Vol. 362 No. 10
I move amendment No. 1:
1. In page 3, subsection (1), line 19, to delete "the Companies Acts, 1963 to 1985;" and substitute "the Companies Act, 1963, and the enactments extending or amending that Act;".
This amendment is being inserted to correct the citation in the Companies Act, in page 3, subsection (1), line 19. The draftsman is of the opinion that the previously used citation is not correct and the citation I am putting in is the one which, in the view of the draftsman, is correct.
Is it correct to say that the initial wording could be interpreted as excluding a venture capital fund?
This amendment relates to section 2.
My apologies, my comment relates to another amendment.
My amendment is a technical one.
I move amendment No. 2:
In page 4, lines 33 to 43, to delete subsection (1) and (2) and substitute the following subsection:
"(1) Whenever an order is proposed to be made under sections 3 or 15, a draft of the order shall be laid before each House of the Oireachtas and the order shall not be made until a resolution approving of the draft has been passed by each such House.".
The purpose of the amendment is to ensure that any alteration in sections 3 or 15 would have to be approved by a positive resolution of the Minister being approved by the House. In my experience here I sought to have amendments to regulations relating to fuel allowances discussed in the House but I found it impossible to do so under Standing Orders. If subsection (1) is allowed to stand the Minister can delete or add companies to the First or Second Schedule simply by presenting his order in draft, tabling it in the House and, if a resolution is not passed within 21 days annulling it, the order will stand. Under Standing Orders the only opportunity a Member has of presenting a resolution seeking to annul that order is in Private Members' Time as the Government, as a matter of precedent, have refused to allow resolutions of this nature to be taken in Government time.
The net effect is that, unless the major Opposition party are prepared to table a resolution and have it debated during the three hours of Private Members' Time each week, then individual Deputies who are not associated with that party are not in a position to have any regulations which are brought in under this kind of order annulled or even debated. I draw attention to the earlier experience in relation to the fuel allowances where an order was made which we could not debate despite strenuous efforts and appeals, both to the Government and the main Opposition party. In October, the Minister for Health found it necessary to table another amendment to his original amendment because he found his first amendment to be faulty. There is no doubt that, had the debate been allowed, that fault would have been seen, recognised and deleted in the first place.
As a matter of principle Deputies should be able to discuss orders made by Ministers if they so wish. As Standing Orders stand at present, the kind of order proposed to be made under section 4 (1) will not be debated unless the main Opposition party of the day permit it to be done during Private Members' Time. I have examined the Official Report and over recent years there has never been such a resolution tabled by that party. That is why this amendment has been tabled. Also, whether the Minister should add State-sponsored bodies or State-sponsored commercial companies to his First or Second Schedule is a matter of legitimate concern to Members of this House. Consequently section 4 (1) should be altered as proposed in the amendment.
First, I think that the Deputy would be importing an unduly bureaucratic procedure into what should be a simple process. All that this order-making power allows is the addition of a new State body to the list of bodies in the Schedule with which the NDC could be involved in joint venture activity. If one were to require an affirmative resolution of the House simply to add X State body to the list, that would delay the House considerably. It is likely that the establishment of the new State body — and we have endeavoured in one existing list to be quite comprehensive as to existing State bodies — would have been approved in the House and its addition to the list of bodies with which the NDC could enter into joint ventures would require a second debate of a purely formal character. It would serve no great purpose if the Deputy's amendment were to be met.
Also, it is possible that the necessity to obtain Dáil time could delay investments being made. From listening to the Deputy contributing in the House, I imagine that he is in favour of the State making investments. I would have been less surprised had the amendment proposed come from the direction opposite rather than his direction. In a sense what the Deputy is proposing would hold up the possibility of a particular State investment being undertaken if a new State body were coming into being and one of its early acts were to seek conjunction in some enterprise with the NDC.
The Deputy made a number of interesting and fairly valid points about the availability of time for debating motions to annul orders. This is a defect in our procedure from which I remember suffering when in Opposition. In some cases in the past the Government did provide time but, in more recent times, successive Governments have not done so, and therefore what the Deputy has said is broadly true. However, this order-making power is so procedural in nature that it would not warrant the kind of guarantees for which the Deputy is looking. I am afraid that the order will have to stay. I hope that I have answered reasonably the Deputy's comments.
I certainly hope the Minister is not implying that we would be willing to hold up the business of the House.
I do not wish to start a row. No, I was not so implying. I was saying that I was surprised at Deputy De Rossa proposing an amendment that might have that effect. I am not saying that it would.
I wish to seek clarification from the Minister as to whether there might well be unnecessary delays, especially as this order would have to be laid before the House for 21 sitting days. In the event of an order being made, for instance at the start of the recess, one could find that there would not be 21 sitting days for perhaps four or five months and I would be worried about that. It might jeopardise the prospect of a number of projects getting under way. Could the Minister get around that type of situation?
That would not happen, because the procedure is that, once an order is made, even though it has not run for the 21 days on the Order Paper, anything done under it after it has been made is not invalidated, but is legal. If it were to be annulled within the 21 days nothing could be done under it subsequent to the annulment, but anything done prior to the annulment would be legally valid. I do not think the danger about which the Deputy speaks is likely to occur.
The Minister is quite correct in saying that we are anxious that there should be investment in State-sponsored commercial companies. There is nothing in what we have proposed which would inhibit that. The Minister argues that perhaps it might create delays, but the procedure which we are seeking to introduce in relation to section 4 (1) does not place any time limit on when the order may be introduced. There is no reason why a Minister cannot introduce an order into the House on the day on which it is required to be passed. In my experience, certainly in the number of years that I have been here, the House has always been exceedingly helpful when Ministers have requested legislation to be passed in a hurry. Indeed, some very major legislation has been passed in a matter of a half hour or hour.
I can see no real opposition being brought forward to the inclusion of companies in the schedules concerned. There may well be opposition if the Minister or the NDC want to delete companies. This section gives the Minister power to add companies to or delete them from the schedules. If the Minister in his capacity as the person responsible for Dáil reform were to give me a commitment that he will listen — I do not know if he is listening——
I am listening closely to the Deputy.
I particularly want the Minister to respond.
I will respond.
If the Minister would prefer to give a commitment in his capacity as the person responsible for Dáil reform to look seriously at ways of enabling individual Deputies to bring forward resolutions seeking to annul orders or even have them debated in the House, I would be prepared to let this fall.
One of the procedural reforms in the works, so to speak, at the moment is one for allowing reports to the Dáil presented to committees or under statute to be debated here without a division being taken on the day of the debate. Possibly this could be done on a Tuesday morning. That is a proposal I have made but it has not yet been approved by the Government and I am not sure whether it will be approved. It is possible that it could be extended to allow a debate on orders if Deputies felt they should be annulled, but the division would have to be some other time. I am prepared to look at the possibility which the Deputy has urged in the context of what I have just described.
The Deputy is a bit naive if he thinks that there would be no problem in finding time for an affirmative motion of this kind on the Order Paper. There may be needless delay because there is too much legislation, all of it urgent to some extent, at a given time on the Order Paper to be taken in the time available. The Deputy may say that in very extreme cases matters can be dealt with on the day of introduction, but if we did that with all legislation there would be total chaos.
I do not propose to delay the House much longer on this matter. The Dáil is sitting until 11.30 p.m. or midnight at present to enable Deputies to participate in discussion on various points. Perhaps that could be considered for one or two nights a week to enable items of this kind to be debated. I take the Minister's point in relation to unnecessary delay and I hope I am not too naive in relation to these matters. A large number of regulations are made in this House by way of these "negative" orders on which Deputies have no opportunity to make their views known. Some of these orders have quite wide-ranging effects. That is why I intend to continue proposing this kind of amendment until such time as the House alters procedures to enable Deputies to debate these orders. In view of the Minister's indication that he will look at this area of reform I will withdraw the amendment.
