I just wish to appeal to the Minister to ask the Board to consider some scheme that would enable them to supply power to the farmers throughout the country. I think that is outside the scope of the motion on the Order Paper, but make the appeal to the Minister.
Accounts of the Electricity Supply Board.
The Seanad resumed consideration of the following motion:
"That in the opinion of the Seanad the report and accounts of the Electricity Supply Board should be expanded and clarified."—(Sir John Keane.)
If I might make an appeal to the Minister before he commences his reply it would be an appeal not to overload the staff of the Electricity Supply Board with the task of supplying heavy and elaborate statistical details which at present will fulfil no useful purpose.
In my reply I think the best way is to give details indicating the attitude which I propose to adopt arising out of these points that have been made by Senator Sir John Keane. Senator Sir John Keane did not leave out of consideration a matter that was more or less sub judice as between the Permitted Undertakings Association and the Electricity Supply Board. As that is pretty well under consideration at the moment I do not propose to refer to it. The Senator can raise that point in some other way in the House. The Senator has asked me as to the responsibility of the Electricity Supply Board in the matter of rates and he asked me as to their responsibility in regard to income tax. When the legislation dealing with the Electricity Supply Board was before this House I was asked by a Senator as to the liabilities of the Board in connection with these two points. I think I made it clear that as far as income tax was concerned we did not propose to change the present law and as far as rates were concerned I have provided special exemption under the Electricity Act of 1929. Outside of that I think I said that the Board was liable for the rates and should pay the rates. Both these matters may be called in dispute. Legislation will be introduced some day soon to deal with this matter and regularise the position. The exemption conferred by the Act of 1929 will remain but everything else in the way of rates will have to be paid according to the proposal that is coming before the Oireachtas. Income tax is also in dispute. At the moment, I have no proposal in regard to that. I think the position is clear. If, however, we find that there is still time, it is likely that in order to prevent the cost of legal action between the Revenue Commissioners and the Electricity Supply Board, we will bring in legislation to regularise that position. My view is that the Board ought to pay income tax. There may be a slight exception to be made and there may hereafter have to be adjustments as between the burdens that are to fall on the ratepayers or the taxpayers in relation to the State and the consumers of electricity. That matter will arise later.
Senator Sir John Keane drew attention to one item in the auditor's certificate in which it was stated that "the amount due to sundry creditors for materials purchased, constructional work carried out and expenses incurred has not been fully vouched by us, due to the fact that statements in verification of some of the amounts shown due in the book to creditors were not available." I have queried that point and found that it simply refers to this: that when the creditors' balances came to be investigated and a decision taken as to the amounts, documents were sent out to the various creditors indicating, as far as the Board's accounts went, what were the balances that were due and asking if there were agreements. In most cases returns were sent back which were in agreement not merely with the amount stated but also indicating the allocation of the amounts against certain items. In some accounts information had not come from the creditors, but there was no dispute as to the balance. What was in dispute was how the money declared to be owed was to be allocated amongst the different items of expenditure. That point will be cleared up later. That is all that is behind the auditor's certificate.
The next point made by the Senator was that in future the items for generation costs and distribution costs should be subdivided to show what proportion was salaries and what proportion was for materials and overhead charges. I want to call attention to one item in connection with that matter and I hope that it will clear up a lot of suspicion in regard to what has been described here as the revenue account and the items in that revenue account, lower down. These items refer to undertakings which were acquired by the Board and not at all to the Board's own operations. That account is again segregated solely in regard to the undertakings which were acquired at the date to which this account relates. In that connection I might say that hereafter, when the Shannon power is really the matter which the Board is using and on which their accounts will turn, I will most sympathetically consider— in fact, I have decided almost to accept—the Senator's suggestion that the further item of the generation expenses should be subdivided. I say "almost to accept" for the reason that it may be a year or two before a proper allocation of general headquarter expenses can be made. There may have to be some changes, but as soon as we can see a proper allocation of that, the items will be subdivided.
