Industrial Credit (Amendment) Bill, 1977: Second Stage.

Minister for Finance (Mr. Colley)

I move: "That the Bill be now read a Second Time."

The purpose of this Bill is to raise the statutory limit on the borrowing powers of the Industrial Credit Company and to bring up to date the formula for converting into their equivalent in Irish currency borrowings by the company in foreign currencies and guarantees of borrowing in foreign currencies given by the Minister for Finance.

The Industrial Credit Company was set up in 1933 to provide industrial credit mainly of a long-term nature. Since its establishment there has always been a statutory limit placed on the extent to which it may borrow for the carrying on of its operations, and this limit has been extended from time to time as occasion required by amending legislation. The existing limit on borrowing is £75 million. Outstanding borrowings now total £72 million and are rising rapidly as the company's business continues to expand. On the basis of firm commitments already entered into by the company it is probable that the statutory limit will be reached by mid-November, 1977. It is essential, there-fore, that the present limit be raised to enable the company to continue its very useful work. The new limit proposed in section 2 of the Bill is £200 million. An increase of £125 million may be considered to be very large. ICC business is, however, steadily growing and is at present at a level of above £30 million per annum and it is likely that this growth will continue. Lendings of £30 million would involve borrowings by the company of some £25 million. Hence an increase of the limit on borrowing to £200 million should suffice to enable the company to borrow its requirements for a further four to five years before Oireachtas approval has again to be sought. I do not think that Deputies will regard this period as too long.

For the purpose of determining to what extent any particular borrowing in foreign currency counts against the statutory limit which is expressed in Irish currency, existing legislation had incorporated in it a formula for converting the foreign currency into Irish currency. The existing formula provides that the basis for conversion shall be the International Monetary Fund parities in operation at the date of borrowing. This formula is no longer appropriate because of the increasing number of exchange rate changes and the prevalence of floating rates at present, and it is proposed to up-date the formula in the manner set out at section 2 (b). A similar updating is necessary in the case of the formula for converting into Irish currency borrowings in foreign currency which are guaranteed by the Minister for Finance pursuant to powers conferred by existing legislation. The new formula is to be found at section 3.

In the year to December, 1977, the company has budgeted to provide financial facilities totalling £30 million for industry. In the previous 12 months the company disbursed £27 million which was in itself a record figure. Of the £30 million which the company will advance up to December next, £5.3 million relates to loans for the building of new vessels within the country and will be disbursed by its subsidiary company, Shipping Finance Corporation. The balance will be disbursed by the ICC itself for the benefit of industry in general. Most of the capital needed by the ICC is secured from non-Exchequer sources and it is hoped that this position will continue. The capital required for the operations of the Shipping Finance Corporation is provided by the Exchequer as it is re-lent at a subsidised rate of interest.

Over the last decade the ICC has expanded its activities considerably. The company's main activity is the provision of longer term loans but it also offers a wide and sophisticated range of other facilities to meet the complex demands of industry. These include share investment in industry, capital underwriting and issuing house services, hire purchase facilities for plant and machinery, equipment leasing and finance for distribution. In addition to the provision of capital it has also a subsidiary company, Mergers Limited, which specialises in the field of mergers and takeovers by undertaking share evaluations and by advising in negotiations for mergers between firms. As I have already mentioned, it is also concerned with shipbuilding finance through its other subsidiary company, Shipping Finance Corporation.

In view of the need for higher industrial investment to promote economic growth, there will be a continuing and increasing demand for the facilities provided by the company, particularly in the climate of greater optimism which is currently manifesting itself. I am most anxious, there-fore, that the company should be in a position to contribute to industry the financial and organisational expertise which it has built up over the years in addition to financial assistance. The present legislation, when enacted, will enable the company to maintain an appropriate flow of funds to industry.

