In bringing this very disagreeable Bill before the House I feel it will be necessary to go somewhat into the past history of the whole Shannon scheme and of the Electricity Supply Board as it was set up, in order that Senators may get a proper perspective of what has happened, in so far as that can be accurately revealed at the moment, and an indication of what the future is likely to be. The Bill before the Seanad asks for three things. The first is that two million pounds should be handed over so as to be left at the disposal of the Electricity Supply Board under certain conditions. Here I must draw attention to the phrase which occurs in Section 3 of the Bill. In the first place the Minister for Finance "may" advance—not "shall" as before—and, secondly, he may advance "all such sums as the Minister for Industry and Commerce shall from time to time certify to be reasonably and properly required by the Board" for certain purposes. I draw attention to that because it is quite clear it makes a fundamental change in the old-time constitution of the Electricity Supply Board.
In Section 4 I am asking the House to impose upon the Board the necessity of paying £2,000 in the way that is mentioned there. These are the three things that are in the Bill: a requirement of £2,000,000 for the particular purposes of the Electricity Supply Board: ment of £2,000,000 for the general purposes of the Electricity Supply Board; and in connection with that second sum there is the stipulation that the money "may" be paid by the Minister for Finance, but only after another Minister has certified that the sums so required are reasonably and properly required by the Board.
I said previously, that if not in this Bill, at any rate in the penumbra of people's consciousness, there were certain other facts. The first fact is that certain resignations were presented to the Executive Council and that the Executive Council accepted these. The second fact deals with the constitution of the Board in so far as that constitution has relation to part-time members, or to put that in another way, the question of the association, in a part-time way, of people having a business point of view with the full-time members of the Board.
The Shannon scheme proper is not in this Bill. By that I mean the scheme which provided for generation of electricity through the waters of the Shannon running through the turbines at Ardnacrusha and the transmission of the electricity so generated over the long distance system bringing it to the outskirts of towns and villages with a population of 500 and upwards. That was the original Shannon' scheme. It was system No. 1. I had to carry out the constructional part of that scheme for a declared sum of money, first to be £5,200,000. I should divide that figure into two items, the figure of £4,600,000 to be spent actually on construction and the figure of £600,000 which was to be set aside to meet interest payments during the time that the construction works were being built and to meet deficiencies arising in the early years before the scheme had come to the point that it was earning sufficient revenue to repay the moneys expended on it. No part of that money is in this Bill. I allude to it here so that the whole thing may be put properly before the House.
There was a second system—the distribution system. That depended on the Bill that passed through the Oireachtas in 1927, and was amended later. The two principal Acts dealing with the complete Shannon development are the Shannon Electricity Act of 1925 and the Electricity Supply Act— on the distribution side—of 1927. Both Acts have been amended. The Shannon Electricity Act of 1925 was amended in 1929. The Electricity Supply Act was amended in 1929, and again in 1930. Under the first Act the sum which I was authorised to spend on certain matters then detailed was £4,600,000, with the addition of £600,000 to meet certain deficiencies. Under the 1929 Act that sum of money was raised to an effective sum, for the purposes of the Shannon, of £5,700,000. Under the old system the £600,000 was included in the sum of £5,200,000. In the second Act there appeared, as an addition to the sum of £5,700,000, the sum of £156,000. Out of the sum of £5,700,000 —I am giving a round figure—plus the £156,000, the Shannon first system was to have been built out. It was regarded that that sum of money would be sufficient to meet all the charges that were necessary under the Acts of 1925 and 1929. It was considered almost certain that it would do. There was certain provision made for contingencies, but the statement was made at the time that the total could not be regarded as absolutely clear, that there might have to be another application to the Oireachtas for more money. At the moment I am not making any application for more money so far as that side of the scheme is concerned.
The first part of the scheme entailed a commitment by way of capital expenditure of £4,600,000 and £600,000 to meet certain deficiencies. I pointed out that the difference between the first Bill and the amending Bill of 1929 if one viewed it from the point of view of the moneys necessary to remunerate the capital put in, could best be understood in this way. In the old Bill it was stated that if from 134,000,000 to 138,000,000 units were produced under the Shannon partial development scheme, and sold at .83 of a penny in bulk, that then everything would be paid for. That would provide revenue sufficient to meet the cost of management and operation of that part of the scheme, interest payments, sinking fund, renewals, depreciation. Everything could be met if 134,000,000 units could be sold at .83 of a penny. The difference made by the addition in the second Bill came to this, that if you sold the same number of units, not at .83 but at .9 of a penny, the Shannon No. 1 Scheme would pay its way and there would be sufficient money to remunerate all capital spent upon it. That is the situation with regard to the first stage of the Shannon scheme. I am not asking for any more money for that part of the development, and the situation is still the same, that if 134,000,000 units can be sold at an average price of .9 of a penny in bulk that part of the scheme is economic. I am speaking provisionally and on reports that are subject to scrutiny, but, as far as I can make out, that number of units will be sold in the year we are in, and the revenue obtained will not only pay for the outgoings on the generation and transmission system but will allow a certain carry forward to the distribution system.