The Senator's next point dealt with the small amount shown against the interest on loans. That only means interest on loans on moneys borrowed by the local undertakings which had been acquired and has nothing to do with moneys advanced by the Minister for Finance. That is under the heading of loans. There is a discrimination in the accounts between the loans due by undertakings taken over and moneys advanced by the Minister for Finance from the Central Fund. "Advances" is the word used for moneys advanced from the Exchequer. That explanation would also answer the next point made by the Senator except the suggestion he made at the end as to how this capital sum of repayment might hereafter be dealt with. We had a suggestion that a capital redemption account might be opened and that the full sums of money advanced from the Central Fund should be shown with a subtraction showing the repayments up to a certain date and the nett figure plus subtraction would be shown in lieu of certain figures shown here. It was decided after consultation with the auditor not to have these accounts opened in this particular form because the amount of money to be dealt with was so small. I shall again, however, consult the auditor as to the advisability of instituting that capital redemption account and of treating these sums of money in the way I have spoken of. The suggestion that the Senator made with regard to segregating the sums according to the sub-head under Section 12 of the Electricity Supply Act of 1927 under which advances are made, will be adopted. In other words, we will show distinctly how moneys are advanced under subparagraph 2 and also under subparagraph 3. I cannot say, however, that the suggestion will be easily carried out on the revenue side, because it is not so easy to show how the two items can be segregated, as in fact we will be only dealing with one of the items, redemption. It may be possible even on the redemption side to make a similar segregation, and I will consider that.
On the question of the redemption of loans, and the very small sum which the Senator pointed out is provided this year for the redemption of loans, the Senator did not inquire so much as to the amount but rather as to what was the method of keeping the money set aside. For instance, he talked of showing the securities in which this money was invested. At the moment, this repayment was one of a group of cash disbursements made as soon as the cash came in. Again it is hard to say that the Electricity Supply Board will ever have on hands sufficient money to involve it in any investing policy, but if they do have a surplus built up—say in the repairs and renewals fund which will have to be built up from year to year—and there is any money in their hands which could properly be invested, the Senator's suggestion can be adopted and a list of the securities shown. The Senator will realise that most of the moneys shown were cash disbursements made as soon as the cash came in. The Senator referred to separate accounts and I will deal with that later.
I can assure the Senator I am making my best endeavour to see that the accounts are issued earlier, but you cannot expect in the first couple of years that things should be done as in the future. The Board is only finding its way and the form which the accounts will ultimately take has yet to be decided. The present form is very different from that which the accounts will take when they become stereotyped and the office organisation is built up. As the work increases in a certain way we will have the organisation built up and the accounts put on a different basis.
Senator Jameson made a comparison with the Dublin Electricity Department and said that there should be some details given. I have been told that the old accounts prepared under the Board of Trade regulations were devised only for the purpose of giving a lot of useless information and hiding the exact facts from everybody else. That does not at all mean that there may not be details that could be given in the future. It would, however, be very difficult for me to compel the Board to make any such wide division which the Senator read out dealing with the Dublin accounts, but we could divide certain accounts. The particular matter to which the Senator referred will really come in due course. I think at the moment most people would say that it is unjust to put on the Board the task of compiling all this statistical matter when their operations have been really so limited and when in fact they have not data on which to base a statistical record.
Senator Johnson called attention to the fact that the auditors' report stated that "all head office expenses have been capitalised, no portion of the sum being charged against revenue." Even under the present form of accounts a certain amount of office expenses have been segregated or spread over certain accounts, but this is only a preliminary matter. It is only what one would expect in a preliminary report, which would not be so rigid as that which would appear later.
