the interests of creating a situation in which this legend about foreign firms being favoured as distinct from Irish firms will be got rid of once and for all. In the interests of getting rid of that legend, once and for all, I plead with the Minister to make this change.
Mr. J. Lenehan
I think it is completely wrong to say that foreign firms have any particular advantage over local firms. If we have a foreign firm whose directors are prepared to come in here and establish and industry which would give employment to our people then, in fairness to everybody, I think we should accept them. I wish to draw attention to an important point with regard to income tax and with regard to the other various types of taxes which are imposed on firms be they foreign or Irish. Surely we should get some type of an assurance that the Irish firms will be not only on a par with the position as it relates to foreign firms but in a much improved position?
There has been a great improvement in our industrial techniques over the last few years and I see no reason why Irish firms should not get some advantages in relation to taxation over foreign firms coming here. I live 200 miles from here and from what I see when travelling along the road, in ten years from now, all the good land of Ireland which should be rearing bullocks which are the only profitable exports from this country——
On a point of order. You will be aware we are anxious to facilitate the Government in speeding up this debate, and I am wondering whether this contribution is in order.
I was about to point out to Deputy Lenehan that he seems to be travelling a bit wide of the section.
Mr. J. Lenehan
I could not hear what the Deputy said, so I cannot give him an answer.
He said they are anxious to facilitate the Government in getting the Bill through.
Mr. J. Lenehan
I am prepared to do likewise. As I was saying, at the rate we are now going, all the factories and industries will be built over the good lands, while we in the west will still be left with the bad lands. The right attitude would be to build these factories on the bad land.
Underground.
Mr. J. Lenehan
We do not want to put them underground. We are not like the Deputy's friends in Cuba and these other places.
The question of land does not arise.
Mr. J. Lenehan
It does arise.
Not on this section.
Could we have a clearer definition of the fixed assets as they apply to grants?
Section 2 defines that.
In regard to subsection (5) does the Minister envisage any change in the procedure whereby the authority will find out the capital value of money spent by a firm, or is he satisfied with the existing method?
In regard to the last point, I dealt with that on a previous section. It is necessary to have somebody to determine what the value of this is in order to ensure that the instalment grant in total or in its present value will not exceed the limits laid down in the Bill, and I think the IDA are the people to do it. As to the method they will adopt, I am not in a position to say precisely, but I would assume they would calculate the present value of the capital sum involved.
The question of the cost of implementing what Deputy Donegan and Deputy FitzGerald are advocating has not arisen at all, because they are comparing two things which are completely different. As Deputy Donegan said, the re-equipment grants provided for here are roughly comparable with the adaptation grants which we had before and which in the designated areas amounted to 25 per cent. We have stepped that up to 35 per cent to assist the designated areas. By the way, they did not say this, but were the Deputies arguing that the re-equipment grants should be increased all round to the level of new industry grants?
We said if the Minister increased the 35 to 40 he would have lined up section 38 and section 33.
But only in relation to designated areas.
The 25 per cent in the rest of the country is already in line with section 33.
Which was already there, as I pointed out. We are stepping it up in the case of the designated areas to 35 per cent. The new industry grant is a completely different matter. The position at the moment is that any industry, whether it is Irish or foreign, if it is a new industry or if there is such a substantial adaptation and re-equipment of an existing industry that it amounts to a new industry, any such industry is entitled to new industry grants, but all the conditions that apply to new industry grants have to be applied, of course, to this, where it is being treated as a new industry. The requirements in regard to re-equipment grants as laid down in section 38 (1) relate to re-equipment, modernisation, improvement or expansion. The practice has been that in the case of adaptation or re-equipment grants, once the project qualified at all, the 25 per cent or 35 per cent of the designated area is approved: there is no question of scaling these down as there is in the case of a new industry.
The Minister has said there will not be under section 33 in future.
That is true.
There is nothing whatever in section 33 about new industry.
The Deputy is arguing a theoretical case which arises because we have endeavoured to assist the designated areas. I do not think Deputy Donegan and Deputy FitzGerald ought to assist the spreading of the myth——
We are trying to demolish it.
They are assisting the spreading of the myth that there is a difference in treatment between Irish and foreign proposals. There is not, but if the criteria, the tests, which very often include a condition of 100 per cent export of product, which are applied in the case of new industry grants, are to be applied to re-equipment grants, you will cause serious loss to Irish industrialists. You are not helping them at all; you are making things worse. If you treat re-equipment as new industry, if you recognise this principle that you must apply the same criteria as you apply to new industry, then you already have that position on the basis that a new re-equipment operation is so large that it conforms to the requirements of a new industry grant, it will be treated as a new industry exactly the same as a new industry coming from abroad.
