Dáil Éireann debate -
Tuesday, 16 May 2000

Vol. 519 No. 2

Cement (Repeal of Enactments) Bill, 1999 [ Seanad ] : Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Rabbitte

When the debate was adjourned the House was agreed that the Bill is not controversial. It merely seeks to repeal legislation which is a hangover from a protectionist era and will contribute to a more competitive marketplace in the cement industry.

When I spoke, I set out a number of questions which I hope the Minister can answer because a great number of people outside the House are awaiting answers to those questions. They will be particularly interested in the impact of the Bill on the cost of house building. The Bill is otherwise an innocuous item of legislation and merely takes redundant legislation off the Statute Book.

In terms of competition, will the Minister of State address the long-running controversy affecting small producers in the industry and the alleged abuse of dominant position? I am sure he is familiar with the organisation known as Quarry and Concrete Family Alliance in which the principal might be a gentleman by the name of Mr. Seamus May, who I recall was in touch with me a number of years ago. I have not talked to him in the past couple of years. In current correspondence in anticipation of the Bill being introduced in the House he again draws attention to his conviction and, apparently, that of the small producers with him in the alliance that they have been the victims of anti-competitive practices in the industry. This is a good opportunity for the Minister of State to tell us what he knows about the matter and what his assessment is of the claims being made. I am aware that it featured in a series of court actions, distinct from the one to which I referred in Kinnegad, in terms of restoring a company by the name of Amantiss to the companies register. It is important that the opportunity is taken to clear the air. While it is not a sin to have an 80% share of the market or to hold a dominant position, it is, legally speaking, a sin to abuse that dominant position.

This is an important issue in another regard. I understand from expert sources, including inside the public service, that arguably the biggest problem confronting the country is not the £42 billion investment plan but whether we have the expertise, skills and manpower to implement it. For example, it is extraordinary that only two tenders were received for a recent major road project. The Taoiseach has made a statement, which I understand perfectly, to attract workers and contractors from outside the country. The lesson is that for a major building project such as this one will not attract German or French contractors, one is essentially looking to British contractors in the hope that they will bring workers with them, assuming that the Minister of State's colleague, the Minister for Justice, Equality and Law Reform, will let them in. We need them if we are to put this infrastructure programme in place.

This is not separate from the issue being discussed. I would be greatly obliged if the Minister of State addressed some of these issues. While I am all in favour of tidying up, doing the housekeeping and taking a redundant Act off the Statute Book, I cannot the see the point in us being here otherwise. Nobody has looked for a licence in the past 20 years. If memory serves me correctly, it was observed more in the breach than in the observance. Other than that I cannot see the relevance. I ask the Minister of State to address specifically the claims being made by Mr. May and indicate whether it is considered that there is cause for concern about the matters raised in respect of the abuse of dominant position and the use of anti-competitive practices to do down or put out of the marketplace small producers or to prevent the entry into the marketplace of new producers.

Mrs. Owen

As the Minister of State and Deputy Rabbitte said this is not earth shattering legislation, but the question that comes to mind is, from where did it come. Of all the work that needs to be done why are we discussing the Cement (Repeal of Enactments) Bill, 1999? I was not aware of any particular problems or lobby on the issue. Of all the legislation that needs to be tidied up or repealed why did this Bill jump out of the concrete block? When it was placed on my desk and I saw it was being sponsored by the Department of Enterprise, Trade and Employment I thought it would not cause any particular stir but I was wrong. Funnily enough, it has generated more interest than a Bill of the size of the Copyright and Related Rights Bill and I have been surprised by some of the information forwarded to me. While everyone who has been in touch with me is in favour of the repeal of the legislation in question, the Bill has stirred up some sleeping ghosts, particularly for small producers.

It is important that we look at the concrete industry. In the last week I have received a copy of a study by KPMG entitled A Strategy for the Concrete Industry in Ireland from the Irish Concrete Federation. It contains some useful information on the scale of the industry and places in context the matter I wish to raise, the Competition Authority and the complaints received about the failure to examine the industry.

Total output in 1999 amounted to £992.8 million, of which the extraction sector – stone, sand and gravel – accounted for £357 million. The manufacturing sector – readymix concrete – accounted for £253.7 million; concrete blocks, £122.1 million; precast concrete, £120 million, and asphalt, mortar and other products, £140 million.