Because of the probable high rate of demand for industrial finance over the next few years, as industrial investment continues to recover and because of the capital intensive nature of modern industry, it may not be easy for the company to procure without recourse to the Exchequer all the funds which industry is likely to require. In seeking funds from the Exchequer the company's requirements would have to be balanced against demands on behalf of other important services. It is hoped therefore that the initiative shown by the company in the past in raising capital from non-Exchequer sources can be maintained and intensified.

For over 40 years the ICC has been to the fore in the financing of Irish industry. Many of the successful industries established over that period started from modest beginnings with the assistance of finance provided or arranged by the company. Facilities are provided for the establishment of new industries as well as the expansion of existing firms and the company has a tradition of giving special attention to proposals in regard to small projects. The continuing increase in the demand for the company's facilities is proof that its importance has in no way diminished with the emergence of present-day financial institutions in the private sector. The present legislation will enable the company to continue its important role in the development of the economy and I confidently recomend the Bill for the approval of the House.

Mr. P. Barry

I welcome this Bill and I am very heartened to see that the ICC have so expanded their business and have such confidence in the country and the basis on which industry can expand and grow that they now seek to increase from £75 million to £200 million the amount of money they require.

Before dealing with the Bill, I should like to say that two people died in the past year who had a very significant bearing on the growth of the ICC—Dr. Beddy and Mr. Denis Herlihy, both past chairmen. Both were products of the Department of Industry and Commerce and were both exemplary public servants inside the Department and in the less rarefied atmosphere of the commercial world. There are many such people in the country—I mention these two particularly because they were associated with the company—who began their careers as civil servants—one very eminent one has been elevated to the Seanad in the last six weeks—and who moved out afterwards and contributed very greately to the progress of the country. There is a long list of them and I should like to pay tribute to all of them, but particularly to the late Dr. Beddy and the late Mr. Denis Herlihy.

In welcoming the Bill I want to make a few points about it. When the company was set up the Minister guaranteed a proportion of the fund and this remained up to the 1974 amendment of the Act. At that time the amount of money required was raised from £30 million to £75 million but the guarantee was also raised at that time from £30 million to £75 million. Now the Minister is raising the amount of money from £75 million to £200 million. Why has that change been made on this occasion back to the position as it was prior to 1974? Perhaps there is a reason for it, but in view of the very impressive amount of money the ICC now require they may need the guarantee for the total sum involved. Perhaps the Minister would clarify that in his reply.

A measure of the success of the ICC over the past 4 years is the number of amendments there have been to the Act. Originally, they were limited to borrowing the equivalent of £12 million. This was increased in 1971 to £30 million and to £75 million in 1974. Now it is £200 million. As the chairman of ICC said in the latest report, which was out almost exactly 12 months ago, 31st October, 1976, they had seen even at that stage—and this report I think came to the general meeting earlier this year—on the accounts up to the end of 1976 a significant improvement in the economic atmosphere. He was concerned even then about that situation and I presume that it was as a result of discussions they then had that they came to the Minister requesting that the amount of capital should be increased to £200 million.

Section 2 also changes slightly the limitation of power to borrow the foreign currency. From memory I think this is not original, that it also happened in the case of Aer Lingus. Perhaps the Minister would enlighten me on that point.

I was quite shattered when the previous Minister came into the House seeking to have this amount raised from £30 million to £75 million. At that stage, the borrowings were £22 million, roughly 75 per cent of the amount available to the company. Now they have gone almost to the brink and there is considerable urgency about the passing of this Bill. I can assure the Minister I will facilitate him in every way, but evidently we have run into a technical difficulty as regards the operations of this House. I think more money will be required by mid-November and it may be that the Bill will not have passed through the two Houses by that time. The Minister can be assured of my co-operation in getting it through the House as quickly as possible.

I have been asked to make a small technical point. In his private capacity the Minister might be better able to answer it than I am to make it. It is about the desirability of including a subsection on which certified lawyers could rely to the effect that a certificate by a Minister that his guarantee in any particular case did not extend his £75 million limit and that the borrower could rely on this in some way. It is a technical point which would allow lawyers to assure companies with whom they were negotiating that the guarantee by the Minister was effective and that the money involved did not extend over the £75 million but, if there was a shortfall at that stage, the firm involved might find themselves liable for part of the debt over the £75 million. It is a lawyer's point and probably the Minister would appreciate it better than I would.