The second section of the scheme deals with the distribution. The Act of 1927 was amended in the years 1929 and 1930. In the second Electricity Supply Act of 1927 two and a half millions were voted for the purposes set out in the 1927 Act, and for that there was to be done all distribution work, and all expenses in connection therewith had to be met. The Board had sums at its disposal for house-wiring, appliances, the setting up of showrooms, and even if they liked for their entry into the manufacturing side. With the money voted, and from the revenue that came in it was expected that the Board could pay its way, and both remunerate that sum of money as well as meet management and office expenses. The scheme of the Board was set out in considerable detail in the 1927 Act. Certain provisions were made with regard to the Board itself, the position it was to occupy, the number of people to be appointed, and the maximum period for which they might be appointed. There were also conditions laid down with regard to the capital put at their disposal, and how they were to remunerate that capital. There was a definite direction given to the Board with regard to their charges. It was imposed on the Board that their charges under Section 21, before the appointed day, had to be such as to conduce to a certain position being achieved after the appointed day. The appointed day was fixed as the last day of December, 1932, or such later date as might after consultation and after presentation to both Houses be agreed upon. As far as the 1927 Act was concerned, the appointed day was fixed for 1st January, 1933. After that certain things had to happen. The Board's charges to the public had to be such before the 1st January, 1933, that after the 1st January, 1933,
"the revenue derived in any year by the Board from such sales and services, together with its revenue (if any), in such year from other sources, will be sufficient and only sufficient (as nearly as may be) to pay all salaries, working expenses and other outgoings of the Board properly chargeable to income in that year (including the payments falling to be made in such year by the Board to the Minister for Finance in respect of interest and sinking fund payments on advances out of the Central Fund), and such sums as the Board may think proper to set aside in that year for reserve fund, extensions, renewals, depreciation, loans and other like purposes."
The Board was to be an independent Board. It was to be freed—and I explained this in the Parliament when legislation was going through—from Parliamentary inquisition; it was to be freed from Departmental inquisition; freed from the control either of Government Departments or of the Houses of Parliament, and in return for that—and it was stressed in every statement during the course of the legislation as the consideration for this tremendous independence— there was demanded the greatest publicity. There were to be account reports and statistics produced every year. The legislation for it that came first out of my hands was amended in both the Dáil and the Seanad, and in the end was quite precise upon what the Board had to produce. Certain accounts were stipulated that the Board must produce. The time for the production of these accounts was, as far as the Board was concerned, stated definitely and, as far as the Minister was concerned, some discretion was left to him. In addition to what the Board must produce as consideration for the independence given to them, the Minister has power under Section 32 to demand, if he thought fit, certain statistical information and certain other returns in addition to what the Oireachtas precisely required the Board to bring forward. The scheme, therefore, was a Board with considerable independence, a Board flung as far as it could be flung from Governmental control, and in return for all of that there was to be publicity on the finance side. That is a summing up of what the legislation insisted upon, great independence but great publicity with regard to the accounts. Certain responsibility was thrown upon the Minister when he got the accounts to see whether other material should not be demanded for the purpose of clarifying the accounts. The question of presenting these to the Houses would then arise.
The Board had considerable freedom as to how it was to spend the two and a half millions given to it, but no borrowing powers were given the Board. The Board was tied fast as far as legislation was concerned to the two and a half millions to carry out the multifarious duties thrown on it by legislation. A certain section in the Act deals with the acquired undertakings, of which, unfortunately, more has to be heard. The undertakings were divided for the purpose of the Bill into several classes. The authorised or statutory undertakings were put in a particular class and they were divided into two sections, the privately owned concerns and the municipally owned concerns. It was laid down with regard to privately-owned concerns that the purchase price had to be fixed by arbitration in default of agreement, and the Board had then to set aside a sum of money to meet that particular fair purchase price as either arbitrated or agreed upon. In regard to the municipal undertakings, the scheme was that, if and when they were taken over, there was to be no payment made, by way of purchase price, but the Board kept indemnifying the previous undertaker against the particular charges that were outstanding.
That was the scheme, therefore: an independent Board, consideration by way of publicity, publicity with regard to finance, publicity particularly with regard to certain specified accounts, and publicity in respect of certain reports, statistics and returns that the Minister might think fit to call for. The Board's duty with regard to charges was that the charges must be such before the appointed day that after the appointed day revenue was to meet outgoings, and only just to meet them. I think I can say, summing up all the implications of the legislation, that one thing stood out above everything else: that the electricity consumer was to pay for everything in the way of expenditure in bringing electricity to him, and the taxpayer was not to be called upon to meet any part of the charges. The taxpayer's credit was at the disposal of the Board for giving them certain money, but that the capital had to be remunerated, the interest had to be paid, and the sinking fund arrangement had to be such as to pay back the money in some period of years. The taxpayer under the first scheme was not to pay anything, was not to suffer any financial loss with regard to this scheme. As I said, he put his credit at the disposal of the Board for certain purposes, and for that he was to get the ordinary remuneration.
The Act, with these provisions, safely passed, the Board was eventually appointed. Right at the beginning I found myself in something of a dilemma. I had originated this scheme of an independent Board myself. I had always spoken of it as being a Board which could only carry on if it was freed from control of the type put upon a Government Department. But, while the legislation was going through, I had pointed out that there was a clause which gave the Executive Council power to demand certain dismissals, if they thought these dismissals were required, in order to ensure the economic and effective performance by the Board of their duties. I found myself right at the beginning faced with this problem. I had to give the Board as much independence as possible, but I had to discharge properly the responsibility laid upon me, as representing the Executive Council in this particular, of deciding whether a dismissal should be called for at a particular time.
The counter, by the way, to a dismissal was that on a dismissal being enforced by the Executive Council a statement of that fact and the reasons for it had to be put before the Oireachtas. I wanted to give the Board complete independence, and yet under the Act there was no doubt about my duty. If mistakes were made and came to my notice even accidentally, and if I did not take hold of the section which gave me the right to dismiss, and did not operate on it, I could certainly be held responsible for whatever the Board wrongly did. I argued to myself, and I argued to certain members of the Board, that the power to dismiss involved some supervision, such supervision, at any rate, as was necessary to enable me at the proper moment to say, "Now I must call for a dismissal." It did not at all involve any responsibility for the ordinary actions of the Board in technical matters or taking upon myself the burden of their decisions and operations in everything, but it certainly did entitle me, in fact it imposed upon me, the necessity to exercise such supervision of a limited type that would warrant me, if and when things were going astray, calling for a particular dismissal when the proper moment had arrived. That was under the Act which established the independent Board.
