Dáil Éireann debate -
Wednesday, 8 Jun 1983

Vol. 343 No. 4

Irish Steel Limited (Amendment) Bill, 1983: Second Stage.

Minister for Industry and Energy (Mr. J. Bruton)

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

The purpose of the Bill is to raise the limit of borrowings by Irish Steel Ltd. which may be guaranteed by the Minister, with the consent of the Minister for Finance, from £75 million to £100 million.

Irish Steel Ltd. is a wholly State owned company with share capital of £30 million held by the Minister for Finance. The total amount of borrowings covered by ministerial guarantee at present is £75 million. The principal activity of the company is the manufacture of steel from ferrous scrap.

The Dáil will be aware that Irish Steel's old plant has been replaced by a modern plant whose production efficiency compares favourably with the best in western Europe. The development project was initially approved by the Coalition Government in February 1977. In the event, the commencement of work on the project was delayed because of the necessity to notify the European Commission of the project, and the importance of ECSC loans, which would be contingent on Commission approval, to the project.

The project was finally approved by the Fianna Fáil administration in June 1979 when they approved the legislation to provide funding for the project. A total amount of almost £125 million has been provided to Irish Steel since the commencement of the project, of which £75 million has been by way of guaranteed borrowings. The company now have 630 employees.

The production of reinforcing bars, merchant bars and sections, which had ceased completely in order to facilitate the installation of the new plant, was recommenced in July 1981.

In addition to the cost of the development project, the company incurred losses from 1974 to 1980 due to the obsolescence of the old plant. Losses were also incurred during the installation of major items of plant when production was suspended for 18 months, and since July 1981, in commissioning products, re-entering old markets and breaking into new export markets. The combination of these factors has resulted in borrowings amounting to £75 million at the end of May 1983.

A Government grant of £25 million was made available to Irish Steel in 1982 to reduce their cumulative losses. Taking this grant into account, the company's accumulated losses at 30 June 1982, amounted to almost £23 million and their anticipated losses for the year to 30 June 1983 are of the order of £21 million. Further losses are expected to be incurred in each of the years up to 30 June 1985 even if substantial additional funding, to which I will refer, is provided. Earlier this year the Minister for Finance invested a further £5 million in the share capital of Irish Steel. In addition the company have recently negotiated a loan facility for £3 million and are now in the process of negotiating further borrowings amounting to £17 million to cover their requirements until early 1984. Their ability to raise these borrowings is dependent on the enactment of legislation to provide for an increase in the limit to which the Minister may guarantee borrowings by the company.

Increasing the amount of borrowings which may be guaranteed will not solve the company's financial problems. It is clear that the level of borrowings is far too high for the company to bear and corrective measures are obviously needed.

Deputies will recall that in July 1982, the Minister and the European Commission jointly appointed consultants to assess the viability of Irish Steel. The consultants who reported in September 1982, concluded that Irish Steel's production costs were not competitive. However, on the basis of certain assumptions in relation to prices, reduction in production costs and growth in sales and revenue, electricity costs and the provision of State funds of up to a maximum of £89 million, the company could, in the consultants' opinion, be viable and should be allowed to continue in operation. The consultants warned, nevertheless, that if it were decided to keep the plant in operation and to provide the necessary funds, there remained the risk of failure due to the difficulty of adequately breaking into the export markets.

I should like to emphasise that no financial aid, and that includes both equity investment and the guaranteeing of borrowings, may be provided by a member state to a steel undertaking without the prior approval of the European Commission, and aid for the continued operation of a steel undertaking cannot be paid after 31 December 1984. I emphasise that the Government have not taken a decision in relation to aid to Irish Steel in respect of any period after 1983. Their decision, in due course, will be influenced by the viability prospects having regard to the company's performance up to the end of this year.

A notification of the maximum level of aid which the Government might contemplate was sent to the Commission at the end of September 1982, the latest time for receipt by the Commission of such notifications. That included the period right up to the end of 1984. The maximum aid envisaged in the notification — and this was just a permission we were seeking, not necessarily a decision we were taking — was the guaranteeing of further borrowings of £25 million to be replaced by share capital — that is what this Bill is about — and the provision of share capital of up to £89 million. That is not something taking place at this point and, as I have already indicated, the decision will have to be taken before the end of this year, namely, 1983. Whether that £89 million is put in will be dependent on that decision. The Commission is required to give a final decision on all aid notifications by 1 July 1983. The Commission will not approve aid unless the basic viability of companies is established. Therefore, while the Commission might give us permission we are not necessarily bound to avail of that permission. It is a decision we have to make before the end of this year on the basis of the performance of the company, indeed not just the performance of the company but also our view as to the future of the steel market and so on. Then the point I made was that the cost ot the State of closing Irish Steel could be of the order of between £80 million and £100 million.

Mr. Reynolds

Were they given something earlier this year?

Mr. J. Bruton

Yes, £5 million I think was the figure. That was equity, this is the borrowing. The Commission has already given approval for the equity investment of £5 million made earlier this year and has also approved the drawdown by the company of a further £7 million in guaranteed borrowings which will be sufficient to cover the company's requirements pending a final decision by the Commission on aid notification.

The situation in the international steel market continues to be extremely depressed. Recent forecasts, which revise downwards forecasts made in October 1982 indicate that world steel consumption in 1983 is now expected to be only about 1 per cent above the 1982 level, while that for the European Community is expected to be down by 1.2 per cent. The problem of over-capacity in steel production in the Community, estimated at 40 million tonnes per year, has yet to be solved and demand for steel is now — within the EEC — at an even lower level than in 1982. It is in the context of this difficult market situation that Irish Steel must export some 70 per cent of their production. It is clear that the future of Irish Steel will continue to depend on the way in which the markets for their products develop and on the costs and efficiency of the company's operation.

Since 1974 enormous imbalances have been created in the Community between supply and demand in all the main steel product categories. This excess of supply over demand, which has pushed up costs and caused prices to drop below the break-even point in many companies, and the severe competition on export markets have seriously eroded the financial viability of the European steel industry as a whole. As a result the European Commission has had to take a number of measures designed to prevent the situation deteriorating into a state of chaos and to set in place the mechanisms to adapt the structure of the industry to the new situation. The main measures currently being operated by the Commission are restrictions on investment in steel production, restrictions on State aid to steel undertakings, restrictions on steel production, measures to raise steel prices, aids for redundancy, short time working and early retirement, loans to industries which can help to replace employment lost through steel plant closures and loans to help steel undertakings to carry out restructuring plans, involving a reduction in capacity.

The present system of monitoring production and deliveries of a number of steel products, and the system of production quotas for certain steel products is due to expire on 30 June 1983. The Commission has made a proposal for the extension until 31 December 1985, of these measures but with the inclusion of plate and heavy sections in the system of compulsory quotas. In discussions on this proposal our aim has been, and will be, to ensure that Irish Steel which, carried out their restructuring plan with Commission approval, should not be prevented from being viable by the application of the measures proposed by the Commission.

