Permission has been given to Deputy Hussey to raise the question of the closure of the National Film Studios and the consequent effects on employment in that regard. The Deputy has 20 minutes; the Minister will have 10 minutes to reply.
Adjournment Debate. - Closure of National Film Studios.
In fact the notice which I put down for the Adjournment, as well as the effect on employment mentioned the effect on tourism and the Irish film industry, which is a far wider area than the effect on employment, serious as that is. It is important to recap on the events leading up to the raising of this issue this evening in the Dáil. It is being raised so long after the event because at six o'clock on Saturday, 3 April — two days after the Dáil adjourned — the workers' board and management of the National Film Studios of Ireland——
To avoid any misunderstanding later, let me say that the Minister would have got notice that your intention was to raise the question of job losses. I understand that no intimation was given to anybody that the matter of tourism might be raised.
I am sorry but I said quite clearly on the Order of Business that I wished to raise the question of the abrupt closure of the National Film Studios on 3 April with subsequent effects on employment, tourism and the Irish film industry. That was the wording I used and the record will show that wording. That was the wording which the Ceann Comhairle's office informed me would be debated this evening.
Might I explain that what I have before me indicates that the question to be raised was the closure of the National Film studios and the subsequent threat to jobs. On the other hand, I take the point that the Deputy says she has indicated or has evidence that there was an extension of that to embrace tourism. The Chair will accept the Deputy's word for that and hope that the Minister has been so advised and will be able to reply to the question of tourism as well as the question of unemployment.
And the Irish film industry which was mentioned specifically when I rose to speak. I believe that the Editor of Debates could send us a copy of what I actually said, which would be on record. It is essential that we get this straight.
The Chair is taking the Deputy's word as against what I have before me. I expect the Deputy to take that as a compliment rather than a criticism and I am allowing the Deputy to proceed.
Thank you. I was saying that on 3 April at six o'clock in the evening two days after the Dáil recessed people who are concerned with employment in the National Film Studios of Ireland at Ardmore and the much wider interests involved with film making and tourism were very much taken aback at the sudden announcement that the Minister had decided to close the National Film Studios. There was no prior notification of the board of the film studios, no prior notification of the workers, no consultation with any trade union or with anybody involved in Irish film producing, no consultation with the newly constituted Irish film Board, and no consultation with the Arts Council of Ireland. It was an extraordinary and unprecedented decision made quite brutally without any consultation with anybody.
It is easy to imagine the effect on people whose livelihood is placed in jeopardy when they so find out from the cold announcement in television or radio news. Not only are 46 full-time jobs in the studios directly affected, but it is calculated that when a film is being made at the National Film Studios a minimum of 300 people are at work, so that we are talking in terms of employment of not only the 46 currently employed but about a much larger number. This particularly affects me. Not only did I grow up on the road where the studios are located and see the effect of their establishment on the surrounding area, but my constituents are widely affected, and the whole of the North Wicklow area, both in employment and tourism, are very seriously affected.
One aspect of the employment element is that a technical expertise has been built up in the National Film Studios which would be extremely hard ever again to assemble and which is vital to the success of a film studio. Again I stress that this event took place while the Irish Film Board were actually holding their first meeting, an extraordinary juxtaposition of events which leaves one quite breathless. It is generally considered that from the word "go" there was a lack of capitalisation for the National Film Studios. This capitalisation should perhaps have been undertaken by the previous Coalition Government, and the Fianna Fáil Government from 1977 to 1981 had ample opportunity to undertake it but did not. There was lack of capitalisation on one hand and insufficient business coming to the studios on the other.
Many reasons could be given for insufficient business and among those reasons — I believe a very valid reason — would be the lack of any incentive scheme which would attract Irish or foreign people to invest in film making. Incentive schemes exist in many areas where we wish to attract investment but there is no such scheme to attract film making. The reasoning behind calling for an incentive scheme could well be summed up when you consider that the amount of foreign currency attracted here and spent in Ireland since the inception of the National Film Studios is conservatively calculated at £12.5 million. This calculation is achieved by getting figures from the accounting section of visiting foreign film companies, asking them to detail expenditure in this country which they undertook by making a film here. The value is estimated by adding the number of films and foreign film companies visiting this country and it amounts to something in the region of £12.5 million.
