asked the Minister for Industry, Commerce and Energy if he refused to sanction a price increase to the Dublin Gas Company until the board agreed not to distribute a dividend.
Ceisteanna—Questions. Oral Answers. - Gas Company Price Increase.
When considering a price increase application from the Dublin Gas Company in April 1979 I took into account the poor profitability of the company and the fact that the company was being bolstered by the payment of an annual Exchequer subsidy in the region of £4.5 million. I considered it to be fundamentally wrong that a company which, were it not for State assistance, would in effect be in a substantial loss-making situation should continue paying annual dividends to shareholders at the expense of the Exchequer subsidy, and therefore directed that no price increase could be granted until a commitment had been received by me from the board of the Dublin Gas Company not to distribute a final dividend for the financial year ended 31 December 1978.
An interim dividend amounting to £87,000 had, in fact, already been paid by the company in September 1978.
Did the NPC recomment the price increase that the Minister spoke of and that he threatened to refuse?
Is it true that the subsidy does not go to the company but is a subsidy on the consumption of town gas?
In theory, yes. The payment is made to the company.
Of course it is. You cannot go around to every street in Dublin taking out £1 or £10. Does the Minister not think that it is completely wrong that he should use the price mechanism in this way? Is it fair that the shareholders in that company should be deprived of their dividends, which they are entitled to expect after investment, and that the company would not necessarily be in loss because of the State subsidy which is there for the consumers?
Deputy Barry, this is an admonition.
This is a fundamental point of freedom, whether the Minister can use a mechanism to deprive shareholders, who in this case are not well off, of a dividend to which they are entitled.
I do not accept that. The dividend is a small one. The amount which each person would receive on average is very small. The principle involved that dividends from what would otherwise be a loss-making company should be paid in effect out of a public subsidy for consumers seems to be wrong.
The Minister is quite wrong.
If the Deputy sees it otherwise he is entitled to, but that is my view.
Even if it is a loss-making company, that does not matter. The fact that the Minister is using the pricing mechanism to deprive the company of the right to pay dividends if the board so decide——
I am calling Question No. 21 and I am calling it because Deputy Barry was not asking a question, he was making a statement.
It was quite impossible to finish while the Minister was walking out of the House. What was the Deputy to do?
Deputy Barry was making a statement. I was compelled to call the next question.
Does the Minister agree that the argument put forward is a circular one? If the State intervenes to require that the price of gas be not increased and to subsidise it in order to keep the price down, to use that subsidy as an argument for depriving shareholders of their dividend is clearly unjust and the argument on which he has arrived at that is completely a circular one.
The Deputy should complete the circle. If a subsidy were not paid it is obvious that market forces would ensure that the company would be in a substantial loss-making situation and there would be no question of dividends then anyway.
That is speculation.
I am calling Question No. 21.
It is obvious that if £4.5 million of public money were withdrawn from the company the company could not make the profit that they are making now.
There is nothing obvious about that. The previous Government decided to keep down the cost of living.