I move amendment No. 3:
In page 6, subsection (1), between lines 6 and 7, to insert the following paragraph:—
"(a) to establish either alone or in co-operation with a State-sponsored commercial enterprise, any enterprise which, in the opinion of the Corporation, is capable of becoming profitable and efficient and has reasonable prospects for profitability, development, expansion, growth or providing viable employment;".
The purpose of this amendment is two-fold. Firstly it transposes the existing sub-clause (c) to make sub-clause (a) of section 10(1). This is to put the clauses in a more logical order. What was sub-clause (c) is an innovative power, something unique to the corporation. Its other activities will be conducted in conjunction with others and it seems more sensible to put this provision at the top. The amendment also alters the wording of the existing subsection at section 10(1)(c) to make it consistent with the wording used in the remainder of the section. This is achieved by inserting the concept that any enterprise established by the corporation under this subsection must, in the opinion of the corporation, be "capable of becoming profitable and efficient". The wording does not require the enterprise to be profitable and efficient at the time the investment is being made. It could not be since it is a new investment.
I move amendment No. 1 to amendment No. 3:
In the fifth and sixth lines, to delete "or providing viable employment" and substitute "and providing viable employment".
I want to address briefly the amendment of section 10. I mentioned it earlier at the beginning of the debate. Without harping too much on the amendment, the Minister has given only a vague reason for finding it necessary to introduce an amendment to his original Bill. It might expedite matters if I dealt with several amendments together.
It would be preferable if you dealt with all your similar amendments together.
The end of the Minister's amendment contains the words "expansion, growth or providing viable employment;". I understood that the point in introducing this Bill setting up the National Development Corporation was to provide viable employment. Section 10 and this amendment indicate that we have a choice. I am concerned that we either become involved in enterprises which will become profitable and efficient with reasonable prospects of profitability, development and expansion or in the provision of viable employment. I understood that the principal objectives of this Bill would include links with State-sponsored bodies and State-sponsored commercial enterprises and I suggest that there is a very real fear that such links would merely result in an additional layer of bureaucracy and I said so on Second Stage. There are excellent examples of existing State-sponsored commercial enterprises which have developed new projects, many of them in areas well removed from the initial commercial mandate of the organisation. The opportunity to develop a new project can best be encouraged by facilitating the development of existing organisations rather than by placing an additional layer of administration over and above them. The doubtful word "or" providing viable employment should be changed to "and" providing viable employment. They are two small words but very important and I ask the Minister to reconsider the wording.
I think Deputy Flynn made that point — or perhaps it was Deputy Lyons — on Second Stage and I have been thinking about it. There is sense in the thinking which prompted this amendment and I have dealt with it in amendment No. 18 which says "in carrying out its objects the corporation shall have regard to its general duties under section 13". One of their general duties is to assist in the creation of the maximum amount of viable employment in the State. Therefore, an umbrella provision affecting all the items in section 10 is the creation of the maximum amount of viable employment in the State. Under section 10 the corporation must have that in focus all the time. Under section 13(b) the corporation must carry out their objectives in such a way as to enable them to make a reasonable return on any investment made by them. That requires that the profit motive must apply to the corporation in respect of all their activities. The point which the Deputy made is being met in another way. There is a slight danger that his provision would be unduly rigid and I will elaborate briefly in that regard. His amendment requires that any investment would have to have reasonable prospects for profitability, development, expansion, growth and providing viable employment, because that is the interpretation when the word "or" is applied. If you put "and" in place of "or" each of them has to be achieved. However, there could be cases where a company has prospects of profitability and provides viable employment but who, for one reason or another, do not wish to or cannot expand. That could conceivably, although it is not very likely, be a problem. In response to the points made on Second Stage I am dealing with it in a better way than that suggested by Deputy Lyons.
The Minister's interpretation differs from mine. I did not suggest that "or" replace "and"; the Minister suggested that.
The Deputy wants to substitute "and" for "or".
I am suggesting the change of words at the bottom of each section. The Minister suggested that I was introducing a change of wording right through the section. I have no such proposal. My amendment merely suggests deleting "or providing viable employment" and substituting "and providing viable employment".
Maybe we are talking about different things. I am not just looking at amendment No. 8 in the Deputy's name but also at amendment No. 4 where he deals with subsection (1)(a). In amendment No. 5 he substitutes "and" for "or" in subsection (1)(b) and the same applies right down to amendment No. 15. These imply that the projects would have to have reasonable prospects of profitability, development, expansion, growth and providing viable employment. I do not think that that is what the Deputy wants but my advice from the draftsman is that that would be the effect of his amendment. In practice, it is likely that any investment which has a prospect of achieving profitability and viable employment will also probably provide development, expansion and growth, so I concede that the Deputy's amendment would not cause enormous problems. However, in theory it could, and in drafting legislation of this kind we try to avoid even theoretical dangers. As I said, I tried in amendment No. 18 to meet the Deputy's point by making the whole section subject to section 13.
My amendments on section 10 are consistent because they are so repetitive. When there is such repetition the words need to be examined very thoroughly. I accept what the Minister has said, that technically and theoretically there may be problems, but this is not the case in practice. The Minister referred to section 18 but what he said does not remove doubts I hold. When this Bill was introduced we were told the purpose was to create viable employment. There has been no definition of the word "profitability".
That can be done on Report Stage.
I am sure the Minister understands my concern in this matter. To create employment any development must be profitable. People may have an ideological hang-up about profits but if profits cannot be made people will not invest. Profit is necessary to create employment. The development and expansion of growth would provide this extra employment in the normal course. I am concerned that we use the word "or" providing viable employment instead of using the word "and" and I am concerned this may have an adverse effect in achieving the aims of the NDC. Section 10 is a very important section of this Bill. Perhaps the Minister will see if he can allay my concern in the matter.
I am not sure if it was Deputy Lyons or one of his colleagues who drew this matter to our attention on Second Stage. I should like to thank them for that. I consulted the parliamentary draftsman and my officials as to how best to deal with the problem and in our view amendment No. 18 is the best way to deal with it.
Is amendment No. 1 to amendment No. 3 withdrawn?
Yes.
Amendment No. 4 has been discussed already.
I move amendment No. 4:
In page 6, subsection (1) (a), lines 13 and 14, to delete "or providing viable employment" and substitute "and providing viable employment".
Is the amendment withdrawn?
It is not in my nature to withdraw amendments but in view of the explanation given I withdraw it.
I move amendment No. 5:
In page 6, subsection (1) (b), line 23, to delete "or providing viable employment" and substitute "and providing viable employment".
I move amendment No. 6:
In page 6, subsection (1), lines 24 to 27, to delete paragraph (c).
This is a procedural measure. In amendment No. 3 I have moved paragraph (c) in the original Bill to paragraph (a). That would mean that paragraph (c) is appearing twice, namely, as paragraph (a) and paragraph (c). From the point of view of the parliamentary draftsman and Dáil procedure I must delete paragraph (c) since it is re-appearing in paragraph (a). In essence what it means is that when the draft Bill comes back on Report Stage new letters will be inserted for all the paragraphs and there will be no gaps.
As I have not the benefit of the advice of the parliamentary draftsman or the officials I am at some disadvantage. The shifting around of sections and subsections needs to be watched carefully. What we are dealing with here concerns the managing and holding company of any enterprise. This affords me an opportunity to indicate that there is abroad some misconception that private enterprise has failed.
It is more abroad than at home.
It is here too. It has been said often enough and it is extremely hard to understand why, in the face of reality. The Government, at Exchequer and local government level, manage 70 per cent of GNP in the form of capital. That is an extraordinary high proportion, the highest in western industrial economies; it is hard to find an economy in which a Government manage more than half of the national output.
I move amendment No. 7:
In page 6, subsection (1) (c), line 27, to delete "or providing viable employment" and substitute "and providing viable employment".
I move amendment No. 8:
In page 6, subsection (1) (d), line 33, to delete "or providing viable employment" and substitute "and providing viable employment".