In addition to that, at the beginning of the Board's operations there was a peculiar and accidental circumstance. The Board was engaged upon certain operations through the country at the time when part of the Shannon works, which had been handed over to me to construct, had not been completely constructed. My contractors were on the spot at certain parts and their plant was there, and their ordinary officials for supervising purposes were there. The Board put it to me that there was a certain amount of work which was somewhat on the border line of transmission and distribution, and that as my contractors were there the best thing would be that, acting some way as the Board's agent, I would get my contractors to carry out certain work for them and charge it against their two and a half million pounds. I agreed to do this. But the money in the first place had to be put up by me, and I got recouped by the Board. That was the arrangement. I found myself, even in that piece of work, subject to the ordinary control I was under with regard to the whole contract. I had to make my case on everything to the Minister for Finance. I had to have a case made to me to my own satisfaction by my technical advisers, and that I then had to make to the Minister for Finance before the money would be granted to me. That accidental circumstance put me very closely in touch with the Board at certain parts of their operations, and I can put no better word on my feelings at the time than that the Board's operations, as I saw them, being in this close relationship, caused certain disturbance and anxiety in my mind. But if that accidental circumstance had not occurred, I, nevertheless, had some duty on me to exercise some sort of supervision, so as to enable me to say when the proper moment came for calling a dismissal, if that had to be done.
A correspondence originated between myself and the Board on all this matter, and right at the beginning I decided that the best line I could take with the Board was to concentrate entirely upon two things, which were really the same thing viewed from two angles. I wanted to concentrate upon this: Would they be able to carry out all their duties under the distribution system within the sum of money given by the Oireachtas? Sometimes I approached this from the angle of the money they had to expend, and sometimes I approached it from the angle of, "What return are you going to get, what number of units do you think you are going to sell, and what revenue are you going to derive?" Both things converged on the same point: could I get an assurance that they would carry out their duties within the sum of two-and-a-half millions; could they carry them out in such a way that they would sell at the experts' prices a sufficient number of units to remunerate the State for all the money that had been expended on the plan, both Number 1 and Number 2 system.
The first letter I wrote in which that statement was put up in a definite way was in August, 1928, where I used a phrase more or less of this type: that I would be glad to hear that the Board is optimistic that distribution will be achieved within the limits of the money voted for the purpose, and to be supplied with the figures upon which that optimism is based. I take that as the first letter in a long drawn-out correspondence which ran on until March or April of this year. I got from the Board in answer to that request a statement that really they could not give me any estimate; it was too soon to expect any estimate; that anything they could give me would be so vague and unreliable as to be of no use for all practical purposes. Later on I got a letter which they said was sent to me for the purpose of assuring me that the work could be carried out within the limits of the two-and-a-half millions. When I examined that I found that the undischarged liabilities of the municipal undertakings acquired by the Board were in question. The Board said, "That clearly is not within the sum of two-and-a-half millions." I said, "It is." I said, further and distinctly, "Whether it is or not, it was intended to be." I said: "We always wanted to have the picture of the £5,200,000, whatever it may rise to, plus the two-and-a-half millions as the entire capital sum which you will have to remunerate in some way or other. You may divide it and say of part of it that you will pay it year by year out of revenue, and of another part that you will merely pay interest on it with a sinking fund arrangement to amortise it; but while you may approach your problem of repayment either from the point of view of the revenue required to remunerate the capital entrusted to you, or from the angle of the capital sums requiring to be remunerated, we intended that the full capital for which you shall be liable would be the money spent on the Shannon works as by the Act defined, plus a sum of £2,500,000, which includes the capital liabilities undischarged of the municipal undertakings acquired by you.
I soon found that they were proceeding on the basis that the two-and-a-half millions did not include this sum. That was my first difficulty. I knew how the two-and-a-half millions had been drawn up. I felt I left the Oireachtas under the impression that it was intended to cover all these charges, and I warned the Board in April, 1929, that if that was not quite clear there was a Bill coming on in 1929, and that in that Bill I would make it clear. I told them I was going to ask the Dáil to put in a very definite statement, declaring that the two-and-a-half million pounds must be looked upon as including the undischarged liabilities of the municipal undertaking which the Board had acquired or which they would acquire. I also wanted another amendment put in. At that time I was not satisfied that we were getting sufficient information even about the finances of the Board, and I intended to come to the House and to ask them in the phrase which imposed upon the Minister for Finance the necessity of paying sums of money to the Board, as and when they demanded it, to change the word "shall" which imposed the necessity, into the word "may," which would give a certain amount of financial control. I said I would make the case that until that money was expended, until, in other words, the accounts began to appear in the ordinary way, and the finances of the Board were shown to be what they should be, there should be some sort of financial control. I told them I was coming to the Dáil to ask them to agree to that.
At the time when the Bill was introduced I formally intimated to the Board that it was my intention to introduce two amendments to achieve that position. The Board asked me not to put up these amendments, and they said if I agreed not to put in these two amendments they would agree to regard the sum which was at their disposal as two-and-a-half millions, less the amount of undischarged liabilities of the undertakings of a municipal type acquired or to be acquired by them. They said that they would base their expenditure on the assumption that two-and-a-half millions was the figure, less the sum of the undischarged liabilities. And upon that undertaking, which I got reduced to writing, I did not ask the Dáil to insert either of these amendments.