Senator Johnson raised two matters of policy, one being in regard to the question of power charges. I do not think the question of power charges really arises on this motion, but the Senator managed to get a foothold in the account to bring the matter up. He raised the general question of policy, and said that the Board, by a certain method of charges, may run counter to the industrial development policy which a Government might think was desirable. That question was raised in the two Houses during the passage of the electricity supply legislation. My recollection is that my answer was, and it holds good to-day, that the Board's policy, as outlined in certain sections of the Bill, is that they charge so much for current and so much only as will enable them to meet all expenses. That is implied in the legislation itself, if not absolutely clearly stated. It is also stated that amongst separate items their charges should be such as would pay their expenses for that item. If it is the policy of the Government, say, that the use of power from the Shannon Scheme should be to encourage industrial development by cheap power, and if that interferes with the Board's ability to make both ends meet, under the instructions they have, then it is a matter for a resolution to be brought in. It is a matter for the Government to give that direction, having got their authority from the Oireachtas previously, that such works should be charged in certain ways to certain classes of consumers. It is clearly laid down that the Board has to make such charges as will pay for the cost and, therefore, they are bound to make their charges on certain items pay for the costs. That cannot be urged too rigidly against them, because we all know that power-users ordinarily get cheaper rates than householders, who are charged at domestic rates.
The question I raised had reference to the use of power in Dublin for trams and power in Cork for iron works. Supposing another proposal comes forward at an equal distance from the power centre as say Cork, for an entirely new class of industry, is the Cork charge to determine the charge for the new industry? Can the Board adjust its tariff to further or retard a particular industrial development?
I think the Board's policy on the question of tariffs is pretty well clear. I think the Board is bound not to make any discrimination. They make it clear that they were dealing with rates for current for ordinary domestic purposes and not for power. They say there are two principles—one, that the rate charges must be such that the maximum number of consumers will utilise the supplies, and secondly that the rates of supply will be such as will correspond as closely as possible to the cost of supply for particular purposes, and that there should be no discrimination in between. Any business man will make an adjustment so that the large user would normally get better prices than the smaller purchaser, that is to say, if the larger purchaser takes it right through the year. If he is using it only intermittently he would have a discrimination against him, just as if the smaller user were only getting it for part of the year he could not expect to get it as cheaply as if he were getting it all the year.
Is the small user in any industry to have his electricity supply at the same rate as the big user in the same industry?
Generally speaking, the discrimination made gives the big user an advantage as a big user. I think that, however, had better be left over. There is a general policy laid down in the report. It does not deal with power charges except to a very incidental extent. If there is any question of discrimination arising the matter can be raised very easily and dealt with. It could be more reasonably dealt with when you have a concrete case.
Will the Minister say something on the question of a flat rate?
I was waiting to come to the Senator's remarks in the order in which I have them here. Senator Johnson raised a question of policy with regard to the appointment of civil servants. That question has been put many times to me. I do not know what it means. If it refers to a temporary appointment of two civil servants, Mr. Fay and Mr. Leyden, on the Board for three months, the explanation was that there was great overlapping between my Department and the Board, and I wanted to have closer information about the activities of the Board in relation to these items than I had generally. These two civil servants went on the Board for that period and then came off the Board in that capacity when the period ended. I do not know if the Senator has been talking of the general personnel of the Board.
I assumed a connection between the changes which the Minister has spoken of and the change in the chairmanship.
I am not going to speak on that until more definite questions are put to me and a more definite resolution brought forward. Senator Colonel Moore raised a point about the flat rate and he surprised me by saying that I had agreed with him in that matter. I doubt very much if I agreed with any such suggestion, because it is impossible under the Act. My first proposal as brought before the Oireachtas would allow a flat rate to be struck all over the country irrespective of the point to which current was to be carried, but amendments were put in, peculiarly, with a view of safeguarding the Dublin consumers against what was described as bearing the burdens of the unremunerative parts of the country. These amendments were accepted and, under the legislation as it is, the Board could not give a flat rate for the supply of electricity. The Board may give a flat rate for the supply of electricity on the outskirts of towns and villages. Possibly that is what the Senator meant. Four or five years ago I expressed the point of view that that would be the best way, but the bulk rate is a very small fraction of the final cost to the consumer and as far as the other costs are concerned, distribution charges and so on, the legislation lays it down that each area bears its own cost or, to put it negatively, that no area can be charged with the cost of distribution within any other area. That means that ordinarily it would be only a series of accidents that would bring about a flat rate all over the country. A flat rate is practically impossible.