I move amendment No. 9:
In page 6, subsection (1), lines 34 to 39, to delete paragraph (e) and substitute the following paragraphs:
"(e) to assist (financially or otherwise), manage or act as a holding company for any State-sponsored commercial enterprise established after the passing of this Act which, in the opinion of the Corporation, is capable of becoming profitable and efficient and has reasonable prospects for profitability, development, expansion, growth or providing viable employment;
(f) to assist (financially or otherwise), manage or act as a holding company for any enterprise established by a State-sponsored commercial body which, in the opinion of the Corporation, is profitable and efficient or capable of becoming profitable and efficient and has reasonable prospects for profitability, development, expansion, growth or providing viable employment;"
This is similar to the others, though not the same. It refers to the change made by amendment No. 3. Paragraph (e) is now being split into paragraphs (e) and (f) in regard to the NDC assisting as a holding company. When we are considering subsidiaries of the kind referred to, it is better that the full terminology in other subsections be applied here — that the subsidiary or holding company should be capable of becoming profitable and efficient, or that it should have reasonable prospects of doing so. We want to use the same terminology in paragraphs (e) and (f) as we are using in paragraphs (a), (b), (c), (d), (g) and (h). Our aim is to achieve consistency in the wording.
It is something new for the State to get involved as a holding company. We have seen it in the private sector and my main concern would be about the share out of capital. Though the private holding companies have not been very successful, it is something new for the State to get involved as a holding company. I should like a clearer definition of "holding company". Would the Minister indicate, too, how he proposes to get funding for the holding company? I understand that a holding company means an undertaking that would operate from one base, that it would have funding available to buy up something new.
In the original draft of the Government plan and the party programme, the NDC were envisaged as a holding company for virtually all semi-State bodies. We considered it carefully and came to the conclusion that this would simply add another layer of bureaucracy. There would be discussions between semi-State bodies concerned, the holding company and the Minister, so there would be three lines of decision making. Such decisions should be made immediately in many cases, and we dropped the idea that the corporation should be a holding company for all State companies.
In this section we are giving the corporation the power to be a holding company, perhaps for a group of State companies. For instance, Údarás na Gaeltachta might establish a commercial fish farming undertaking and we might have some other State company, the ESB for example, developing the same type of activity in their hydroelectric undertakings. The NDC are already involved in fish farming and from the point of view of national management it might be better for the NDC to act as a holding company for the fish farm operations rather than have the ESB holding shares in one operation and Údarás na Gaeltachta holding shares in another. The whole operation would be gathered together under the NDC with that body overseeing the operation and using their expertise. We considered that such an arrangement should be facilitated in this section and I hope Deputies will see it in that light. We do not want to lumber the NDC as a holding company for all State companies because the corporation should be concerned only with new operations rather than the resolution of old problems.
I accept the point about all semi-State bodies, but I am troubled about the fact that the State has never acted as a holding company. I can see the NDC acting as a holding company for all State bodies eventually. I am aware that several State companies have offshoots, but the term "holding company" is new to the State sector. Is the Minister suggesting a complete new departure?
It is, but it is not possible through this section for the corporation to become a holding company for existing State enterprise unless that enterprise is starting a new activity. After the passing of the Bill, such a State company could transfer its operations to the NDC.
If a future Government were to decide that portion of a State company, for instance, Irish Life, the ICC or Aer Rianta, were to be floated, would it not be convenient to have a vehicle such as the NDC as a holding company?
I do not think so because any remaining shares that might be held in such event by the State should be held by the responsible Minister. He would have better oversight of the policy concerns than would the NDC. There would be no point in lumbering the NDC with a lot of administrative responsibility for existing policies and decisions. The whole notion in the Bill is that the NDC should be a body revolving their portfolio all the time, making new investments continuously and dispensing with old ones. In this way the corporation will be in the forefront of new technology rather than being bogged down in obsolete technology or in older organisations.
In the sections we are dealing with there is a definite indication that the corporation will be able to assist, manage or act as a holding company for any State-sponsored commercial enterprise, even any established after the enactment of the legislation.
Yes, only companies established after the passing of the legislation and not existing State companies.
In the First Schedule there are listed 15 State-sponsored bodies which have a very wide promotional role——
That is in a different context. It is not in respect of holding companies.
Apart from the possible involvement of holding companies after the setting up of the NDC, the First Schedule lists 15 State-sponsored bodies who have a very wide promotional role in respect of various sectors of industry. These include marketing, research and development and also business in the industry in general. In the Second Schedule, 24 State-sponsored commercial enterprises are listed and these cover a very wide range of business and industry. It is very difficult to understand the need for another development agency or another public enterprise corporation. I am making this point in the interest of being consistent with regard to the whole question of the setting up of the corporation. The Minister has confirmed that the corporation will be able to assist, manage or act as a holding company for any State-sponsored commercial enterprise established after the passing of the Act Does that mean that the company would be one established only after the legislation comes into operation and that the other companies listed in the Schedules will not be affected?
The Bill refers to it being the opinion of the corporation that a venture has a reasonable prospect of success but that it not being ambitious in any way. The doubt should be removed from the section. In other words, more ambitious wording should be used. The whole Bill is about ambition. The Government declare the setting up of the NDC to be a very ambitious step but I am very concerned about the doubt inherent in the section. Such wording as "reasonable" and "or providing employment", is not good enough. Firm and strong wording is needed.
We are talking here about decisions that will have to be made in the future and about investing money to back some view that might be held. We could provide that the corporation invest only in projects that will be profitable. That would be very positive wording but profitability could not be guaranteed. Equally, we could omit the word "reasonable" and substitute such wording as "prospects of profitability". In other words, if a venture had a chance in 100 of becoming profitable, that would be acceptable but people will be using their reason anyway in regard to the decisions that have to be made. By including the word "reasonable" we are saying that something that had a minor chance of being profitable would be ruled out because it would not be reasonable in such circumstances to assume that there was a basis for profitability and prospects for providing viable employment while by requiring it to the opinion of the corporation that a venture would be profitable, efficient or capable of being profitable and efficient, rather than saying simply "investments which will be profitable and efficient", we are leaving it clearly as the responsibility of the corporation to take a view about whatever is involved.
The Deputy in his private life has made investments in his own enterprise and perhaps in others so he, too, will know that there are no certainties in investment. He invested because he believed he would make a profit but that profitability could not be guaranteed from day one. The NDC must have the freedom to act with the same use of judgment that the Deputy in his private business affairs would apply. They cannot be put into a straitjacket where they would not be allowed exercise their judgment or act without accountability but neither can they be required to be certain of success before making an investment. Should they seek certainty, they would not act at all.
Is the Minister suggesting that the NDC will guarantee the success of enterprise and investment? There is no lack of funds for investment at this time. The problem is that the return from any such investment is too low by comparison with gilts and other investment opportunities. If there is any hope for this proposal of the NDC the atmosphere will have to be changed to get people to invest in these "capable of becoming profitable and efficient enterprises" about which we talk in section 10, amendment 9. We must focus on developing viable commercial enterprises. The NDC will have to encourage, if possible, projects being developed by individuals or groups of individuals. In this Bill we seem to concentrate too rigidly on State-sponsored commercial enterprises.
This does not arise on the amendment. This is more like a Second Stage speech.
The Minister's contribution——
I was responding to Deputy O'Keeffe.
——is what prompted me to discuss the matter in this way. To recall what the Minister said about my colleague's investment, the Minister hoped that it would be profitable.
I am sure it was, from what I know of him.
The Minister's contribution, if one were to be very strict about it, could also be described as a paragraph from a Second Stage speech. We have to create an atmosphere conducive to investment. I am not yet convinced that the proposal before us will do that.