Now, that undertaking is a very important item in this whole business, but is not by any means the most important item. I had got something which amounted to a limited control over a certain part of the Board's money by that undertaking, but before that undertaking was made, and after it was made right down to the months of February or March this year, my attitude to the Board was this: "The Oireachtas, to my mind, was given a definitely limited figure for the amount of money you are to expend. If you want more I shall get it for you provided I get from you the data on which I think I can make a good case to the Dáil to grant more money." The allegation has been made that I tried to put the Board into the strait-waistcoat of this two-and-a-half millions of money. Nothing of the sort. Over and over again I held out the prospect of further advances on a suitable case being made. I said to them, "This is a large sum of money; it has grown to enormous proportions. Give me the data on which I can form an opinion that at some time this vast sum of money will be remunerated." Even in the last days of the correspondence, I said to them: "Regard yourselves as people who have exhausted all the capital at their disposal and give me such information as a borrower would afford to a man from whom he was seeking a loan, because that information the Oireachtas will want from me if I come before them for further money for you."
The meeting about the agreement took place in July, 1929. The undertaking was reduced to writing some time in the early days of August of the same year. I got certain statements from the Board at the same time that any information I required would be given in the fullest and freest way. They proceeded to make demands for money, and at a much later time we again got apprehensive. A calculation was made, and on it we wrote back to say that it looked as if they were now committing themselves beyond the sum of money at their disposal, and directed their attention to that agreement. And that correspondence on that particular side of it went on for many months. In the end, in February or March of this year, I got a statement from the Board to this effect—a statement, remember, either in February or March, 1931—that the agreement entered into in August, 1929, was broken in December of that year, or at the latest in January, 1930. As an explanation of the breach I was told that the Board did not know with any degree of accuracy at any time what their capital commitments were, and they stressed that whatever they had spent in excess of the sum of money allowed was spent up to June, 1930, in ignorance of what exactly they were spending. My retort to that was: "I do not regard it as any mitigation when you say you were in such a position in regard to your accounts that you did not know what you were spending up to June, but the clear implication of your letter is that from June, 1930, you continued to spend with knowledge and in breach of that agreement." Their answer was that since June they had overspent with knowledge—they admitted that; they agreed that the sum of money in question was about £225,000, and their plea on this amount was that they had spent it because it was consequential on the earlier quarter of a million that they spent in the early part of 1930 without knowing that what they were spending was beyond the limits imposed upon them. That directed my attention more acutely upon another side of the Board's operations.
I had it previously revealed in letters to me that their accounts were in a bad way. I want this phrase to be understood properly; when I say in a bad way I mean that they had not material upon which to base proper accounts. As I say, I had some disquiet and anxiety about it beforehand. But I got that information in a definite way at the same time as I got a rather reassuring statement from the man who had been appointed the new Chairman in 1930. In June or July of 1930 he told me that, recognising that the accounts for the year before had not been of the proper type, and that there were certain defects revealed in their organisation, he decided upon what I thought a good step, and one that certainly relieved me of a considerable amount of anxiety at that time. He said that with the approval of the Board he had decided to call in the outside firm of auditors, who had been in to supervise the accounts of the year before. That firm was the firm of Kennedy, Crowley and Company, who were appointed by me the previous year on behalf of the State to supervise the accounts of the Board according to the Act, and the Chairman in July, 1930, said that in June he had got the approval of his colleagues on the Board to call in the staff of that auditor's firm in order to get together the material for the accounts. In the early part of this year, when the worst was being broken upon me almost at one blow, I found this out about the accounts. I was told that in the early part of the year—I think again it would be February or March of this year—that from July, 1930, five of that auditor's staff, and from September seven of that auditor's staff, had been on the Board's premises, engaged continuously in the remaking of the records that should have been there, and were not there, and that were required for the proper building up of the Board's accounts. I know now that not merely were there five or seven men there continuously, but that the number jumped to seventeen at a later point. Remember that their work was not the preparation of accounts simply. This point should be stressed: the material necessary for anyone to build up accounts was not there. Invoices were in arrear—thousands in arrear—order forms, and everything which goes to the making up of accounts, had either been mislaid or destroyed. There was no material from which proper accounts could be produced. Add that to the other situation. The Board tell me at a point that they have expended nearly half a million in breach of agreement; that for the first six months of 1930 that money was spent in breach of agreement, because they did not know at any time with reasonable accuracy what their capital commitments were. And they tell me that for the remaining part of that year they spent £225,000, because it was consequential upon the amount they had previously spent in ignorance—an amazing statement, which could not be believed but for the further information which I got about the accounts.
The last point and the worst of the situation was revealed to me in the early part of this year—that the Board had, in fact, gone very far beyond the expenditure they were allowed. They had gone beyond it in two ways—in actual spending and in commitments from which they could not extricate themselves. What they had done put me in the difficulty that I had to face up, unprepared and without material for a decision, to a new development of, say, the Shannon or some other river. They had got to the point at which consumption was such that it could not be supplied from the full output at Ardnacrusha in the first stage of development. In other words, they had put me in the position that I would have to come to the two Houses of the Oireachtas and say, "I want money for a new development of the Shannon, though I can give no satisfactory information about the development which has been exhausted." The Board found themselves in the position that they required more power than the Shannon scheme, on partial development, could produce, and they left it to me to come post factum and make that explanation to the House and say, "I want the money for this further development." It was a disagreeable situation in which to be placed. I asked them to show me how the money already granted and spent on any stage of the Shannon scheme has remunerated itself, how the scheme is remunerating the capital moneys spent on the old stage or will repay those required for the new stage, and I will try and get the money for you. But I want certain data. I want the sort of data that a borrower who had exhausted the moneys previously placed at his disposal ought to give a lender from whom he is seeking a new loan." That information I did not get from them. I have not got it accurately up to this moment. I have, however, got certain figures—much better figures than I ever got from the old Board. But I did not get the information which I ought to have got to enable me to come before this House and ask for an additional sum of £2,000,000. And I have not got the information which would warrant this House giving me that sum in ordinary circumstances.
