Supplementary Estimates, 1979. - Industrial Research and Standards (Amendment) Bill, 1979: Committee Stage.

Section 1 agreed to.
SECTION 2.

On section 2, two amendments, Nos. 1 and 2 in the name of Deputy O'Toole, have been ruled out of order.

Question proposed: "That section 2 stand part of the Bill."

I put down two amendments on section 2 (2) of the Bill, for obvious reasons, during debate on Second Stage, with which other members of my Party, and the Opposition in general, agreed. I appreciate the reasons for the Chair's ruling these two amendments out of order, but section 2 (2) does something which to my knowledge has not been done before, in that it allows the IIRS to raise funds for capital equipment, without these funds being underwritten by the Minister for Finance. On Second Stage, Deputy John Kelly and I and, indeed, others asked the Minister if this approach were applied elsewhere and if there were a precedent for this line of action. The Minister nodded in the affirmative, but, in reply to the Second Stage debate, did not give any examples of this provision where an institution or State body were being asked to mortgage their fixed assets in order to raise funds for capital equipment or any other kind of capital investment. As far as I can ascertain, this is new and is not at all acceptable which was why I put down the amendments.

I appreciate that the IIRS are in receipt of a grant-in-aid to which very definitive regulations attach, one being that, under regulations, no excess expenditure may be incurred on grant-in-aid subheads. This is accepted by this House as part of our financial regulations and is a good thing. This Bill tidies up this area where the IIRS were coming along with audited figures showing excess expenditure over grant-in-aid allocation; section I regularises that situation, allowing the institute to borrow for current expenditure and show in their books that they have not gone beyond the grant-in-aid allocation. The sting in the tail is section 2 (2), which is unnecessary. If the Institute for Industrial Research and Standards avail of this facility and have to pay for availing of this facility out of the grant-in-aid, the Minister will say that, in the case of capital equipment, they need not fall back on grant-in-aid to cover the cost, that the equipment they are using for testing purposes will generate enough revenue to cover the cost of loans raised to purchase the equipment. This is great in theory, but may be a false assumption. I can envisage certain types of equipment—possibly very expensive equipment—which need not necessarily generate the necessary revenue to meet the purchase price and interest rate on loans raised to purchase it. While in many cases, possibly in most, the Minister is correct in saying that equipment used on a fee basis for testing purposes will generate revenue and pay for itself, there may be cases where this is not so.

The Minister in her opening speech on section 2 said—and I quote from the last sentence of her statement: "These borrowing powers should assist the Institute in keeping abreast of technological change in equipment needs." That is a very lofty aspiration with which we all agree. However, the institute may be forced because of lack of revenue, into a position where they may not be able to purchase with bank loans this technological equipment to meet the needs of the day, because if they do they will be falling back in their grant-in-aid, which I am sure will be earmarked by them for other purposes within their annual budget. I see no reason why the Minister for Finance should not underwrite this kind of expenditure. If the equipment generates enough revenue to cover itself, surely the need to call on the Minister to meet this underwriting facility will not arise. I fail to see the reason for fear or reluctance on the part of the Minister to underwrite this expenditure if what the Minister says is true, as he will not be called upon to meet that guarantee as a guarantor. If what he says is not true, then the taxpayer is being asked to foot the bill in the form of increased grant-in-aid to meet the payments on this type of equipment.

A principle has been breached here. I would ask the Minister, for the second or third time, to give concrete examples of situations where bodies like the IIRS are being allowed to raise funds for specific purposes and where the Minister for Finance is excluding himself from the obligation of underwriting such funds.

As the Minister is aware, we on this side of the House are happy with the Bill if the Minister for Finance is prepared to guarantee the borrowings of the Institute of Industrial Research and Standards. In such instances as they have applied to him for consent to borrow and he gives that consent, then it is essential that the Minister for Finance guarantee such borrowings.

As I and other speakers pointed out on Second Stage, this Bill has a lot of significance for this country. Our Institute for Industrial Research and Standards is a most important body for our industrial future. There are two institutes in this country, the Agricultural Institute and the Institute for Industrial Research and Standards. I believe that both are regarded with the highest esteem throughout the world. But we have been solidly starving the latter institute over the years through lack of finance. We have not provided them with sufficient funds to project themselves and become involved in the industrial research so necessary for industrial expansion here. It is a sad day for this country to have a Bill before this House in which the Minister is not prepared to guarantee their borrowings. The Minister is obliged to show his confidence in this institute, not through any form of words or hot air but through financial backing. Indeed he is obliged to add his signature showing that he is prepared to guarantee their borrowings.