Section 10 is the kernel of the Bill in terms of its principal objectives. Each paragraph in section 10 sets out to promote, assist and develop, in general terms. There is nothing wrong with that but I fear that the incumbent board of directors with responsibility for trying to implement section 10 will not have a clear set of guidelines on which to operate. The Minister and the Department are attempting to be as unrestrictive as possible in this, but I would like to see included in section 10 a much clearer set of guidelines. Deputy Lyons said that there was no shortage of money for investment. My understanding is that to replenish stocks of investment to sustain output at its present level costs £1 billion of new investment every year and that that is running at around £600 million this year. The problem may be the rate of return on investment but the area in the industrial sector where there is not the resources is in the small farm sector.
What is the source of that figure?
The CII.
An unbeatable source.
It is a legitimate source. Section 10 would be a lot more vibrant if included in it were a clear set of terms whereby the maximum that could be invested in any company would be a given amount of say £150,000.
This would be more relevant to discussion on the section rather than on the amendment. The amendment is purely technical and we will be coming back to section 10 afterwards. Perhaps we could dispose of the amendment.
Is the amendment agreed?
The Minister quite rightly corrected us for wandering off the amendment but we are all aware that section 10 is the bones of the Bill and we are concerned that if we get away from the section we might not get back to it.
The amendment is taken first, and then we get to the section.
On paragraph 1 (e) the Minister should copperfasten the role of the NDC as a holding company. That needs clarification. It would appear for instance that the right to evaluate any investment which they might be asked to accept is not clear so I would ask the Minister to clarify the role of the NDC as a holding company in simple terms.
The whole thing hinges on investment. If we are to create employment we must create a climate for investment. One of our big problems is that we have not a climate for investment. The private sector is capable of providing jobs if they get the appropriate atmosphere. That would bring me away from the Bill and into the whole field of taxation. Just one figure from the CII——
That is more relevant to section 10. This amendment is only concerned with holding companies in the public sector.
There are two specific paragraphs, (e) and (f), to be dealt with here.
Deputy Lyons asked me a question about them and I will deal with it.
I will hold off, I will make my point later.
We are dealing with paragraph (f) as well as (e).
We are not.
There is a new paragraph (f).
There are two paragraphs to amendment No. 9 (e) and (f).
Then what I was saying is in order.
The Deputy can say it better on the section.
Thank you for your help.
In relation to Deputy Lyons's question about this holding company business, it will only be a holding company for a new State-sponsored enterprise established after the passing of the Bill or any enterprise established by a State-sponsored commercial body. That could be something already in existence but in respect of a new State-sponsored body as distinct from a subsidiary of a State-sponsored body. The corporation can only be a holding company for new enterprises established after the Act. I explained broadly the type of area where common problems might exist and there might be a need to group these companies together under one financial umbrella. I do not think this will happen on a large scale and it will not be a very important part of the corporation's activity. It is there as a permissive power. The corporation will be better engaged in setting up new enterprises or investing in new enterprises rather than engaging in any type of holding company activity which is a sort of permanent burdensome activity as against the developmental role which should be the primary role.
Is amendment No. 9 agreed to?
We are running into the same trouble with the little words "and" and "or", where we began. Are we allowing that that is acknowledged? Shall I say it is acknowledged?
We have acknowledged it elsewhere.
I understand amendment No. 10 has already been discussed.
I move amendment No. 11:
In page 6, subsection (1), between lines 39 and 40, to insert the following new paragraph:
"(f) to invest in any enterprise—
(i) involved in advance technology;
(ii) engaged in the establishment, promotion, development or provision of marketing and related services;
(iii) engaged in the commercial exploitation of research carried out in Irish colleges or research bodies, or licensed in from overseas;
(iv) commercial research projects in third level colleges, research institutions or other suitable bodies;
(v) structurally sound wholly Irish owned firms;
(vi) any of such a nature which the Minister might from time to time direct;
where such an enterprise in the opinion of the Corporation, is profitable and efficient or capable of becoming profitable and efficient and has reasonable prospects for profitability, development, expansion, growth and providing viable employment;".
In paragraph (vi) I am suggesting some leeway for the Minister so that he would not be too hide-bound by some of the "ands" and "ors" we have already discussed in the other sections. I might suggest that the amendment speaks for itself and hope the Minister will find it possible to accept it.
The other point I raised comes up on this amendment because this amendment seeks to open up the provisions in terms of what companies can be invested in by the National Development Corporation. My point is that there should be a restriction in terms of specifying that, in the venture capital market, the areas of greatest weakness and of greatest financial equity need are in small firms. They are over-dependent on bank borrowings and their debt equity ratio is all wrong. Therefore, venture capital is often vulture capital for them.
I put it to the Minister: surely it would allow a greater spread in terms of employment if the primary role of the National Development Corporation was to have a revolving equity structure for small firms under the same terms of reference as the business expansion scheme, say, a five-year period which is already an up and running equity scheme. With the maximum investment in any one venture of £150,000 I suggest that more companies would be aided. I say this because the risk ratio means that half of the projects aided will fail. In America a figure of two out of ten is considered an acceptable success/failure rate. I am suggesting that one would be spreading one's risk a lot better and, in so doing, would be able to cover all the different sectors that Deputy Lyons and the Minister have outlined in their amendments and in the Bill itself. Furthermore, one would be addressing the area of greatest need. Rather than being too generalised in an attempt to be as unrestrictive as possible it would be better and less ambiguous to the new board of directors to set out clear guidelines of where the focus of investment should lie.
There is some merit in what Deputy Yates has said. But one must ask what will be the source of funding of venture capital? If it has to come from the market place it will have to be loaned at rates over and above the market price prevailing. That would render the problem to which Deputy Yates referred even more complex. They would be better off in the situation obtaining rather than moving into a new one. I do not know what will be the source of funding for the National Development Corporation. But, if those funds have to be borrowed from the market place, they will have to be loaned at rates over and above the prevailing market price.
The National Development Corporation will have to make a return on all their investments in excess of what the State is paying in interest. Otherwise it would be better not to borrow the money.
Therefore, immediately they are commencing at a disadvantage. It would not be competitive from the point of view of loaning out money to the sector we believe will contribute most. We on this side of the House are critical of the Bill. It must be remembered that we must look at the areas of investment on this island and at the problem presented to the State generally. Our real problem is lack of investment because of the——
I would remind the Deputy that this amendment deals with the question of adding new projects in the NDC rather than their financing.
Then may I make a global comment on section 10 when this amendment is dealt with?
It would be impossible to stop the Deputy at that stage. May I intervene in an effort to clarify the matter. First I have to say that I do not think Deputy Lyons' amendment is really necessary and, in one respect I consider it dangerous. For example, paragraph (i) of the Deputy's amendment is dealt with in section 10 (1) (i) as it is on page 7 of the Bill. Also paragraph (ii) of his amendment is already dealt with in section 10 (1) (h) of the Bill. Paragraph (iii) of the Deputy's amendment is already dealt with in section 10 (1) (i). Also paragraph (v) of the Deputy's amendment is dealt with in the existing powers of the corporation.
The section of the Deputy's amendment which I feel to be dangerous is (vi) which provides that the corporation could invest in any enterprise of any such a nature which the Minister might from time to time direct. That is a bit dangerous. We do have power to give the corporation directions as to broad sectors and so on in which they should invest. But I do not think it desirable that we should allow a possibility that the Minister could direct them to invest in a particular enterprise. That would be highly dangerous. I think the Deputy himself could quite easily imagine that there might be somebody who, let us say, was setting up an enterprise who was a supporter of some political party, unnamed. If the Minister of the day were to direct the corporation to invest in that body there could be all sorts of accusations of improper behaviour and so on, even though it might be a perfectly reasonable thing to do from a commercial point of view.
It is not meant in that way.
Sorry, I know that. I am not trying to infer any improper motive to the Deputy. I am quite certain that is not what he intended. Unfortunately, what counts is what goes into the Bill. Subsequently in drafting the power I have to give general directions as to policies in section 31, I was very careful to exclude from that directions in respect of particular investments. There is a danger that that could be imported in the Deputy's amendment. My main point really is that section 10 as it stands already meets in greater detail the various purposes which the Deputy is seeking to achieve in his additional amendment. I do not think there is need to put the same thing in twice in different words.