As to the point raised by Senator O'Farrell, I queried that with the Electricity Supply Board, and find that they are clearly of opinion that a change of policy with regard to the system of house wiring is necessary. They now intend to develop a system of deferred payments as against the hire-purchase system. The main difference between the two systems is, that under the hire-purchase system, which they had been following, the consumer had to take standard fittings and the payments were spread over a very long period. In the case of the deferred payment system, there is a choice of fittings given to the consumer, but payments have to be made within a shorter period. The Board have made up their mind that the old hire-purchase system led to tremendous difficulties. Consumers were always complaining of having to take a particular type of fitting, but did not want to realise that if they went outside the standard fittings the price necessarily had to go up. It was also discovered that the lengthy period over which payments were spread made the hire-purchase system definitely unremunerative. The new system will have the advantage that it will give more in the way of choice to the consumer in the matter of fittings. The Board think that while the shorter period over which the loans are spread will not weigh too heavily on the consumer, it will have the advantage of bringing in their money much quicker than the old system. The new system will, it is believed, increase the consumption of electricity and be remunerative, which the old system was not.
Senator Jameson raised the general question as to whether the Board was making a profit or loss on certain items. He pleaded generally for a segregation of accounts as between three items. Under the legislation passed the Board have to produce separate accounts for the generation and distribution of electricity, and, thirdly, an account which covers their other activities. One of the separate accounts must cover their other activities. I have consulted with the officials in my Department, and also with the Chairman of the Electricity Supply Board, and I think it will be possible to prescribe accounts for, say, installations and for the salesrooms. I think that division of the accounts would meet the main point that the Senator stressed. Senator Jameson, in that connection, said that he was anxious, as a Dublin consumer, to find out how consumers were now faring under the new system. I think the Senator has his answer in that I promised him the information he asked for in regard to the separate accounts. When he gets those separate accounts he will know whether the sales rooms are being run at a profit or loss, and whether the wiring of houses that is being done all over the country is being carried out at a profit or a loss.
With regard to the citizens of Dublin, I think the answer is pretty clear. The citizens at the moment, on contract rate, have an advantage over the old rate and, in addition, they have the option of a different method of charge which, on the whole, will bring a further reduction to them. When I say that I am to be taken as speaking generally, because it is possible that an individual consumer by reason, for instance, of the amount of electricity consumed and taken in relation to the valuation of his houses, may have to pay a higher charge than was imposed heretofore. But, in the main, the rates that are now set out offer an inducement to the citizens of Dublin. They are a definite decrease on the rates that heretofore obtained and, in addition, the citizens have the option of a second method of charge.
The last point that Senator Jameson made is one of the most difficult things that we have to deal with— that is, with regard to the rules and regulations for the public safety. The Board have published certain regulations for the wiring of houses which are described as being provisional. These regulations govern the electrical wiring of premises to be connected with the networks of the Electricity Supply Board. These regulations will have to be supervised and changed, but that does not finish the question. It is not a very defensible position that we have at the moment. The Electricity Supply Board issues regulations governing the wiring of houses, say, and decides as to whether or not they themselves have carried out their own regulations. Finally, if anybody suffers by reason of the wiring they decide as to whether or not they are guilty of any dereliction of duty under regulations that they themselves imposed. That is not a very defensible position. It is one that we shall have to look into. It means that instead of my Department being able to divest itself of all responsibility and consequently of all its staff in connection with electricity, we shall have to retain someone who is expert in such a matter as this. It is a matter for consideration whether we can get some official who, while having other duties to occupy him fully, will be able to give the time required for a duty such as this. I am not at all holding that the present system should be continued, but there is some difficulty of getting another system arranged.