The situation in regard to the Board was that an undertaking had been made with me and broken. The explanation was that it was broken in ignorance, because the people concerned had not taken the elementary financial precaution of getting together the material for accounts, keeping the accounts in order, and getting them properly produced. Even when I realised that this was the situation I temporarily put the agreement on one side. I urged the Board to demonstrate to me that at any stage the Shannon development is properly remunerating the capital expenditure on it, and I held out hopes of getting extra money for development. I could not get that demonstration. I found myself in a position in which I had to come to the Oireachtas for more money to be placed at the disposal of people who had made an agreement and broken it; who had their accounts in the condition which I have described, and who had rushed me, the Government and the whole country into new development without giving us an opportunity of deciding before the event whether that new development should be undertaken or not. In those circumstances, two resignations came to my hands and I accepted them. And in that medley of circumstances I have to make my appearance in this House and ask for a sum of £2,000,000. I shall give details of the £2,000,000 on Committee Stage. I think that will be the proper occasion on which to give the details. But I want some money to carry the Board forward, and until I get a better appreciation of what the Board's circumstances are, I want to have that money under the control of the Minister for Finance, who may issue the money on a certificate from the Minister for Industry and Commerce that it is reasonably and properly required.
I have a bundle of correspondence with regard to this whole business. The public has a right to get that correspondence, and it will get it some time. Public policy, however, dictates that it should not be produced at the moment. That correspondence makes clear that there was an agreement made with me. There is an admission that the agreement was made, and there is no quibbling about it so far as the correspondence is concerned. There is also a clear-cut and definite admission that the agreement was broken. I put it to the Seanad that where you have an independent Board, a Board entrusted with a big amount of public property—£5,000,000 worth at least— a Board which is in addition given big sums of public money to dispose of, and which is not subjected to the ordinary inquisition to which a Government would be subjected as to how they are spending their time and money, you must demand the greatest care, the utmost punctilio, with regard to agreements into which they enter. Otherwise, no Minister will trust himself in the hands of such a body, but will insist on having control right down to the bottom. There is at any rate the definite admission by these people that this agreement was broken, that their accounts were in such a condition that no true picture of their commitments and of their finances could be got, and the position later on revealed that every department required reorganisation, and that there was no co-operation as between the different departments. I have all sorts of phrases from themselves with regard to their operations, and I think the implication from those phrases, as well as from their explicit statements that they did not know from time to time with reasonable accuracy what their capital commitments were—the implication from all that is that they could not have based their system of charging upon an appreciation of what it was costing them to supply electricity to consumers. How they arrived at their charges I do not exactly know. I have certain explanations from them as to how it was done, but it certainly was not done in the way the Act laid down—that the charges shall be such and only such as to meet a certain number of things laid down. If they got to that point—I do not think they ever did—they would have got to it by accident, because they had not before them at any time a statement of what their capital commitments were. In those circumstances, how could they have decided upon the revenue required to remunerate their capital commitments? They have further done this—I do not know that any independent board ever conceived by a government was expected to be in this position—they have brought themselves, whether deliberately or not I do not know, but, on their own admission, they are brought to the point where new development of some type must take place. They do that, and they ask us to bless the affair after the event. They do not give us the data or figures upon which, if they were coming to us before the event, we could properly decide whether we should authorise them to undertake it or not. They simply say, "There is the position, and so much money must be spent on new development."
The question of Cork has been introduced as a special item into this controversy. I have two statements, and two statements only, with regard to Cork. On 26th February, of this year, the Board told me that the acquisition of Cork rendered impossible, without breaking the agreement, what could be considered as the minimum measure of development. On 2nd April of this year they wrote me more or less to the effect that the keeping of the agreement was rendered impossible by the acquisition of Cork. Remember that, between February and April of this year, they discovered for themselves that the acquisition of Cork in April, 1930, rendered the keeping of the agreement impossible. They continue with this phrase in the letter of April of this year: "The purchase of Cork was entered upon in the belief that it could be done within the agreement; otherwise we would have approached the Executive Council to secure release from it." Cork cost a sum of £500,000. With extensions, I think, the figure was about £600,000. At all events, it was something in the neighbourhood of half a million pounds. They entered upon that purchase in April, 1930; the earliest date on which they can tell me anything about it is February, 1931; in April, 1931, they make the definite statement that the keeping of the agreement was rendered impossible by the acquisition of Cork, and that that undertaking was entered upon in the belief that it could be carried out within the terms of the agreement, as otherwise they would have approached the Executive Council to secure release from the agreement.