The Minister in his last comment suggested that I was attempting to overrule all the other listings. That is not intended. The amendment says "between lines 39 and 40" and I do not indicate that I wish to interfere with any of the other lines after that. The Minister saw fit to take the word "direct" in his literal concept of directing somebody, saying: "Do as I tell you". That is not what is intended. If possible I would prefer "to invest in any enterprise of such a nature which the Minister from time to time would see fit".
That is definitely in section 31.
Despite all the listing of names of groups, colleges, technological institutions and the various bodies mentioned right through the sections, I am thinking of the possibility — and it is always a possibility — that some group, body or institution may not be so accounted for or included in these various listings in section 10 of the Bill. That is why I put in paragraph (iv).
The Minister did not comment on the phrase "structurally sound, wholly Irish owned firms". We should give consideration to that. I accept what the Minister says, that many of the paragraphs I have included are covered in section 10 and I accept that, but I wanted to broaden it. I was not putting those in here in the amendment to the exclusion of any of the others already listed. The Minister seemed to suggest that at one stage in his contribution.
I did not.
Far from it, I was being very specific in saying only "between lines 39 and 40" to include that. That gives an indication that there is no proposal or suggestion that they be not included. I accept the Minister's point that that word could be misinterpreted in many ways, for instance, in "which seeks to ask the Minister to direct people". That is not what is intended. Maybe we can amend it on Report Stage and if the Minister sees that paragraph (vi) in the amendment is worth including, then I have no problem about putting in suitable wording to take the inference out of it that the Minister would direct in the sense that he spoke about.
I have already dealt with that problem as far as ministerial direction is concerned in section 31. We have dealt with it in a reasonably balanced way, and the Deputy's amendment is not necessary in that regard. One point in the Deputy's amendment that I did not deal with adequately is paragraph (v) "structurally sound, wholly Irish owned firms" in which he wants the NDC to invest. I have been advised that if we were to say that the NDC were restricted to investing in Irish firms possibly that would be contrary to EC law, and we do not want that to be the case.
The Minister is talking about the earlier part of the amendment.
However, in practice the NDC will be investing in Irish firms and the use of the words in section 10 companies that have "reasonable prospects for profitability, development, expansion, growth" etc. by definition are companies that by having this development, growth, profitability, expansion and so forth are becoming structurally strong, Irish owned firms. I know the use of the term "structurally strong, Irish owned firms" is borrowed from the Telesis report, NESC reports and so on, and I share the Deputy's desire that the NDC should put equity into these companies to help them to become bigger. I notice that Deputy Yates has gone. I do not think that small firms on their own while remaining small can solve our problems. We need small firms that become big firms because in some markets you must be big to survive. I would see the NDC investing in some companies and helping them to become bigger. I see nothing wrong with that. On the other hand I do not see the NDC remaining permanently involved with any company.
I want to say in response to Deputy Lyons's amendment that we have been advised that the use of the term "structurally sound, wholly Irish owned firms" would run into the EC rules. Also, the draftsman feels that it is not a very precise term. What is "structurally sound"? We must be guided by the draftsman when he feels that this is imprecise wording and has no legal meaning that is understood and accepted. Therefore, we have done it in another way, by providing in all the sections in respect of all the investment powers in section 10 that the NDC have, that they shall be capable of investing in companies that have the prospects for growth, expansion and so on. That really is the same thing as being structurally strong.
Does the Minister feel that the NDC could usefully invest in, for instance, the continuation of the erection of the briquette factory in my constituency? The contradiction in the Minister's policy in relation to the NDC, if it is any indication of his record when he was Minister for Energy, the one Minister who terminated the project which would provide employment for 500 people——
I told Bord Fáilte and Bord na Móna to stop it and they decided later that they should have stopped it themselves earlier. I realised the truth before they did.
The NDC are to invest in viable projects of State or semi-State organisations. The Minister, when he was Minister for Energy——
"Viable" is the key word.
——decided to terminate a project which would provide long term employment for 500 people in my constituency. He is now setting up the NDC on the basis of investing in projects which will provide employment, yet we had a viable project. Work commenced with the expenditure of over £12 million of Irish taxpayers' money. Now briquettes are being imported here. There is a shortage of peat briquettes, and suppliers and distributors have to queue up for their quotas. If the Minister had allowed that project to go ahead, that briquette factory would be coming on stream in 1985——
On a point of order, this does not arise on Deputy's Lyons's amendment.
It is not a point of order. I am explaining the contradictions in the Minister's policy. When he has an oppor-tunity——
Ballyforan briquette factory has nothing to do with this.
It has a great deal to do with the Minister's philosophy in relation to the investment.
We are not talking about the Minister's philosophy. We are talking about amendment No. 11.
Surely I am in order to refer to the implications of the section and the philosophy behind the Bill? The Chair may interrupt as often as he likes and protect the Minister if he wishes but I am entitled to make my contribution.
I am not protecting any Member or interrupting anybody but giving a direction from the Chair. Before the Deputy entered the Chamber we were debating amendment No. 11.
The Deputy who has not been here all morning arrived five minutes ago to get himself into the newspapers before he departs for lunch.
And on the radio.
The Minister is being very unfair because I am interested in this project.
I am very accurate.
It was the Minister who scuttled the project.
Within ten minutes the Deputy will be off.
If the Minister wishes to be offensive about this he may be, but as far as I am concerned I put a lot more into that project than he did. I am anxious to contribute to the debate.
I hope the Deputy remains in the Chamber for the debate.
If we are to judge the Minister by the way he handled his portfolio in Energy we can expect him to scuttle every project put up to him. He is the person who was responsible for more job losses here than any previous Minister. I cannot understand why the Minister is establishing the National Development Corporation when he did not permit expansion when he was Minister.
That will make the Deputy a champion in the Roscommon Champion next week.
To suggest the establishment of such a body is a sham. The Minister is a sham and his policies are a sham.
I think the Deputy is a sham.
I will be happy to withdraw my amendment if I am convinced that the Minister has understood my intentions. Will he accept what I was endeavouring to convey in my amendment?
The Deputy was seeking to put into rather plainer language what is contained in the section in a somewhat legalistic form. In that regard it is useful that he has put down the amendment but I am happy to assure him that all the points contained in his amendment are encompassed in the existing section.
There is a contradiction in that. There is an element of risk in regard to advanced technology and viability is mentioned in the Bill. Can the NDC invest in advanced technology even though there may not be a light at the end of the tunnel to indicate that the project will be profitable?
No, they cannot.
Therefore, the Minister is not accepting our amendment.
Deputy Lyons' amendment requires that it be profitable and, therefore, we are not in disagreement on that point.
I must point out again that profitability is one of the keynotes, one of the requirements for the creation of employment.
Hear, hear.
They cannot be divorced one from the other. Expansion requires profitability because one must make a profit to plough it back into an industry. I was concerned about the words "or" and "and". My concern has been accepted by the Minister. If my amendment will create drafting difficulties it would be foolish of me to press it but in the light of what the Minister has said I will withdraw it.
Amendments Nos. 12, 13, 14 and 15 have already been discussed with amendment No. 3.
I move amendment No. 16:
In page 7, subsection (1), between lines 33 and 34, to insert the following paragraph:
"(f) to prepare a co-ordinated development plan for commercial state-sponsored manufacturing companies within the national and economic planning process;".
We agree about the correctness of the general outline of the various sections but the provisions are ad hoc. For example, the section provides that the corporation may invest in any enterprise involved in the exploitation, development, production or marketing of natural resources but where such enterprises will come from one does not know. There is no co-ordinated plan as to how the corporation will promote companies through investment. There is a need for a co-ordinated plan.
I must point out that in drafting our amendment we used the wording in the Fine Gael-Labour Programme for Government published on 30 December 1982 in regard to a national development corporation. That programme stated that the corporation would prepare a co-ordinated development plan for commercial State manufacturing companies within the national economic and social planning process. The Irish Congress of Trade Unions also expressed considerable worry about the contradictions between the White Paper on Industrial Policy and the National Development Corporation in relation to manufacturing companies. They made the point that the White Paper seemed to indicate that the Government's idea on a national development corporation was not in accordance with the original idea or with their views.