When the Minister was announcing the closure and subsequently giving interviews to the Press, before he decided that he might have any words with anybody else involved, he mentioned a loss of £2 million since the studios were set up. In the context of attracting foreign currency to Ireland I do not think that £2 million compares with the amount of investment we see fit to make in an airport in the west, or the continuing staggering sums invested in NET, Whitegate Oil Refinery and Clondalkin Paper Mills, which it cannot be said attract foreign currency to Ireland. We have yet to see what kind of foreign currency an airport, which may be closed half the time, will attract to Ireland. We must put into context the kind of losses this company have had in the past.
The Coalition Government completed the appointment of the Irish Film Board during their term of office. This was the first step to having an integrated policy about Irish film making and the National Film Studios. The Coalition Government were about to reconstitute the board of the National Film Studios; new life was to be brought into the film industry.
The Board of the National Film Studios favourably considered investment by the private sector in facilities in and around the studios. The building of a new film laboratory was grant-approved by the IDA. The laboratory would have increased permanent employment by 30 people. It is interesting to note that since the Minister came into office he has not met the board of the National Film Studios. In a letter dated 12 March 1982 the Minister was invited to meet the chairman and chief executive of the board of the National Film Studios to discuss the future of the film studios. On 16 March an acknowledgment was received from the secretary of the Department.
It is important that I should state the facts about a letter which the Minister made a lot of when he was replying to criticism on the closure of the National Film Studios. He quoted a lot from a letter which was sent by the chairman and a member of the board, not by the chief executive of the National Film Studios. This letter must be seen in the light of a series of discussions the board had been having with the Department on the whole question of the kind of investment needed by the studios from the State for film-making and providing incentives. The Minister quoted at length from this letter and it is also important that I should quote from it as follows:
Without substantial direct investment in films and the tax incentives recommended by the board in the past we cannot expect the National Film Studios of Ireland to reach the minimum of break even let alone be profitable. A healthier environment for film making, as outlined above, would go a long way towards solving the company's problem.
The Minister presumably received this letter on 13 March and, without having met the board or having answered their letter of 12 March, he proceeded to act very swiftly to close the company.
This letter was a call by the chairman for help for the National Film Studios, for a new look and discussions. Instead of any talk with the board the Minister proceeded to close down the company. Why did the Minister proceed to close Ardmore Film Studios so abruptly without any consultations or discussions with any interested parties? That must raise serious questions in the minds of any people involved in State companies. On 3 April it was Ardmore Film Studios, next week it could be any other State company, it could be CIE. It was the most extraordinary handling of a Minister's brief and was out of character with the often stated interest of the Taoiseach in furthering Irish arts.
It is important to state that a direct result of that decision is that a film called "Jigsaw Man", which was due to come into the studios, has now been withdrawn with a loss to Ireland of $3 million in revenue. The film, "Educating Rita", which was also due to come to the studios, is now in jeopardy, a further $3 million lost to the country. I understand also that a film, which would have starred Seán Connery and which was to be made between Ireland and two other countries, with a spending budget of $25 million of which $8 million might have come here, is going to another country.
We already see the losses to the country of this extraordinarily quick decision made under very mysterious circumstances. I would like the Minister to explain why it was felt this decision had to be made so quickly, why he refused to meet the chairman and the board, why there was no consultation with the trade unions or any film making interests in the country, what he intends to do about the employment which will be lost and if he has any plans for replacing in that part of the country, which is already badly hit by unemployment, the tourism losses which will accrue. I regret the way this matter is being handled and that we should have had to wait until now to have a democratic discussion in this House because it was done so suddenly.