A further point has been introduced into the discussion, that the Electricity Supply Board found itself hampered by departmental control exercised over them by supermen in the Civil Service who regarded their position with jealousy and who determined to get their hands fastened upon the whole business. In proof of that one thing is alleged—that on the first demand the Board put up for money in September, 1927, they were met with a refusal by the Department of Finance. I want that position made absolutely clear. Early in the month of September, 1927, the Board applied for the first advance of a sum of about £1,000. They got an intimation, verbally, from the Department of Finance that there were two sub-sections of a section under which they could demand money and that it would be necessary for Government purposes to keep separate accounts of the moneys withdrawn by the Board under the two sub-sections. They were asked to put their requisition in such a form as would indicate under which sub-section they wished to put their demand. As a matter of fact, they subsequently made their demand under the wrong sub-section, but they got the money and got it by the date that they said they needed it. That was the only time until October of last year that the Department of Finance raised any point about the money to be advanced, and from the time that first £1,000 was advanced until October of last year a sum of £1,900,000 was advanced. The Department of Finance never said anything with regard to advances since September, 1927, until last October.
In October of last year, acting for me, the Department of Finance stated to the Board "We have now definitely come to the conclusion that you are beyond the sum of money which you are allowed. Until you prove that there is still some money to come to you we cannot advance you any further money." They have not been able to prove to me that there is any money to come to them. In fact they have admitted that they have over-spent. In October the Department of Finance did close down on them at my request. Previous to that in the first month of the life of the Board there was a demand for £1,000 and the Department of Finance returned the demand with the request "Tell us under what sub-section of Section 12 this is being demanded," and the moment they stated that, even though they mentioned the wrong sub-section, they got the money on the date they required it. That is the whole story with regard to control by the Department of Finance.
The sum of two and a half million pounds is to some extent pivotal in all this discussion. I have been asked how was that sum arrived at. I may frankly admit that it was a rather rough-and-ready calculation, but there were data upon which it was built. On the Second Reading of the Electricity Supply Bill in 1927 I stated that there were certain groups outside this country who were interested in electricity in this country, who were keen, in fact, in getting control of the electricity development of the country, and these groups, one in particular, had advanced to the point of making a detailed calculation as to the money required to be put into the distribution side. There was one person here acting as agent for that group, and the calculation made through and by that agent was brought to me. I took it as a basis upon which to go. I made certain deductions from it. It was the first sum put up to me here; it clearly was a sum which had bargaining points.
I made certain deductions, small in amount relative to the total sum in question, and I found myself arriving, on the basis of that calculation, at two and a half millions as being the necessary sum to cover everything required on the distribution side. I remember raising another point that an outside firm coming in was not going to take over the municipal undertakings without buying them. Some group in this country might do that. The cry of confiscation was, in fact, raised even in regard to the change of trusteeship from municipal government to the National Board, and when then raised I could not help thinking how appropriate the cry would have been if an outside body was getting control of electricity charges in this country in order to remunerate themselves for the capital put into the undertaking? But, at any rate, the sum of money suggested by them was supposed to include everything I had before me. I am now told that this is not so, but if it is not, and if money was spent on other things, why was not that answer put up to me when I said the two and a half millions had been overspent? Then I could have come to the Oireachtas and said that the two and a half millions was only supposed to cover certain items, and extra money is required for what is clearly extra work.
I had another way of judging the matter. A rough calculation for electricity undertakings shows that as between generation, long-distance transmission and distribution, you can divide your capital expenditure into equal thirds. We had before us particulars of the Shannon first scheme development in respect of generation and long-distance transmission at a capital cost of £4,600,000. The extra £600,000 in the first sum of £5,200,000 was not capital money as we ordinarily know it; it was intended to meet certain deficiencies during the non-paying period. The actual money to be spent was £4,600,000. That calculation of thirds, again on a rough-and-ready basis, gives us two and a half million pounds as the sum essential for distribution. In addition I had an entirely different memorandum produced for me by the man who afterwards became managing director, in which he proved to me, on the basis of calculations made on the spot by experts, that omitting the cities of Limerick, Waterford, Dublin and Cork, and setting out to build a completely new network in every town and village of 500 population and upwards, to bring leads into the houses, to instal meters, and to provide public lighting in all these places, a sum of £600,000 would suffice. If we brought in Waterford and Limerick £75,000 extra would cover them.
We had £675,000 as the sum required to put in a completely new network in all towns and villages of 500 population and upwards, to put leads into the houses, and to provide for street lighting in all these places, etc. Cork cost half a million, as the actual event showed. The undischarged liabilities in Dublin were about £600,000. The undischarged liabilities of the whole undertakings at date of vesting amounted to £800,000. Add £675,000, £800,000 and £500,000 together, and on this basis you will certainly find two and a half million pounds would be sufficient for all purposes. Those, at any rate, were the calculations I had before me when I came to the two Houses of the Oireachtas for a sum of two and a half millions. Although everything was supposed to be within our consideration when we allocated that sum, nobody ever thought that that was the last sum which would be asked for for distribution. The only point was that it was sufficient to start with, and that a case would have to be made for any further sum. That was the line I took in my letters to the Board: "If the two and a half million pounds has been expended, show me that it has been usefully expended, and, if you want any extra money, show me how you are going to remunerate that."