I note that Deputy Leyden has left the Chamber, as predicted.
Congress differed from the Government particularly in regard to the potential for State-sponsored bodies developing new companies in the manufacturing area. It is the investment in companies and assistance in management in the manufacturing sector that will create new jobs and new wealth. It has not been sufficiently emphasised in the Bill that there is a need for the developing of commercial enterprises in the manufacturing area. Our amendment is designed to co-ordinate all efforts.
The NDC would be acting on a co-ordinated development plan in the specified areas of natural resources, for example, forestry, food processing, or fisheries. To have a co-ordinated development plan for manufacturing companies in those areas is the purpose of amendment No. 16. It would strengthen the Bill and would clarify that the corporation would be able to move into the manufacturing areas, establishing new State-sponsored or assisted companies in the area of natural resources. Once they had that co-ordinated plan they would not be just reacting to someone else's views but to their own ideas.
The point here is that the NDC are an investment body looking for investment opportunities in the market place. The Government considered the matter and set down in the White Paper on Industrial Policy alternative arrangements for corporate planning and overall planning in State companies. These were discussed in very great detail last night in the debate on the motion for the extension of the terms of reference of the Joint Committee on Commercial State-Sponsored Bodies. Essentially, we are not giving the corporation the job of doing overall planning for State companies; we are getting the State companies to do that in conjunction with the parent department. I would like Deputies generally to understand that we are doing so. I think the reasons are good.
If the NDC were given some sort of overall responsibility for planning manufacturing in the country at large, it would create a terrific number of consultancy reports, studies and plans and a considerable amount of paper work, without necessarily all that much output at the end of the day. Confining the corporation to not becoming involved in looking at the big picture and in making great planning decisions but looking for investment opportunities existing in the market place gives a better focus for the operation. They would be developmental as distinct from prescriptive in their activities.
I do not believe — and this may be an area in which Deputy Mac Giolla and I would not fully agree— that it is possible to plan the economy in the fashion in which one would plan military procurement during a war where one would measure how many boots one needed for the Army and what the casualty rate is likely to be and place an order then for a given number of boots. You plan who is going to produce the boots in how many factories and the whole thing is done on such a planned basis. It is not possible in a small, open economy, regardless of the social system, once we have free trade. That is quite apart from who owns the industry. To my mind, that detailed planning of the economy is not on. The only people who attempted that — and it was in a very large economy in eastern Europe—were in the Union of the Soviet Socialist Republics.
It did not work.
It did not work particularly well there, but it was done in an economy which was virtually on a war footing and was also a closed economy.
The Minister is going astray here. He is talking about planned econonies which have not been mentioned at all in the amendment. I think he is deliberately straying off into planned economies manufacturing boots for some war. I do not know what he is at. Surely every company must have some development plan. Surely the Minister is not contemplating a National Development Corporation which has no idea or plan of what it is going to do but just goes into the market place to see what is going to happen? Is that what the Minister is talking about?
Of course there will be a plan.
Can the Minister not talk about that? What type of plan will they have? That is exactly what I am asking, not about planned economies or anything of that sort. The Minister says this is just an investment company. That is not true of this Bill. It can, for instance, establish any enterprise either alone or in co-operation with a State-sponsored commercial enterprise.
That is an investment.
It can establish an enterprise.
Yes.
It can assist an enterprise.
That is part of investment. Do not tell me that someone is going to make an investment and not look after it.
Will the Minister allow me to make the point? I allowed him fair freedom to go astray for as long as he liked.
The Deputy interrupted me. The Deputy started talking while I was answering him.
Deputy Mac Giolla. I would remind you that the Minister was still on his feet and answering you. If you wish him to reply to your amendment, perhaps you would give way, or do you wish to continue and let him come in again?
It is seldom that I agree with the Minister, but he was telling the truth.
The Minister recognises by his smile that he had wandered off into oblivion, away from the amendment.
No, but I wonder when the Deputy will allow me to answer him.
I was merely saying that the principal object of the corporation is not that it is just an investment company. Investment is part of it. Consultation is appropriate for State-sponsored bodies. To manage and assist financially or otherwise is mentioned. It is not just investment. I am asking the Minister in this amendment to have some co-ordinated development plan of where they are going to establish, manage, assist or invest, without just waiting for the market place to say who is the best lobby or who can put on the most pressure with no plan at all.
The Deputy is still interrupting. It is the longest interruption on record.
The Minister replied that he did not believe in planning. Was that correct?
The Deputy should quote what I said and not try to import words into it.
I understood from what the Minister said that he thought when I spoke of planning I was talking about planned economies and so forth and that he did not believe in planning.
That type of planning.
What type of planning? Could the Minister explain what he would have in mind for the NDC? Will be provide the plan for them, or will the NDC formulate their own plan, or will they have no plan whatever?
This is not an interruption, it is a contribution to the debate. Of course, the National Development Corporation will plan in the sense that they will be looking at individual sectors and finding out an opening which can be filled, either by investing in an existing company developing that sector, or making an investment by setting up their own company. They would be planning in that sense. The Deputy's amendment would mean that the NDC would take on the job of preparing a co-ordinated development plan for State-sponsored manufacturing companies, in other words, they would be responsible for the planning of NET, Irish Steel and any companies owned by the State in other areas of manufacturing. These would all be the responsibility of the corporation. To my mind the corporation have plenty to be getting on with in creating new jobs without being given the responsibility of planning for these companies.
No, not that. They would be new manufacturing enterprises.
No, the Deputy's amendment says, "to prepare a co-ordinated development plan for commercial State-sponsored manufacturing companies..." That presumably means existing companies.
It does not mention the word "existing" there.
"... commercial State-sponsored manufacturing companies" is a phrase used at a particular point in time. It applies to commercial State-sponsored manufacturing companies that exist at the time the phrase is used. At present they are Irish Steel and NET. That is the only thing the Deputy's amendment could be referring to. It would not be sensible to give the NDC the role of becoming involved in a co-ordinated development plan. There is an implication that NET and Irish Steel need in some way to be co-ordinated. They are in quite different sectors of the economy and do not need to be co-ordinated. We need a body to make specialised investment in specialised sectors and get on with selling the results of that investment. One can co-ordinate initiative to death.
This is becoming more and more painful. Let us take forestry, an area which has become the subject of some controversy over the past six months. According to the Bill the NDC will be very much involved in this. Surely this is one area where some development plan is absolutely essential. It is tangled up with the Department of Forestry in the marketing and development area and needs a development plan. If there is such a plan and the NDC are involved, presumably manufacturing enterprises will arise from it. Marketing will also be involved. If ever a co-ordinated development plan was required it is in the forestry area, covering planting, the take-out from the forests, the development of manufacturing enterprises, saw mills, paper manufacturing and all sorts of other enterprises which could create jobs. Private enterprise has had a free hand for 60 years and has not been able to do very much. There are one or two good enterprises but most have collapsed.
Forestry is one example. There are others such as food processing, fishing and the area of mineral development. A coordinated development plan is needed. I am suggesting commercial State-sponsored manufacturing companies who are prepared to go it alone or to co-operate with others. The Bill already provides for this to be done. I am not referring to NET or Irish Steel. The amendment deals with the development envisaged in the Bill and the manufacturing companies which would arise from this development. Could the Minister confine himself to that?
We will have to agree to differ. My interpretation, backed by official study of the Deputy's amendment, is that it would involve the NDC in preparing a co-ordinated plan for existing State companies. While it needs to be done, I do not think the NDC is the body to do it. It would be better done by the bodies concerned. As far as timber is concerned, it might be better to discuss that point on amendment No. 17. Of course the NDC will be planning their investment strategy very carefully. To some degree the Deputy's amendment may be based on the original provision in the Joint Programme where the NDC was to be a holding company for a large number of existing State companies. If it were a holding company then it would be appropriate to have an overall development planning role in respect of existing companies. It is not going to be a holding company but an investment body, not in the sense of taking minority shares but in the sense of looking for new openings rather than concerning itself with existing companies and their inherited problems.
