Seanad Éireann debate -
Wednesday, 21 Feb 1945

Vol. 29 No. 15

Public Business. - Minerals Company Bill, 1944—Second Stage (Resumed).

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

Mr. Sweetman

When I was discussing this Bill on the last occasion before the Adjournment I had mentioned, as the Minister himself had mentioned, that the Bill really only dealt with two things, that in the first place it related to the administrative machine by which these existing companies would carry on and, in the second place, it extended from £240,000 to £400,000 the amount that would be advanced out of public funds to the new company that was going to take over the project he had in mind. I suggested then that I thought it was desirable that the Minister should inform the House of the reasons and the qualifications upon which he had appointed the several directors of the company. I do not mean that I want to know the personnel. So far as the names of the personnel are concerned I am not interested, but I am purely interested in their qualifications, the qualifications we will say of Mr. A and Mr. B. I happen to know who they are. I know one of them and, so far as the one I know is concerned, I am perfectly satisfied that he has the qualifications for the position so long as it did not cross his own private commercial enterprise. But I think the House should get, so to speak, a picture of the manner in which the Minister has moved in making appointments of this nature and in considering the remuneration which these directors obtain by way of fees for carrying out their duties. The Minister made the point that the Civil Service has not the technical knowledge that industrial and commercial concerns perhaps require, and the red tape of the Civil Service does not allow sufficient enterprise. I am inclined to agree with him that that has been approved in respect of one industrial operation that was carried out under Civil Service management. At the same time I think that we ought to be very clear in our minds when employing this method of dummy companies.

These dummy companies do in fact mean that by their formation of regulations they had a complete avoidance of the fundamental regulations of the Civil Service, which we like sometimes to sneer at as red tape, but which were designed for integrity, economy and Parliamentary control. We must be certain that in giving us those regulations we are getting something that is very considerable. This is not a new question at all. It is a question that was discussed in the first place by the Banking Commission, and was discussed at very great length by the Vocational Commission, which reported to the Government on the 4th November, 1943. Even at the risk of boring Senators with knowledge that they have already acquired through the reading of the Report of the Vocational Commission, I do think it is worth while to refresh their memories on one or two paragraphs. If we refer to paragraphs 4, 7 and 8, on page 298, we see this sentence: "The Banking Commission pointed out that some of them"—(they, of course, are references to these companies)—"that some of them were established without legislative authority, that they, often received public funds to a large extent, and that there is an evasion of Parliamentary responsibility as regards both policy and accounting to the Comptroller and Auditor-General."

Now, so far as this company is concerned, the position, I understand, is that the Comptroller and Auditor-General does audit accounts which are laid on the Table of the House, but I will deal with a certain deficiency in these accounts as presented. Be that as it may, the Comptroller and Auditor-General, although accounting in the way he does, is purely dealing with it not as an investigator but as a checker, if I might use that word. One of the worst things I felt in regard to the accounts of these particular companies was that there was only a consolidated profit and loss account and a consolidated balance sheet. I find that the Vocational Commission in their report used very strong words of criticism in respect to the refusal of the company concerned to give similar information. In respect to the Dairy Disposals Board, the Slievardagh Company and the former Minerals Development Company, a report was made to the Department, and the report was there available on the Table of the House, but there was no effort made to produce a trading account.

That trading account or that report would segregate into various departments the many different enterprises that were being carried on by the particular company concerned. All these things were considered as I say fairly and fully by the Vocational Commission. The Minister in the other House tried to brush aside as being of no importance the report of that commission, but it does appear to me that it is of very little assistance to set up commissions from time to time to report to the Oireachtas if we are not going to pay some attention at any rate to their representations, even if their representations are made on matters to which we did not quite anticipate they would advert when they were being set up.

On page 430, paragraph 683, perhaps the most significant paragraph appears. It says:—

"This method of administration is clearly fraught with great danger to the prestige and integrity of democratic government. It offers a wide field for the exercise of political patronage of a very costly and undesirable type, for not merely may large salaries be given to persons as a reward for political services but large sums of money for capital and working expenses may be placed at their disposal without adequate safeguards. It could provide an unscrupulous Government with a means of making a large number of persons dependent on it for salaries and wages and of obtaining electioneering support by promoting enterprises or industries in certain localities without due regard to economic factors."