This is a highly important institute in regard to the industrial research they are conducting here and also because of their setting of standards in respect of our industries. It is a bad Bill that does not permit the Minister to guarantee its borrowings. Indeed the provision of subsection (2) specifically state: "without any guarantee by the Minister for due repayment...." I am totally opposed to this. It is a grave mistake; in fact it is a blunder.

I quoted previously the figures for 1975 in respect of our gross domestic product being devoted to research and development. I quoted also the amounts being devoted by other countries. For example, in 1977 Ireland's share of gross domestic product devoted to research and development was approximately .8 per cent only. I would ask the Minister to contrast this with the situation obtaining in other countries throughout the world. To take one example, Germany devotes 2.1 per cent of its gross domestic product to research and development.

The Deputy is now getting into the Second Stage debate. This section deals only with borrowing. It is in order to deal with their borrowings, the amount thereof and also to raise the question which has been ruled out of order on the section. But it is not in order to go right back on the Second Stage debate again, and that is what the Deputy is doing.

I am glad to know that the Chair is allowing us to speak on what has been ruled out.

I cannot stop Deputies doing that. The amendments were ruled out of order. It is in order to raise the matter on the section but that is all.

I shall not develop the argument any further except to point out to the Minister the seriousness of the situation in which we devote too little of our gross domestic product to research and development. However, I would reiterate that the total amount we devoted in 1977 for that purpose was similar to the amount in 1975, which I am sure will be somewhat similar to the amount for 1979 when the figures come to hand.

We in this House have a grave obligation to show our confidence in the institute by having the Minister for Finance guarantee any borrowings for the purpose of purchasing capital equipment. If we are to compete with other countries on the industrial development scene we must shoulder our responsibilities by providing the necessary finances for such research and development, equipment and so on, which is of paramount importance to us. Even if we have not provided sufficient funds heretofore it is essential that we do so now. I would put the proposition to the Minister that what we are now allowing this institute to do is borrow on the strength of their land and premises, meaning that they mortgage their land and premises without the guarantee of the Minister for Finance. That is wrong and is a practice we must endeavour to change. Otherwise it will be questioned by many people and regarded as being serious that the responsible Minister is not prepared to guarantee their borrowings. I cannot put it any stronger than asking the Minister to outline the reasons for his not being prepared to guarantee such borrowings. There must be a reason and I should like to know what it is. It is of little use to maintain that there will be an income from capital equipment. That is a weak argument and an insufficient answer. It may be that when the institute require some capital equipment they borrow on the strength of some project in which they are engaged but, if they require some further equipment, they should not be handicapped in its acquisition. They are already mortgaged to the hilt, are unable to borrow further and are handicapped in this respect. We are telling this institute they can go a certain distance only, and that only without the backing of the Minister for Finance, which is a grave mistake.

Section 2 (2) has been depicted as forcing the IIRS to mortgage their land and buildings to buy capital equipment. That is not true because the institute purchase already substantial amounts of capital equipment from their grant-in-aid. The borrowing power for capital equipment is to facilitate the institute in purchasing more equipment where that expenditure can clearly pay for itself out of fees earned. Its rationale is clearly in line with what a frontbench spokesman of the Deputy's party put forward in March last when borrowing powers were being sought for An Foras Talúntais via the AnCOT Bill. The main point in the Opposition argument at that time was that borrowing should be for profitable capital investment only.

Section 2 (2) of the present Bill dealing with capital borrowing has this intent. Another point made by the Opposition at that time was that only commercial State bodies with their own source of income should have borrowing powers. This is clearly such a case because the IIRS have a substantial own income. The Opposition made the point that the State would have to repay the borrowings but the overdraft facility in this Bill is simply bridging finance to cover the delays that the IIRS have in receiving their income. Clients are slow to pay and there is a cash flow problem at the end of a financial year. At the moment the IDA, CTT, Bord Iascaigh Mhara and An Foras Talúntais have borrowing powers similar to those proposed in this Bill. To rectify this anomalous situation where the institute did not have those powers, this Bill was brought before the House. There is nothing new in it and I cannot see why the Deputies have a problem with this section of the Bill.

The Minister mentioned the IDA, CTT and BIM. Can the Minister give the House specific examples where one of these bodies have power to raise money and the Minister is excluded in relation to the borrowing powers? I know that CTT and a dozen other bodies have power to raise revenue but is there written into the order or the Act empowering them to do so a section specifically excluding the Minister from his obligation to underwrite that borrowing? That is the question at issue. The Minister has consistently refused to answer it and is now again not prepared to give a straight answer.

There is no power in the Bill specifically to exclude the guarantee of the Minister. As a teacher, it should not be necessary for me to tell Deputy O'Toole that on five or six different occasions. In subsection (2) we are allowing them to borrow without such guarantee but there is no specific provision in the Bill which does not allow the guarantee of the Minister.