I do not want to lay emphasis on the situation which Deputy FitzGerald pointed out existed in the designated areas, namely, that it would take very little money to provide a greater percentage of grants for re-equipment there, because there is not very much there to re-equip at the moment. I want to concentrate on the fact that existing industry in Ireland when getting assistance in the form of an adaptation grant got 25 per cent when a new industry could get a grant of 50 per cent. The Minister will not convince anybody who knows anything about business in this country that, when large sums were spent by existing industry, they were treated as a new industry and given the higher scale of grants. They were not, except in about three instances of very large grants, and in one of those instances which I will not produce here—it was as a result of a failure of the very proper attempt by the Minister, not 200 miles away from me, and by the Government to retrieve something from that failure—the grant was treated in this manner. The Minister is afraid, just as I am, of giving individual instances in verbal duels. It is clear up to now in existing legislation that grants to existing industry were restricted under the adaptation label to grants where the industry was export-orientated. Grants were restricted to certain types of industries. Bakeries, for instance, were excluded from re-equipping themselves and from getting grants. That has been changed under the re-equipment grants system now.
If they were treated as new industries they would not get them at all. We would not now give a grant to a new industry starting up as a bakery but we give re-equipment grants.
Re-equipment grants are now given if firms re-equip themselves not only to make new jobs but to defend the jobs already there. If firms do this, they will be given grants of 25 per cent outside the designated areas. If someone comes in to do the same operation with a new industry he will be given a 60 per cent grant. We appreciate that unless there is major expansion firms are not entitled to the big grant. Up to now the position has been that they did not get that high rate of grant even with major expansion.
The Minister is basing his argument in relation to the new legislation on what happened in the past. With possibly three exceptions in this country over the past 15 years old industries, even when they expanded, were treated as eligible only for an adaptation grant of 25 per cent. Others got 50 per cent if they produced a new industry. The operations of sections 33 and 34 are related directly to new industries while section 38 relates to existing industries. Section 38 restricts maximum grants to 25 per cent outside designated areas and to 35 per cent within those designated areas. A new industry gets 60 per cent through the operations of sections 33 and 34 if it is in a designated area and it gets 45 per cent in an ordinary area. The ordinary industry in this country will get a grant of 25 per cent if it is lucky while the new industry can get a grant of 60 per cent or 45 per cent depending on where it is. The grant in respect of an existing industry in a designated area is 35 per cent. That is the only improvement so far as percentage grants are concerned.
The Minister has got involved in misunderstanding the Bill and also the NIEC Report. The Minister says the purpose of section 38 replacing the old adaptation grants is to enable firms to get such grants easily without having to go through procedures involved under section 33 when they have to show that 100 per cent of the goods will be exported and that they are a new industry. Where does such reference occur in section 33? The Minister is talking about administrative practice in the IDA in relation to grants for new industries. That practice is inapplicable to a major extension of an existing Irish firm. If a firm involves itself in major extension which entitles it to an adaptation grant, it is not a new industry. Therefore, that part of the Minister's limit which he imposes under section 33 is not applicable. Must an Irish firm export 100 per cent of its goods? If it sells some goods on the home market is it not eligible for grant? A firm which gets an industrial grant for a major expansion of activities would be treated as equivalent to a new industry. Such an expansion is not a new industry. It may not involve 100 per cent exports of its goods. The firm may be selling goods on the home market.
There is nothing in section 33 to change that entitlement. The Minister is not talking about the limitation of section 33 which would prevent by law a firm seeking re-equipment from getting a grant unless it were a new industry and unless it were exporting 100 per cent. The Minister is talking about administrative practice which has been adopted by the IDA in giving grants to new industries. It does not apply to major expansion of existing firms.
Is the Deputy sure of the last point?
The Minister specified two points. First, the industry should be new. We are talking about existing industries that get grants. The Minister referred to this as being a feature of the existing legislation. Is the Minister saying it must be a new industry when he has told us that new industries can get grants?
I said when an industry amounts virtually to a new industry——
"Virtually" is a word that does not appear in legislation. An Irish industry expands on a major scale so that it is equivalent to a new industry, such a firm is not a new industry but is entitled to get a grant. There has never been anything in relation to industrial grants to limit them to new industries solely or to industries which export. The Minister is aware of the three cases involving laundries. It is not the practice of the IDA to give grants to laundries but there is nothing in legislation to stop them. In giving them grants they were acting legally. In giving grants to Irish firms involved in major expansion it is not required that there should be 100 per cent export in such cases and firms who have got grants are selling on the home market. The Minister is talking about the administrative practice of the IDA which they apply, rightly and properly, to cases where industrial grants under section 33 are paid to new industries. He is suggesting that section 38 is necessary because grants would not be paid under section 33. This is nonsensical. Section 33 specifically includes these cases because it refers to maintenance and development of industry.
