In view of the fact that this is legislation by reference, would the Minister think it helpful to relate the two and, if so, perhaps he would do so? What is happening under section 2 is clear enough, but there may be later sections on which the Minister could assist the House.
Committee on Finance. - Sugar Manufacture (Amendment) Bill, 1973: Committee and Final Stages.
Section I agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
I shall be only too glad to do so. This section simply repeats the existing power of the Minister to guarantee debenture borrowing by CSET with the addition of clauses empowering him to guarantee such borrowing in foreign currencies and extending his guarantee powers to cover payment of incidental expenses arising in connection with a debenture. At present there is some doubt as to whether or not the State has the authority to guarantee borrowing in foreign currencies and this section will ensure that there will be no doubt about this in future.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
May I take it that the substitution of six months for 90 days is in relation to the time for the submission of the account?
It is. In practice the Sugar Company has not been able to furnish the accounts within the time provided because of administrative difficulties in doing so and it is felt that an extension of the period will in future enable the company to furnish the accounts within the statutory period.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
The present section provides for an increase in the number of directors of CSET and enables the company to borrow in foreign currencies. It eliminates the requirement that the company shall have a managing director and it also eliminates certain qualifications with regard to the Minister's financial interest in the company and the duty chargeable on sugar, which are no longer relevant.
The 1933 Act requires that the number of directors shall be seven. The Minister for Finance considered it desirable to increase the size of the board by increasing the number of directors from seven to ten. He also considered it desirable to widen the range of interests represented on the board because of the variety of operations following the integration of the food processing operation with the other activities of CSET.
The Attorney General ruled in 1964 that reference in legislation to borrowing by State-sponsored bodies shall be taken as referring to borrowing in Irish currency only, unless otherwise specified. As a result of that, special provision for foreign borrowing has been inserted in amending legislation relating to a number of State-sponsored bodies, namely, the Air Companies, the Agricultural Credit Corporation, the Electricity Supply Board, Córas lompar Éireann, and NET. It is proposed to do likewise now in the case of CSET. The company has just completed negotiations with the European Investment Bank for a loan, but this will not be a debenture loan. However, it is important that the company should not be restricted by statute from raising debenture loans abroad where suitable opportunities arise.
The 1933 Act specifies that the company shall have a managing director, but this requirement is too restrictive and, in any event, the company has not had a managing director for some years. The present section removes this requirement.
Under the 1933 Act the Minister's right to appoint directors and an auditor to CSET is subject to the conditions that he either holds not less than one-tenth of the share capital of the company or guarantees a company debenture or that the customs duty chargeable on sugar imported here is higher than the rate of excise duty on sugar manufactured here. These qualifications were introduced because it was felt at the time there was a possibility that the State's interest in the company would gradually be sold off to the private sector. This possibility now appears extremely unlikely and it is considered that the qualifications do not serve a useful purpose and should be removed.
I take it that, in the admittedly unlikely event at the moment of a greater interest by the private sector in this company, if this were to happen, the Minister would then contemplate removing this provision in relation to the Minister's powers and reverting to the position which obtained before.
I take it what Deputy Colley is interested in is ensuring that no monopoly situation would be given to the private sector which could prejudice the public interest and I think he may be assured that any steps which would be necessary to protect the public interest would be taken and that it would not be open to any private interest to use the crucially important sugar industry to its own advantage and to the detriment of the public.
Question put and agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
The section will permit CSET to increase its share capital from £5 million to £10 million. The existing limit of £5 million on authorised share capital—which was fixed by section 2 of the Sugar Manufacture (Amendment) Act, 1962—has been reached by the issue of shares as follows:
Ordinary shares held by the Minister for Finance—£4.5 million 6 per cent cumulative preference shares (£1 each) issued to the public in 1934—£0.5 million.
An increase in the paid up share capital of CSET will increase by a similar amount that company's power to raise money by means of debentures because the articles of association rovide, as required by the schedule to the Sugar Manufacture Act, 1933, that the amount of money raised by debentures shall not exceed at any time the paid up share capital of the company.
Question put and agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
Of the existing investment of £4.5 million by the Minister for Finance in the share capital of CSET, £1 million represents bonus shares issued by the company in 1961 so that the Minister has, in fact, subscribed for only £3.5 million of shares. The present section will enable him to subscribe for an additional £5 million of shares.
The dividend on share capital has been 2½ per cent since 1963. Prior to that the dividend was 5 per cent for a number of years.