We have got now to the point, this being the medley of circumstances, that the Board must be allowed to carry on. The Board, to my mind, has overspent under the terms of the agreement a minimum figure of £600,000. If I were to take into consideration what I might call its overspending and its inextricable commitments, the sum of £850,000 would certainly be required. If that money was in the Board's hands to-morrow I do not think they would have a shilling of it within a week. Something else in the way of financial provision is required to carry them on for a reasonable period, and I ask for £2,000,000. I will detail the sub-heads under which it is proposed to spend that money in Committee, as I think it is a point more for Committee than for this stage. I want that money under control. For some of it I take no responsibility; that is in regard to the debts that have been incurred. We had better pay them. There will be certain inquiries as to the people who are getting the money, but you may take it that there is a sum of about three-quarters of a million that will have to be expended almost at once. In addition, the Board requires other moneys. One could limit the sum of money according to the period one thinks the new situation should last. Again, I would like to talk of the period in the Committee Stage. That sum of £2,000,000, if expended, has to be remunerated by the sale of such current as will be produced from the partial development of the Shannon scheme, but it is not intended to be remunerated only by that, because some of that money will be spent for the purpose of a greater generation system. There has to be some extra unit supply generated and sold to consumers. There is certain development money in this. We have got to arrange for a stand-by, for such arrangements at the Pigeon House that we have the effect of three turbines working at Ardnacrusha instead of the ordinary two. There are various ways in which extra power can be squeezed out. This money involves the provision of more than was ordinarily expected from the Shannon system alone on partial development. Of course I hope to get remuneration of any money that will be spent. For the debts I take no responsibility. Even for the new money, other than that portion used to pay accumulated debts, I shall come to the House to get myself relieved of responsibility at the first moment I feel that the responsibility can properly be taken from me. The Board must be allowed, when it comes into smooth water again, to function once more in an independent way.
We have not got the accounts yet for the year 1929-30. As I say, the material upon which to base these accounts was not there. It has been mainly re-made by these outside people who have been brought in. If it is re-made in its entirety it means that the material upon which the 1929-30 accounts and the 1930-31 accounts will be founded is there, so that the 1930-31 accounts ought to come out much more speedily than the old accounts. I believe the 1929-30 accounts have only gone to the auditor. He will have to audit them. Then they will come to me and I will have the right to demand extra clarifying information if I want it. The requesting of certain information from the Board and the getting of it may take several weeks. These accounts may be published about October of this year. I am not in a position to guarantee anything earlier than that. But the 1929-30 accounts mean very little. The accounts that are important are the accounts for the year ending 31st March last. When those will be in my hands I cannot say. Again, I would not guarantee them earlier than the beginning of next year. I doubt if I will have them at that time. Certainly at that time special reports will have to be called for. One special report must be called for, as to the circumstances that led to the delay in regard to the accounts in general; secondly, as to what the auditor's view is of the then position of the Board with regard to its capital commitments, its expenditure and its revenue. I certainly will have a great deal of statistical returns to look for at that time. It will take some time to get those and I cannot promise them for presentation to the House until about St. Patrick's Day or Easter of next year. Then there may be legislation required on foot of all that.
Two question are likely to arise when that information comes before the House. I think it is almost certain they will arise, and I say this relying on information in my possession. I have not this information in final form. Even such as it is, I have not had time to have it examined for myself and there is a good amount that I cannot examine on my own. Anything I have is provisional, but even though of a provisional nature it makes it clear to me that the old rigid and conservative system upon which the whole Shannon finances were laid has to be changed. Some easement must be made as a result of what has happened so that electricity consumers will not be burdened with excessive charges and the taxpayer will not have to pay a single shilling for this, as we intended he never should pay.
I hope to come forward when I get these accounts with the best analysis that I can make of the accounts and with what the auditor says, and I will submit these to the two Houses. At that time two types of outsiders may have to be called in. We may have to get somebody to say whether a proper system of electrical accounts has yet been arrived at. Secondly, if I have to make suggestions, and I think it is the Government's duty to make suggestions, first as regards the readjustment in the finances and the layout of this scheme and in regard to anything else that may have to happen, then I think it is most likely that experts of a different type—not accountants—may have to be brought in to say whether our suggestions are right or wrong, and what amendments of our suggestions they will make. But no date can be assigned for that before the Easter of next year, to my mind.
That, as I said, is the disagreeable situation in which I find myself. My responsibility will naturally come up for criticism at this point. There was an independent Board, a Board at any rate so far as legislation was concerned that had given to it an independent position. In my statements to this House indicating my own point of view, and I take responsibility for the scheme of the Board, I certainly made it clear that it was the intention to fling the Board at arm's length from the Government, but I always balanced this freedom by publicity with regard to accounts and finances and the power to dismiss.
It can be said that I have interfered. I have. I interfered with different attitudes of mind at different times and in different ways—what I call suspicion at first, deepening to anxiety, getting to a point of moral certainty, and at the end to absolute certainty, in regard to what was happening. At the beginning I operated on my own. I tried to get reports from the Board. I wrote them letters and concentrated on one or two items: "Will you be able, within the limits of the money, to get a distribution system going so that you can sell electricity at a cheap rate and remunerate all the capital expenditure?" Then I got an agreement made in August, 1929. In September of 1929 I associated with the Board in a part-time capacity two people. In the early part of 1930 I decided upon a reorganisation of the Board. That reorganisation led to what I still call the resignation of the then Chairman, and his reappointment as a part-time member at a decreased salary, with bonus by way of remuneration.
It has been said elsewhere and I accept it as a correct statement that I took responsibility for, first of all, taking the resignation, if that is the word we are going to use, of the Chairman and thereafter associating him as a part-time member with the Board. The date is important in this matter— February of 1930. Not very many months after the gentleman's agreement had been made and very many months ahead of my having any information that things were definitely wrong I had two part-time people appointed on the Board. When their period of office was over I had certain talks with them. The main thing I got from them was that it was almost an impossibility to get correct information even as a member of the Board. That was the situation I faced up to in February, 1930. I had no information that anything was wrong, nothing much to go on to warrant dismissals, but sufficient disturbing circumstances to make me take certain action regardless of feelings of certain persons. I put it to the then Chairman that I wanted a reorganisation, that I wanted in somebody who would pay more attention to the general finances of the Board than what had been paid up-to-date, and I achieved my reorganisation in February, 1930. I appointed a new Chairman and a new full-time member, and it took those two people some time to get in touch with the details. It was not until June that I got a statement from the then Chairman that he had secured the approval of his colleagues—I think the phrase was— to call in these outside people, so as to get the accounts in a proper form. That was a satisfactory thing and the first satisfactory thing in connection with the Board almost since I began to get suspicious. Since then, with Mr. Browne as Chairman and Mr. Fay as full-time member, matters developed, and clarification and enlightenment of the real facts of the situation increased until the early part of this year, when in certain circumstances I got two resignations tendered to me. I accepted these resignations.