The Minister mentioned mergers and he also mentioned The Shipping Finance Corporation. I see that 24th January, 1977, was the date of the annual general meeting of the ICC. In his address the chairman said:

During the year, Irish National Trading Corporation Limited was set up. This is a partnership between four major concerns in the private sector and the Government; we are holding the Government's 20 per cent share and are represented on the Board of the new company by our General Manager. We believe that the company's services will be of considerable benefit to Irish industry, particularly to small and medium-sized firms which could not readily afford to set up elaborate export organisations for themselves.

I would be interested to know how this company are doing. The previous Minister made the point, reasonably legitimately, that CTT were not there to sell goods but to open markets. They are a promotional body and the major effort towards selling goods outside the country must come from firms involved themselves. The company were set up in response to that need, where small and medium-sized firms could not afford the sales services, market research and pilot schemes necessary in, perhaps, very distant parts of the world to export goods. As the previous Minister said a few moments ago, exports are jobs. We are all concerned about jobs and getting the highest rate of employment possible.

I am anxious to know from the Minister exactly how this rather novel method of Government and private sector involvement in exporting and in helping small firms is working, and whether the high hopes referred to by the chairman in January have been realised. I am not sure why, but originally the board of The Shipping Finance Corporation were separate from the ICC. They appear from the copy of the accounts I have here to have now been merged into the ICC. There may have been a good reason for that. In the maritime and shipbuilding industry there is a separate kind of mentality, or psychology, or business acumen which needs to be applied to them different from that applied to ordinary commercial dealings engaged in by landlubbers generally. Members of the board of The Shipping Finance Corporation and, I presume, their staff would have had this rapport and sensitivity about shipping and maritime matters generally.

The last ship financed by The Shipping Finance Corporation was a Danish ship to be built in the dockyard in Cork. The type of finance needed is somewhat different. Generally speaking, I understand what happens is that the ship is mortgaged to the finance company, in this case the Shipping Finance Corporation, to the extent of 70 per cent, or so, and the balance is unsecured. Now The Shipping Finance Corporation may be looking for more than that. There is a danger because of the merger of the two boards that this may happen: they may be applying the normal different and more rigid rules of banking and the money market to shipping which needs a different approach and a more sensitive and a softer approach.

As I say I am not sure why the two boards were amalgamated. The Minister might discuss with the board the desirability of again separating the board of The Shipping Finance Corporation and allowing them to engage in this delicate and different matter which needs a more sensitive approach than is normally given in commercial dealings and in banking. This is particularly important at the moment because of the dockyards here which will be requiring orders and because of the fact that Irish people should be encouraged to get into shipping. A regrettably high proportion of our trade is carried by foreign-owned vessels. I hope more Irish people will be encouraged to get into shipping because of the profits involved because, in the end, that is the motivation of anybody who invests money, and that they will be shown the possibility of making profits by The Shipping Finance Corporation and encouraged to invest in ships to be built in this country. I do not think any of our shipping yards would want preferential treatment in that regard.

There is another point I should like to take from the chairman's address. It should provide the ethos in which the ICC operate and it should provide their motivation. In a company established as long as this company, 40 years, there would be a danger that unless they kept themselves continuously aware of the difference of their function from that of the normal commercial banks, they might tend to drift towards absolute security with regard to the money they lend. They were not set up for that. I was very pleased that the chairman in the paragraph under the heading "The Year Ahead" said:

(d) For an environment which welcomes enterprise, there should be facilities for those with good ideas or new inventions who lack sufficient capital to bring those ideas or inventions to fruition. We have accordingly ear-marked a proportion of our funds for financing what are generally described as "venture capital" propositions. One of the difficulties of such propositions is that the failure rate is very high indeed. In considering those which come before us, we shall try to blend reasonable business prudence with a willingness to take risks somewhat above the average.

