On behalf of the Fine Gael Party I welcome this Bill and I concur with the Minister's statement that Bord Bainne are doing an excellent job in the interests of the dairy industry. It is important that this House and the public at large not resident in farming areas should appreciate the importance to our national economy of the dairy industry and consequently of the work being done by An Bord Bainne for that industry on the export market. There is a very large employment content in the industry, not merely on farms but also in creameries and processing plants. As a producer of dairy products we are somewhat more distant from high concentrations of population where these products are sold than are dairy producers and processers on the Continent and in the United Kingdom, where the consuming population forms a larger percentage of the total population. Therefore, a greater effort in marketing is required by a country such as ours which has problems of distance from the market place to overcome.
I should like to take this opportunity of complimenting An Bord Bainne on the success they have made of their work since they became a wholly selfsupporting co-operative in 1973 and the support given to them in this work by the various creameries. The growth of their work can be well illustrated by stating that their turnover in 1976 was £230 million, a 55 per cent increase on their turnover in the previous year, and all the indications are that the turnover this year will be £350 million approximately, which indicates another increase of almost the same magnitude. The production of milk has been increasing and hence the challenge facing Bord Bainne. In 1976 no less than 675,000,000 gallons of milk were supplied to our creameries as against 510,000,000 in 1970 and the indications are that the gallonage will be up this year 7 per cent on the 1976 figure.
The extension of the time limit for the guarantee being given by the Minister to loans raised by Bord Bainne is on their own evidence and the evidence of common sense of great importance to them because, as the Minister said, they have to raise very substantial sums in order to carry on their marketing operations. However, the future of the dairy industry rests on many other factors. There is the problem of imports of cheese and butter from outside the Community into the European market, and I take this opportunity of urging the Minister to act in the most decisive manner possible to ensure that the terms of Protocol 18 of the Treaty of Accession are adhered to in relation to the importation of New Zealand cheese to the UK market. The Protocol provides that special arrangements which continue up to 31st December next should not be retained after that date. Obviously there will be pressure from New Zealand to have a further extension of these special arrangements and it is up to the Minister to ensure that such an extension does not occur. We produce approximately 57,000 tons of cheddar cheese and of that 50,000 is sent to the United Kingdom market where our biggest single non-UK competitor is New Zealand. The continuance of New Zealand imports obviously creates problems—indeed, has already created problems—for the cheese industry here and their discontinuance would provide more opportunities for our cheese producers. I urge the Minister, and will continue to do so between now and 31st December, to take the strongest possible measures to ensure these New Zealand imports do not continue and the terms of the Protocol are adhered to.
Furthermore, the diversification of processed products is of very great importance in a situation in which there is an excess of supply over demand in the milk market in the Community and where the consumer needs to be wooed to consume more milk products and thereby provide employment in our dairy industry. Obviously new products appealing to new consumer tastes have an important role to play in this context. The biggest problem is not that of developing these products. The biggest problem is launching them on the market and creating consumer demand for them. This is the job of the co-operative creameries and Bord Bainne and it is one in which they should get maximum support from the Minister. It is equally important to have adequate funds made available to An Foras Talúntais for the development of these products and it is for that reason I would urge the Minister to seek the maximum amount of EEC aid towards the operations of An Foras Talúntais in developing these products. Such diversification would obviously be of benefit not just to this country but to the Community as a whole since an expansion in demand for such products would assist the Community in dealing with its dairy surpluses.
Another matter to which I would urge the Minister to give attention is the development and strengthening of the inspectorate under the various Acts. It is of considerable importance that dairy products should have the reputation of having been throughly inspected by Government inspectors, independent of the producers, whose word is vouched for by a responsible Minister. I would urge the Minister to increase the staff in this sector.
Another very live issue in the industry at the moment is the European Community co-responsibility levy which has been introduced and is applying to all of this country, although I understand there are mountain areas in the Community to which it does not apply. This is a matter which will be discussed on another occasion but I would urge the Minister to ensure arrangements are made as early as possible to use the proceeds of this levy effectively in expanding the market for dairy products and particularly to ensure that a substantial part of the levy raised throughout the Community is used to develop the market for Irish dairy products because we depend as an economy to a much larger extent on our dairy industry than any other of the nine members of the Community. It is important that the measures used should be measures which have the prospect of creating a long-term, continuing and selfsustaining demand for dairy products rather than measures which merely alleviate a temporary situation and, once withdrawn, leave nothing behind them but a disequilibrium in the market situation. Use to create a long-term, increased demand for dairy products is the optimum use and I would urge the Minister to ensure that is the way it is used.
I have one criticism and suggested improvement of the present Bill to offer to the Minister. It concerns the date to which the Minister's power to give guarantees is being extended. It is being extended only to 31st December, 1979, a very short time from the autumn of 1977. We know that An Bord Bainne are engaged in a five-year market development plan. It must be very difficult for the board to plan the financial support for this five-year term when they only have certainty as to the provision of a ministerial guarantee for a little over two years from the present time. I realise that it has been the ambition of both sides of the House to ensure that in the long run An Bord Bainne should be able to stand on their own feet in this matter and the board's efforts, by use of a capital levy, to raise a sufficient capital fund of their own to enable them to be independent in the long run of a ministerial guarantee are to be very much welcomed.
It is however obvious to me, and probably to An Bord Bainne, that although this levy has been increased since 1976 at present rates of income it will not be sufficient to allow the board to dispense with ministerial guarantees for at least five years from now. Therefore, I do not understand why the Bill does not provide for the extension of this guarantee at least until 31st December, 1982. The fact that it is not extended beyond 31st December, 1979, means that An Bord Bainne must rely on short-term finance to a much greater extent than would be healthy for them. Finance extending for less than 12 months is clearly unsatisfactory for the sort of dairy marketing operation in which An Bord Bainne engage in financing their entire operation. There is a place for short-term finance but it should not be the only type of finance available to An Bord Bainne.