May I inquire if the Minister sees any prospect of the dividend reverting at least to the 5 per cent in this time of rising interest and dividend rates?
The Deputy is aware that there are rationalisation proposals ahead. The company is going through some difficulties currently and I think it would be wrong to impose an interest load upon it if that was going to affect the possibility of rationalising to the public advantage. So I would say that in the short term I do not think there would be a better return. In the long term I am certainly most anxious that there would be and I expect that there would be.
The last part of what the Minister said was what I wanted him to say, in other words that there is long term confidence in the future of this company.
Oh, yes, most certainly, and I should like to underline that.
Question put and agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."
The section empowers the Minister for Finance to give guarantees in respect of borrowing in foreign currencies by CSET otherwise than by debentures. Ministerial guarantees in respect of debenture borrowing abroad by the company are covered by section 2.
The section also extends the Minister's power of guarantee to cover incidental expenses in connection with borrowing as well as principal and interest.
The European Investment Bank as I have already announced has approved a foreign currency loan for CSET and the bank will require as a condition of the loan that it be guaranteed by the Minister for Finance. The bank will also require that the Minister guarantee incidental expenses in connection with the loan, viz. commitment fees (which applies to that portion of a loan which is sanctioned but not yet taken up) and any premiums on prepayments (i.e. repayments in advance of scheduled dates) that may arise.
Subparagraph (c) provides a formula for converting the proceeds of foreign borrowing to Irish currency so as to ascertain whether or not a guarantee could be given in any instance within the statutory limit on the overall amount which the Minister may guarantee. The amendment of the various subsections of section 5 of the 1962 Act—which relate to standard procedures governing guarantees—is necessary to take account of borrowing in a foreign currency. Similar provisions have been inserted in earlier legislation authorising Ministers to guarantee the foreign borrowings of State-sponsored bodies.
Question put and agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
Section 7 of the 1962 Act fixes a limit of £5 million on the aggregate at any one time of Exchequer advances to CSET plus guarantees given by the Minister for Finance in respect of borrowing by the company and any amounts owing to the Minister in respect of previous such guarantees.
CSET has an existing Exchequer advance of £1 million but the intention is to convert this to share capital. The advance was made to the company in two instalments in 1964 and 1965 as a support for the food project and no interest or repayment terms were determined because of the continuing poor performance of the project. Conversion of the advance to share capital would help to improve the capitalisation of the company. Apart from this advance, CSET has no loan moneys from the Exchequer at present and the only outstanding guarantee given by the Minister for Finance is in respect of a debenture stock of £900,000 which is redeemable in 1974. Nevertheless, it is considered prudent to double the existing limit of £5 million on Exchequer advances and guarantees because of the probability that in the years immediately ahead the Minister will be required to guarantee borrowings on a substantial scale, additional to the European Investment Bank loan.
In the light of what we know about the requirements of the company, the requirements for reinvestment and for development of its existing and, perhaps, new project, I think this is a reasonable provision and one with which we would not quarrel at all. In fact, we would hope that the provisions of section 8 will come into play fairly soon because this will mean that the programme for re-equipment and redevelopment by the company will be going into operation fairly soon.
Question put and agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
Section 10 (3) of the Sugar Manufacture (Amendment) Act, 1962, provided for a relaxation of section 4 of the Industrial and Provident Societies Act, 1893, in favour of Erin Foods. Section 4 reads as follows:
A society which may be registered under this Act (herein called an industrial and provident society) is a society for carrying on any industries, businesses or trades specified in or authorised by its rules whether wholesale or retail, and including dealings of any description with land. Provided that—
(a) No member other than a registered society shall have or claim any interest in the shares of the society exceeding two hundred pounds.
Section 10 (3) of the 1962 Act made it possible for Erin Foods to exceed the £200 limit imposed on membership of co-operative societies provided its shareholding in any society did not exceed 50 per cent of the total nominal value of the shares of that society. The limit of £200 has since been raised to £1,000 by the Credit Union Act, 1966. The purpose of this concession was to enable Erin Foods to participate in local co-operatives engaged in food production and subsequently Erin Foods took up to 50 per cent of the shareholdings in three co-operatives : Fastnet Co-operative Society Ltd., Skibbereen; Errigal Co-operative Society Ltd., Glencolumbkille, and Kerry Foods Ltd., Causeway. As Erin Foods is now a dormant company it is desirable that its shareholdings in these societies be transferred to CSET and the present section will enable this transfer to take place.