Section 33, as drafted, would enable the IDA, if the Minister authorised them to do so, to pay re-equipment grants freely at the rates laid down to any firm which seeks them. The wording is adequate. Let us amend section 33 if necessary to include the words used in section 38 by adding to section 33 (3) (b) the words "for the re-equipment, modernisation, improvement or expansion of the undertaking."
A consequential amendment in section 34 to exclude the operations of section 34 in cases where grants are given under subsection (3) (b) (2), as I proposed, would be necessary. However, section 38 should not be there at all and the Minister is well aware of this. The NIEC Report suggested the total assimilation of re-equipment grants to industrial grants. It pointed out the undesirability of having two different systems for industry, where many industrialists feel they are being discriminated against. It said not alone should the same amount be paid, which the Minister has departed from quite unnecessarily, but that they should be made into one system. The whole purpose of the NIEC and the Arthur Little Reports was to do this. The Minister has not given any reason for having a separate system. The IDA should be given discretion under section 33 to decide that whereas in the case of re-equipment, modernisation, improvement or expansion, grants will not impose restrictions on 100 per cent exports and, by definition, on new industries, that when they are giving grants for other purposes for new industries or expansion of existing industries they will apply these criteria. That is a decision for the IDA; they can announce how they are going to do it and we will accept that. The Minister is confusing the whole issue. The most serious feature of this Bill is the total failure to accept the NIEC recommendation or even to advert to it in this debate.
The Minister has gone off on a tangent—perhaps he was so close to section 38 that he did not see it in context. I should like him to think about this, make the small amendments I suggested in section 33 with a consequential amendment to section 34 and delete section 38, and this will get rid of this difference in industry. This has been the whole purpose of the NIEC recommendations which have been almost 100 per cent adopted here. It would cost only £16,000 to do this. It should be said that the amount for adaptation for industry in designated areas is disturbingly small. If I recall the figures correctly the amount paid in adaptation grants in those areas is not only a fraction of those paid in the rest of the country, but a fraction smaller than the fraction the industrial output of those areas represents of total national industrial output. There is some evidence that firms in those areas have not been adapting as rapidly as firms elsewhere. They need greater incentives and I see no reason why the incentive should not be 40 per cent. It will cost only £16,000 unless it has the effect of spurring them on to further adaptation, which would be desirable. To be able to say to industry: "You are on a par with new industries coming in, you are the same as those industries, you are not discriminated against," would be very valuable and I appeal to the Minister to consider this between now and Report Stage. He should not confuse two things—the administrative process of the IDA to which he refers, and the legislation. There is nothing in section 33 to prevent grants being paid for re-equipment. It may need to be clearly spelled out but there is nothing to prevent this being done.
I can visualise that an industry which had developed a new product would have to build a factory for that new product. The firm would be entitled to a grant for a new industry but at the same time they might decide to modernise their No. 1 factory, possibly to prepare material for this new product, and you would have the situation where they would enjoy grants under sections 38 and 33.
The proposal I am making would allow that to be done. All we should do is to preserve the right for the genuine major expansion of new industries to enjoy extra grants under section 34.
I visualise a case where the extension was given 40 per cent and the old factory got 35 per cent.
Would the Deputy not prefer both to get 40 per cent?
Yes.
Then we are agreed. I hope the Deputy can persuade the Minister.
For the last time I shall endeavour to explain this matter. I do not care whether Deputy FitzGerald, the NIEC or anybody else has misunderstood the position but this, in fact, is the position. First, the fact is that at the moment we treat a major extension of an existing industry as equivalent to a new industry for the purpose of giving it an industrial grant but the same criteria must apply as apply to new industries. Deputy FitzGerald seems to think we can do that without section 38 and with some minor amendments give re-equipment grants under section 34. I do not think he has really grasped what is happening in this country under re-equipment and modernisation. In many cases we are reducing employment by re-equipment schemes; this is essential in order to ensure that the industry survives. May I refer Deputy FitzGerald to section 33 and the criteria to which he has been referring? Section 33 refers to the expansion or maintenance of employment. None of these apply to re-equipment grants. In the case of section 38 re-equipment grants are available for the re-equipment, maintenance, and expansion of an industrial undertaking. There are cases where the effect is that employment is reduced and you could not possibly contemplate this under section 33. There is a basic difference between re-equipment and new industries and if the Deputy cannot grasp it I cannot help him. If his proposals were accepted many Irish industrialists would not thank him for it because they would not get any re-equipment grants.