Those are very strong words of criticism particularly taken in conjunction with the fact that a couple of pages further on they state:—

"There would appear to be little justification for appointing persons without special technical or business ability. The practice of making appointments on the ground of rank or political affiliation is most questionable and is open to many of the abuses concerned with interlocking directorships and the utilisation of political personages for company promotion."

It was to satisfy myself that was not in fact what has been happening in regard to these particular companies that I suggested on the last occasion to the Minister that he should explain to us the qualification upon which the directors in this case had been appointed. That may be all very well from the point of view of theory but we have got to get down to brass tacks and try to see if this theory has had any practical effect in recent years. That report was made in 1943. We all know that the practice of the State engaging in commercial enterprise since then has largely increased. There is, quite frankly, a danger that such an increase would mean that the very evils to which the Vocational Commission referred would be extended. There were in the last few weeks proceedings in a case before a certain court, which have now terminated, proceedings which were of peculiar interest to the members of this House. In those proceedings one of the witnesses for the State has alleged, on oath —and we must, of course, accept that statement without question— that he was making a sum of £12,000 net profits from a contract that he had obtained from one of those companies—I do not mean one of the companies mentioned in this Bill but one of those State-controlled dummy companies. I have no means whatever of verifying whether the statement was correct but the statement was made on oath by that individual, that he had made, over a period not exceeding two years, a sum of £12,000 profit out of one contract, that that was only one contract, that he had several, and that he made that profit by sub-contracting the contract given to him by this dummy company. The mere fact that that could be stated in open court suggests that we have got to get down to the basic principle of these companies, that we have got to ensure that we shall substitute for the red tape that does mean integrity in the Civil Service, some method of control that is not there at present, some method of control that will ensure that nothing of the kind I have described can happen in future because we are dealing with public funds. The particular person concerned on that occasion was receiving public funds when he said that he was making £12,000 in two years, that is, £6,000 a year.

I want to make it perfectly clear that I am making no charge against the Minister or against any director of any company that that was in any way fraudulent but there should be some method, something equivalent to the Committee of Public Accounts in the Dáil, whereby such a system of accounting could be examined and at least the public would know that the money that was being spent was being watched and checked by somebody on their behalf. I think the Minister will agree with me when I say that the very essence of an audit of these companies by the Comptroller and Auditor-General as apart from an audit by the Comptroller and Auditor-General of public funds distributed through the Civil Service, is that the Comptroller and Auditor-General will merely vouch that the amount has been spent and that he will not of necessity inquire into whether it was good business or bad business to spend it. I do not think it would be reasonable to ask him to do so. In respect of these matters I think we shall have to have something on the lines suggested by the Vocational Commission itself, that there should be a body of experts set up which would be invested with some such power as that of the Committee of Public Accounts in the Dáil, and which would be in a position to judge and to report whether in fact the public funds in this case were being used to the best possible advantage. So far as this particular Bill is concerned, I fully appreciate that we are in the middle of an emergency, and one of the things done under this Bill is to produce anthracite —340 tons a week, I think, was the estimate given by the Minister. I think it would be very inadvisable to do anything at present which would hinder our getting that 340 tons, or prevent it from coming in to assist the supply situation, but, on the general principle, if we are not going to have distrust of the whole system of State entry into commercial enterprise on those lines, sooner or later some such system of control will have to be established. Therefore, I think it is advisable that we should ask the Minister to give to the House an indication of what his views are as to the future of such companies, and as to the future method of ensuring that they will be patterned to some degree at any rate along the lines that were suggested by the very diversified experience of the members of the commission to which I have referred.

