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Dáil Éireann debate -
Thursday, 8 Dec 1977

Vol. 302 No. 7

Vote 42: Industry, Commerce and Energy.

I move:

That a supplementary sum not exceeding £6,703,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1977, for the salaries and expenses of the Office of the Minister for Industry, Commerce and Energy, including certain services administered by that Office, and for payment of certain subsidies, grants and sundry grants-in-aid.

This Supplementary Estimate is needed in order to provide additional funds for certain of the services operated by my Department and organisations for which I have responsibility and to effect adjustments in the provisions made for certain others of these services. The additional requirements include expenditure under a subhead which is now within the ambit of the Vote because of the recent transfer of the energy function to my Department from the former Department of Transport and Power. The need for these additional funds could not have been foreseen when the Estimates were prepared originally.

The additional £100,000 sought under subhead BI is due principally to an increase in travelling by the Department's inspectors on price control duties and on other inspections arising from the administration of subsidies on bread and flour. It reflects also the effect of increased subsistence and mileage allowances.

The additional grant of £84,000 which I am proposing for the Institute for Industrial Research and Standards is required to meet the extra cost of implementing the terms of the 1977 National Pay Agreement for the staff of the Institute.

This year's Estimate provided £4.3 million towards the Grant-in-Aid for Córas Tráchtála, who now require an additional £54,000.

This amount is needed almost entirely to meet part of the cost, £45,000, of implementing the 1977 National Wage Agreement and which had not been provided for in the original allocation for this body. The balance is needed to meet the cost of certain short-term borrowing requirements.

The estimate for the current financial year provided £322,000 towards the Grant-in-Aid for the Kilkenny Design Workshops Limited. An additional amount of £20,500 is required by the company to meet their needs in the financial year.

This additional amount is needed to cover the cost of implementing the 1977 National Wage Agreement and some minor adjustments in certain other costs. These are administration costs in relation to increased rates of social welfare contributions and costs related to the arrangements for the completion of the renovation of the company's property known as Butler House, which was acquired in 1972.

The original allocation to the Industrial Development Authority for administration and general expenses was £5,700,000. An additional £30,000 is required to meet part of salary increases as a result of the 1977 National Pay Agreement.

The original allocation for the capital grant-in-aid was £55,000,000. An extra £4 million was allocated in the January budget to assist job creation. This money is being spent on additional land acquisition and factory construction by the authority.

I propose to include a new provision of £220,000 for expenditure under the Vacant Rents subsidy. This is a technical adjustment necessitated by the decision to transfer to the Industrial Development Authority the responsibility held formerly by the National Building Agency for the provision and financing of industrial housing for new industry. It covers the amount of vacancy rents payable by the IDA to the NBA in respect of houses built by the NBA at the request of the IDA but which remained unsold for a period. As will be seen from the Supplementary Estimate there was a compensatory saving under another subhead of the Authority's expenditure, that was subhead I.3.

A supplementary grant-in-aid of £50,000 is necessary to finance essential activities of the Irish Productivity Centre until the end of the year 1977. The original allocation of £300,000 is inadequate due to cost increases and a shortfall in expected revenue from fees.

The amounts allocated already for the bread and household flour subsidies for the current year are £13,850,000 and £2,150,000 respectively, an aggregate of £16,000,000. While the aggregate cost of these subsidies remains unchanged at £16,000,000, there is likely to be an excess of £100,000 on the bread subhead offset by a saving of £100,000 on the flour subhead. The indications are that there has been a slight variation in the pattern of utilisation of the two commodities with a move away from the home baking—in which subsidised flour is used—to subsidised bakers' bread.

It has been arranged with a number of the consortia concerned that under the terms of their exclusive offshore petroleum exploration licences, they will contribute a total of £1.7 million during a five-year period to provide education, training and other facilities in the areas of petroleum and other natural resources. My Department, with the assistance of the National Science Council and its successor body, the National Board for Science and Technology, will administer suitable programmes which, in addition to education and training courses at home and abroad, will include studies, consultancy and technical assistance projects.

The objective is to build up in the private sector a body of native expertise with a view to grasping the many opportunities arising from off-shore developments. It is intended also to provide the Government Departments and agencies concerned with these developments with the necessary competence and expertise to perform effectively.