It is ironic that we are discussing the concrete industry at a time when the issues of housing, building and rezoning are being discussed inside and outside the House. We have reached the stage where there is a sense that nobody should be making concrete and cement and nobody should be building anything, that it is an issue we should not discuss but that is foolish. It is a major industry and we have to look at who runs it and how it is run.

Stone, gravel and sand extraction and readymix concrete etc. which account for £464 million are the basic ingredients for the housing, commercial, agricultural, infrastructural and contracting sectors. Another £11.6 billion will be allocated for house builders, local authorities, business, Government, farming, public bodies, developers and investors. That reflects how intrinsically the concrete industry is built into our lives. One cannot put down flagstones in one's back garden, a path or build a chimney without using concrete products. The concrete industry is all pervasive.

This report indicates that the industry's revenue has increased by more than 40% between 1997 and 1999. More than anything else, that gives an indication of the booming economy, the increase in development in agriculture, business, industrial sites, housing and other sectors of commercial activity. A survey of the industry shows that the output volume of the industry, rather than price increases, has led to the industry's increase in revenue and that the price of products has remained fairly stable.

According to CIF published data, the annual average price increase in manufactured concrete products for readymix mortar and concrete is 1.7% per annum and 2.2% per annum in respect of concrete blocks. Those figures are well below the rate of inflation. According to this KPMG report, that element does not appear to be the reason house prices have soared out of all proportion. Other factors rather than the price of products in the concrete industry have contributed to that.

According to the figures in this document, even with that increase, it appears the industry is flexible and can increase its capacity without too much difficulty. Demand was catered for during 1999. A major problem arises in respect of the Government's national development plan which provides for £40 billion in investment. Concern has been expressed that the industry will not be able to produce enough or keep up with what will be required to deliver on what is provided for in the national development plan. I am sure that is of concern to the Minister. Investment of £40.6 billion is expected up to 2006, of which approximately £17.6 billion, or 43%, will be directed exclusively towards public infrastructure and there will be additional regional spending. There is a concern we may not be able to deliver on what is provided for in the national development plan – a concern beginning to be felt by IBEC and others.

The Government has not only been extremely tardy in setting up structures for public private partnerships, but it does not seem to have an understanding of how they will operate. We have two examples of how they have operated in terms of the East Link bridge and the Westlink bridge, but the system in that regard then appears to have fallen down. There does not appear to be a serious effort by the Government to deal with public private partnerships. For that reason I am concerned we will not be able to deliver on what is provided in the national development plan. I hope the Government is considering seriously not only what is provided for in the national development plan but how those proposed developments can be delivered.

The national development plan will impact severely on the construction industry. The debate on this Bill presents us with an opportunity to examine how the plan will impact on the construction industry. There will be direct financing of public built infrastructure and co-financing of building investments will be encouraged. That will apply to industries, private agricultural investment and the service industry sectors. The concrete industry will have to deliver on private sector housing and private sector retail commercial development. It must be able to meet the challenges to which those developments will give rise.

As the Minister of State will be aware, it is estimated that approximately 48,000 new dwellings will be built over the next five years or so. It is also estimated that there will be a 4.3% increase, on average, in the building of offices. The rate of growth in the industrial sector will probably not be quite as fast as in previous years, partly due to the current labour shortages.

As I am addressing my comments to a Minister of State in the Department of Enterprise, Trade and Employment, I want to tell him that I believe we have reached a point where IDA Ireland and Enterprise Ireland will have to seriously consider whether they need to accommodate every investor who wants to invest in Ireland. We must be sure we can match the advantages we offer foreign investors with the labour needs they will require, otherwise companies will open here and then close with the consequent disappointment, pain and the relocation of workers who will probably have to sell houses they bought. The investment of IDA grants in such companies will take years to regain in revenue, as the building from which such a company operated may have to be sold.

We have reached a stage where we must be more selective. I do not want investment curtailed, but we must ensure we can deliver on what is required in respect of foreign investment. Matters such as the provision of toxic waste disposal facilities must be considered. If foreign industry is invited to invest here, we must ensure the necessary infrastructure is in place to allow it to work effectively and safely in an environmentally friendly way. There is no point in turning a blind eye to that need.