Mr. Duffy

I should like to say at the outset that the introduction of this Bill seems to me to confirm the arguments which are frequently used by some of us on these benches, when various measures are going through the House, to the effect that they require much more close examination than they have been receiving. We have had such an example earlier this evening in relation to another Bill. Both Senator Sweetman and myself urged strongly that the Bill did not, in one particular, mean what the Minister in charge said it did mean. The Minister was adamant; his advice was the best possible, and consequently we had to accept his view. Here we have an example to confirm the little reliance which can be placed on assurances of that kind. In 1941 the then Minister for Industry and Commerce—not the present Minister—insisted that the way to get development work done was to proceed with two Bills, one a general minerals Bill and one a coal Bill. He insisted that the procedure had to be along certain lines. He got his way. There was a good deal of criticism of the manner in which the thing was approached, criticism of the suggestion that you must have two companies working side by side, doing much the same thing, because the Minerals Act of 1941 authorises the company to do everything except mine for coal. Special machinery, a special Act, was provided in regard to mining for coal. Subsequently, it transpired that the same persons constituted the directorate of both companies. I think they probably have the same staff. In his Second Reading speech in this House, the Minister told us that there was duplication and waste, and this Bill is now submitted for the purpose of undoing what his predecessor said was the only sensible thing that could be done three years ago.

In making that criticism, however, I do not desire to associate myself with the kind of criticism which was made by the last speaker. I think if there is one thing more obvious than another it is that the concerns established by the State to do research, to carry freight, to operate industries of various kinds, have saved the people of this country from destitution during the last four years. Let us bear in mind when we criticise those companies that the State never goes into a concern except where the private capitalists feel they cannot make enough profit. If there were going to be 25 per cent. dividend on coal mining, some of our friends would be in on the hop. They would not wait for a State company. They would get in on the ground floor for the 25 per cent.

Similarly, in the case of shipping, flour milling, or transport of any kind. Wherever there is a profit, the gentlemen with the money to invest are in on the ground floor. But when, in order to save the community, the State enters upon some enterprise of this kind, and fails to make a profit, the wise guys who are always after profit come in and criticise. I think the public must not be deceived by that kind of humbug. As far as I am concerned, my criticism of this Bill is a criticism purely and simply of the manner in which those subjects are approached, and the unwillingness of Ministers, occasionally, to listen to common sense, but I entirely approve of the steps which are being taken by the Minister to save this community by taking risks, where it is necessary to take risks, to establish a company which is essential in the public interest. As a matter of fact, whenever one sees the Minister or the State entering upon an enterprise of this kind, it may be taken as prima facie evidence that there is going to be a loss, because, if there were to be a profit, the Minister would not get the chance of coming in. There would be a race to get in before him.

Again, I want to say that I am not in favour of placing unreasonable restrictions or unreasonable imposts on those concerns. It is easy to come in here and make a case for having their accounts examined by the Comptroller and Auditor-General. But the Comptroller and Auditor-General is appointed by Parliament. He is appointed to report to Parliament on the expenditure by State Departments on the money voted to them by Parliament. It is hardly his function, and I doubt if he has qualifications to examine and audit the accounts of a commercial firm. Those are commercial concerns; they are not State Departments. Parliament votes a certain amount of money to the Minister for the purpose of establishing one of those concerns, and holds him responsible for the manner in which the money is expended, but in no other direction. If we are wise, I do not think we ought to tell the Minister here that we are going to place upon him—not perhaps now, but in a year or two—these restrictions, restrictions which will have the effect of destroying the competence and the efficiency of those concerns, because what you are doing is proposing to get inside to find out, for the advantage not of the public at large but for the advantage of the investing public, the secret by which they can make money, when the concern is going well. I do not think we ought to support that, and, as far as I am concerned, I am going to make it clear that, while the matter is not in issue now, if it were in issue, I would be violently opposed to it.

Sir John Keane

I suppose that I am one of the "wise guys" referred to by the last speaker—one of the "wise guys" who is looking for an opportunity for a good investment, and will not come forward unless I see a certain 25 per cent. profit on my money. Now, I share very strongly the apprehensions voiced by Senator Sweetman, and I do not share those apprehensions without some knowledge of the atmospheric or psychological background of this business. I readily admit that in special circumstances, such as this war has brought about, a certain amount of legislation of this kind was justified, but what I am anxious about is to know whether these companies which were set up in times of scarcity, and in order to handle certain commodities, are going to continue in the same way after the war, because I feel that, if so, when the commodities concerned are again in plentiful supply, or in reasonably plentiful supply, the consumer is going to suffer, and to suffer very grievously as a result of this kind of legislation. One reads about these things in the paper, and certain approaches are made to one in connection with them. Therefore, it occurs to me that the whole matter must be viewed in a different way. For instance, people come and tell you about certain things that are happening, and if you ask them: "Can I use that information?" they answer: "No, because if you give that information, it will be used as a black mark against me, and the next time that I look for a concession, or for some reasonable way of going about my business, I will not get the same chance as if I had been a ‘good boy,' and had kept my mouth shut." The Minister may say that this does not happen, but I suggest to him as a man of the world, and I am sure he realises that if a man comes along with a complaint of that kind, that man's business will suffer, or that, at least, he is afraid that his business will suffer.