The State and oil companies have a degree of common interest in this matter. The offshore operators are required to use Irish bases, goods and services and to employ Irish personnel where suitable and available. They recognise that, if commercial discoveries are made, this raises very substantially the demand for Irish personnel and services and it is in their interest that suitably qualified and trained people be available here. It is important also, from their point of view, that the Irish Government agencies concerned with offshore operations should have adequate facilities, including appropriately qualified staff, to administer the many aspects of offshore activities.

It is my intention to proceed initially by way of a two-year programme, at the end of which I shall review the position in the light of experience gained and of the position in the petroleum industry at that stage.

In the present financial year only a provision of £50,000 will be needed to cover anticipated expenditure. the appropriations-in-aid show receipts this year under this arrangement.

The original provision in the Estimates for 1977 in respect of town gas subsidy—£1.8 million—was made in the Vote for Transport and Power. As I mentioned earlier, energy is now a function assigned to my Department and the extra money needed is, there-fore, included as a subhead in this Department's Vote.

This subsidy was first introduced with effect from 1st July, 1975 and is at the rate of 12½ per cent of the cost of town gas at that date. It has been continued on this basis since then despite further increases in the price of town gas.

The National Prices Commission, in May, 1977, recommended two increases in the price of town gas in Dublin, the combined effect of which would have been to increase the price of gas by about 37 per cent to Dublin consumers. To ease the family budget and to maintain fully the Dublin town gas system pending the possible availability of cheap natural gas the then Government decided to pay an additional subsidy to the Dublin Gas Company with effect from 25th May, 1977 to offset the increases in prices recommended by the National Prices Commission. It was decided subsequently in August, 1977, to extend the subsidy at the rate payable in Dublin to provincial town gas undertakings with effect also from 25th May, 1977.

The extra cost of the additional subsidy in 1977 is estimated at £3 million and this supplementary provision is to meet this expenditure.

The main reason for the steep increase in recent years in the cost of production town gas is the huge increase in the price of naphtha which is used by most of the gas undertakings for gas manufacture. This raises the question of the feasibility of using an alternative fuel which would reduce the cost of gas production and possibly eliminate the need for subsidy. The only other fuel which offers prospects of long-term production at a reasonable cost seems to be natural gas.

So far as the provision of natural gas for Dublin is concerned, the only economically-exploitable deposit of natural gas discovered so far in Irish waters is the Kinsale Head find. As Deputies are aware the allocation of this find was decided by the then Government in 1974. The allocations made were—40 per cent for the production of ammonia and urea for the fertiliser industry in a new plant to be built by Nítrigin Éireann Teoranta and 60 per cent to the ESB for use in a new power station at Aghada, and in an extension to the existing station at Marina, Cork. Subsequently it was agreed with the ESB that a small quantity of their allocation would be made available to the Cork Gas Company to meet their requirements.

The question of allocating a supply of Kinsale Head gas for distribution in Dublin has been raised by the Dublin Gas Company. I referred this matter to an inter-departmental committee to be examined in the context of the decision already mentioned to use a large part of the Kinsale Head gas for electricity generation. The committee have concluded their examination of the matter and their report will be available to me very shortly.

The total amount of the increased expenditure is £7,708,500 but there is an offset of £695,500 in savings mainly made up of £250,000 on subhead D— Geological Survey—as a result of the deferment of a proposed aeromagnetic survey of the country; £245,000 on subhead 1.3—Industrial Development Authority—Grants for Industrial Housing; £100,000 on subhead S.2—Flour and Wheatenmeal Subsidy and a surplus of £310,000 in Appropriations-in-Aid chiefly in respect of payments made by holders of exclusive offshore petroleum licences to which I have referred earlier.

I have explained in the case of each subhead the reason for the increased expenditure but if Deputies consider it necessary or desirable I shall deal with any points that may be raised in relation to them.

I recommend this Supplementary Estimate to the House.

I did not know that a proposed aeromagnetic survey of the country had been deferred. I am pretty ignorant of the technical aspects of such matters but I presume that this survey would be a mineralogical one intended to assess possible areas of workable deposits. Can the Minister give a reason why this survey has been deferred and will he say a few words about the relevant importance which his Department attribute to it? Since it has been deferred will the Minister say when it is proposed to get on with it?