The Minister's suggestion is absurd. The whole purpose of the adaptation scheme is to maintain employment in Irish industry in the face of free trade and this has been the purpose of all re-equipment grants. They may have the effect of creating some redundancy but they are designed to keep the firm going and one cannot get those grants unless one satisfies the authority that the effect of the grant will be that the firm will survive and employment is maintained.
Not to maintain employment.
It is the whole purpose of these re-equipment grants to maintain employment.
The Deputy is playing with the word "maintain".
No, it is the Minister who is doing that. From the beginning it has always been the purpose.
Does the Deputy maintain that the primary purpose of these grants is to maintain employment?
Yes. I say that as a member of the committee which recommended this legislation.
Surely the primary purpose was to maintain industries for import and export.
The primary purpose of the industrial grants is to create new employment.
What is the Minister's rooted objection to the merging of the industrial equipment grants?
They are completely different matters. If I applied the same criteria then many firms needing re-equipment grants would not get them.
Only if the Minister makes up his mind to interpret it this way and if he is not prepared to make the amendments necessary.
To make an academic point——
It is not an academic point. The members of the NIEC are not academics whatever about people on this side of the House and in the Labour Party. The members of the NIEC were appointed by the Government; they include representatives of the public interest, the secretary of the Minister's Department, the secretary of the Department of Finance and nine or ten representatives of the ICTU.
And they produce agreed reports.
We fully agree with Deputy FitzGerald.
To suggest that this is an academic report is nonsense. The people who produced that report include half-a-dozen of the people on the CIO who originally proposed adaptation grants. The whole purpose of every CIO report was to maintain employment and the whole reason for introducing them was the fear that if these grants were not introduced Irish industry in free trade conditions would suffer and employment would suffer. The whole motivation was to preserve employment.
Was not the whole purpose to maintain an economic balance and in the case of exports to maintain the position in relation to the balance of trade?
Adaptation grants were paid to any industry, export or otherwise. If anything, the orientation of the grants was towards industries producing for the home market but certainly exports were not excluded; they were merely not envisaged. The whole purpose is to maintain employment and to suggest that a firm that is seeking a grant in order to survive and maintain employment, is not maintaining employment because as a result of this re-equipment there may be some redundancy, is an absurd misuse of the English language. The Minister must appreciate that the NIEC in putting forward this report had good reason to do so. I have given the composition of the board; they are people who know what they are talking about. They know the attitudes of industrialists, the feeling that industrialists have that they are not put on a par with foreign industrialists coming here and that belief has this degree of justification, that the types of grants available for an Irish firm re-equipping and a new firm coming here are different.
We see that it would be necessary in some instances, with some foreign firms meeting certain specified criteria, to be able to give them a bigger grant than might be justified in the case of adaptation. For that reason the NIEC devised—basing it on the Little Report but modifying it in a number of respects—this two-tier scheme. A lot of thought went into it. Many meetings were held on this and as a result there emerged a proposal which appears in the form of sections 33 and 34.
The whole purpose of this was to ensure that the adaptation grants system could be merged in section 33; that there would be one system of grants and no difference between an Irish firm and a foreign firm. The only place where higher grants came in would be in the section 34 arrangement which would apply only where specified criteria are met. In that way Irish industry would, as far as is humanly possible, be put on a par with and would be seen to be on par with foreign industries.
The Minister, I am sorry to say, for reasons which remain obscure to me but which seem to have something to do with his use of the English language, has made a mess of it by introducing section 38. I propose therefore on Report Stage to put in an amendment on that with a view to incorporating section 38 in section 33.
I suffer from the disability of being just an ordinary businessman who operates on an overdraft. The last I heard from the Minister for Finance and others was that they were going to abolish overdrafts next year. All I hope is that they will not abolish me. I might be quite difficult to abolish.
I want to restate quite clearly the position of this party in relation to section 38. The position of the Fine Gael Party is this: there are among us many who have the opportunity of seeing balance sheets of firms and there are among us many who work in those firms. We have carried out a study of this matter. Anyone who reads a balance sheet can compile from the fixed assets, creditors and debtors, stock and all the other figures, a net figure for the amount of capital employed in the industry. When the re-equipment consists of a figure equal to a very large percentage of that net figure of capital employed, it is the policy of this party to give, either in the designated areas or in the rest of the country, a grant and opportunity for a grant equal to the grant afforded to a new industry whether it came from abroad or not.