Senator Duffy talks about the State only coming in to take charge of a business when the business shows no profit, but take the case of any business man who is offered a monopoly of shipping at certain rates, combined with marine insurance. I think the Minister knows what I am talking about here, and that is, the question of the interlocking of the operations of two companies, one in collaboration with the other. Now, that is what is going on. I can quote the Minister one example, and this was not told to me by any person who, I feel, cannot get into any trouble. The company in question gave a quotation of £15 per head for taking cattle to France. Now, that is the danger in connection with matters of that kind. I know that you cannot reverse the wheels straight away, but I should like to have an assurance from the Minister that he is anxious about this whole business and that he does not propose to continue this kind of thing after the emergency has passed. I do not say that, in every case, he should be asked to liquidate all these companies, but I do say that he should view with concern the operation of these companies, when the emergency has passed, and try to get back to the normal operation of such companies, because otherwise it is as clear as daylight that the Government, having sunk its capital in these enterprises—the capital of the State—has only got to raise protective barriers in order to get a monopoly on its own trade, the cost of which, inevitably, will be passed on to the consumer. In the nature of things, moreover, any company of that kind cannot be as efficient as a company working for shareholders and which must go "broke" unless it is worked efficiently. If there is not the fear of going "broke", you will never have the full measure of efficiency.

I might refer to another company that was set up in Cork—incidentally, to deal with a commodity ill suited to home production. That company got into trouble fairly early, and the Government came to its rescue, and I suppose the time will come when we shall be shocked to find at what price that company will be able to sell its product, in the face of the world competition when the emergency has passed. I want the Minister to assure us that the taxpayers, through their elected representatives, will have some control over such companies as I am referring to and that, as I say, reports can be got from the auditors of such companies somewhat in the nature of the reports given to the Committee of Public Accounts of the Oireachtas through the Comptroller and Auditor-General in the matter of the expenditure of public funds.

In the case of the Public Accounts Committee, the Comptroller and Auditor-General points out in what way the money devoted to the various Government Departments has been spent, in what way the money has been managed, or mismanaged, as the case might be, and I think that the same should apply in regard to the accounts of these particular companies.

Mr. Douglas

I did not know that Senator Sweetman was going to raise this matter on this Bill. There are only a few remarks that I should like to make. In the first place, so far as this particular Bill is concerned, I do not believe that it is practical politics to have an extension of coal-mining or mineral development in this country by means of private enterprise, at this stage, at any rate, in the history of the country. It is a matter which I have heard debated, in my opinion, rather wildly on both sides. Some people say that we should have millions of pounds sunk in this country in mining, while others say that we have no minerals at all. One thing is clear, and that is that nobody— even Senator Duffy—would be prepared to sink money in either coal-mining or mineral development in this country unless there was some prospect of profit. Again, we are up against the problem of how to deal with this matter. It can be said, quite logically, that there is no use in attempting any development of our mineral resources unless the prospects are sufficiently good to induce people to invest their money in such projects. I think that that is not a bad principle in general, but it cannot be applied when it comes to a question of national necessity; and the provision of coal, unquestionably, was a matter of national necessity, and if some such company had not been established, a great number of us, to put it mildly, would have been very uncomfortable, and a great many of our industries would have been very seriously affected Again, in this connection, we are up against the problem of management. In the case of a public company, with a certain number of shareholders, certain safeguards are provided by the fact that you have those shareholders to look after their own interests.