The Minister's estimate includes an increased grant-in-aid for Córas Tráchtála. Further to things I said about Córas Tráchtála during the Export Promotions Bill debate about two months ago when both the Minister and myself adverted to the very unfavourable trade balances in our trade relations with eastern Europe, about which Córas Tráchtála were complaining, more up to date figures have become available and the picture is now emerging for the whole year. Córas Tráchtála are fully justified in regarding them as disappointing. In modification of what I said previously, although the gap in the trade balance with the Soviet Union is still about the same size as it was last year, namely, £12 million or thereabouts, the increase in Irish exports to the Soviet Union is very marked.

Having been so severe on the subject six weeks ago I feel I ought to mention this. It would not be unfair to attribute that increase substantially to the visit of the last Minister for Foreign Affairs to Moscow last year and to the agreement which he signed there. The Soviet Union falls in for most of the criticism in this regard but the most recent figures show that our adverse trade balance with Poland is of about the same dimension, to within a small number of thousands of pounds. Our adverse balance with Czechoslovakia although the figures involved are smaller is colossal in terms of ratio. Of all these eastern European countries Yugoslavia is the only one with which we have a slightly favourable balance. I mention this in order to modify somewhat what I said six weeks ago. Although the gap overall remains very worrying and Córas Tráchtála are perfectly right to draw the country's attention to it, it has to be acknowledged that there has been some improvement in regard to Irish exports at least to the Soviet Union.

The Institute for Industrial Research and Standards dates back to the 1940s, the war-time period when we were trying to produce materials and services for things which could not be imported during the war. It has grown out of all recognition since then. The Institute is a place of colossal interest even for someone as technologically ignorant as I am. I paid an official visit there early last year in my capacity as Parliamentary Secretary to the Minister for Foreign Affairs and I was treated with extraordinary courtesy. The visit arose because the Department of Foreign Affairs, in which I was responsible for development aid was confronted with a suggestion that we might make money available for the development of an experimental quantity of leprosy vaccine. I suggested that this might be done in Ireland by the Institute and with commendable speed they produced a quotation for the amount of money they would need to do it, and then the work was done there. It is a most exciting place and the people there gave the impression of being enormously interested in their work. I am sorry that I should have been in office, even if a relatively junior office, at a time when the financial constraints under which the National Coalition Government had to operate from 1974 on, meant that this institute was financially squeezed in the way that we had to squeeze many other objects on which we wished to spend money. Had we not ruthlessly squeezed them—and I am afraid that in the process we squeezed ourselves out—this country would not be in the healthy condition it is now in. The figures which resulted from the very miserly budgeting from which the Institute suffered are given by the chairman at the outset of the report for 1976 which was published in June around the time of the election. They show that the annual increase in the money made available by the Government to the IIRS from 1974 to 1977, although an absolute increase in terms of pound notes, did not keep pace with the annual increase in the consumer price index but fell steadily behind. The people who work there have to live and have to be paid wage increases. They have the same expenses as the rest of us and cannot remain immune, because of their specialised function, to the ordinary operations of inflation. In 1977 we provided a sum which was a percentage increase in money terms of 11.1 per cent on the previous year—I am combining the revenue expenditure and equipment with the capital for building—whereas the CPI rose by 13.9 per cent. I am glad to see that the Minister is giving them some more money now but that £84,000 which he is giving still leaves them with an overall allocation this year which falls slightly short of keeping pace with the increase in the cost of living. It is not anything like what is needed by way of an increase in real terms and the chairman complains that the IIRS cannot do its job without more money. The chairman says that it must still be considered to be a developing organisation which has not yet reached its plateau of minimum effective size or of funding, and that this cannot be achieved by successive grants which diminish annually in real terms and that even small percentage increases in real terms each year would be quite adequate.

It is no use to belabour the Minister for not doing what my Government failed to do, but since I cannot open the paper without finding good news being distributed in heaping handfulls by Ministers, and that miraculously the sun jumped over the horizon on the 5th July, although it has been demonstrated that all the economic indicators on which these optimistic speeches were based were showing months before the change of Government, and many more were shown in 1976, I appeal to the Minister that if the good news is all good I wish it could be spread as far as the IIRS in Glasnevin which has made a very substantial case, which has been recognised by the Minister in his Estimate speech, for increased funding.