Would the Deputy withdraw protection at the same time, if they had protection?
The Minister is being a little bit troublesome because he knows he is caught, and well caught.
Perhaps the Deputy will explain that one?
On the question of protection, the Anglo-Irish Free Trade Area Agreement is dealing with that and as we approach Europe a different situation will develop. I must stay in order. I must re-state the position lest the circles we have talked around should deflect the mind of the Dáil from the policies of the two parties. I want Deputies not to be absolutely enthralled by my colleague, Deputy FitzGerald's point—a very good and valid point—that it would cost very little to give this to the designated or undeveloped areas. I want the House to relate their thoughts to the whole country.
It is the policy of this party that when the balance sheet of a company applying for a grant is examined and it is seen that the re-equipment envisaged is a very large percentage of the net capital employed, that company will get equal opportunity for a grant percentagewise and in every other way, without any question of criteria being mixed up with it. I do not want to be deflected from that by any discussion.
Could we have the views of the Minister?
Could we have the views of the Minister on the points made?
We have had the Minister's views at length. We gather that the Minister does not take everything from the NIEC as gospel?
I do not, no.
It should be placed on record that the Minister is suffering from schizophrenia in regard to grants. There is undue ossifying of the structure built into this section. I submit with respect to the Minister that in the decade ahead confusion will reign throughout the country in regard to State grants. There is undue rigidity. I might even say—not in any personal sense—that if the Minister had thought of it before the NIEC thought of it he would have responded quite differently in the House in regard to that elementary proposal for the co-ordination and rationalisation of industrial grants. If a firm comes to Ireland and brings with it, literally, secondhand equipment——
It will get no grant if it has secondhand equipment.
There is this rather glib, fashionable term "new industries" so well liked by the Government, so completely inapplicable to industries which rationalise and thus create new industries, new plants, in new locations. I suggest that the Minister suffers from schizophrenia in the matter of the administration and making of grants. It is time there was clarification of this matter and, indeed, of the NIEC report which supported the proposition.
Question put and agreed to.
SECTION 39.
Question proposed: "That section 39 stand part of the Bill".
This extends the training grants from the undeveloped areas to the rest of the country—or has that been done already?
That has been done already.
What does this do, if anything?
This extends what may be covered by training grants. The former training grants scheme related to the actual wages of workers during their period of training and the amount of their expenses on travel and subsistence where they were trained outside the State, subject to compliance with the criteria which are again set out in subsection (1). Here we are extending it to the training of managers or supervisors and payments made to persons who are training or assisting in the training of an industry's staff. It is clearly recognised now that the training of managers and supervisors is necessary and the use of outside instructors or consultants in training is well established.
Would the Minister clarify? The training grant is being made for the training of persons for positions of supervision or management in an industrial undertaking. In some new industries training would be needed for a great range of operatives. Is there a problem in subsection (2) that in the case of a firm which may be involved in a totally new process and which would have to have a programme of training for many of their operatives, such operatives might be excluded from the terms of the section because they are not specifically mentioned? It seems that subsection (2) is unnecessarily rigid.
That is additional to subsection (1).
Will the training be selective and how will the people qualify for training? Will there be somebody who will decide that a certain person is entitled to be trained?
These training grants are given only in the case of new industries.
Will they be given to all new industries where application is made?
The IDA have to be satisfied that the training programme is necessary for the particular industry.
The Minister is aware that something like this happened with his famous small industries grant where, after numerous symposia and various discussions, somebody sends a stereotyped letter to the person who made the application saying: "We are sorry but you have not yet reached the stage where a grant would apply." Would the same apply here?
I should hope not.
The Minister has said that these grants will only apply to new industries. Does that preclude existing industries?
There is nothing in the section to preclude them.
What the Minister has said indicates the line of thought which seems to have indoctrinated our efforts in industry. I can think of many instances in which existing industries will be much more in need of a training grant to bring their people up to scratch than what a new industry would be. A new industry starts off with technicians and managerial competence and trains new people from the beginning. Of course, they are entitled to a grant when that is provided for in the legislation but there will be many cases in which the grant will be necessary to keep existing industries on their feet by the re-training of their people and changes in their methods of work. There will possibly have to be fundamental changes in the machines used and this would present difficulties for the operators concerned. It seems to me that a situation has arisen in which the Minister who is probably one of the best Ministers in the Government, dribbles through this on the basis that it will be accepted by the House. It is a disgrace and there will certainly be an amendment on Report Stage.