To clarify the matter, may I ask the Minister to confirm what I believe to be the position, that is, that the effect of this section would not be to prevent the company investing in subsidiaries in future if it wished to do so as they have done in the past?
The effect of this is to transfer the responsibility to Comhlucht Siúicre Éireann Teoranta now that Erin Foods is dormant. There is in this section no limitation whatever on such future interests.
Question put and agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
I agree with Deputy Colley's intervention on the need to explain matters. As this section is so brief it is only fair to explain what is involved.
Section 10 (2) of the 1962 Act provides in relation to an approved subsidiary company of CSET that (i) no change shall be made in its memorandum or articles of association without the prior approval of the Minister for Finance, given after consultation with the Ministers for Agriculture and Fisheries and Industry and Commerce and (ii) its audited accounts shall be submitted after the end of each accounting year to the Minister for Finance who shall have copies laid before the Houses of the Oireachtas. An `approved subsidiary company' is defined in the 1962 Act as a company formed by CSET with the approval of the Minister for Finance.
Erin Foods is the only approved subsidiary company of CSET and it is most unlikely that CSET will set up another such company in the foreseeable future. Erin Foods is now a dormant company and, following the enactment of the present législation. it will be divested of all its holdings in other companies. It is no longer appropriate, therefore, that it should be subject to Ministerial supervision in relation to its memorandum and articles of association and the company will not prepare annual accounts. Consequently, it is considered that the obligations imposed on it by section 10 (2) of the 1962 Act should be removed.
There is no reason to believe that the proposed status of Erin Foods after the enactment of the present Bill will be altered significantly in the foreseeable future. Erin Foods might possibly be used by CSET at some future date merely as a vehicle to hold shares in some concerns—though nothing such as this is now envisaged—and in that event it would not be appropriate that the Minister for Finance should be obliged to lay its accounts before the Oireachtas or that changes in the company's memorandum and articles of association should require the approval of Ministers.
Question put and agreed to.
SECTION II.
Question proposed: "That section 11 stand part of the Bill."
The section introduces a standard provision on Oireachtas membership which is included in all new legislation dealing with the establishment of State-sponsored bodies and also in amending legislation relating to long-established bodies, where the provision does not already apply.
Subsections (1) and (2) of the section relate to membership of either House of the Oireachtas by directors and staff of CSET while subsection (3) disqualifies a person who is entitled to sit in either House from becoming a director or a member of the staff.
Staff are being treated somewhat differently from directors. While a director would cease to hold his position as soon as he is nominated either as a candidate for election to either House or a Member of the Seanad. the position of a member of the staff would not be affected until he actually became a Member of the House, at which point he would be seconded from his employment for the duration of his membership of the House and would during that period be ineligible to receive his normal wage or salary. Directors are usually part-time and have no pension rights. As policy maker and final judge on loan applications it is considered inappropriate that the director should continue in office if he becomes a candidate for either House of the Oireachtas. Staff, on the other hand, are in most instances permanent and pensionable and it would be unfair to require them to interrupt their employment in advance of being assured of a seat in the Oireachtas and the income therefrom, such as it is.
I have been responsible, as Minister, for the introduction of sections exactly similar to this in relation to other State bodies. On each occasion on which I have done so, both in this House and in the other House, there have been objections, I think, from all sides. By that I am not saying there were objections by many people but there were objections by people on both sides of each House who took the view that the thinking behind such sections was wrong and was in some way reflecting on membership of either House of the Oireachtas. There are arguments for that view, but on balance I certainly am of the view that what is in this section is in the public interest. Since I have brought in such sections before, I certainly would not oppose this one. I believe, on balance, it is in the public interest, although I think I should draw attention to the fact that that is not a universal view in either House of the Oireachtas.
Section put and agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."
I do not think the section needs explanation. It empowers the company to take such steps as may be necessary to conform to legislation.
Just as a matter of academic interest, what is the position if a company does not comply with this? No time limit is laid down.
I suppose it could lead to dismissal of the board if they did not do their duty. It strikes me that it is very odd that the parliamentary draftsman considers it necessary at all. It is simply a directive to the company to comply with statutory requirements. Apparently it was considered to be necessary. If the law is not fulfilled the remedial action is the dismissal of the board.
Does the Minister approve of that sort of action?