For instance, cheddar cheese produced this year, because of the necessity for it to mature, will not be sold until next year and the financing of those stocks must be carried by An Bord Bainne over two marketing years. Secondly, the board are engaging in investment companies abroad concerned in the distribution of dairy products and the purchase of equity in such companies, I submit, should be financed by long-term finance because the return from such investment will itself be long-term, not short-term. Thirdly, it is a fact that the board never reach the stage at any time of any year in their present operation where they do not need loans from banks. They have a minimum continuing lending requirement of approximately £30 million. That being so, it is desirable that this £30 million core of lending requirement should be financed by long-term loans. The banks prefer it that way and the interest rates are more favourable in the case of long-term loans than they are in the case of short-term loans.
I wish to draw the Minister's attention also to certain defects in the wording of the 1973 Act in relation to the types of guarantee which may be given by the Minister. I ask him to consider, if not in this legislation—although it may be possible—certainly in legislation in the near future, steps to remedy these deficiencies. There are two defects, first, the use in section 6 (1) and elsewhere in section 6 of the term "loan" rather than "liability". It has been represented to me that certain matters for which the board may wish to obtain the Minister's guarantee could not, under a strict definition of the term, be construed as loans. Three or four basic situations are covered by this statement. The board, from time to time, have to obtain performance guarantees from the EEC in order to pre-fix export refunds or to pay moneys in advance of certain other actions being completed. In essence, when the board enter into a contract for the provision of dairy products over a period to third countries they do not know what the level of the refunds obtained by the board from the EEC over the full extent of that contract will be. This is because the level of refunds will vary with the movement of currencies and of dairy products and prices over the contract period. It is desirable for certainty on the part of An Bord Bainne in their operations to be able to prefix the rate of restitution obtained. This involves them in expense which, I understand, is not covered by the term "loan".
They also have to provide bid bonds to third countries, to which they are offering a tender of supply, that the bid or the tender will not be withdrawn prior to the closure. Obtaining a bond to this effect from the bank who will act as a third party or a guarantor between the board and the third country wishing to purchase their products is a facility which, strictly speaking, does not come within the term "loan" as envisaged in the 1973 Act.
Furthermore, the obtaining of foreign exchange dealing facilities, which are obviously very important for the board, I understand, does not come within the term, nor do operations involving the use of bills of exchange. I would urge the Minister to consider carefully between now and Committee Stage whether it would be possible to substitute for the term "loan" where it appears in section 6 the wider term "liability" which would include loans as well as the matters I have mentioned.
There is another phrase in the 1973 Act which could be improved to the benefit of the board and their operations. Section 6 (5) states
Moneys obtained by the Society on foot of a loan guaranteed under this section shall be used solely by the Society for the acquisition in the course of its ordinary business of dairy produce.
I understand the use of the phrase "acquisition in the course of its ordinary business of dairy produce" does not necessarily in all cases cover the sort of expense incurred by Bord Bainne for which a loan might be obtained for which the Minister's guarantee would be appropriate. In a strict interpretation, it does not cover such things as storage and marketing as distinct from acquisition. This is a matter to which the Minister perhaps should also give attention.
There is a third matter to which I should also like to draw the attention of the Minister in respect of section 6 of the Principal Act. Section 6 (7) provides:
The Minister shall, as soon as may be after the expiration of every financial year, lay before each House of the Oireachtas a statement setting out with respect to each guarantee under this section given during that year or given at any time before, and in force at, the commencement of that year—
(a) particulars of the guarantee,
(b) in case any payment has been made by the Minister under the guarantee before the end of that year, the amount of the payment and the amount (if any) repaid to the Minister on foot of the payment,
(c) the amount of principal covered by the guarantee which was outstanding at the end of that year.
The requirement is that that information be given in respect of each guarantee and that it be given at the end of each financial year. My information is that the provisions in respect of putting this information before the Oireachtas and in the Dáil Library have not been complied with fully. I should like the Minister to give an assurance that they will be complied with fully in future.
I should like to make a brief reference to guarantees in general. A guarantee which is the Minister, on behalf of the Government, underwriting a loan obtained usually but not in all cases by State companies, and not in this case a State company, is an undertaking that if that company defaults in the payment of the loan the Minister, on behalf of the Exchequer, will step in and make the repayment. It is important that there should be monitoring on a long-term and continuing basis of the liability which the Exchequer and the taxpayers are entering into in respect of such guarantees. At present individual Ministers give or extend guarantees to State bodies under their care, or other bodies under their care. It is important that adequate central monitoring of the movement of the total liability of the Exchequer in respect of all Departments should be carried out in one place.
I know it is the function of the Minister for Finance to do this. It is important that it should be done because there has been a considerable growth in the overall contingent liability of the Exchequer under guarantees in general. The amount of loans guaranteed by the State in March, 1972, was £267 million. The amount guaranteed on 31st December, 1976, was £652 million, a very significant growth. More significant still is the fact that, within that total, there has been a much more rapid growth in the guarantees given by the Minister to loans raised overseas as against loans raised within the State. In 1972 the comparison was £204 million loans raised internally as against £63 million raised externally. The present situation is: £375 million internal loans as against £277 million external loans. If this trend continues we can expect there will be more external loans guaranteed by the Minister than internal loans.
Obviously moneys owed outside the State in currencies other than our own and which may be rising in value at a more rapid rate are less desirable, if that is the case, than loans raised internally. Therefore I urge the Minister, in conjunction with his colleagues, to ensure that the development of contingent liabilities under guarantee of the Government is adequately monitored in the years ahead. I conclude by welcoming this Bill.