This relates to the application of quotas, to the types of products produced in large quantity by Irish Steel not presently the subject of quotas. If the quotas are based on historical production trends obviously Irish Steel would be at a disadvantage because, for much of the base period, they have either not been in production or producing at a relatively low level. Therefore, the introduction of quotas at this point would have serious effects on the viability of Irish Steel one way or the other. I am hopeful that a satisfactory arrangement can be worked out which will take account of Irish Steel's position in this regard.

It will be clear to Deputies from what I have said that the difficulties facing Irish Steel are enormous and it would be misleading of me to minimise them. The company must achieve an increasing level of sales at a time when the international steel market is deeply depressed and at a time when established producers are being compelled to reduce their production capacity because of the imbalance between supply and demand.

Irish Steel now have a very modern and versatile plant and have commssioned 65 of their intended range of 85 products. As far as sales are concerned, the company have made substantial progress in the past year with the result that, in the year to 30 June 1983, the volume of sales is expected to be more than double that achieved in the previous year. While this aspect of the company's performance is encouraging, it must be pointed out that much more remains to be accomplished in relation to costs and prices and to further increases in sales, if the company are to succeed as a viable and competitive producer. The difficulties facing the company in the market place should not be under-estimated and the prospects for the international steel market simply cannot be viewed optimistically. In the interest of the taxpayer and the country as a whole both the Government and I will continue to keep the performance of Irish Steel under review. I would hope, however, that the essential performance required to safeguard the future of the company can be achieved.

I am confident that the Bill will commend itself to the Dáil and I recommend its approval.

Mr. Reynolds

It is very difficult to form an opinion of what the Minister is trying to get at here because, from his own words, it appears that this is no more than a holding operation. The Government have taken no decision on the future of Irish Steel at present. It would appear also that they are awaiting a decision from the EEC as to whether they will or will not allow the amount of aid they are proposing to give them, that that decision will be taken by 31 July next, that Irish Steel will continue until 31 December 1983 but beyond that the Minister is not prepared to say here today what will be the position.

It is a rather curious position for the Minister and the Government to take up. One would have thought that, in any holding operation — as is being proposed under this Bill — there would not be a certain lack in the information available to the Government. I do not think either the Minister or anybody else would deny that that is the case. Judging from the figures given about the steel industry it appears it has worsened since last year, when it was approximately 30 million tonnes in excess of capacity within the EEC, to what the Minister says today is about 40 million tonnes. The outlook for the steel industry is apparently very clear to the Minister, as are all the facts relating to Irish Steel. I cannot understand the Minister shaking his head because it was only this time last year that we were considering Irish Steel in this House, when very shortly after I took over as Minister for Industry and Energy the position of Irish Steel was that they had borrowed approximately £24.5 million. They had exceeded their figure in relation to bank borrowing. They were in a crisis situation and a Bill had to be introduced to give them State aid of £25 million. This amount was provided in the Estimates by the previous Government. At that time I said this situation could not continue unchecked. I set up a monitoring committee to look at the projections of Irish Steel for that year. I had lengthy discussions with the chairman and chief executive of the company. I told them there was not a bottomless purse in relation to money for Irish Steel and I said we would have to take an in-depth look at their operations.

There seemed to be a feeling that the taxpayers' money was endless and that unlimited sums were available. From May last year we monitored the operations of Irish Steel. Subsequently the Government decided, after consultations with the EEC, who were very concerned about the future of Irish Steel, to set up a joint consultancy into their operations which was to report back within three or four months. The monitoring committee were also to report to the Government before 31 December 1982.

The consultancy report came in. I got a preliminary view of that report in September because we had to put forward a conditional situation to the EEC as a holding operation until the full facts regarding Irish Steel were known to the Government. At that time the Government would consider them carefully and decide whether a package should be put forward to the EEC. A conditional holding situation was accepted by the EEC and the report came in shortly before I left office. A memorandum for circulation to all Government Departments, the normal procedure, was being put together at the time of the election. There was a change of Government after the election.

I fail to see why the Minister is not yet in a position to say where the Government stand in regard to Irish Steel. I can understand his political reluctance in view of the tragic unemployment situation that is developing in Cork city and the Cork region but what he is doing today is of no help to the future of Irish Steel or to the morale of the work force or the management. Here they are being told that if there is not a major upswing in performance between now and 31 December their future looks bleak.

I should like to ask the Minister what factors he sees that can dramatically change the performance of Irish Steel between now and the end of July or December this year? In his speech he has outlined the difficulties in relation to the steel market. We know that will not change dramatically overnight. Have the management got their hands on segments of the market? Do they hope they can increase their sales in a certain section of the market between now and the end of December? This is a short time in marketing terms, as I am sure the Minister will appreciate. It is not possible to jump in overnight into a sector of the market. The Minister could have given much more information to the House that would have given us some insight into the Government's thoughts on this matter. Many more facts could have been put before the House. Very little has been said about the report of the consultants. I know they were looking at various options.

Mr. J. Bruton

You saw the report.

Mr. Reynolds

I am surprised the Minister has not told the House about the matter. I have the benefit of having seen a preliminary report and I have a good idea about what was said. However, Deputies of the House are entitled to know the situation and I am surprised the Minister did not put it on the record of the House.

Mr. J. Bruton

The consultants reported in September 1982.

Mr. Reynolds

If the Minister wants to check the sequence of events I suggest he should look at the files in the Department. There was an EEC deadline to be met by December. As the Minister said, the consultancy was set up in June. A period of three months is a short time for consultants to get into action and report. They gave us an initial look at their report, at which time we adopted a holding situation with the EEC. Those facts cannot be denied. The final report came to me shortly before the election. That had to be considered by the monitoring committee and, as is the practice in such matters, a draft memorandum had to be prepared. Now, six months later in office with all the work done for you, having had your own opportunity of talking to the people concerned in Brussels——

An Ceann Comhairle

I ask the Deputy and the Minister to address their remarks through the Chair.

Mr. Reynolds

——it is ludicrous for the Minister to suggest he is not in a position to take a decision and that he will wait until he sees how Irish Steel perform between now and 31 December. I do not believe there will be any dramatic change, from what the Minister has told us today. I am not in possession of all the up-to-date facts in relation to that company but from a business point of view I do not see a dramatic change taking place in Irish Steel between now and 31 December. In my view the prescription given by the Minister is a prescription for a lingering death for Irish Steel.

Mr. Gene Fitzgerald

The Minister is all right but some of his colleagues would like that.

Mr. Reynolds

I am sure they would. In his speech the Minister has said that Irish Steel have over-borrowed. Yet, we introduce a Bill today allowing them to increase their borrowing from £75 million to £100 million. This Minister when he was Minister for Finance and this Government for a long time lectured this side of the House and the nation about borrowing for current expenditure. This is another exercise in borrowing for current expenditure but it is transferring the borrowing from the Exchequer to Irish Steel, a company the Minister knows are not in a position to service that borrowing.