We all extol the work of the IDA. The Minister for Enterprise, Trade and Employment visited India recently. The first thing she had to do on her return – as each Minister does on returning from such a visit – was to write a statement on the number of new industries that will invest here and the number of new jobs that will be created. It will take a courageous Minister to take a stand and say we should slow down the pace a little and not accept every industry that wants to invest here, as we may not have enough people to staff such industries. The demands in respect of such investment will be enormous and we must ensure we do not get a bad name throughout the world for not being able to provide what is needed to meet demand.

A total of 5,000 public sector houses will be built annually over the next five years. That will require substantial financial investment and their provision will put a major strain on the construction industry. I hope that industry will be able to match what is required to make that provision.

There are labour shortages in a number of the skilled jobs and also in the semi-skilled and low skilled jobs in the construction industry. Unless 7,000 or 8,000 workers had come here from England and elsewhere to work in the construction industry, we would be in a dire situation.

I remind the Minister of State of the dangers attached to the lack of action by the Minister for Education and Science with regard to apprentices. Apprentices are required to complete six years training. One phase in terms of education is completed with FÁS and phase 4 and phase 6 are supposed to be completed in the colleges of technology, where apprentices are required to participate in full-time education for a period. Without completing that moiety of an apprenticeship an apprentice cannot qualify. At present, particularly in the construction industry, some apprentices are not moving from phase 3, which comprises on-the-job experience, to phase 4 to complete their education moiety because places are not available and the colleges will not provide them.

I hope the Minister of State will take this matter on board. The issue is appropriate to this legislation, as we are discussing the cement industry, which is the lifeblood of the construction industry. Apprentices, whether completing bricklaying, electrical, plumbing or other apprenticeships, required by the construction industry must be able to complete their training.

We have heard about bricklayers who can command a £1,000 a week at a minimum. To retain workers, some builders have given them not only pay increases but bonuses for each job they have completed. This is a dire situation which will worsen if Minister does not take note of it.

I am concerned at the capacity of the local authorities to get people to build local authority houses. I have been informed by Fingal County Council that if it wants to build nominee houses it cannot get anybody to tender for them because the construction workers are involved in the big projects. Therefore, somebody on a housing list has to wait while the person buying a private house will get his or her house and industry will get its buildings. Local authorities cannot pay workers such high amounts of money for local authority work. In county councils the houses approved for building in 1998 are two years behind. It takes two years to get to the point where they are built and occupied. This causes chaos for those on the housing list and people are suffering. I hope the Minister will take an interest in this issue.

I wish to refer to the Competition Authority, its lack of resources and the fact that it has never conducted an investigation into the alleged cartel in the cement industry. The enforcement officer of the Competition Authority recently handed in his resignation on the basis that he had not got the resources to carry out investigations into some of the cartels that exist. It is estimated that 1% could be added to our GDP if the Competition Authority was working properly. It is a scandal that the Minister, Deputy Harney, has refused to give the Competition Authority its due resources. There are no gardaí attached to it. The economists, with the exception of two economists with four and eight months experience between them, have left. I am not saying they are not up to the job, they are just inexperienced. There is no lawyer attached to the Competition Authority. Yet the Minister has already announced that her pet project, the company law enforcement agency – legislation for which has not yet gone though the House – will have eight gardaí and 30 plus staff while the Competition Authority is left bereft of resources to conduct its investigations.

In a recent article in the Sunday Independent, journalist Gerry Byrne said a major probe into cartels and other anti-competitive conditions in the quarrying and concrete industry collapsed earlier this year when the Competition Authority failed to get additional resources from the Civil Service. He made a comparison with the telecommunications regulator who has a staff of 50 to look at one industry while the Competition Authority, the poor relation, is left aside and cannot get the necessary resources. I have a letter from somebody else who asked the Competition Authority to look into the co-operative creameries. The reply dated 14 April 2000 read:

I regret I have to advise you that at the present time the Authority is not in a position to pursue the matter due to lack of resources.

If there is a complaint about any industry that might be involved in anti-competitive practices, lack of resources should not prevent the Competition Authority from investigating it.