The scheme of the Board will have to be discussed. I do not think it can be discussed here because we are not in a position to consider it clearly, but I am very reluctant to abandon the idea of an independent Board working a big scheme like this. When we come to discuss the independent Board and what degree of independence it is going to have we must also have a discussion on what the power to dismiss entails. Is it to be regarded as involving the duty of looking into the affairs of the Board? If so it may soon become a full time post. If we are going to take up that attitude, it is better to associate the Minister actually and definitely with the whole working of the Board. I do not think we ought to get to that, but there ought to be a certain responsibility arising out of this power to dismiss. It ought not to drive him into looking into all the details of the Board. However, I did interfere in certain ways. I interfered by letter when I tried to get certain information. It was as little interference as I could have, but I do admit that it was almost as much as I could have in the early stages of the Board. But when I found that to my mind they were going beyond the amount of the money put by the Oireachtas under their control, I asked them to submit to the arbitration of the Legislature that created them. They said that they would accept that point of view. I took it that, having accepted, they would carry out their undertaking. I did not insist on coming to the two Houses, and I regret that I did not so insist.
Later I associated two men with that Board to see what was happening there. I wanted to get certain particulars of the working. I asked generally what was the situation. I had nothing concrete; but a certain number of vague, disturbing things came to my notice, and they drove me to reorganise the Board. I reorganised the Board. To some extent that might be called interfering, putting in two new members. To the extent that there was interference there may be blame or credit attached to me. Now we come to a complete disruption of the scheme of the old independent Board. I ask for it over a limited period. I am not abandoning the idea of an independent Board, but in the particular circumstances I have again to face up to my responsibilities. The two millions is to be given on the authority of the Minister, instead of paying as and when the Board demand. For the time being I am interfering completely with the Board, but my responsibility is going to be exercised in this way. I am not technical. I doubt even if I have advisers about me who are technical. The interference that I will exercise on the Board will be on the money side. I shall ask: How much do you want? What is it for? To what extent will it be remunerated? I intend generally to have my control confined to that.
The last item is the position of the part-timers. I forget the exact month upon which their period of office terminated, but as from that date they were appointed for a six months' period. It is limited to six months deliberately, because I wanted to have discussion with these part-time men as to whether there can be struck a proper balance between the authority which they can exercise by their votes upon that Board and the responsibility which they will take as and when things go wrong with the Board. It is a very difficult balance to get. They are three members of the Board out of five. The three part-timers might often outvote the full-time men. If anything goes wrong when they have the controlling authority, it is clear that they must take the greatest share of responsibility. I regard the business element on that Board as very valuable from two points of view. One that they stand in a sort of representative capacity; they represent the consumers, and stand between the Board and the consumers in the country. Secondly, they bring to bear upon the Board a business outlook. I hope that they are not for the future going to deal with the technical side very much. Their position on that Board should be such that they would confine themselves to the bigger questions, the finances of the Board, how far the money is being spent wisely, and in seeing whether the money being spent will show the certainty of remuneration early, or not too late. Although they are in a very indefinite position at the moment it is my intention to keep the business element there. I say that though I recognise there is still considerable room for doubt, arising out of all the circumstances of the past, as to what position they ought to occupy in the affairs of a Board of a technical type such as this.
People will ask at this time, as a sort of summary of the whole affair, what is the situation with regard to the economics of the Board. To that I must simply say I am not in a position to state anything accurately or usefully. I have reports which will have to be examined thoroughly, reports which will probably suffer a great deal of adjustments before they can be made to fit into the circumstances of the Board, but it is quite impossible for me at this moment to give any indication with regard to the economics of the whole system. If I said anything, I am as liable to mislead people on the optimistic side as on the other side. I do not think it is possible for anybody to make a definite statement on that point at the moment. I hope that I will not be pressed on that matter, because it would be asking me, with certain information in my hands, to pass a judgment on that information without knowing whether that is all that has to be said upon the subject. People may ask: "Are we not to know soon about this matter?" They will know about it as soon as I can get the information. As soon as the two years' accounts that are now outstanding are in our hands, and as soon as reports are made, so soon will I come to the House to make a statement. People may rely upon that being done as speedily as possible. It will be done for this reason: no Minister ever wants to be charged with responsibility for a concern like this, which is fundamentally a business concern. If any Minister takes it on, he loads himself with a terrific responsibility. I, in particular, am loading myself with a responsibility that I am very unwilling to take, because it is purely a business concern, and my commitments are such that I cannot give the time to the work that it really demands. There is a stimulus to me to get rid of that responsibility and hand it over to the Board as early as possible. That alone, if nothing else, would bring me back to the House.
With regard to dates, I may say the first year's accounts will not be in hands until some time in the autumn. The vital accounts, the 1930-31 accounts, will not be in hands until early next year. After that, some examinations and certain adjustments have to be made; but between St. Patrick's Day and Easter time there ought to be a presentation to the House of all the facts and figures. I hope that then the Minister will be completely relieved of all responsibility or have it precisely fixed how far he is to have any responsibility for this scheme.