The Minister has told us about their losses in 1982 and their projected loss of £22 million at June 1983. It is a crazy, daft decision to give such a company the facility to borrow another £25 million when they cannot service their existing debts. This is no more than a prescription for the slow lingering death of Irish Steel. Who will pay the interest, never mind the repayments? Worse than that, the Minister is coming in with a Government guarantee.

The whole matter of Government guarantees for loans in relation to certain semi-State bodies and operations like this should be called into question. The Minister and the Government have lectured the nation and this party time and again about borrowing money recklessly, about borrowing money that cannot be repaid and about getting value for money borrowed. I ask the Minister to apply the criteria he has preached on many occasions. What answer does he come up with in relation to the proposition before the House? I ask him to apply it. Will there be a return on investment? Can this company service the borrowing? Is he not transferring the Exchequer borrowing right on to the semi-State company while at the same time the Government guarantee it? If that is not an exercise against all the Minister and this Government have ever preached then I do not know what is. The Minister knows quite well that nothing will change. I heard no observations from him in relation to the items that could give Irish Steel a chance regarding their future. If I recall correctly, the consultants talked about 40 per cent ESB charges. Out of line with their competitors Irish Steel were paying 40 per cent more than their competitors in energy costs. I heard no mention of what the Minister might do about that, and he is also the Minister for Energy. That area can help the competitiveness of Irish Steel and he has spoken a great deal about Irish Steel having to become competitive. They are paying 40p a therm for gas. Maybe the Minister considers that a fair enough price, maybe not, but he does not refer to it.

I recall also that the consultants talked about the possibility of viability being at a much later stage than the Minister spoke about here today. The Minister talked about 1987 — is that right? I did not have the opportunity of the benefit of his script earlier. Was it 1986? Anyway it was around that period. I would have thought that the report suggested a couple of years later than that. I would like to know the company's view of when they see viability around the corner. I think it is on the record of this House that last year we talked about a breakeven situation in 1986-87, yet three or four months later when I monitored the performance of Irish Steel in relation to the projections we had been given earlier in the year they were a long way short on their projections. I do not know if the position has improved or worsened since then, but enough information is available to the Minister to enable him to make up his mind as to where this Government are going in regard to Irish Steel rather than bringing in a makeshift operation of allowing them to borrow more money that he knows quite well they are not in a position to service, and he knows that they are not in a position to carry on under those circumstances. He is in effect imposing a further burden on the management board and workers of Irish Steel.

If the Minister believes that Irish Steel is an industry that Ireland should have in the future and that the Cork region should retain — in the present traumatic unemployment situation in Cork you would have an argument to go on there — then why not do something sensible in relation to getting money to Irish Steel? If he believes in what he is saying, that they should be kept in operation, then they need State equity, not borrowing that they cannot service and repay. It is interesting to look back at what happened earlier this year. At one stage the Minister gave them £1 million in State equity, and he, I and everyone else knows how long £1 million would help in the dire financial situation of Irish Steel. It was followed later by £4 million. We saw every sign of Government indecision that one could look for. First he gave them £1 million, then £4 million and now, instead of State equity which the Minister should have continued if he believed in the future of Irish Steel, he takes the easy way out and tells the company to borrow £25 million, keep going for the rest of the year and we will look at them later this year. He has been postponing the decision since he came into office and he and the Government are continuing to do that here.

We all know the problems of the steel industry and that they have existed for quite a long time. We know that the best projections for the future are pretty gloomy indeed. During my short stay in the office of the Minister for Industry and Energy I made my own inquiries in relation to what the business community and the people involved in the steel industry might see in relation to Irish Steel. On my first visit to the UK I had a long discussion with Ian McGregor who is well known in the steel business. His view was that whatever chance steel had in the future was in a mini mill, a modern steel mill, but that marketing and penetration of the market would be extremely difficult. We know about the joint marketing operation with a French company. The Minister today has not given any indication of how that is working or whether it is working at all. We also know that the firm involved there was latterly nationalised. Maybe it is not operating as effectively as might have been foreseen at the start. I would like to hear from the Minister as to the present position in relation to that French joint marketing agreement. Is it proving effective for Irish Steel?

On a visit to Norway in September I had a long discussion with the man who had taken on the unenviable task of putting the Norwegian steel industry back on its feet. I had also a long discussion with the Minister concerned. The man I have referred to promised that before the end of the year he would come over and take a look at the operation on my behalf and give me what he believed would be a true and factual assessment of the situation and advice as to what he would do if he were given the responsibility for them. He was not looking for any consultancy work or anything like that. He was coming purely on the basis of assistance because there is a great deal of goodwill in Norway, in Norwegian industry and in the Norwegain Government towards development in Ireland and he was only too happy to spend a week or two over here and have a look at this. With the change of Government he may or may not have come. I do not know.

On my last visit to the US in October I met two senior vice-presidents of US Steel. While they were throwing up their hands in anguish at the state of the steel industry, nevertheless they too said that whatever chance a steel mill had in the present state of the market, it was the modern steel mill that had some chance of success, provided costs and manning were right and marketing was strong. I asked them if they would be interested in having a look at Irish Steel or any sort of joint package or joint venture, as I had mentioned in other areas also. They said that in the present situation they would not, but they would be only too glad to provide any help or technical assistance that might help Irish Steel out of its present situation.

I was prepared to go to any lengths to find out what the people in the market place felt about the future of Irish Steel, because the decision is a big one. A great deal of taxpayers' money has been invested in Irish Steel, there is quite an amount of expertise in the work force, and this is not a decision that anybody would take lightly as to where the future lies. However, in this situation the Minister apparently is trying to put the gun to their heads and say, "We are giving you the opportunity to borrow money to keep going and if there is not a drastic improvement in your company's performance between now and 31 December it looks as if all is up for you". That is an impossible position to put Irish Steel into.

I have outlined the areas that would help them in their efforts to become competitive, such as a reduction in their ESB charges of 40 per cent to put them in line with their competitors, and maybe a reduction in the charge for gas although probably that is not a major factor. I have mentioned the consultants' views that I am aware of in relation to the manning levels, comparatively speaking with their competitors in the market place. The whole area must be looked at to see what can be done to improve it. Apparently the Minister is not taking any steps within his power or the power of the Government to improve that situation and to give Irish Steel the opportunity of improving themselves. He is putting them in the position that they will not be able to improve themselves and, furthermore, more and more taxpayers' money will be lost in the process. If, as it appears this Government have made up their minds in principle to close Irish Steel, then they should have the moral courage and honesty to come out and say so and not give them any more money. However, the Minister is not saying anything one way or the other. He is saying that if the EEC have a decision by 1 July the Government are not bound to go along that road. They have their options open. All they say is that, unless performance dramatically improves between now and 31 December, they do not see much future for Irish Steel. That is postponing decision day. The Government have been in office for six months and have had the opportunity to study all the facts. They should be in a position to make up their minds and give a decision. Coming in here with the minimum of information is not becoming to a Minister who talked so much about Dáil reform, the effectiveness of this House and what we should and should not do.