I am sure the Minister received, as we all did, a document from the Quarry and Concrete Family Alliance. If the Minister has not got a copy of this document I will hand her mine. The document is scathing of the way in which Cement Roadstone has been able to build up a monopoly. Cement Roadstone will say it is not a monopoly and will refer to various companies. There are a number of companies which appear to be independent but when one looks at them that is not the case. In an article in the Sunday Independent of 17 October 1999, CRH has confirmed that it controls a second quarry company in the south west and goes on to mention that it has a 51% interest in Joseph Hogan of Glin and Foynes, County Limerick and mentions other companies in which it has a 51% interest. However, because the companies are so small, CRH did not consider it necessary to include them in the annual report.

The accusation is that there has been a hidden buying up of independent companies to give the impression that those independent companies, with their own names, are still independent when they are part of the Cement Roadstone Holdings cartel. Will the Minister give a commitment at the end of this debate to give the Competition Authority an opportunity to look at the allegations? It may be that not all the facts stated in this document are correct. It may also be the case that the facts which Cement Roadstone Holdings will give me are not all correct. An examination of this industry is needed to see where the truth lies. We need to ensure that in repealing this legislation we do not leave matters in the industry in a bad state.

Mr. Gormley

While I welcome the Bill we must ask why it has taken so long to introduce the Bill. It is probably due to pressure from the European Union. It gives us an opportunity, however, to reflect on the nature of Cement Roadstone Holdings. CRH has been an enormously powerful company. It has played a pivotal role in IBEC. It has had a monopoly position. That is unhealthy not only for the economy but for politics. The nature of CRH reveals the very incestuous nature of Irish business. We need only look at the make-up of CRH and the overlap between it and other companies to begin to get the full picture. The chairman, Mr. Barry, is the deputy governor of the Bank of Ireland; Howard Kilroy, the Governor of the Bank of Ireland, is on the board of CRH. Don Godson—

Acting Chairman (Mrs. Barnes)

I remind the Deputy it is not the practice to mention names from outside the House in the House.

Mr. Gormley

That is not quite correct. I have checked the record of previous speeches and I know this is the case. I am not trying to be obstreperous, rather to indicate that the Governor of the Bank of Ireland is also on the board of CRH. If ever there was a company that was a home to the golden circle this is it. We can consider also Mr. Des Traynor, the bagman for Mr. Haughey, and his role in the controversy of Glen Ding. Mr. Traynor carried out his activities in terms of the Ansbacher accounts from the headquarters of CRH.

This company has been involved in many different activities. I have a number of questions to put. How is it that CRH has 100% of the explosives industry? How was it allowed to abuse its monopoly position for so long? Why were those family concerns, mentioned by Deputy Owen, bullied and why do they feel so aggrieved? Why was CRH allowed to manipulate the market to the extent that cement prices were the highest in Europe at one stage? Deputy Owen said she was not sure whether the allegations contained in the document can be borne out.

Mrs. Owen

Without an examination.

Mr. Gormley

Exactly. I have met with these people and I have to take them in good faith. They appear to be extremely sincere and very aggrieved at what has happened over the years. Why did the Oireachtas allow the introduction of the cement certification scheme against EU law? In 1969 why was Roadstone allowed to take over Irish Cement? Why did not the Government intervene?

These questions need to be answered and the answer is simple – these people had enormous influence. Later we will debate the question of corporate donations. We know that CRH contributed handsomely to the political parties. One of my colleagues, former councillor David Healy, took out one share in CRH to entitle him to go along to the shareholders' meeting. He asked what parties CRH contributed to. He got the answer that it contributed to all the political parties. Why was there no intervention? Why were these people allowed to ride roughshod over everyone? The answer is that politicians stood by and let it happen. This is a terrible indictment and CRH is an example of why corporate donations should be banned. I agree with Deputy Owen that this is the time for a full investigation. Mr. Justice Moriarty said he will try to investigate the scandal of Glen Ding, but the Competition Authority needs resources to enable it examine the way CRH and others operated.

I wish to deal with the role of the cement industry in the so-called progress of this country. There was an extremely interesting discussion in the House this afternoon involving the Taoiseach. It was one of the few times I have been captivated by what was going on in the Chamber. The discussion was about a quality of life index and Deputy Bruton and Deputy Quinn also made some interesting contributions. A large number of cranes on the sky line and much building activity is often considered a sign of progress. The national plan involves the building of more roads, more houses and better infrastructure. However, will that improve the quality of life in Ireland?