That sums up the attitude the Industrial Credit Corporation should have. The normally well secured collaterally-backed loan can be got from a commercial bank but what is called in that publication "venture capital" is what is needed. I accept that the ICC in such a case can run a risk. We do not want them to be foolish and give money to every hare-brained scheme put before them but there is a grey area between the hare-brained and the absolutely secured risk. History is littered with examples of people who had good ideas but found it very difficult to get the capital to back them. If the ICC are now going to deliberately set aside part of their funds to see that people who would find it extremely difficult, if not impossible, to get money from the ordinary commercial sources to back their faith in themselves and their new venture, then the corporation are on the correct lines. They are underlining again the reason why they were set up and, for that reason, I am happy to agree that the House should extend their borrowings from £75 million under the 1974 Act to £200 million, as proposed by the Minister.

Mr. Kerrigan

I welcome the Bill. In doing so I am aware of the work carried out by the ICC over the years. There is no doubt that they proved helpful to industry through good and bad times. In accepting this Bill we are showing the company we have faith in them. In relation to the £5.3 million for the building of new vessels here, I am to take it that this figure is a once-off or is it a continuing proportion of the £200 million over the year? It is essential that we improve our position with regard to the carrying of our imports and exports in our own ships and that we take a higher percentage of this by increasing our merchant shipping capacity. The more adventurous we are in helping small industries the better and while the record of the ICC has been second to none in this regard I hope they will not lessen their effectiveness in this field. I hope they help smaller industries more. I wish the Minister well in his future dealings with the ICC and I am pleased to support the Bill.

Mr. Moore

I welcome the Bill and I should like to congratulate the Minister on his appointment as Tánaiste and Minister for Finance. We welcome the Bill because it is a mark of our confidence in ourselves. The Minister encouraged the company to borrow from non-Exchequer sources and in my view this is essential. We are reaching the stage here when we look to the State for everything, particularly with regard to money, and, therefore, it is a healthy sign to hear our Minister urging the ICC to borrow money outside Government circles. As the money will be loaned to a concern who are aiming to provide more employment, we should suggest to the corporation that they involve themselves more in the everyday lives of our people. Few people know anything about the ICC. There is a great opportunity also for the trade unions to invest their money in the ICC and encourage their members to do so. We would then have this unity of purpose whereby a semi-State concern would have the backing of our trade unions. In return the trade unions could expect a double award. They would see their money being used to provide employment and also earn a good return on it. If we are to solve our unemployment problem every facet of our society must become involved. It is not good enough to leave everything to the Government. The Government must be supported by everybody.

The ICC played a noble part in our history. The Bill seeks to amend an Act passed in 1933 when our industrial revolution started. Since then many things have been done but when we look at the unemployment figures we realise the great task facing us all. I view the Bill as a sign of our earnestness to get on with the job of building up our economy and affording an opportunity to everybody to have a worth-while standard of living. I should like to draw the attention of the Minister to subsection (b) of section 2 which states:

(iii) money so raised or borrowed in a currency other than the currency of the State shall be deemed to be the equivalent in the currency of the State of the actual money raised or borrowed,...

I raise this matter because when on a trip to Eastern Europe recently a number of us found that Irish money was not accepted. In most cases the people insisted on being paid in American dollars. For people so anti-American I was surprised to hear them insist on being paid in American dollars. In some cases we were told that American dollars were not worth anything. They flatly refused Irish money and in many cases refused British money. Will the Minister investigate this matter and tell us if our money is being recognised and honoured abroad. On that occasion I did not see any Irish products on display.

Mr. P. Barry

Did the Deputy see any products at all?

Mr. Moore

We saw very few but I saw Scotch whisky on display. They would not even sell Scotch whisky for Irish money.

I welcome this Bill which is another chapter in our drive towards a better economy and a better way of life. I would ask the Minister to bear in mind the points I made and to extend an invitation to the trade unions to look at this investment. I would not attempt to suggest to the trade unions how they should spend their money, but they might just think about this. I know that many of our 93 trade unions are not rich, but some are solvent and in the past, they contributed to Government loans. Today, when we need more jobs, is an ideal time for the unions and the employers' associations to invest in the ICC and help in the employment drive.