I take it that the training grants will apply to existing industries?
They are certainly not precluded as I pointed out but Deputy Donegan is just as aware as I am that there will be problems that will be quite different between new industries and existing ones. It is a further illustration of a point we were discussing some time ago. The facilities available for an existing industry are not, in practice, available for a new industry in many cases; also, the scale of the operation is normally quite different and because of the case that has been made I wish to point out that as far as many of these existing industries are concerned they have had a great deal of protection for a number of years.
Do not hammer them now.
I am not hammering them at all but I do not wish a case to be made here which suggests that they are being ill-treated. I wish to make it quite clear that the treatment meted out to existing industries is extremely good but if existing industries meet the criteria and tests applied to new industries they get the same treatment and these grants would be available to them.
As far as new industries are concerned, there has been a problem for the supervisory and management staff of some of them because when they come to this country they do not know about our industrial relations system and neither do they know about our trade union system. Would such a training ground cover their induction period or would the training cover such a delicate matter?
It would be unlikely because it would be unnecessary. The Deputy is aware that every one of these firms is fully advised by the IDA on our industrial relations system——
Some of them do not act as if they are.
——and they are also very strongly advised to make arrangements with the trade unions. They do not have to accept but the fact that they do not does not mean that they do not know the score.
I see a particular deficiency in section 39 of the Bill. There is no reference whatever in the section to the role of the IDA's training authority. I find it rather weird that one would devolve on the IDA the power to give grants without any executive liaison being built into the section. I am very conscious that a new firm coming here may be introducing into Ireland a particular piece of scientific skill or a particular piece of managerial expertise which would be quite unique in this country and I submit to the Minister that it would be an extremely difficult exercise for the executive and administrative staffs of the IDA to establish the criteria by which they would make these training grants available.
I am sceptical because of some of my experience in this regard. I should like to know what will be the criteria as to how the money will be spent and who is to have training and so on. The Minister, on Report Stage, might usefully demolish the element of internal empire building by an amendment and ensure that there will be executive liaison built into the section in relation to AnCO so that grants might be given after consultation with the IDA. This could be much more appropriate.
Far from putting down an amendment on Report Stage, I pointed out on Second Stage that section 18 refers to AnCO and provides for the transfer to AnCO of the powers vested in the IDA under section 39. I also explained that the comhairle are not as yet in a position to take on these responsibilities but that provision had been made for it in the Bill and that as soon as it is demand possible to transfer these powers, they will be transferred to AnCO.
On this question of training grants for a given industry—I see my friend Deputy Paddy Lenihan is here and he is a man who has been involved quite closely with the spinning industry—I was never any nearer to the industry than to walk through the factories but I have seen the difference in that industry down through the years. I have seen the highly technical machines which arrived to replace old looms. I have no doubt whatever that the people who brought in those highly technical machines had to have people specially trained. Existing industry does not get the grants a new industry gets. An amendment is being tabled for Report Stage from this party which is in line with our policy of supporting existing industry—the Minister can refuse it if he feels like it—so that the section will state that those training grants will be available for existing industry.
The Deputy mentioned the spinning industry. Is that right?
Yes.
All I can say is if the spinning industry brings in new machinery the supplier of that machinery is always ready and willing to train and adapt the workers concerned to new spinning machinery. There is no problem there at all.
That would apply to new industry.
If an old industry is tottering and on the verge of collapse they will bring in work-study engineers to study their working methods. The industry gets grants to cover the cost of that. There is no problem at all in adapting or training existing workers in an industry to new machinery in that industry.
The Minister was very definite when I asked him about old existing industry and he said that it was out. Deputy Lenihan's point would apply equally to new industry. If all the factories which were starting were spinning industries I am quite sure they would come in and train for new industry as well as old. Fortunately, or unfortunately, that is not so and therefore we will have to cover industry generally. The Minister was definite, that existing industry did not qualify but subsequently he said: "Well, they are not excluded."
I said that before too.
The Minister knows quite well that after a Bill has been passed there is very often difficulty in the law courts over the interpretation of the spirit of the legislation. This Bill I assume will not be affected by the law courts but it will be affected by a group of civil servants dealing with industrialists and people like that. If what the Minister says he has said is left on the records and not categorically changed or denied it will simply mean that somebody in the Civil Service who is dealing with this matter will simply pick up a document and say: "The Minister said this did not apply to existing industry."
