I thank the Members for the welcome they have given the Bill, the purpose of which is to convert into equity the £18 million guaranteed loan which the State would have to pay in the event that Irish Steel Limited were to close. The improved performance of Irish Steel Limited in the past few months — as a result of my intervention with a view to getting rationalisation proposals in Irish Steel Limited agreed — combined with improved conditions in the market place, in terms of the reduction in the price of scrap and some modest improvement or at least stabilisation in the price of steel sold by the company will lead to a profitable future for the company.
In my remarks I paid tribute — I am sorry that that was not echoed in any other speech in the debate — fulsomely and deservedly to the chairman of the board, Mr. Kevin McCourt, for the work he has done in having this agreement reached and also in seeking a joint venture for the company which would bring in further equity. He and the board have done very valuable work in this regard.
Deputy E. O'Keeffe asked about the reduction in the guaranteed borrowings. This occurs because various equity injections, including this one, have reduced significantly the guaranteed borrowings by converting them into equity. Consequently there is no need to have the high borrowing limit — in fact it is not borrowing but equity that is providing the finance for the company. I suppose in the long run it is a protection for the taxpayer as well, although it will not be possible after 1 January 1986 to give any further guaranteed borrowings. Guaranteed borrowings, just as equity or financial injections, are ruled out under the EC Steel Community aids code for 1986 and subsequent years. I am very glad of this because a most undesirable situation has obtained in which European Governments have been competing with one another in pouring money into the maintenance of steel undertakings in a surplus market where they could not really compete, using up money that could otherwise have been used to create viable employment elsewhere.
Let us not forget that all those very substantial sums — and Deputy Lyons I believe quoted correctly — are being given by other governments, much larger than anything we are doing, to their steel plants. Essentially that is money which should not have been given at all because the Europe of the future will not be a Europe covered in steel rigs. It is a Europe of sophisticated brain-based service-based economies. For Europe to be using money that it should be putting into forward-looking investments, creating an environment for continuing autonomous growth, on essentially the prolongation of the life of an industry which may well more accurately represent the Europe of the years prior to the Great War rather than the Europe of the nineties is not very sensible.
When there was a situation in which Europe was divided into countries which had engaged in warfare with one another twice in this century it was considered important that each European country should have its autonomous steel industry. That is similar to its having its own coal industry because it could not rely on other countries for supplies of these products in a wartime situation. That imperative is no longer there because we now have a united Europe as far as economic matters are concerned. The need for each country to maintain its own separate coal and steel industry has disappeared. Indeed, the first really important step towards the unification of Europe taken after the last war was the foundation of a European Coal and Steel Community, in other words, to remove the economic basis of separateness upon which different nations within Europe had gone to war on two occasions in this century. To hark back, as some do in looking at the steel industry, to the economic thinking that pre-dated the creation of the European Coal and Steel Community, based as it was on a separate industry for each state, is ante-diluvian and certainly pre-Great War economic thinking.
On the other hand, there is, of course, a justification for the maintenance of a steel industry on a non-subsidised basis if it makes a profit and contributes effectively, and I hope that will be the case as far as Irish Steel are concerned because this is a modern plant, among the most modern in Europe, and in an era of low scrap prices they have considerable advantages over other steel industries. They had big advantages over the continuous process steel plants where they were essentially producing their own iron and then converting it into steel, whereas Irish Steel were able to use scrap which was in very substantial supply. However, Irish Steel were hit very hard when scrap prices went up and the more traditional continuous process industries thereby gained an advantage. It looks this year as if that is changing and we are moving back to where the natural advantage of scrap use as distinct from in-house iron using plant is restored. I hope this will endure and that, therefore, Irish Steel will benefit from the modern nature of their plant.
One error that was, perhaps inadvertently, in Deputy O'Keeffe's contribution was his reference to EC aid and for Irish Steel. No EC aid is available for Irish Steel. EC aid is available for redundant workers leaving Irish Steel, we hope, and that is under negotiation at the moment, but any money that is going or has gone into Irish Steel has been exclusively money provided by the Irish taxpayer. The fact that we must get the consent of the EC to give that aid does not mean that the EC are contributing £1 for £1 or 1p for each £1 that we contribute. Every penny must be provided by the Irish taxpayer. It is important that people understand that.
I thank Members of the House for their support for Second Stage of this Bill.