Mr. C. Murphy

I do not propose to delay the House. I welcome this Bill and would like to add my voice to those of other Deputies who praised the important role ICC play in the development of the economy. It is vital that a Bill like this is brought before the House to allow the company to continue their good work.

The Minister spelled out the various facilities given by this company, which include share investment in industry, capital underwriting, issuing house services, hire purchase facilities for plant and machinery, equipment leasing and finance for distribution. Would it be possible to extend the facilities of ICC to incorporate bond financing? I am thinking now of small companies who are procuring overseas orders. They are finding it very difficult to come up with the necessary insurance or contract bonds. I have been giving some thought recently to how some of these companies might be able to get around this difficulty; it is not insurmountable but it is causing a number of problems. That is why I am asking if, within the establishment order for ICC, it would be feasible to come up with the financing of bonds.

I note that the subsidiary company, Shipping Finance Corporation, is involved. It is essential that capital be made available for shipbuilding because at this moment many of our vessels need renewal because of age. Capital must be made available to enable owners to go ahead with the renewal and improvement of their vessels.

I would like to take this opportunity of wishing the Minister well in his appointment. He has a difficult task but I know he is extremely competent and will be able to deal with them. Tá súil agam go n-éireoidh go geal leis san Aireacht agus guím dea-ghuí ar a obair.

Mr. Callanan

I congratulate the Minister on his appointment and wish him well. Like other Deputies I welcome this Bill to increase the borrowing powers of this company. I should like to direct my remarks to selling this company to the Irish people who have money to invest. As Deputy Moore mentioned, very few people know the good work this company are doing in financing industries and shipping. If anybody has money to invest he would be very patriotic if he invested it in this company. I do not know how much capital trade unions have to invest, but any Irish group who have money should be encouraged to invest it in Irish companies, such as the ICC and the ACC, which are likely to provide many jobs.

Shipping was mentioned here. Many of the older generation know what Irish Shipping did for this country during the Second World War. They played a vital part in helping to maintain our neutrality during the war. Many of these ships are getting old and need to be replaced. It is essential that we should always have a good fleet and we should encourage everybody importing or exporting goods to use Irish ships. Therefore every encouragement should be given to this company to finance the replacement of these ships.

When we talk about financing industry we should place greater emphasis on small industries. It is in this area that this company could take the odd risk. If you take a risk to finance a big company the risk is very high and we know many such companies went down the drain. There are a number of small companies which could employ a few people. Our unemployment situation makes us, perhaps, too ambitious: unless we hear of an industry which is prepared to make a big impact on our unemployment situation we do not think it is of much use. For that reason loan companies may not be included to even consider helping small businesses. If we had a very large number of small businesses employing two, three or four people we might be on better wicket. Again I would ask that greater emphasis be placed on financing small industries. In my view it is up to every Irishman, woman or group who has money to invest to make sure that it is invested in companies like the ICC and the ACC. I welcome this Bill.

Mr. Colley

Ba mhaith liom mo bhuíochas pearsanta a chur in iúl do na Teachtaí a ghuí rath orm sa phost atá agam agus san obair atá romham. Tá mé fíor-bhuíoch díobh siúd.

I also expressed my thanks on behalf of the ICC to all the Deputies who participated in this debate and I thank them for welcoming the Bill. The reaction from all sides of the House is a good measure of the appreciation there is of the tremendously important and successful work which the ICC have carried out over the years in which they have been operating. In the early years they operated very much on their own. One of the reasons for their foundation was that at that time it was difficult for Irish industries starting up to obtain the necessary finance and capital from the normal commercial sources. We have come a long way since that time and to some extent the ICC are now competing with commercial banks. As far as I am concerned that is a good thing and it indicates the development which has taken place in the general thinking in financial and commercial circles over the years. This change was brought about in no small way by the ICC.