I thank my colleague for giving me the opportunity to support this matter she has raised on the Adjournment. While the studios were facing serious financial difficulties the Minister should have given sufficient time for them to come to grips with any final decisions that might have to be taken in relation to the overall financial structuring of the company. There was no prior notification to the board of an imminent decision and no prior notification to the 46 workers, the vast majority of whom are highly skilled in a particular industry. A number of those workers live in my constituency. There is great anger about the sudden decision by the Minister without any prior consultation.
I am aware that about three months prior to this decision some efforts were being made in relation to the studios. They should have been pressed forward to try to bring a joint venture into the operation of the studios prior to taking a final decision. That should have been fully explored and efforts should have been made to find other private capital interests who might be prepared to share the work of the studios.
On many occasions in the House I was critical of the extent of State subvention which was necessary to maintain the studios. I recall the Minister, Deputy O'Malley, indicating they were on their final chance. Nevertheless, the manner of the decision, with no prior consultation, was utterly precipitous and in the context of the vast sums of money which the Minister and the Government have spent on all sorts of things which do not relate in any way to employment or the maintenance of it, it is highly questionable that that kind of expenditure, even in the context of State losses, should be so suddenly cut off. I wish to record my serious concern and that of my colleague, Deputy Kavanagh, regarding this closure, a closure which perhaps could have been avoided but which certainly should not have been effected in the way in which it was effected.
I understand that the Minister has agreed to give two minutes of his time to Deputy Gallagher.
(Waterford): The decision to close the Ardmore studios was announced during the Dáil recess. The first observation I would make in relation to that decision is that it is strange that a Government who are preaching continuously about proper industrial relations should announce such a decision without any consultation with either the management or the workers involved. This decision is in stark contrast to the Government's much publicised commitment to the question of job creation and to the maintenance of existing jobs.
Workers in the private sector have reached the stage of accepting as typical this type of practice in so far as many employers are concerned but for the Government to indulge in such practice is another matter and is something that must be condemned without reservation.
Ardmore film studios are a national asset. They form an integral part of the Irish film industry. However, the question must be asked whether the studios can be maintained by way of private enterprise. Any objective person would have to answer no to that question having regard to present circumstances. Indeed, this is accepted by the workers. However, it should be recognised also that when RTE were connected with Ardmore, the studios were making money but it was only when a policy of privatisation was introduced that the studios began to lose money.
The workers' committee involved in the studios are convinced that with an adequate capital base and with a new board representative of the studio workers together with State participation, there can be profitable future for Ardmore. The workers' committee have carried out a detailed analysis based on a restructured company and they are anxious to meet the Minister so that they will have the opportunity of putting their case to him. I strongly urge the Minister to accede to this request.
The Ardmore studios have been responsible for attracting millions of pounds from abroad and apart from the full-time employment there, hundreds of ancillary jobs have been generated. Therefore, the decision to close the studios represents two major blows to Irish workers: first, the loss of the jobs and the consequent effects on the workers of being made redundant and, second, the closure will mean the death knell of the Irish film industry. The smallest portion of the expenses involved in the running of the studios is the wages of the workers while the largest proportion relates to the exorbitantly high interest repayments to an American bank as a result of the failure of successive Governments to capitalise the company.
I thank the Minister for agreeing to accommodate me and I urge him to accede to the request to meet the workers.
There is a great display of political hypocrisy from two Deputies opposite. Deputy Gallagher has only come into the House recently and cannot be expected to be in possession of the facts in relation to the whole background against which the decision was made, and I am willing to take his point of view. I have listened to figures being pulled out of the air regarding films that were to have been made at Ardmore but the situation is that there was not a single contract in existence for a film to be made there. Various sums of money have been mentioned this evening. One might get the impression that all these moneys were to be spent at Ardmore but that is not the position. Deputy Hussey has quoted from a letter from which she says I quoted extensively on radio when being interviewed in relation to this situation. I have never quoted from a particular letter in this regard and I recall distinctly saying that the board of the National Film Studios concurred with my view and that I was surprised to hear somebody express a contrary view. However, Deputy Hussey was very selective in what she quoted and in the way she presented the whole matter to us.