The NDC will not have a very large staff and will have to be selective in the type of person recruited. If one is looking for somebody good at preparing long term development plans with lots of figures about projections into the future and the macro-economic nature of the environment, one goes perhaps for an economist. If, on the other hand, one is looking for people whose eyes are turned down to the ground, looking for immediate openings and investment opportunities, one is looking for a different type of person. What I want is an action oriented corporation which will be seeking out individual investment opportunities, not a theoretical body preparing plans and blueprints for the future. I am not saying that is what the Deputy has in mind and I will be careful not to provoke him as to our definitions of what planning means. There would be a danger in giving the NDC an overall planning role when they should be looking for specific, immediate investment opportunities which will create jobs. I cannot accept the amendment because it would be sending off the NDC in the wrong and less productive direction. That is not to say that this planning should not be done, but it should be done by the Government rather than the NDC.
The discussion on this amendment has served to confirm my view that the NDC is improperly titled because we have now been assured by the Minister that it will not be a development or planning corporation but at best a national investment corporation. I have been looking through the White Paper on Industrial Policy. Paragraph 12.1.2 refers to a new method of direct State equity investment in new or existing ventures through a National Development Corporation. Paragraph 12.5 refers to one of the recommendations of the Telesis report that policy towards existing indigenous industry must be re-organised to emphasise the development of structurally strong Irish firms rather than strong agencies to assist weak firms.
I want to take this opportunity to indicate clearly what the concept of the National Development Corporation may be as far as the public are conerned. Paragraph 12.6 of the White Paper says that the overall intention is that the NDC will provide for a form of direct State participation which will be both innovative and developmental, particularly towards potential growth areas of the economy. However, the Minister said that the NDC will have no function in development or planning ——
I did not say that.
The Minister's statement put the NDC in its proper perspective. The White Paper also said that the National Development Corporation should be securely guided by commercial considerations. The functions of the NDC are also mentioned in paragraph 12.7. They are envisaged as acting as a State investment company in existing or new private sector enterprises. One would have expected that the National Development Corporation, by their title, would be just that. However, it is becoming clearer that the NDC are merely an investment company and have no responsibility for planning and development. Are we to assume, without it being clearly defined, that the corporation will have no function in planning or development?
I did not say that.
It was clearly indicated by the Minister that the NDC have no function in planning and I presume that that is not physical planning but planning for investments.
They plan their own industry, not the economy, which is a matter for the Government.
Will Deputies please stick to the amendment?
This is not my amendment and I had not intended to speak on it but the contribution by the Minister and Deputy Mac Giolla forced me to do so. We will have to address ourselves to the role of the National Development Corporation. The Government will probably succeed in passing the Bill, but if the National Development Corporation do not have any function apart from investments without planning or development they will not be successful. If the functions of the NDC are not laid down in very definitive terms, the whole thing falls flat. It is absolutely essential in the broadest context that the National Development Corporation must be what their title says— a development corporation and not just an investment corporation, an assisting body or all the other phrases which the Minister used. It appalled me to hear the Minister say that they had no function in development or planning for development that is the same thing— you must plan for development. I ask the Minister to note that and ensure that the role of the National Development Corporation will be provided for. The end result should be to create an atmosphere conducive to the provision of employment and the encouragement of investment in industry to provide the employment which is so badly needed.
The Deputy is trying to be mischievous ——
Far from it.
The position is that the corporation will be investing for national development. Any investment they undertake will be designed, as was made clear, to create viable jobs and so help national development as a whole. That is what the corporation are intended to do; but they will not take over the functions of Government in so far as planning the economy is concerned or in so far as planning existing State companies are concerned. The planning of their activities should be drawn up by the companies themselves in conjunction with the Ministers responsible. As I said in response to Deputy Mac Giolla, the corporation should concenterate on looking for new opportunities for investment which would create jobs. This requires particular skills. If the corporation were to be given the job of drawing up a comprehensive co-ordinated development plan for commercial State manufacturing, which would essentially be taking over the role of the Government, or if they were given responsibility for a comprehensive plan for food processing, which would mean taking over the functions of the Department of Agriculture and of the Department of Industry, Trade, Commerce and Tourism, they would have to recruit an entirely different type of staff as they would be involved in the direct placing of investment in individual projects with a view to making money and creating jobs rather than in an administrative co-ordination planning role, which is properly the responsibility of Government Departments.
The NDC will not take over the job of the Department of Industry, Trade, Commerce and Tourism, the Department of Agriculture or the Department of Fisheries and Forestry. Those Departments must continue to do their own job. It would be a complete error to give the NDC overlapping responsibility with existing Departments. Nobody would know what they were doing. I want to confine the NDC to an area where there is a need for a body of this kind to seek out new investments and to create new jobs that will contribute to national development through investment.
I do not believe very much in plans. We have had several plans but we have failed to implement them. There is a resource in this country we have failed to tap, and I do not know if the State sector can harness that resource. What we need are people who have the entrepreneurial flair to create extra employment. It will be very difficult to attract them into the State sector. It appears from what the Minister has said that he shares my outlook on this matter and he should try to convince his Government of the desirability of encouraging entrepreneurs. We are an open economy and we are operating in free trade. An open economy is the best economy. Western economies are of more help to their people than other economies we hear about.
We are dealing with the amendment at this point.
The question arises if there will be restrictions on the NDC by the European Community. It may happen that the matter could be taken to the European Court. The relationship of the NDC with the IDA will become rather strained because both will be involved in job creation. I should like clarification from the Minister on how he thinks the two bodies will work together.
All of this can be discussed on the section.
The Minister spoke about job creation. I am saying that the IDA and the NDC will have a function in that area. I want the Minister to tell us how he proposes to deal with that problem.
The Minister has said that an investment company will not do the job of existing State companies. However, it appears that the NDC will do a certain amount of the job of the IDA. It is becoming more difficult to pinpoint the difference between the NDC and the NEA. I understood the NDC would initiate new manufacturing projects. Surely they would be interested in getting the ESB, who import a considerable amount of the materials they use, to join with them in the manufacture of a product to supply their needs? In other words, it would be a new enterprise for an existing State enterprise. Is the Minister saying that is solely the job of the ESB or would the NDC be interested in a project like that?
Yes.
If the NDC do not have a development plan they will not get anywhere. The Minister said they are to leave the existing State enterprises to do their own thing and presumably this applies also to private enterprise. Surely the NDC must have some development plan to create jobs in the manufacturing and service area. The Minister has downgraded this aspect of the work of the NDC. It appears it will be rather like the IDA where they will be given a few pounds to get off the ground. What the Minister is proposing is just an investment company. At the end of Second Stage my understanding was that we would have a development corporation to develop new enterprises either on its own or with the assistance of existing State bodies. We understood the function of the NDC would be to develop new enterprises and projects. Because the Bill seemed to us to have the NDC reacting to events rather than the corporation having their own development plan, we put down this amendment. I gave the example of the ESB where there could be a joint venture. The Minister has not given us any examples to indicate what the NDC will do. I agree with Deputy Lyons that there is a grey area here. It is a very vague concept.
Of course the NDC will plan their own activities but they will not plan the activities of everyone else as well. They will not be responsible for doing the work of the Department of Agriculture, of the Department of Industry, Trade, Commerce and Tourism or of the IDA. They will be quite separate from the IDA, who are a grant-giving body while the NDC will be an equity investing body. The NDC will be empowered to invest on a joint venture basis with the ESB if they want to develop a manufacturing industry in association with some product they are buying. The NDC can approach the ESB and the ESB may approach the corporation. On the other hand, either of them can go ahead on their own. There are three options available to them. What I do not want and what this amendment would achieve — this applies also to amendment No. 17 — would be to give the NDC a huge administrative burden of doing work for other people who are already charged by this House with that work. I refer to Departments and other development agencies. I want to keep the NDC concentrated on developing new projects and new jobs that would not otherwise come into existence, either by helping the private sector along the way or by doing it themselves.