I wholeheartedly join in the very warm tribute paid by Deputy Barry to the late Dr. Beddy and to the late Mr. Denis Herlihy. I had the pleasure of knowing both of them personally and the pleasure of appointing the late Mr. Denis Herlihy as chairman of the ICC. I fully agree with Deputy Barry's assessment of their dedication and of the importance of the role they played in the ICC and of the other many facets of their careers.

In the context of the general welcome for this Bill a number of points were raised. Deputy P. Barry asked whether the change embodied in this Bill in regard to the formula for calculating the amount of borrowing in foreign currency had been made in other cases. It has been made in a number of cases. Comhlucht Siúicre Éireann is one example but there are a number of other examples where the same formula is being used.

Mr. P. Barry

Will it be extended to other State companies?

Mr. Colley

Yes, as the opportunity occurs. This is a small point but in the absence of it we could find ourselves without any certainty as to whether a State company was or was not exceeding its statutory limit of borrowing power. The Deputy also raised the point as to why we were not proportionately increasing the amount of borrowing by a company which the Minister can guarantee. Consideration was given to this question in the preparation of the Bill. At the moment the guarantee limit is £75 million whereas the actual amount guaranteed is only £26 million, so it does not appear that there is any necessity to increase that limit at the moment. I assure the Deputy that that is the only reason and that there is no question of principle involved and that if it was necessary to increase the limit it would be increased.

Mr. P. Barry

If what the Minister says is correct this will not come back to the House for four years. It would have to wait until then.

Mr. Colley

That is true, but on the figures worked out on a somewhat similar basis to the one on which we worked out the £200 million it would not appear to be necessary to increase the existing limit of £75 million on the guarantee for that period. If any problem arose this could be done, but no problems are anticipated.

Deputy Barry also raised what he described correctly as a technical point in regard to a certificate by the Minister as to the statutory limit not having been exceeded. I am not quite sure of the significance of the point raised but I will certainly look into the matter and see if it is necessary to make provisions in that regard. These provisions can be made between now and Committee Stage if necessary. The Deputy will appreciate that as regards the question of the guarantee in relation to the ICC we are well within the statutory limits and as regards the overall borrowing by the ICC this Bill should provide adequate statutory cover for the borrowing by the ICC.

Deputy Barry also raised a question about the Irish National Trading Corporation Limited and asked in effect how it was progressing. This company is largely under the auspices of the Minister for Industry, Commerce and Energy and it was established only quite recently. An assessment of its performance might be difficult at this stage, but I will undertake, having made the necessary inquiries in so far as any assessment is possible, to communicate the result to the Deputy.

Deputy Barry and others who spoke raised some questions in connection with Shipping Finance Corporation. Shipping Finance Corporations is a wholly-owned subsidiary of the Industrial Credit Company but has a separate board. It was established in 1961 and was always, since its establishment, a subsidiary of the Industrial Credit Company. The shipping finance provided by that company is very competitive. Indeed in to-day's world it would need to be because we all know that the whole of the shipbuilding industry is so competitive it is very difficult to engage in without losing money. My own suspicion—I cannot say this from firm knowledge —is that shipbuilding is very heavily subsidised by Governments all round the world. There may be some yards which are not being subsidised, but if there are I am not aware of them at present. It makes the position of Irish shipyards all the more difficult. However, Shipping Finance Corporation do provide finance at very competitive rates. Up to 70 per cent of the cost is advanced and security for that amount is sought. As I indicated in my opening speech, they provide subsidised interest rates.

Deputy Kerrigan, I think, raised this point also. I want to tell him that the £5.3 million referred to is a once-off operation to finance the building of a ship. It is a question really of getting the business in the shipyard. When it is got Shipping Finance Corporation are there to finance it on concessionary terms. For instance, an 8 per cent rate of interest is charged repayable over seven years. Even in current terms—that is, in terms of falling interest rates—that is competitive.