I am sorry that the Minister is becoming personal about this.

I am not becoming personal. I fail to see what the Deputy is having difficulty about.

CTT have powers to borrow and in their borrowing powers is there a clause or a provision which allows the Minister to opt out if he wishes? Can they borrow without the Minister having to underwrite that borrowing? The Minister knows what I mean but is not prepared to interpret it because she does not choose to do so.

In the Córas Tráchtála Act or the Export Promotion (Amendment) Act, 1967, there is a provision which is not, as the Deputy says, similar to the one we have here, that the board may, with the consent of the Minister given with the concurrence of the Minister for Finance, borrow such sums as they may from time to time require for the purposes of their capital expenditure. The wording here says "and without any guarantee by the Minister for the due repayment of any such borrowings, ...". It does not say that the guarantee by the Minister is being excluded, it allows the institute to borrow without any guarantee.

That is exactly what I mean. It also allows the Minister to opt out of his obligations to these bodies if he wishes. That is what is new about this Bill and that is why we oppose this section. The Minister knows that, although she said consistently that there were precedents for this. Now the Minister has admitted that there is no precedent to be found in the case of CTT, the IDA or BIM.

Question put.
The Committee divided; Tá 64; Níl, 44.

  • Ahern, Bertie.
  • Ahern, Kit.
  • Allen, Lorcan.
  • Andrews, David.
  • Andrews, Niall.
  • Aylward, Liam.
  • Barrett, Sylvester.
  • Brady, Gerard.
  • Brady, Vincent.
  • Briscoe, Ben.
  • Browne, Seán.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Cogan, Barry.
  • Colley, George.
  • Conaghan, Hugh.
  • Connolly, Gerard.
  • Cowen, Bernard.
  • Daly, Brendan.
  • Doherty, Seán.
  • Fahey, Jackie.
  • Farrell Joe.
  • Faulkner, Pádraig.
  • Filgate, Eddie.
  • Fitzsimons, James N.
  • Flynn, Pádraig.
  • Fox, Christopher J.
  • French, Seán.
  • Gallagher, Dennis.
  • Geoghegan Quinn, Máire.
  • Gibbons, Jim.
  • Haughey, Charles J.
  • Herbert, Michael.
  • Hussey, Thomas.
  • Keegan, Seán.
  • Kenneally, William.
  • Killeen, Tim.
  • Killilea, Mark.
  • Lalor, Patrick J.
  • Lemass, Eileen.
  • Lenihan, Brian.
  • Leonard, Jimmy.
  • Leonard, Tom.
  • Leyden, Terry.
  • McCreevy, Charlie.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Moore, Seán.
  • Morley, P.J.
  • Murphy, Ciarán P.
  • Nolan, Tom.
  • O'Donoghue, Martin.
  • O'Hanlon, Rory.
  • O'Leary, John.
  • Reynolds, Albert.
  • Smith, Michael.
  • Tunney, Jim.
  • Walsh, Joe.
  • Walsh, Seán.
  • Wilson, John P.
  • Woods, Michael J.
  • Wyse, Pearse.

Níl

  • Barry, Myra.
  • Barry, Peter.
  • Barry, Richard.
  • Belton, Luke.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Liam.
  • Byrne, Hugh.
  • Cluskey, Frank.
  • Conlan, John F.
  • Hegarty, Paddy.
  • Horgan, John.
  • Keating, Michael.
  • Kelly, John.
  • Kenny, Enda.
  • L'Estrange, Gerry.
  • Lipper, Mick.
  • McMahon, Larry.
  • Mannion, John M.
  • Mitchell, Jim.
  • Murphy, Michael P.
  • O'Brien, William.
  • Corish, Brendan.
  • Cosgrave, Michael J.
  • Crotty, Kieran.
  • D'Arcy, Michael J.
  • Deasy, Martin A.
  • Desmond, Barry.
  • Enright, Thomas W.
  • Fitzpatrick, Tom (Cavan-Monaghan).
  • Griffin, Brendan.
  • Harte, Patrick D.
  • O'Donnell, Tom.
  • O'Keeffe, Jim.
  • O'Leary, Michael.
  • O'Toole, Paddy.
  • Quinn, Ruairi.
  • Ryan, John J.
  • Spring, Dan.
  • Taylor, Frank.
  • Timmins, Godfrey.
  • Treacy, Seán.
  • Tully, James.
  • White, James.
Tellers: Tá, Deputies Woods and Briscoe; Níl, Deputies L'Estrange and B. Desmond.
Question declared carried.
Section 3 agreed to.
Bill reported without amendment and received for final consideration.
Agreed to take Fifth Stage today.