To date, the national plan has not proved a recipe for the improvement of quality of life. In terms of ecological sustainability, it is a retrograde step. It will increase enormously the amount of COf7>2 that Ireland emits. The country does not have a hope of complying with the Kyoto Protocol under which it is allowed to increase emissions by 13% above the 1990 levels. If all the cement factories required because of the Celtic tiger economy and the national plan are built Ireland will not have the slightest chance of complying with the Kyoto Protocol. Cement production creates huge amounts of carbon dioxide and local air pollution. Are there sufficient deterrents and do we have the capacity to clean up their mess?

If one considers places where cement factories are located, one will see the terrible local pollution that is caused. The environment has, to a great extent, suffered in those areas and I have received many representations from people in that regard. Ringsend in my constituency is an environmental blackspot. The worst industry imaginable is located on the Poolbeg peninsula. There are two concrete crushing plants and when the wind blows in the direction of Sandymount, cars in the area are covered in a fine dust. People are breathing in this dust and there are huge problems in relation to asthma with one in four children in the area suffering from the condition as a consequence.

There must be a role for the EPA. It has been slow to act and this is another example of the power of the people involved. Why has the EPA not come down heavily on companies such as CRH? This has not happened. Luckily, one of the concrete crushing plants in my area is being closed but it has been a slow process. It has taken much hard work from me and others. Regarding the Taoiseach's comments earlier, it is important to establish a quality of life index. It is fine to say that there will be huge investment in roads and houses and that this will make a tremendous difference to our standard of living. However, if our quality of life is reduced as a consequence, serious questions must be asked about whether we are taking the right direction.

If there is increased concrete and cement production for the construction of roads, there will be more cars and more COf7>2 will be produced. It will become an unsustainable cycle. Although the Taoiseach rejected my view, the Government cannot distinguish between standard of living and quality of life. If this continues, many people will become disenchanted with the Government. Health crises and housing problems are bad enough but serious questions must be asked if the environment is also suffering.

I welcome the Bill because it repeals specific legislation. However, many questions arise in relation to CRH and I hope these questions will be asked in the future. The events we are witnessing at present at the tribunals are miniscule compared to the various stories of which we are aware about how people operated in shady ways. These people have had so much clout that they feel untouchable at present. However, the day will come when justice will be done. I hope when these matters are investigated that this white collar crime will not go unpunished and people will be put behind bars for terrible corruption over the years. When the investigations delve into the activities of a company such as CRH, I hope all the dirt will come out.

Mrs. T. Ahearn

I welcome the Bill. The debate provides Members with an opportunity to discuss a matter about which we are concerned. Many activities in the past of which we were aware are now coming into the open and it is good that Members have an opportunity to comment.

The purpose of the Bill is to repeal the Cement Acts, 1933 and 1962. It will remove the requirement that any person proposing to manufacture cement may do so only in accordance with a licence issued by the Minister for Enterprise, Trade and Employment. In hindsight, the Cement Act, 1933, was extraordinary because it gave the Minister total control over who could manufacture cement and where and how it could be manufactured. However, we cannot judge the Act on the basis of the conditions that prevail at this time – it must be judged on the conditions that prevailed when it was introduced in 1933. At the time, it was excellent legislation which contributed to the development of the native cement industry. It achieved its objective in terms of ensuring there was an indigenous cement industry, capable of meeting the needs of the country.

However, times have changed. It is obvious that the Act is now redundant and obsolete. It was introduced during a protectionist period when it was necessary for a small, closed economy such as Ireland to protect a native industry. Such protectionist policies are unnecessary in the current economic climate. I agree with other speakers that it is amazing the Act was not repealed before now. I hope its repeal will improve the conditions for further planned development and provide a fairer and more even playing pitch for those in the industry. I congratulate the Minister on examining existing legislation and taking the opportunity to repeal it when it is obvious that it is no longer relevant.

I share Members' concerns about the success of the Act when it is clear that only one company obtained a licence for the manufacture of cement since the legislation was put in place in 1933. This correctly and justifiably raises many questions. It is incredible that no competitors ever received a licence throughout the years. We must ask why there were not more applications and whether the Act was overprotective. Did it produce a monopoly? My answer to those questions is "yes".