Deputy Donegan was quite correct in the point he made. The Minister must state, as emphatically as he stated to me, that this does not apply to existing industry, otherwise it will not work out that way. I would be glad if the Minister would do that. I am not trying to embarrass him or to make it awkward for him but matters like this should be clarified here and not left to be argued over by people who want assistance at a later stage. The point about getting training from the people who are selling machinery is all right. They will do it up to a point but what we are talking about here is people who not alone are installing new machinery but also adapting old machinery. The only way that can be brought into operation is by having somebody who will train those who are working the machines at a particular time. Existing industry should benefit the very same as new industries which are being installed. Would the Minister say categorically that existing industries are entitled to benefit by this particular section?
I said that on the face of the section existing industry is not excluded. I think I also said that it is not contemplated that the section would apply.
It would not apply.
It is not contemplated it would apply but it is contemplated it would not apply, if you like to put it that way. However, Deputy Tully may be a little happier if I also place on record the fact that there has been one case of an adaptation grant some of which took the form of a training grant to existing industry. It is not excluded but in the nature of things this section will not be required so much by existing industry. It is supported in one way by existing industry. For instance, Deputy Lenihan made the point about technical assistance grants. Those of course are not availed of by, and are not available to new industry, but they are availed of substantially by existing industry and very often are availed of to develop a training programme. This assistance is not available to new industry at all.
This is part of the trouble we have been having here, this concept that we ought to treat existing industry and new industry in exactly the same way. That is all right in theory but in practice you have to have regard to what is really happening. If you want to treat them the same you have to apply the same criteria to them. Here is another example of something which is available to existing industry which is not available to new industry. It should be so available but let us recognise that the situation is different and the machinery we have for dealing with it is different and ought to be different.
I want to get this through as quickly as possible but the way to do this on this section, on such a fundamental and important thing, is for the Minister to accept an amendment that such training grants are available for existing industry. I intend to table that amendment for Report Stage.
If this section means what the Minister says it means that it applies to new industry only then it does not say so.
I did not say that.
The Minister said the nearest thing to it.
The Minister said in the first reply to me, and the debate will prove this: "It does not apply to existing industry." That is the point on which I was taking him up.
The section is somewhat defective and loose because it does not clearly indicate whether it applies to new and existing industry or to new industry only. I do not care what the Minister says in this House. I have had experience time and time again of law agents passing judgement afterwards on what was in legislation. It is no good to quote what the Minister said in the House. I have heard many legal people say they did not care a damn what the Minister said in the House, it was what was written into the legislation that counted. There is a lot of pressure on industry to diversify and if you have diversification you must have a requirement for new training and new skills.
Hear, hear.
This is a case where old industry should come in for consideration. The Minister has given the explanation that one of the reasons why old or existing industry is not included in this section is that it may have enjoyed protection over a long period.
No. That was in a different context. It was in the context of alleging that the two, new and existing industries, should be trained in exactly the same way.
The Minister's explanation was that existing industry in many cases receives benefits that new industry could not possibly have received, in the way of protection etc. and that this was a reason for what is here. If the Minister really wants to have improvement in existing industry, wants to have diversification, and wants to induce people to train their staff, as they should be trained, in the interest of industrial expansion and development, he should allow both old and new, or existing and new industry in under this section.
Question put and agreed to.
SECTION 40.
Question proposed: "That section 40 stand part of the Bill."
Would it be possible for the Agricultural Institute or An Bord Bainne to qualify for a grant under this section for research into, say, a new product or would it be possible to do it on an agency basis for an industry or for a series of industries? It is important that this should be covered in this section.
This would be possible.
Question put and agreed to.
Sections 41 to 43, inclusive, agreed to.
SECTION 44.
Question proposed: "That section 44 stand part of the Bill."
I should like to know what is the reason for section 44. I understood that the Industrial Credit Company could always take shares in an industry but I do not understand why the IDA should now be taking this power.
This is a new power for the IDA.
I know that.
It arises because, particularly in the case of larger undertakings where very substantial grants are given, it seems to me that many of these cases are very sound commercial propositions which are clearly going to make a good deal of money. If it is possible for us to arrange it in this way, we ought to try to ensure that the State will get back some of its investment, and this is a good way to do it. Of course, it is purely an enabling section. In many cases the promoters would not be prepared to agree to it but there are some cases in which they would be prepared to agree to it. Again, it would form another aspect of providing a package deal. The principal reason behind it is to enable us, in cases which are deemed to be suitable, to recover some of the State's money that is invested in projects.
This would seem then to be a situation where the State envisages entry into the industrial field in cases where its entry is not absolutely necessary. I thought the line here was that the State went into the industrial field only where private enterprise quite obviously had failed or obviously would not go in because of the nature, size or some other facet affecting the industry. It appears to me now that in this change we have an indication by the Government that they are prepared to go into production themselves, to take shares in industrial undertakings, and that this enabling power in the Bill does indicate a change in policy on the part of the Government which will have to be considered.