There is an enormous amount of taxpayers' money involved. The losses this year will be somewhere in the region of £21 million. How does that line up with the corporate plan which the company had this time last year? The cost of closure — £100 million — was mentioned. Are these the consultants' costs, the company's costs or the Minister's costs? Could we have a breakdown of figures? It would be interesting to know what size of redundancy payments we are talking about. We heard last week, in a different debate, that they were being offered a half week's pay for every year of service.

Mr. Gene Fitzgerald

We had some success as a result of our Private Members' motion.

Mr. Reynolds

Was this figure mentioned to prove that it is as cheap to keep Irish Steel open as to close it? I do not know whose figures they are and it is a bit naive to come in here and toss a figure of £80 million or £100 million at us. We are entitled to more information. The Minister and the Government should think very seriously about what they are doing here. They are tying a noose around the neck of Irish Steel. They are not taking the necessary decisions to enable Irish Steel to prove themselves in the market. This is an efficient, modern plant and surely the percentage of the market that Irish Steel needs is so minimal that there must be every reason to believe that marketing experts can be found to sell it? If not, one must seriously question the ability of the management.

There is another way into the market — piggy back on another firm who have entry into the market. That is a well known phrase and it is a very common practice. The way to break into highly competitive European markets is to get a joint venture in the marketing area with a stronger company. There are markets for very heavy components that could marry the marketing of Irish Steel products which are minimal in relation to the total market place. The production of Irish Steel could be geared to tie in with a very strong company in that market. I do not know whether this has been tried but it is one of the areas I would have pursued if I had remained in office because it is a successful way forward for many companies who are weak in the European market. Has that course been tried and, if so, with what result? There is always a small opening in the market which can be exploited by an aggressive marketing team. What segment of the market are Irish Steel going for? What has been the result of the joint venture with the French company, especially since they have been nationalised? Have any approaches been made for a joint marketing operation or a piggy back operation with another company? Has the Minister taken any decisions in relation to production costs to make them more competitive? Has he any intention of reducing ESB costs which are 40 per cent higher than those of competitors?

There was another assumption made by the consultants that there would be an increase of 10 per cent in prices over the July figure of last year and, furthermore, that there would be an allowance made in the projections of 2½ per cent rebate to allow Irish Steel marketing strategy to penetrate the market. What has happened in relation to all those areas? We must have the answer before we know whether the Government are right or wrong in what they are doing. This is a holding operation. We believe that approaches could have been made and that Irish Steel could have been directed on another road. They have not been given that opportunity and all we have heard today is that another £25 million will be borrowed which will keep them going for this year. There must have been more than one option in the consultants' report but we did not hear about them. Is the Minister saying that Irish Steel can be viable in 1986-1987 and, if so, on what does he base his assumption? Are the company saying it? Are the monitoring committee saying it or is it the consultants' view? I should like to know the answer because, from what I recall, it will be a long time before they are viable, but it is six months since I was in office and perhaps there is more up-to-date information. The Minister's decision is bad; he should have given the company State equity if he believed in their future or, if he did not believe in their future, he should have had the honesty and courage to stop borrowing for day-to-day expenses. That policy is against what the Minister has been preaching since he came into office. Perhaps it is the pressure from Cork Deputies that is forcing him to do this.

Mr. Allen

I have been reading Deputy Reynolds's speech when he, as Minister, brought in a Supplementary Estimate for Irish Steel and, at the same time, a Supplementary Estimate for the National Enterprise Agency, and I realise now why he is enjoying the luxury of being in Opposition. Of course this is a holding operation but, in his speech last year, Deputy Reynolds said he had given long and careful consideration to the financial problems of Irish Steel and he said that the present severe budgetary problems and the uncertain future of the steel market in general made it necessary to hold to an absolute minimum the amount of money paid to Irish Steel.

Mr. Reynolds

That is completely different.

Mr. Allen

It is hard to understand how some people can speak uninterrupted for 40 or 50 minutes and another speaker is interrupted every second.

An Ceann Comhairle

The Chair will see that nobody is interrupted.

Mr. Allen

Every Member will have a chance to put his point. The Minister said that, for the reason given, the Government had decided to provide the company with sufficient funds to enable them to continue in production for the next year only.

Mr. Gene Fitzgerald

That is right.

Mr. Reynolds

Sure.

Mr. Allen

It is holding operation.

Mr. Reynolds

That is quite clear.

Mr. Allen

The position at present——

Mr. Gene Fitzgerald

It is for a 12-month period.

An Ceann Comhairle

The Deputy was allowed to make a speech without any interruptions and he should allow Deputy Allen to do likewise.

Mr. Gene Fitzgerald

All right.

Mr. Allen

The Deputy says that the morale of the work force in Irish Steel will be badly affected by Government policy. I want to refresh Deputy Reynolds's memory. It is well known in Cork that Deputy Reynolds and his Cabinet had decided, before events took over, to close Irish Steel and this was reflected in a speech by the Deputy in Bantry earlier this year in which he said that he had come to the conclusion that Irish Steel were to be closed.

Mr. Reynolds

On a point of order, I do not want to become involved in any cross-talk. However, the Deputy should be accurate in what he says; otherwise he will bring on interruptions. He has not said what I said. He should quote the newspaper article.

An Ceann Comhairle

That is not a point of order, Deputy. The House is entitled to peace.

Mr. Reynolds

If the Deputy wants peace in the House he should be accurate in quoting from the newspaper article.

Mr. Gene Fitzgerald

On a point of order, in my experience Deputies in this House, when referring to newspaper articles, are asked for the source of the quotation. That has always been my experience and I hope it applies equally to both sides of the House.

Mr. Reynolds

The Chair should ask for the source.

An Ceann Comhairle

The Deputies are being disorderly. A Deputy must give a reference if he purports to quote. If he does not quote, or is not purporting to quote from a specific document he need not give the reference.

Mr. Reynolds

He has purported to quote what I said.

An Ceann Comhairle

I understood that the Deputy made reference to a speech that was made some place. That is not quoting.

Mr. Reynolds

What speech?

An Ceann Comhairle

Please, Deputy. You are being quite unreasonable.

Mr. Reynolds

All right.

Mr. J. Bruton

Deputy Allen has a large quantity of bricks to throw at Deputy Reynolds.

Mr. Allen

It is well known in Cork that a decision had been made by the previous administration which affected the future of Irish Steel. That was reflected in a speech made by Deputy Reynolds early this year. That is all I am saying.