God knows, 70 per cent of our GNP passes into the Government's hands already and one thing we do not want is to have the corporation looking into what three or four other bodies are doing. I do not think that is what Deputy Mac Giolla intends by his amendment. My anxiety is that the corporation would concentrate on creating new viable jobs. That should be their sole work.
I am glad the Minister is not in favour of the amendment. I wholeheartedly support the Minister's thinking, but I suggest the Minister should follow that to its logical conclusion and get rid of section 10 altogether, because the section calls for the corporation to invest, in consultation, where appropriate, with State-sponsored ation to manage and assist and participate in joint ventures. This goes right through the section. What the corporation should be doing is trying to create jobs in association with semi-State bodies, and I do not think it is logical for the Minister to make the statement he has just made and then leave this section as it is. There are enough State agencies, as we know as members of the Joint Committee on Commercial State-sponsored Bodies.
We did not intend to convey in our amendment the meaning the Minister put on it. It is not intended that the corporation would take control of all State companies. The Bill refers to consultation by the NDC with companies in regard to new developments. That is what our amendment is intended to do. Obviously it is badly worded and I will not press it.
I move amendment No. 17:
In page 7, subsection (1), between lines 33 and 34, to insert the following paragraph:
"(m) to develop a comprehensive plan for revitalisation of the food processing industry through profitable innovation by the state sector, the private sector, and co-operative societies."
The amendment refers in particular to food processing. We need new enterprises and developments in that area and our idea is that the NDC would take an overall look at the matter and devise a comprehensive plan for development. They should not be going around with a mission of hope, wondering if they should assist this man or that. They should concentrate on a particular sector of food processing and develop it. It is a huge industry and a variety of technologies are involved. Therefore, the corporation should not be hopping around from one section of it to another. This function for the corporation was included in the original Programme for Government, which stated that the NDC would have a special responsibility for indigenous Irish resource development. We know that thousands of jobs, not 50 or 60, could be created in this industry. Our amendment asks for the development of a comprehensive plan for revitalisation of the food processing industry.
I am sure the Minister agrees that the next couple of decades will be particularly difficult because of the huge increase in the labour force, and that therefore we must think much bigger about jobs.
There is enormous potential for jobs in the food processing industry and I hope the Minister will tell us what his idea of a plan is for the NDC, or if he thinks there should be any planning at all.
I do not see any difficulty about the thinking in the amendment, which carries a laudable request, but I do not think we could put it into legislation because it would mean overlapping the work of the IDA. To my knowlege the latter body have been doing this work for years. There is nothing to prevent the corporation from investing in food processing or developing a comprehensive plan. That idea is sensible, but it could not be written into the Bill.
The NDC will be empowered to be involved substantially in the food processing sector as the Deputy will note from section 10 (1), paragraphs (f) and (g). In paragraph (f), they are being given a general responsibility to invest in the agriculture, fisheries and forestry sectors while in paragraph (g), they are being mandated specifically to develop long term supply contracts between producers and processers in such enterprises with a view to developing these sectors to the maximum. The problem of seasonality of supply will be addressed by the development of contracts. Seasonality is a factor that affects adversely almost every sector of agriculture in Ireland. It is the cause of the under utilisation of our resources.
In the beef sector, for instance, four times as many cattle are slaughtered in the last quarter of the year as are slaughtered in the first quarter. That means that the meat factories are under utilised. I could talk at length as to the reasons for that. Deputy Mac Giolla or others might superficially blame the farmers for this, but the farmer only reacts to the price he will obtain for his produce and to the cost of production at different times. In an effort to overcome those short term seasonal factors we must have long term supply contracts. The NDC will be mandated to develop such contracts.
By way of assuring Deputy Mac Giolla, he may be confident that the NDC will be doing this in a planned way. They will be taking account of the IDA plan for the food processing sector. The NDC would regard that plan as one in general terms and then ask themselves what sort of specific plan they should draw up for investment, a plan that would support that broader plan and achieve the corporation's specific objective which is to make money and create jobs. As Deputy Brennan has pointed out correctly, to give the NDC the role of drawing up a comprehensive plan for the entire sector, apart from those matters that will be within their direct remit, would be to give them a quasi administrative role which would not be desirable, which would cause overlap and a misdirection of resources. They should be directed specifically towards investing, either on their own or in conjunction with others, in job creating projects or in projects that will make profit.
When talking about joint ventures, there is some merit in saying that the co-operative sector will have a role to play in terms of the NDC because all our co-operatives are fairly starved in terms of capital. I should hope that if what is envisaged for the NDC should come to fruition some of the co-operatives and especially the more advanced ones in the food processing sector would put forward some projects which the corporation would be forthcoming in assisting. There is a vast resource in that whole area in terms of technology and skill and this could be utilised for job creation in downstream processing but the major problem is a shortage of funding. The money is not readily available.
The Minister referred to the factor of seasonality of supply, but the only area in the food sector that I would consider vulnerable in that respect is the area of milk production. In all the other areas, seasonality is a factor throughout the world. Sugar beet and such vegetables as cabbages and carrots are harvested in late autumn or early winter. That is the case here as well as elsewhere so I do not understand why the Minister would refer to seasonality as being a problem. Those of us who have travelled on the Continent will be aware that the position is similar there. On many occasions I have seen sugar beet being harvested near Schipol Airport in Holland in the month of December so that is a seasonal commodity.
We have allowed our food industry to go into decay. We have lost out on marketing and on downstream processing in the added value area mainly because the farming community did not have the money to fund the industry as neither did the sources or agencies with whom they traded. If there is anything worthwhile in the NDC, this is one area in which they must have a role to play so far as joint ventures are concerned. What concerns me about the capital aspect, though, is that the corporation will have to acquire their capital in the market place and they will then lend to the other agencies at rates higher than the market place rates. That is where I see the weakness in the NDC.
I was interested in the Minister's point about paragraph (g) and in particular his references to long term supply contracts and to the seasonality aspect. I agree with Deputy O'Keeffe that seasonality is a factor in regard to most crops but it can be overcome in the case of beef and to a great extent in the case of dairying. It is a problem that has been overcome to a far greater extent on the Continent in the dairying industry than is the case here where there is a 14 to one difference between summer and winter production levels compared with a ratios of two to one on the Continent. Therefore, there is a great possibility of improving the seasonality aspect in the areas of milk and beef. The Minister said that this is one of the areas in which the NDC would interest themselves. That would be good because it would make an enormous difference in the area of the production of soft cheeses, for instance, to have an all year round supply of milk.
There is nothing in the Bill that would prevent any one in the agricultural area or in any other area from telling the NDC that their involvement is not desired, so how then will the corporation be able to move into such areas? The co-operatives and the Department of Agriculture have been dealing with this whole area for years. They have been dealing with the matter of seasonality, so how are the NDC to move in and say that they will alleviate whatever problems may be involved?
There is an answer to that. The new paragraph (a) will give the NDC the power to set things up themselves. They will not necessarily have to be in co-operation with anyone else. Paragraph (c) of subsection (1) will empower them to establish, either alone or in co-operation with a State-sponsored commercial enterprise, any enterprise which has reasonable prospects of success.
Will that not be by invitation?
They can act alone if they so wish.
But the other body would have to invite them.
Only if they are going in with someone else, but they can act alone. Therefore, there are no grounds for Deputy Mac Giolla's fears in that regard. I welcome Deputy O'Keeffe's expression of hope that agricultural co-operatives will come forward to the NDC with various projects.
I am still of the opinion that the amendment should be made.
Can the Minister explain the reason for his comment that the co-operatives should come to the NDC?
The reasons are as given by Deputy O'Keeffe.