Question put and agreed to.
Section 45 agreed to.
A Cheann Comhairle, may I raise a point of order? I left the House today after Question Time, when the order of business was settled, under the impression that an attempt would be made to complete this Bill by 7 o'clock and that then the motion on the RTE programme would start. I should like to know what the position is?
Nobody can tell us that except the Taoiseach.
I thought it would finish at 7 o'clock. I have since heard that Deputy Garret FitzGerald has said he will put down amendments for Report Stage, which would seem to indicate that there is no intention of finishing this Bill today.
I do not understand the Taoiseach's second intervention aimed at me. There will be amendments on Report Stage from myself and from other Deputies. We have proceeded with Committee Stage as fast as we could. There has been only one irrelevant intervention which took up time from the Taoiseach's side of the House. It is now 7 o'clock and we have to move to other business. We will have to finish this tomorrow.
Could some arrangement be made to take it tomorrow? I do not mind if it will be taken tomorrow.
We are anxious to co-operate.
We can come back next week and do the Taoiseach's Estimate on Monday or Tuesday. I am quite willing to do that. I am quite serious and I do not want to curtail the debate.
Is it agreed to finish Committee Stage now?
I feel that Committee Stage will take only a very few more minutes and if it is agreed to take Report Stage tomorrow I do not think it will take too long either.
SECTION 46.
I move amendment No. 7:
In page 16, lines 1 and 2, to delete "sections 33 and 34 of this Act, as the Authority considers appropriate" and substitute "section 33 or sections 33 and 34 of this Act (as the case may be)".
The draftsman considers that this amendment is desirable to enable a grant in aid of rent to be related to the maximum of first tier grant, that is under section 33, or to grants under both sections, whichever the case may be. This is a drafting amendment.
As a drafting amendment I am quite prepared to accept it.
Amendment agreed to.
I move amendment No. 8:
In page 16, line 7, after "the said section 9" to insert "as so extended)".
This is also purely a drafting amendment.
Amendment agreed to.
Section 46, as amended, agreed to.
Section 47 agreed to.
First Schedule agreed to.
SECOND SCHEDULE.
Question proposed: "That the Second Schedule be the Second Schedule to the Bill".
I observe in section 4 of the Second Schedule that now a member of the authority shall not be a member of a local authority. We have gone far too far in the exclusion of members of this House and people who work in various counties in Government or in local authorities from membership of boards. I know many members who are not members of political parties and who make a point of saying that they will not be affiliated to political parties. It is a great mistake, and something that should be considered by the Minister, to exclude members of local authorities from membership of the board of the IDA. I know people, particularly in the cities of Cork, Galway, Limerick, Waterford, Dublin and places like that, who are non-political and make a point of being non-political. I consider that the political end does come in, as far as membership of the board is concerned, but where a person is obviously non-political he should not be excluded.
I do not agree at all with Deputy Donegan's point that a member of a local authority who is a member of a political party should be ruled out. This section should not have been included because of the fact that on the board there will be members of political parties nominated by other people. Anyway I decry the effort made by certain people—and I am surprised at Deputy Donegan raising this—to say that because one is a member of a political party there is something wrong with one. Disraeli once said that an independent was a gentleman whom nobody can trust.
Fair enough.
Question put and agreed to.
Third Schedule agreed to.
TITLE.
I move amendment No. 9:
In page 4, lines 6 and 7, to delete "THE UNDEVELOPED AREAS ACTS, 1952 TO 1968," and substitute "THE UNDEVELOPED AREAS ACTS, 1952 to 1969,".
I am advised that the amended citation is more correct than that used when the Bill was introduced. The House will appreciate that the Bill has been around for some time.
Amendment agreed to.
Question: "That the Title, as amended, be the Title to the Bill" put and agreed to.
Bill reported with amendments.
Report Stage?
The Report Stage will not take long. If the Minister wishes we could take it at 10.30 tomorrow.
Two o'clock tomorrow?
Right.
Just a moment. We are getting rapid decisions here. Does this mean that the Report Stage will take one hour only? Are we going to mess business up again to continue Report Stage after Question Time? Could we not sit late tomorrow night or sit in the morning?
There is a chance it will finish in an hour. If it does not, we could continue at 10.30. There is a good chance it will finish in an hour.
Shall we say an effort will be made to finish in an hour.
Yes.
A serious effort.
Report Stage ordered for Wednesday, 17th December, 1969.