We are all concerned about the future of the Irish Steel work force. That work force of 630 have gone through a traumatic time since 1977 or 1978, when the construction work started on the new mill. The commissioning of this universal rolling mill took some time and everybody acknowledged that management and work force went through difficult times with short-time lay-offs during the commissioning process. The plant and its work force have come through that experience honourably. The largest task then facing Irish Steel was to win back old markets and open up new ones. However, this was during a recession, with a depressed market place. Irish Steel found it difficult to gain a foothold once again in that market place.

At last, Irish Steel are progressing well with a highly versatile plant. They have changed their galvanising sheet process to a more modern type which has resulted in a great advantage to our agricultural industry. The 1982 loss amounted to approximately £22 million, but production was low because of the commissioning process. The industry was also affected by the prevailing interest rates. Productivity has increased between 1981 and 1982 from 9,000 tonnes to 61,000 tonnes. The Minister said that losses will continue up to 1985 and borrowings up to 1984 and that the continued borrowings will not solve the industries problem.

Deputy Reynolds mentioned energy charges. From memory, costs for gas make up 3 per cent of the overall production costs and for electricity 20 per cent. I have not had an opportunity to check out these figures and would ask the Minister to refer to this matter when replying. Gas energy costs at 40p per therm are away above those charged to other industries here. Would the Minister let us know what discussions have taken place with An Bord Gáis in relation to the price of gas and with the Electricity Supply Board in relation to their charges.

Last year, in our debate on the 1982 Estimates, we dealt with the importation of steel, figures being produced in relation to importation from third world countries and the eastern bloc, Since then, a problem has arisen over the United States Government taking action against EEC countries in relation to the dumping of steel. I would like to know what discussions have taken place since last year at Commission level in this regard, especially the importation of steel form third world countries. Is there any way of stopping this importation of cheap steel? There may be reciprocal agreements in relation to other products. This is an important issue and it is hard to explain to the Irish Steel work force why Argentinian and Far Eastern steel is used here.

The Minister told us that steel consumption had dropped by 1.2 per cent within the EEC over the last 12 months, whereas the worldwide demand has increased by 1 per cent. If taken in isolation, these figures are not too encouraging for the future of Irish Steel. The Cork area as a whole has suffered over the last three years with the demise of many traditional industries. A campaign has been waged in Cork in recent months alleging that this Government have commenced to downgrade Cork. The people who make these allegations should remember that in my constitutency we have seen many traditional labour-intensive industries being run down over the last ten years. The Government were not in power for much of that time. We must remember that unemployment in Cork is above the national average and in that context I ask the Minister to take every step necessary to ensure the future of Irish Steel.

The Minister should make the House aware of the exact position of Irish Steel. At what stage is the examination of the consultancy report? Have any decisions been made? The morale of the work force in Irish Steel is not great. The introduction of this estimate, like last year's one, is merely a holding exercise. We should try to give some encouragement to the work force. There are indications that the world wide recession will be soon over and there will be a demand for steel and other products in the coming months. I appeal to the Minister to consider the future of Irish Steel. I recognise that a cash injection must be given to keep the industry going. I ask the Minister to give some form of encouragement to the work force in the near future.

Mr. Gene Fitzgerald

I thought Deputy Barry might have wished to avail of the floor before me. I offered purely as a gesture to a Cork colleague and no more than that. I welcome any assistance to employment in the Cork area. Despite the limits which this Bill imposes on Irish Steel, I share my colleague's concern that there will be an extra burden placed on the company because of the financial interests repayments. This is a company in the Cork area which, despite the weak efforts of the previous speaker to indicate to the contrary, is beleaguered and threatened by the attitude of the Government. I emphatically deny the suggestion made by the previous speaker regarding decisions taken by the Government of which I was a member in relation to Irish Steel. He was incorrect in his reference to what Deputy Reynolds said in Bantry. Deputy Reynolds said that it was his understanding that the present Government had taken the decision.

I thank the Minister for his consideration to date about this industry. I heard some of his outbursts when he was Minister for Finance. He is obviously susceptible to strong right wing approaches. I want to strenghten his arm to resist the current campaign being waged against some industries to which Deputy Allen referred.

In the current issue of Success there is an article by Robert Merchant. I want to steel the Minister's hand, if “steel” is the correct term to use in this debate about Irish Steel.

Mr. J. Bruton

The Deputy's tongue is now well placed in his cheek.

Mr. Gene Fitzgerald

I do not know what the Minister is referring to but if he wishes to draw me on tongue-in-cheek I will spend the next hour drawing his tongue and the Taoiseach's tongue in cheek. I am endeavouring to assist the Minister because from what I hear the Minister may well be in a difficult position. I want to strengthen his hand. The summary of the article states: "The Irish economy dies of commercial cancer because our illustrious politicians haven't the guts to pick up the surgeon's knife." I respond to that by saying doctors differ and patients die. They die from various diseases, surgeon's knife and otherwise. This article is one of a number of similar articles which I have read recently. Many of them were inspired by the Minister when he was Minister for Finance. They refer to the difficulties of State enterprises such as Irish Steel Holdings. In Cork harbour we have a number of these industries and it is understandable that Deputies on all sides would endeavour to keep them. I offer no apology to people like Robert Merchant who is obviously aiming his article at a readership who like that type of line. He states: "But there is a large element of posturing in his recent statements"— that refers to the Minister —"which suggest he is not half the man that Mrs. Thatcher is".

Mr. J. Bruton

Barry Fitzgerald.

Mr. Gene Fitzgerald

Let me finish. "If Bruton could nationalise Clondalkin within a matter of weeks in response to political pressure, is there any reason to believe he has the guts to take on the three white elephants that underpin Cork's tottering economy — Whitegate, NET — Marino Point, and Irish Steel". That is unfair and terrible journalism. I do not deny the gentleman's entitlement to print that. As a politician I have the right to defend the political approach. He has taken a completely economic approach to it, one of financial rectitude and getting the arithmetic right. However, there are other issues involved.

In his speech the Minister spoke about the fact that earlier this year the Minister for Finance invested a further £5 million in the share capital of Irish Steel. He stated that in addition the company have recently negotiated a loan facility for £3 million and are now in the process of negotiating further borrowing amounting to £17 million to cover their requirements until early 1984. This is the kind of inconsistency that has prevailed in relation to Irish Steel, not only this year but for quite a while and it does not help the company in their present loss-making situation. The Minister has told us that their losses amounted to almost £23 million at the end of June last and that their estimated losses for this year are of the order of £21 million. I should like the Minister to tell us what the interest charges are within that loss-making situation. If we are to have regard to the figures given here, the borrowings will increase by £20 million in terms of the company's present requirements. Obviously, this will contribute to the loss-making situation. It is the sort of situation that has hindered the development of Irish Steel in the present very difficult European situation. I was the Minister with responsibility for social affairs when Luxembourg, because of its heavy dependence on the steel industry, and France to a lesser degree, suffered very big redundancies and cutbacks in production because of the problem of the world steel market.