The Minister in connection with petroleum licences referred to off-shore operations and said that it was important from their point of view that the Irish government agencies concerned with off-shore operations—these agencies include the IIRS—should have adequate facilities including appropriately qualified staff to administer the many aspects of off-shore activities. That is true and I am sorry therefore that a government which felt able to give away, without anybody asking for it, a sum which could be computed at something like £14 million or £15 million in remitted road tax, could not find something more generous to give to the IIRS after it has had the experience of the last three or four years. I am perfectly aware of the political weakness of my stance in making that point in this regard but if times really have changed and if everything is looking up as the Taoiseach and other Ministers tell us, the IIRS should come in for assistance. Its significance to our industrial development and future generally and to our prosperity far outweighs the rather small amount of money which is devoted to it. The amount of money which is now being additionally voted to it is actually less than the amount of money which we are additionally voting to the Minister's Department for travelling expenses and for subsistence expenses arising from travel. That will give the House an idea of the very minute improvement which the IIRS is getting. This institute which has done such good work and which shows such promise for the future should get very generous treatment from the Minister.

Deputy Kelly inquired about the aeromagnetic survey, and the position about that is that I put in the Estimate for this year somewhat provisionally dependent on funds becoming available from the EEC. It was included with a number of other GSO projects in a portfolio of exploration in mining projects from Ireland for presentation at the Community Scientific and Technological Research Committees Working Party which is called CREST dealing with the primary raw material R and D programme of the Community. The portfolio was intended to inform the Community of the type of projects which might be put forward by Ireland if EEC financial support for such projects was available.

An early decision is expected on a CREST proposal which was made to the council in the summer of 1977 for a multi-annual R and D programme in the field of primary raw materials for the years 1978 to 1981 to which these projects relate.

Does this mean that this money is still lying there or has not been used because the matching money has not yet been forthcoming or because the European dimensional question has not yet been decided.

Both in fact. In these circumstances the aeromagnetic survey was postponed with a resultant saving of £250,000 in Subhead D on the 1977 Estimates. The amount of aid that might be forthcoming from the EEC will be an important factor in arriving at a decision about proceeding with the survey.

The other point that Deputy Kelly raised was in relation to the IIRS and he read out figures of what they got in recent years which they and most people agree were scarcely adequate to enable them to expand their operations as they should. The last Government were unable over a period of three years to give them any effective increase and will be aware of the difficulties in this respect. I have recently had a discussion on this very point with the chairman and the chief executive of the IIRS and I know what their problems are. I hope the Minister for Finance will be able to make some reasonable increase next year but I cannot guarantee that, and those figures are not fixed yet. There is, as the Deputy may be aware, the possibility of the institute earning fairly substantial fees from work which they undertake from private clients, local authorities and others who pay for their services.

I think their earnings have been going up.

They have, and I will encourage them to go up further. This year they told me they would exceed £1 million. The institute have a very elaborate building programme and I have recently had that programme examined by an officer in the Department who will be reporting to me on it, and I hope it will be possible shortly to take some decisions in relation to the programme, which is very costly and very elaborate. I appreciate the fact that some of the premises in which the institute are housed are extremely unsatisfactory.

A rag-bag of odds and ends.

I hope it will be possible over a period of years to enable a proper building programme to be carried out.

The other matter mentioned by the Deputy was under the Córas Tráchtála subheading of trade with Eastern Europe. We debated this a month or so ago here and I have nothing to add to what I said then. I agree generally with the observations made by Deputy Kelly. I believe that debate had the effect of stimulating certain activity in relation to the purchase of Irish goods. Certainly this has not yet translated itself into firm orders, but one is hopeful that they will. Irish exports to Russia have increased this year, as the Deputy said, but our trade balance for this year will probably be as least as bad as it was last year if not worse, and the situation with other COMECON countries is as bad as ever. Yugoslavia is in a different situation; they are not in the COMECON organisation and it is possible for our exporters to deal with companies and agencies there.

Vote put and agreed to.
The Dáil adjourned at 5 p.m. until 2.30 p.m. on Tuesday, 13th December, 1977.
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