There is one point Deputy Barry touched on in regard to the financing of shipbuilding about which I want to say a word. In effect I think he was urging that we should be as helpful as possible in regard to the financing of shipbuilding. There is one aspect of this perhaps I should mention, that is, that in the course of the last few years a change was made. I was reminded of this by what Deputy Barry said about perhaps the purchase and lease-back of a ship—that kind of arrangement about which he spoke. In recent years there was a method of financing shipbuilding done by some commercial banks the practical effect of which was that the bank got the benefit——

Mr. P. Barry

Of the tax allowance.

Mr. Colley

——of the State subsidy and, as a result, financed the purchase of ships, in one case by a State company and in another case by a private firm——

Mr. P. Barry

I know the case to which the Minister is referring.

Mr. Colley

——on what seemed to be terms that would not have been available otherwise. Indeed in one case I do not think the ship would have been built—certainly not for quite some time—had that facility not been available. However, my predecessor decided that that was not a good thing. He had an objection to this facility being made available technically to a commercial bank when it was intended for a shipping company and he made changes in the law which precluded that kind of operation in the future. I questioned it on a few occasions but my predecessor insisted that he was taking the right course. I am not convinced that he was and I propose taking another look at that situation. I mention that merely incidentally to the point raised about the whole financing of shipbuilding.

Deputies Barry, Moore and Callanan referred in the course of their contributions to the necessity for the Industrial Credit Company to give assistance to small firms and in the case of venture capital. As indicated in the report of the company, a certain proportion of the company's available resources is set aside for venture capital schemes. I support this approach fully as do the Deputies who spoke on this. I think I indicated earlier that when the Industrial Credit Company were founded they were needed to provide capital for what would then have been regarded as venture capital which was not available in the main from commercial banks and other sources at that time. Despite their growth and respectability —if one may call it such—I am very pleased that the Industrial Credit Company are still setting aside a certain amount of their resources for venture capital. It is not sufficiently realised how important this is in our economy, particularly today when we have such a major problem of unemployment. Given the basic economic system we operate there are no more important people here today than entrepreneurs who will get business going and create employment. “Entrepreneur” is a term some people would think of as being derogatory; others would think of it as describing people engaged in a very big way of business. I do not mean it in either sense at all.

Mr. P. Barry

Neither one of those senses is its correct use.

Mr. Colley

I am saying this is the sense in which it is frequently used. I am using it in the sense of the kind of person who has in his or her makeup the ability to start a business and make it successful. It is not realised that the proportion of the population with this ability is quite small. Very few of us in this House have it; there are some of us who have but very few. That is not necessarily a criticism of us. Neither is it a criticism of that small proportion of the population who have it that they have it. It is time we realised, certainly in our present circumstances, that they are the most important people in the country, that we have got to encourage people with that ability to get up and go and put everything they have into the establishment and expansion of successful business which will create employment. They are the two requirements: business has to be successful and has to create employment. The role of the Industrial Credit Company in helping such people can be vitally important. That is why I welcome the setting aside of a proportion of their resources for venture capital.

Nevertheless, I want to be quite realistic about this. The Industrial Credit Company can do a great deal; but there are people who have the ability to start off a business who would not get assistance from the Industrial Credit Company in the normal way even under the venture capital provisions. I think it was Deputy Callanan who touched on this point. We tend to think in terms of a big industry. What we do not realise is that a man with a particular skill living in a small village who starts up a business and employs two or three people is vitally important in the context of that village. There are people capable of this throughout the country. I do not think the ICC are geared to deal with such people and, to that extent, perhaps I should not be talking about this matter but of the importance of encouraging this kind of skill, industry and entrepreneurial spirit. It is so important that I hope I will be allowed to speak on this topic for a moment or two.

Mr. P. Barry

Why does the Minister say the ICC are not geared to deal with such people? They have regional offices, although I admit there are only two.

Mr. Colley

Yes, Perhaps I should dwell for a moment on some experience I had in this regard.

Mr. P. Barry

As a borrower?