I support Deputy Allen when he says that we have been somewhat too kind in the area of imports from places that are of little assistance to us. This situation hinders companies such as Irish Steel. The company employ 630 people. From long before the time I entered political life I have been associated with the company. During the major development of Haulbowline Island in the mid-sixties my work involved me in almost daily contact with Irish Steel. A year or two later the bridge was built which linked the island to the mainland of my constituency. I know personally a very big proportion of the work force at Irish Steel. I know also many of those who were employed there but who have lost their jobs. Among those were many fathers of families who were the only wage earners in their families. Obviously, there are a large number of people depending on the 630 people remaining with the company. In addition there are a big number of service jobs depending on that industry. I am sure the Minister will agree with me that one service job per one production job is a conservative ratio in this connection. In all, 1,300 jobs are dependent on Irish Steel in the Cork area. This is why it is extremely important that we make every effort to protect employment there especially having regard to the very depressed employment situation in Cork. The May figure in this respect for the city and county region is 19,100. That is the biggest problem facing us whether we are in Government or in Opposition.

This is not the time for talking about examinations. Our young people have their own pressures and problems in that regard during this month but let us talk about the people of my generation who depend on Irish Steel for their livelihoods. These people would find it extremely difficult to find alternative employment.

The question of Irish Steel has been before this House on many occasions. I accept that Mr. Justin Keating, as Minister for Industry and Commerce, was the one who first sanctioned the plans in 1977. His decision is referred to in a rather derogatory way in the article I have mentioned. Our Government in 1979 made the moneys available. There had been delays in the intervening periods. We now have a very modernised and up-to-date mainland plant, one which I am confident can contribute to our economy if given a reasonable chance.

When we talk about losses we must ask ourselves what exactly we are talking about. Interest charges are a major problem where capital investment is concerned. Must we find a new way forward for setting up our State and public companies? We must look for possible alternatives though I accept that these may be few because of the way in which the money market is governed. On the other hand, there is no investment indicated in this Bill for Irish Steel. Deputy Allen referred to a cash injection but what the Minister says is that he is allowing the company to borrow further. I welcome that for the reasons I have stated but I am concerned that it is too short a term and that we are placing an added burden on the company that will make it more difficult for them to achieve positive results and will be grist to the mill for the sort of article I have referred to. For management to be attacked continuously in the way in which they are attacked in that article is not good because it has an effect on their morale and ultimately on the company and on the most important aspect of it which is the maintenance of employment.

Cork Deputies of both Labour and Fine Gael trooped through the lobbies last week to vote against a Private Members' motion tabled by us in an effort to have orders placed with Verolme Cork Dockyard. I do not wish to move Private Members' motions here regarding Irish Steel but I urge my Cork colleagues to be careful and to keep pressure applied on the Minister in order to ensure that none of his Cabinet colleagues harbour bad ideas about Irish Steel. We have a commitment to the Cork Harbour industries and we will continue to have that commitment.

The Minister concluded his statement by saying that:

Irish Steel now have a very modern and versatile plant and have commissioned 65 of their intended range of 85 products. As far as sales are concerned, the company have made substantial progress in the past year with the result that, in the year to 30 June 1983, the volume of sales is expected to be more than double that achieved in the previous year. While this aspect of the company's performance is encouraging it must be pointed out that much more remains to be accomplished in relation to costs and prices and to further increases in sales if the company are to succeed as a viable and competitive producer. The difficulties facing the company in the market place should not be under-estimated and the prospects for the international steel market simply cannot be viewed optimistically. In the interests of the taxpayer and the country as a whole both the Government and I will continue to keep the performance of Irish Steel under review.

These are the sort of damaging comments that are undeserved so far as the hardworking management in some of our State companies are concerned. There may be weaknesses. No organisation is perfect, but these companies were set up for specific purposes. They are going through difficult times. The line of thinking enunciated by the Minister is permeating many Government Departments, many political minds and the minds of people who write articles such as the one I have referred to. One would think from this article that all was perfect outside the public sector. This is not and never has been the case. There are mistakes in every sector but successes also and I welcome successes in any sector. There are references to a "windy" Taoiseach and I would be worried about his commitment to industries such as this.

Irish Steel are ideally suited for inclusion in any extension of the Worker Participation (State Enterprises) Act. During my period as Minister a review of that Act was being carried out and I am sure it is still in progress. I look forward to supporting the Minister for Labour when the matter comes before the House. I was complimentary earlier to the former Minister for Industry and Commerce, Justin Keating, but I would suspect that it was his strength pitted against the then Minister for Labour which prevented Irish Steel from inclusion in the list of enterprises covered by that Act. They were in my opinion ideally suited for such inclusion because all their workers were in one location and I would urge the Minister to think seriously as to whether the advice given then was correct. Certainly I would question it.

I know many people working in Irish Steel at all levels and their only concern is the future of steel. They realise that their own personal well-being is tied up with the future of the company and they have a generous commitment to that company. I am sure that it has some weaknesses, as have all organisations but the ideas of the workers could be channelled through to make a contribution.

My colleague, Deputy Reynolds, probably made more progress in trying to curb imports than any other holder of that office during the past decade. He made great efforts to prevent imports and foster import substitution. Why do we take such a lenient view of imports which are damaging our own State enterprises and threatening jobs? Why do we not adopt a more aggressive approach? Let us look at France and Canada and see what they are doing. There is an obligation on the Minister to continue the aggressive policy begun by my colleague, without much commitment from people in high places.

Mr. J. Bruton

By Deputy Reynolds' friends in high places?

Mr. Gene Fitzgerald

No. The Minister's humour does not do justice to this serious matter.

Mr. J. Bruton

I am trying to find out what the Deputy means.

Mr. Gene Fitzgerald

I hope the Minister's commitment to stopping imports is more serious than those frivolous remarks would indicate. A former Fine Gael Minister referred to this and many other industries as the frivolous industries of Cork Harbour. I hope that sort of mentality is not still permeating through the Government.

The number of employees in Irish Steel has reduced from a peak of 1,026 in 1972 to 630. This represents a cut-back of approximately 40 per cent over a ten-year period and it lessens the opportunity of any further cut-backs without imposing severe hardship. The average age of workers is much lower now because the older people would have been among those who became disemployed over the years.

Irish Steel could only be improved by an inclusion in the worker participation legislation. The vast majority of workers live in the immediate region and are interested in continued employment there. I have had a number of meetings with the worker directors of other State boards. Where there have been difficulties they may have been helpful in some way but certainly the scheme has not done any harm. We are talking about Dáil reform.

Mr. J. Bruton

We are talking about Irish Steel.

Mr. Gene Fitzgerald

Dáil reform is a very sensitive subject.