There are different theories on why there was only one licensee. It may have been due to the high level of investment needed to stimulate an industry in the cement business. Overall, it was due to the unnecessarily protectionist element of the Act which gave a dominant position to one player – CRH.

I know that, in the contributions to the debates in the Seanad and the Dáil, much was said about the dominant position and many questioned the activities of CRH. All such questions are justified. Before asking any questions, I acknowledge that CRH was successful and provided good employment. Many towns and families are indebted to the role it played in their economies. However, in judging the success of any such company, we must also be realistic. We realise that it had no competition, that its road was an easy one to travel and that it was a monopoly. It is disappointing and regrettable that, despite its monopoly position and the protection it was given, our native industry behaved very badly and to such an extent that the EU fined CRH £3 million for its uncompetitive behaviour.

I am concerned about some of the details and points made in a submission from the Quarry and Concrete Family Alliance. Like Deputies Gormley and Owen, I congratulate the alliance on the excellence of its submission. I also found that the people who produced this document were sincere. One must accept that they have a valid point. They opened our eyes to many activities which appear to be ongoing in the cement industry. It is clear that no one else had a chance of entering the business when faced with the dominant position and industrial practices of CRH. This was unfair to those who wanted to make a living out of cement manufacturing. It was bad for our economy, for customers and for our competitive image.

This document proves beyond doubt that many small players were forced to close because of the dominant position of CRH. It is regrettable that we, as politicians, especially those of us who had any period in Government, were not more observant of what was happening within the cement industry and that we did not realise that other potential cement manufacturers had no opportunity to develop and become part of this successful and profitable industry. Will the Minister of State examine thoroughly the points made in the submission? We should take great cognisance of them. They are made by people who tried to make a living out of this business but could not succeed because of the uncompetitive practices and dominant role of a major player.

The Bill will be successful if it at least opens up doors and avenues to others who wish to make a living from cement manufacturing and also allows us to find out about CRH. It appears from the submission, and I accept the points made in it, that, irrespective of the title of some manufacturing industries, we do not know if they are subsidiaries of CRH or independent players. This document, which has been mentioned in the context of the introduction of the Bill in the House, merits thorough consideration on the part of the Minister of State. The repeal of the Cement Act, 1933, and the debate in the House will be worthwhile and fruitful if we end up with a climate where everyone, big or small, has an equal and fair chance of developing and benefiting from this industry and where the monopoly of CRH, which deprived others of making a success of what potentially could have been a successful business, is ended. This must be the outcome of the legislation.

As well as being disappointed by the fact that the practices of CRH denied small players from developing, our questioning of its role in the economy is further merited by the activities of some of its directors. It is shameful that such a company, which was given such support by legis lation and the political system, abused its position. I am sure everyone agrees that any such abuse and those responsible for it must face the full rigours of the law. They not only tarnished the image of CRH but also of Irish businesses. There is no excuse for this and their practices have been and are unforgivable. I hope they will be taken to task for it.

With the repeal of the Act, which means no regulation or legislation exists in the area, we must question the current position. Whither the future of the cement industry? I hope the planning authorities and the Environmental Protection Agency will do a good job in the role they will play in any applications which come before them. It will be to the benefit of the industry and the people who may live close to a plant and it will ensure that all can live happily alongside each other if it is ensured that such plants operate according to the standards expected of them and that there is a healthy environment. The industry can flourish in a satisfactory and peaceful environment, irrespective of whether it is CRH or any other manufacturer.

I hope that, as a result of this legislation, new investors will come forward with proposals to establish cement manufacturing plants in the State. I hope they will be successful. I look forward to the employment they will provide and to the huge benefits they will bring to the localities in which they will be situated. I also look forward to changes in the industry. We know the legislation being repealed was introduced in changing times. We now have a changed economy and changed circumstances. I acknowledge the important role the cement industry played in the economy over the years and its success. However, I also regret that so many people who could have benefited and who could have made successful and profitable businesses from the cement industry were isolated by the dominant position of CRH.

When the economy is thriving and the building industry is expanding at a rate we never dreamed we would experience, it is important that we have a successful cement industry which is able to meet the demands and output expected of it. It is the one sector of the economy which provides so much employment at present. It provides numerous opportunities for apprentices and for many people who have tremendous manual and technical skills.

Debate adjourned.