Deputy Desmond talked about a joint venture and so on. I can tell the Deputy that when I became concerned with the situation, everybody was aware of the financial crisis that existed but that nothing had been done about it. Deputy Hussey complains about my not meeting the board only three days after resuming office but I would remind her that my predecessor, according to the record in my Department did not meet the full board at all. Let us be realistic about this whole situation.
The decision to close the National Film Studios must be looked at in the context of the state of the company's financial affairs when this Government took office. In the years 1977 to 1981 their losses had totalled almost £2,500,000 and they were projected to increase to £2,750,000 in 1982 alone. Excluding the expense incurred in the purchase of the studios, amounting to approximately £500,000, direct Exchequer grants totalling nearly £1.5 million have been made available to NFSI since it was set up, principally to cover the company's administrative expenses during periods of inactivity.
If the foregoing does not adequately portray the disastrous financial state the company was in, I would add that the ongoing operations of the studios were being virtually entirely financed by a bank overdraft which, since the beginning of 1980, was increasing on average by £50,000 per month. On my assuming responsibility for the company, this overdraft stood at £1.615 million and had just been increased to £1.665 million to enable the company to continue operations for about a further month. Surely that indicates clearly where the crisis point lay. This money was only advanced subject to ministerial guarantee, and if one recalls that further debts of approximately £200,000 existed, on which a ministerial guarantee was also being sought, and that there is a statutory limit of £2 million on the issue of such guarantees, the writing on the wall was plain. Despite this, the Opposition say that the situation was unknown. The only way in which closure could have been deferred was by provision of substantial funds in the Estimates for 1982, and as the House will be aware, there was no such provision. It seems necessary, although it should not be, to remind Deputies that these Estimates were prepared and agreed by the previous Government.
It is obvious that in these circumstances the Government had to address themselves to the issues involved as a matter of urgency. On the basis of the information available, the Government felt there was no reasonable prospect of the studios becoming viable in the foreseeable future and, in the context of increasing borrowings, which would inevitably have to be met ultimately by the taxpayer, amounting to more than £1,000 per month per man employed, felt it had no option but to order closure and liquidation of the studios.
This decision was taken in the knowledge that the board of the film studios had recently decided to recommend that the Exchequer should not continue to subvent the continuing substantial costs of the company, and that it was firmly of the opinion that even capitalisation in full, that is, paying off the borrowings of the company, would not solve their problems. The studios as they were organised could not become viable without the making there of at least four feature films a year. The studios failed in the last five years to achieve this level of business, and indeed no feature film was made there in the last 12 months.
In approving the closure and liquidation of the studios, the Government were also aware that interest had been expressed by private sector groups in acquiring the studios, and it is my hope that a suitable purchaser can be found who will not only continue to maintain film facilities there, but will also provide viable self-sustaining employment in the area.
For seven months we were lectured on financial rectitude by the same people who are in Opposition today, yet they produced estimates without making provision for an operation that was in a crisis situation. Everybody knew that the studios would have to close within a matter of weeks and nothing was done about it, and when something is being done about it there is an outcry. This is the type of political hypocrisy that we have had here this evening.
Indeed, recent approaches to the liquidator in this regard give grounds for optimism, and in the desire to sell the studios as a going concern, the liquidator has decided to defer issue of notice to the company's employees to provide the time necessary to assess the substance of the approaches made to him.
I believe that these approaches give cause for optimism regarding employment at the studios. I also believe that the development and encouragement of the Irish film industry can be achieved through the operation of the newly-established Irish Film Board, and I would again quote the NFSI board which felt that Exchequer money should be directly invested in film production, which would yield better opportunities for job creation and retention of skills in Ireland. I have got the same message from many people throughout the industry.
The Dáil adjourned at 9 p.m. until 10.30 a.m. on Thursday, 29 April 1982.