I do not think it should be necessary. I have every confidence in the board.
Question put and agreed to.
Section 13 agreed to.
Title agreed to.
Bill reported without amendment.
Agreed to take remaining Stages today.
Bill received for final consideration.
Question proposed: "That the Bill do now pass."
Having studied the breakdown of the £7½ million investment in the modernisation of plant in the four factories over the next four years and having seen that only £250,000 is to be spent on the Thurles factory, I consider this to be a blow to the people of North Tipperary and to the long term prospects of the factory as the major industrial centre in Thurles town. Some years ago the credibility of the future prospects of the sugar factory in Thurles was badly shattered when CSET decided to transfer the computer with its staff of 40 people to Dublin. This move meant the departure of 150 people from the town. This blow was considerable to the economy of the town and no good economic reason was given why such a move was made.
The credibility of the company was further shattered, in my view, when it was stated that Thurles, which over the years proved to be such a strong factory in the sugar company concern and whose workers proved second to none in the field of labour relations, was to suffer by reason of the unequal distribution between Carlow, Mallow, Tuam and the Thurles factory. While the Minister promises future prospects for the Tuam factory there is very little mention of prospects for the Thurles factory and the North Tipperary area in general.
In Thurles there is an advance factory which has been empty for two years and is waiting to be filled by some industrialist. Having read the report of CSET of last year which stated that one of the objectives of the company would be to diversify, something the company has already done in the food processing and farm machinery line, I appeal through the Minister to CSET to offset this sharp lack of confidence in the sugar industry in Thurles by acquiring this vacant factory to give work to people who are badly in need of employment.
I agree that the sugar factory has given good employment over the years but when one reads in the long term investment programmes that the factory is low in priority, irrespective of the remarks in the report to the effect that the equipment in the factory is satisfactory, it is seen by workers and local people as a lack of confidence in the industry. I appeal to the Minister to try to persuade CSET to avail of the advance factory and thereby give back confidence to the people of the area.
I appreciate what the Deputy has said. I would like to give an assurance that there is no intention on the part of CSET to downgrade Thurles and there is no lack of appreciation on the part of CSET of what is being done in the Thurles factory and by the producers in the Thurles catchment area. The Thurles plant is the most efficient and most up-to-date in the whole network. The only reason why there now seems to be a greater preference for other locations is simply to bring the equipment in the other plants up to the standard which already exists in Thurles.
The Deputy, and his colleagues, in the Tipperary area need have no worries whatsoever about the anxieties of CSET to maintain this Thurles plant at full production. If the same degree of interest and endeavour was exhibited in all the plants CSET would have very few worries today. It is indicative of the enterprise which is apparent in Thurles that, unlike the number of plants where the employment has fallen in recent years, the employment in the food processing industry in the town has risen. CSET is most anxious to maintain the Thurles plant. They are satisfied that the investment which they propose to make will maintain the high degree of efficiency and production which has obtained in Thurles up to now.
I can appreciate the Deputy's anxiety to see any idle plant in Thurles taken over by CSET. As I mentioned on the Second Stage, CSET are most anxious to expand their activities in the whole food processing industry and any viable proposition will receive careful study. As the Deputy realises, in the industry at the moment there is probably over-capacity. If we could find the markets it would be possible to generate sufficient activity but we must, first of all, find the markets or have a reasonable prospect of having the markets.
A great deal of the losses that were generated over the last decade arose oui of over-production and non-availability of markets. That is not going to be to the benefit of the solid possibilities which are available in the food processing industry. I am sure the board will consider sympathetically what Deputy Ryan has offered here tonight. I should like, again, to assure the Deputy that there is no reason for fear, or anxiety, as far as the future of Thurles is concerned. Thurles is ready to avail of the opportunities which can open to Ireland, and the southern region in particular, in the whole food processing industry.
Can the Minister say if there is any difference between this Bill and the Bill which I had introduced, other than the year 1973 in the title?
The position is that our objectives are not dissimilar. The principle difference is in relation to foreign borrowing because of the success of CSET in obtaining the loan from the European Investment Bank. Otherwise, substantially, the legislative amendments are not dissimilar from those Deputy Colley had in mind.
In other words, the answer is "no".
It depends on the question.
Is there any difference?
Yes, there is a difference. After all the £2.8 million would not be available if we did not make some technical amendments to the foreign borrowing clauses.
My recollection is that this was in the Bill I had prepared.
Question put and agreed to.