Mr. Colley

As Minister for Industry and Commerce. When I set up the small industries scheme of course the question of financing these people was one of the major problems. I had detailed discussions with the ICC at the time and I could see part of their difficulty. Let us not forget that the ICC are an institution that borrow money very successfully from the public. If they were to be talked of as a body that in the course of their business invested a good deal of their resources in very risky ventures, they would not collect money from the public in the way they do at the moment. At the time the ICC made certain arrangements to try to assist. A committee was set up—I think it is still operating in regard to the small industries programme—which brought together representatives of the ICC, CTT, of the IIRS and other State bodies who had certain expertise. They assessed these projects.

As far as I am concerned, if somebody has a certain skill or a good idea which can be exploited but if he has no money to do this, we should be in a position to provide the capital to get him going. I do not think that is a function of the ICC, and this is really the point I am trying to make. The ICC can go a good distance but the function to cover that kind of case has to be one developed under the small industries programme of the IDA. This matter has been mentioned by Deputy Callanan and others. That is not to say that the case I have mentioned should not be met; it is vitally important that something should be done but I think it has to be done under the small industries programme of the IDA.

Mr. Callanan

The Minister spoke about the risk involved. I am referring to small firms. If there is no risk involved why not give them the money? There is severe risk with large companies.

Mr. Colley

I mentioned the case of a person who might start up a small business largely dependent on the special skill of one individual. If such a person goes to the ICC he has no balance sheet, no record and no past performance to show them. It is very difficult for a company such as the ICC, who are engaged in taking deposits from the general public, to enter to any great degree into that kind of business.

Mr. P. Barry

If the IDA can give State money to Mr. X by way of grant, then the ICC, using that assessment by the IDA, can lend money. However, that may be another debate for another time.

Mr. Colley

The ICC assessment is, or should be, part of the whole assessment of these projects. In fairness I should say that at the time I am speaking of the commercial banks came in and said they were prepared to finance such projects, even without collateral, on the basis of the assessment by this committee which included the ICC.

Mr. P. Barry

The ICC were not willing to engage in that work but the commercial banks were willing. That does not add up.

Mr. Colley

I am speaking of a situation which obtained nearly ten years ago and the position at that time was as Deputy Barry has described it. I hope the situation has improved since. I can understand the difficulties but that is the situation. I want to make clear to the House that, whether the ICC can or cannot do it, I am convinced that these facilities should be made available through one or other form of State organ to ensure that such projects get the necessary financial support.

Deputy Moore made a very interesting and valuable suggestion with regard to the trade unions who have money to invest to consider investment in the ICC. Like Deputy Moore I do not wish even to appear to try to tell any trade union what it should do with its funds but certainly I would join with him in drawing the attention of the unions and of anybody else who has money to invest to the attractive rates of interest offered on deposit by the ICC. Of course this is fully guaranteed by the State. The deposits of the ICC collected from the public generally stand at about £18 million at the moment. For the various reasons outlined by Deputy Moore I think it would be most appropriate if trade unions were to invest money in the ICC. Again, I want to stress that where trade unions invest their money, the circumstances in which they invest and the matters they must take into account are entirely questions for them, but in so far as this option is open to them I strongly recommend the ICC to them, as did Deputy Moore.

With regard to the point raised by Deputy Murphy concerning bond financing, this is largely a question of export credit financing. The Minister for Industry, Commerce and Energy is at present considering the whole situation with a view to reducing the impediments in the way of exporters, namely, the whole question of performance bonds and the difficulties experienced by Irish firms in obtaining them. I do not think the ICC could have any role in that regard but I will ensure that the Deputy's comments are brought to their attention so that the matter can be examined to see if they could have role in it.

I trust I have dealt with all the major points raised. I repeat my appreciation of the welcome given to this Bill by all sides. The work of the ICC and the success that has attended that body is held in high esteem and the welcome given to this Bill is a measure of that esteem. I feel confident commending the Bill to the House for a Second Reading.

Question put and agreed to.

Dáil Éireann debate -
Thursday, 13 Oct 1977