Mr. J. Bruton

I am glad I have engaged the Deputy's interest in this subject.

Mr. Gene Fitzgerald

The Minister has been talking for some time about Dáil reform and I know the progress he has made to date and the commitment he has to it. He is now introducing a temporary measure to enable Irish Steel to borrow further in order to maintain their position until early 1984. I am entitled to ask what the Minister sees beyond that time. Deputy Reynolds has asked him already to spell out the contribution to losses represented by interest charges. What is the scenario? I would ask the Minister to give a commitment to the continuation of Irish Steel. He talks about £80 million or £100 million which it would cost to close the company and Deputy Reynolds has asked for a breakdown of that figure. We must also consider the trauma caused by job losses.

We raised the issue last week in a Private Members' motion on Verolme. Some progress was made, though we did not have the support of the Cork Deputies on the other side of the House. I hope we do not have to resort to the same type of motion in regard to Irish Steel, that the Minister will help that company to make further progress, particularly in regard to the placing of orders. I can assure him that he will have the full support of all Deputies on this side. We hope the management will not find themselves beleaguered by comments of the sort I have referred to in articles which do not help managements, particularly when they are in a loss-making position. That creates a climate of a certain type in regard to companies such as this and I know the Leas-Cheann Comhairle will agree that there is danger created by such a climate.

I can tell the Minister that the closure of Irish Steel should not be contemplated. I am sure he is not thinking about it and I request him to fight his colleagues in the Government so that this company will be saved. I appreciate that Fine Gael Deputies could not vote with us last week on the motion on Verolme. I hope that motion succeeded in progress being made in getting that company some orders and, as I have said, I do not think we will have to resort to a similar motion on Irish Steel.

Deputy Reynolds asked the Minister to clear some points arising from his opening statement. For instance, it is not clear what the EEC will be taking on next July. I accept that there is urgent need for this legislation. The £20 million will keep the firm going. I understand that the legislation must be enacted before the EEC decision on 1 July. Is there some other angle——

Mr. J. Bruton

It is a generalised EEC date——

Mr. Gene Fitzgerald

Does it relate to steel throughout the Community?

Mr. J. Bruton

No aid can ge given later than 31 December 1984. It does not bind us.

Mr. Gene Fitzgerald

I appreciate that, but what worries me is what inspired such articles as the one I have mentioned. Are they home inspired, or where does the inspiration come from?

Mr. J. Bruton

I did not inspire that article.

Mr. Gene Fitzgerald

I did not suggest the Minister did. It is not in the Minister's line. The article states that the Coalition, tub-thumping at home and sweet talking in Brussels, are about to pour £90 million of taxpayers' money into the company. It is a pretty hard-line attack on companies and on workers, who also have a right. I do not know the gentleman responsible. He is probably writing for a readership who would agree with most of what he says.

Mr. Reynolds

He is well-named — he is a merchant all right.

Mr. Gene Fitzgerald

We cannot afford to lose even one of these 630 jobs in Cork. We heard about the need to curb imports, and Deputy Allen agreed. I ask the Minister to look very closely at this. When we were in Government, the co-operation of the Ministers for Industry and Energy, Trade and Commerce, and the Environment, resulted in the setting up of a working unit to watch the use of imports in State enterprises and Government Departments. This needs watching. This is extremely important particularly in the depressed building industry. That industry needs further injections. It is a great user of reinforced steel. I do not make allegations because I do not have any special knowledge but we should guard against the use of imported steel in the State-assisted construction and building industry, a big user of steel. I am pleading for an industry which is particularly depressed in Cork.

I have covered most of the points. However, I am appealing again to the Minister to be a little more positive. I welcome this measure because it will help to continue employment in the company. I am concerned at the additional burden this further borrowing will place on the company, which I am afraid will further encourage or aggravate the attacks being made on it. Therefore, the Minister has an obligation to spell out clearly how much of the company's losses are related to interest payments and how much interest payments will amount to in the coming year. I am asking the Minister to say positively that he believes in the future of Irish Steel. Whatever some of his colleagues might say around the Government table, the Minister will have our support, and the workers at Cork harbour will appreciate it.

Miss M. Barry

I firmly believe there is a future for this company. I say that for several reasons. It has the most modern plant of its kind in the world. It has the advantage of being able to produce a range of 85 products, more than any other plant in Europe. At the moment only 65 are being produced but the company is gearing itself for the full range of 85 products. The company's sales record has been very good. It is estimated that Irish Steel have doubled their sales in the past year. That is very heartening for the people of the area. In Cobh they have a very well-trained, skilled work force. They are a very responsible group of workers. What Deputy Reynolds seemed to be suggesting, not to give loan facilities of £25 million, would be ridiculous.

Mr. Reynolds

Give Irish Steel equity or do not, but do not make their position worse.

Miss M. Barry

We are trying to better their position because we believe in their future. To pull the carpet from under the company now would be detrimental and a decision the Government would live to regret.

Mr. Gene Fitzgerald

Deputy Reynolds never made that suggestion.

Miss M. Barry

I found it difficult to understand what Deputy Reynolds was trying to get at and if Deputy Reynolds was in Government I do not think we would know what he was trying to get at. He appears to be jealous of the fact that we are providing loan facilities of £25 million to ensure the future viability of Irish Steel and the employment of the 630 workforce together with the spin-off jobs.

Mr. Reynolds

If the Government decided that, I would be happy to accept it but they have not.

Miss M. Barry

I see every reason why we should provide the loan facilities and I am glad Deputy Gene Fitzgerald agrees with me. I welcome the Bill.

Minister for Industry and Energy (Mr. J. Bruton)

I should like to thank Members for their co-operation in dealing with this legislation. Deputy Reynolds suggested that, rather than having the interest borne by the company through allowing them to undertake the loans, it would be better to give them equity. The Deputy omitted to point out, although he is well aware of the position, that if the State gives the company equity the State will have to pay the interest on the money. It is not as if the State has a budget surplus and could put money it has in reserve into Irish Steel from which it would not be paying interest. Any money we would put into Irish Steel as equity instead of allowing them to borrow the money would be money on which the State would have to pay the entire interest.

Mr. Reynolds

Surely the Minister does not believe that?

Mr. J. Bruton

If Irish Steel borrow the money and get into a profit situation——

Mr. Reynolds

A big question.

Mr. J. Bruton

——they will then be in a position to make a contribution towards the payment of the interest. I do not see the distinction as starkly as Deputy Reynolds between equity and loan facilities.