I can promise that most of the things that have been suggested will be attended to in the next accounts. While promising that I have been adverting all the time to the fact that the Board should not have imposed upon it the procuring of a whole lot of information which would simply hamper it in its activities, add to its expense and at the same time serve no useful purpose.
It must, on the other hand, be remembered that this Board was put in a peculiarly independent position. A promise was given that, in return for the very definite independence they got, the public would get the fullest information with regard to their accounts and, in their annual report, with regard to their activities. It seems to me that if we do impose something upon the Board in the way of an obligation which may involve expense that they ought both carry out the obligation and incur the expense in order to satisfy the public that their operations are being properly conducted. There is a point beyond which I would ask the Senator not to press me to go. I do not think that that point is anything like being reached at the moment. I think that most of the statistics asked for can be incorporated in the accounts.
If the Electricity Supply Board is to be embarrassed at this stage by the preparation of details such as the Minister has referred to, then anybody who has ever had to do with the controlling of large businesses must know that the members of the Board will have precious little time to devote to far more important matters than those mentioned here to-day. We have been told that this Board was put in an independent position. Its independence was implemented in the Electricity Supply Act. The present Chairman of the Board is a gentleman who, I understand, was at one time associated with the Income Tax Department. It is reasonable to assume that he knows something about accountancy. Mr. J.C. Foley, another member of the Board, holds a degree in accountancy, while Mr. Egan, another member has had a very extensive commercial experience. The officials of the Board have, I take it, been picked and selected for their competence to do the particular work they are entrusted with. I suggest it would be folly for this House or the Dáil to hamper the members of the Board at this stage of their operations by obliging them to stereotype the form which their accounts are to take, because anybody who knows what is involved in the matter must realise that these accounts will not be capable of standardisation until the activities of the Board attain to a greater degree of development. To ask for a better form of accounts at the present time is, to my mind, ludicrous. I hope the Minister will not ask the Board to prepare statistics which at the present stage of development would be perfectly useless and which would only add to the expense—an expense that will inevitably be passed on to the consumer.
I thought that we were going to end our discussion on this motion on a harmonious note. Senator Dowdall, however, has gone out of his way to be rather provocative about the whole subject. The motion was brought up in a friendly spirit, and moderate criticisms of the accounts were offered. In almost every case the Minister has gone into the matters raised. He admitted that the criticisms made were reasonable, and indicated that as far as possible the suggestions made would be carried out. I cannot see what justification Senator Dowdall has for saying that we are trying to impose on the Board the duty of preparing a mass of useless statistics and a lot of unnecessary work. I do not think the Senator was here when the motion was moved. If he were he would have known that it was clearly understood that the suggestions made could only come in gradually. In bringing forward this motion we are simply looking ahead in a reasonable way to get an accounting structure to meet the demands of a large expanding business. There is nothing unreasonable in doing that. The Senator's statement amounts to this that because there are experts on the Board we should abandon and abrogate our right of criticism, and give the Board a blank cheque to do what they liked. Rightly or wrongly we have a duty in this matter, and I suggest that we should use it with discretion.
I thank the Minister for the sympathetic way he has gone into this matter. I am sure he realises that we are not trying to embarrass him. I imagine that if the accounts were published earlier in future it would be possible to embody in the following year's accounts any agreed criticisms that might be made. If, for instance, the accounts were published in September or October and as a result of criticisms made during December, then I think agreed changes could be introduced in the following year which, for accounting purposes, would, I take it, open in the month of March. I desire to say that I am glad the debate has had the outcome that it has. The motion has had a very favourable reception, and with the permission of the House I ask leave to withdraw it.
Motion, by leave, withdrawn.