The idea of a piggy-back operation was suggested by Deputy Reynolds wherein they would market through somebody else or in co-operation with somebody else. I am not sure whether the Deputy had in mind the arrangements that have been entered into with the French firm or something else. The arrangements with the French concern are working reasonably well from the point of view of the sale of Irish Steel products in France. However, the French company have not been able to supply their products for sale on the Irish market from time to time. That problem is not a major one. The arrangements are working reasonably well. In fact, sales are not really the problem. Sales are up in the year ending June of this year by 10 per cent in volume terms on Sofresid's projections but the unfortunate thing is that prices are down by 10 per cent on Sofresid's projections. What is going astray is not actual volume sales but the price one is able to get for them. While sales are, to some extent, within one's own control in that one can go out and work hard to get business, but the going price declines due to a variety of factors most of which are external to Ireland — Ireland is only producing about 0.2 per cent of European steel — one is not in a position to do as much about that problem as one would be if it was simply a question of getting volume sales up and increasing the market share at a reasonable price level.

I was not sure about Deputy Reynold's recommendation; in fact, he appeared to be careful not to make a recommendation as to what the appropriate decision would be in regard to——

Mr. Gene Fitzgerald

I will make one.

Mr. Reynolds

I will make that later in case the Minister did not understand what I said.

Mr. J. Bruton

There was an interesting contrast between the speech made by Deputy Gene Fitzgerald and that made by Deputy Reynolds but that is perfectly reasonable in their position in Opposition.

Mr. Gene Fitzgerald

There was not; we were consistent.

Mr. Reynolds

If the Minister gives us the information we require we will give him all the recommendations he wants.

Mr. J. Bruton

Deputy Reynolds asked me to outline facts we do not know now but expect to know later in the year to enable us to make a decision that we cannot make now. Two basic elements require to be examined. First the possibility, which is the subject of active discussion, of reducing the energy costs paid by Irish Steel. Reference has already been made in the debate to problems that exist in this regard. Active discussions are taking place but, naturally, this has to be done in a way that is consistent with normal competitive practice in this market. Secondly, there is the question of sales. It could be argued that what we will know about sales trends by the end of the year is not going to be immeasurably better than what we know now but it will be somewhat better. We must recollect that we are dealing with a plant which is only gearing itself up to its production capacity; it is only producing 65 of the 80 products it is capable of producing at present. It is a plant which is in the process of reaching its technical efficiency level and hence it is difficult to make a final decision on whether it will be able to meet viability. That is the reason why we are engaged in what has been correctly described by Deputy Reynolds, and others, as a holding operation.

Mr. Gene Fitzgerald

When will the Minister be able to announce a decision?

Mr. J. Bruton

The aim of our original decision was to allow the company to continue to operate up to the end of the year with a view to making a decision then.

Mr. Gene Fitzgerald

That is pretty rough.

Mr. J. Bruton

We should recollect that the problems Irish Steel face relate to a considerable underestimation of the cost of the project initially. When the project was undertaken initially the estimated cost was about £40 million, including the initial working capital to get it going, but the actual cost turned out to be about £80 million. A large part of the problem of Irish Steel is the interest rates being paid on the money that was borrowed to finance the extra cost over what was budgeted for building the plant. I could spend some time dealing with the factors involved in that serious underestimation of the cost of this plant but I am not sure it would serve any great purpose at this point.

Mr. Reynolds

It needs to be done now and again.

Mr. J. Bruton

We have to ensure that it does not happen again. As Minister for Finance I initiated a measure which will be a contribution in this regard, the commissioning of a report on cost-overruns in major capital projects. That report has been approved for publication and will be issued shortly. It will provide new guidelines for State companies to help them avoid the type of overrun which can totally throw off course a project which, in the first instance might appear to be a reasonable bet although one can never be certain about any investment one is making whether it is in the public or private sector. A project can cost twice what was budgeted for and a decision which might appear to have been a reasonable decision at the time can become a completely foolish decision in retrospect. While it is impossible to unscramble the egg, we should learn from the lessons of Irish Steel, the IIRS building and other similar projects.

Mr. Gene Fitzgerald

There were peculiar factors involved——

Mr. J. Bruton

I did not interrupt Deputy Fitzgerald except in a helpful way.

Mr. Gene Fitzgerald

I want to help the Minister too. I do not want him to be seen as blaming all the semi-State boards for everything——

Mr. J. Bruton

In order to avoid this sort of thing happening again I am meeting all the State company chief executives this week——

Mr. Gene Fitzgerald

I thought the Minister had met them already.

Mr. J. Bruton

——to discuss approved capital controls on State companies and the adoption of corporate plans. This will ensure that company management and board must say what they hope to achieve over a period so that they can be tested against their own predictions. I do not believe it is reasonable for the Government of the day to be the sole arbitrators on State companies' successes or otherwise. State companies should become the arbitrators of their own success, setting out their targets in their annual reports and having to justify their achievement or non-achievement of those targets in the following years. This approach will make a valuable contribution towards the improvement of performance by companies in the public sector.

I have already mentioned that further discussions are taking place in regard to energy costs and that we are monitoring sales to see how the company's performance can be improved, and I urge management and workers to make every effort to improve performance to the maximum extent in the period ahead so that the company's viability can be proved to the taxpayer, the person who ultimately has to put the money in or guarantee the loans being undertaken by the company.

A number of questions were raised. Deputy Allen asked about imports from third countries. There have not been problems in this regard since last year when there were cheap Argentinian imports. The EEC now have 14 steel agreements with third countries, determining quantities which may be imported from those countries. We alone have not the capacity to prevent steel imports. This matter is basically regulated through the European Coal and Steel Community. However, as I indicated, arrangements have been made in this regard.

Mr. Gene Fitzgerald

A stock answer.

Mr. J. Bruton

A similar point was raised by Deputy Fitzgerald. We are in the Common Market and the Community has given us substantial assistance towards building up the Irish Steel plant. The Community as a whole is trying to cope with the situation where there is very substantial over-capacity in the European steel industry. As a new producer, it is in our interests to co-operate to the full in measures being taken by the Community to deal with the European steel industry in such a way that reasonable price levels can be obtained for steel. That can only be done by a major restructuring of the industry at European level and it is not possible to foresee good prices for steel without some considerable measure of success attending the Community's efforts to restructure the industry on a Europe-wide basis rather than in respect of Irish Steel alone. Those are most of the points raised——

Mr. Gene Fitzgerald

There were a few others, the interest charges particularly.

Mr. J. Bruton

Interest accounted for £11 million of the loss of £21.7 million in 1982.

Mr. Gene Fitzgerald

What are the additional costs?

Mr. J. Bruton

If we put in equity all that happens is that the Minister for Finance pays the interest rather than the company. As the money is being used for the operation of the company, it is more logical to have the responsibility for meeting the interest resting with the company rather than with the taxpayer. I do not see anything wrong about that. It must be recognised that the borrowing, as a result of the statute we are passing here, is taking place with the benefit of a State guarantee and terms have been obtained for those loans which would not be as favourable if there were not a State guarantee. It is not as if the company were not getting a considerable benefit by the passage of this legislation, because the guarantee allows them to obtain more favourable terms.

Question put and agreed to.

Agreed to take remaining Stages today.