Of course, we all realise that you may have annual meetings for two, three, four or even five years, at which only a few shareholders turn up, and there is very little criticism of the affairs of the company concerned; but as soon as the shareholders of such a company become suspicious that the company is not being well managed, that the directors or the management are being paid too much, or as soon as a rumour gets around that the agents of the company are making too much out of it, you will very soon find that the shareholders will attend and ask for an explanation and that, if the directors of the company do not give a satisfactory explanation, the shareholders will take action. That, certainly, provides a check on the activities of the company, except in the case, which is unusual in this country, where the directors of a public company control the whole business of the company. It seems to me that the practical thing to consider is how to control the type of State owned company we have at the moment, and I think that a certain number of them will be inevitable for many years to come. I think the Minister has already said that he would much prefer—I gathered this from his speeches—to see privately-owned concerns developing in this country. So far as the principle is concerned, there might be very little difference, but the fact remains that we have got some such companies operating at the moment which are controlled by the State.

But as regards this other type of company, I think we should consider whether any machinery can be found which will adequately take the place of shareholders' meetings. I know nothing whatever about the case cited by Senator Sweetman, but if an agent of one of these companies is making what seems clearly to be an excessive amount out of the contracts given by it, and if that happened in the ordinary public company and came before a court in evidence, I can guarantee that there would be a full attendance of shareholders at the next annual meeting wanting to know something about it. It is not clear what takes the place of these shareholders' meetings. Can the Minister do it, or is it his function?

I do not think that the Comptroller and Auditor-General really provides a solution, although it may be convenient that the Office of the Comptroller and Auditor-General should act as Auditors. Auditors have a definite function in the finding of irregularities, but it is not the function of an auditor, generally speaking, to take any responsibility for the efficient management of the business. His duty is to see that the accounts are kept properly, that everything is straightforward and that there are no irregularities, but, obviously, the accountancy profession would be quite incapable, as a profession, to provide criticism of the various industries that have existed in this country.

The practical problem seems to be one of finding a way out by which the shareholders' meeting will be substituted in an effective way. I am not fully familiar with the procedure, and I do not think you have anything on the same lines in other countries, but I have been reading with very considerable interest some of the plans adopted by the Swedish Parliament. I do not want to be misunderstood as saying that they have anything to deal with like this case, but, in Sweden, a great deal of administrative matters are handled by means of Parliamentary Committees. At these committees civil servants can attend to explain and answer questions. It might be that a Committee of the Dáil, or, possibly, a Joint Committee of both Houses, could be appointed which would, as I say, take the place of the shareholders' meeting in the case of companies where the State holds the majority of the shares. If that could be done on the lines of efficiency apart from questions of Party politics, and I cannot see how Party politics would arise, it would give a way out. I do feel that some solution is needed and the Government will find itself that it will be highly desirable to have some safeguard of the kind.

I imagine that although they may not be technically responsible, the civil servants of the Department do keep an eye on these companies and, perhaps, that may be sufficient and may have been the best way of dealing with it, because there has been a considerable amount of departmental control of all companies. But, if we get back, as I sincerely hope we will in a comparatively short time, to trading becoming almost entirely free again, when there is the minimum control of companies generally, there will be a need for something more like the rules which apply to companies which are controlled by their own shareholders, for safeguards in regard to companies of this kind. I suggest that it is a problem which must be faced.

Mr. Lemass

I find it difficult to speak in defence of the type of organisation which is represented by these mineral companies, because I appreciate it has defects arising out of its nature, which are, in my opinion, unavoidable. I indicated the nature of these defects when I was speaking here in defence of the proposals of the Transport Act. The Transport Act proposed the establishment of a new type of organisation—new as far as this country is concerned—for the control of transport services, and in justifying that type of organisation, as distinct from other forms which were suggested by Deputies and Senators, I gave reasons which necessarily involved some reflection upon the suitability of the type of organisation contemplated here.

It does not follow because this type of organisation has got certain obvious defects that it is possible to improve on it very substantially. I do not think it is. If the State wants to have certain commercial activities undertaken which because of their nature do not interest private enterprise, it can do it itself through a Government Department, or it can subsidise private enterprise to do it, or adopt an intermediate course represented by the formation on its own initiative of companies established under the Companies Acts, in which it will hold the equity. Of the three courses, I think the latter is the best. I doubt very much if it is practicable to have commercial activities of this kind properly directed by a Government Department.

I am not quite clear whether the Vocational Commission considered that a suitable arrangement. I find it hard to speak on the Report of the Vocational Commission because the nature of their report is such that it is not always easy to know precisely what point they were trying to establish. If they contemplated the type of Parliamentary control over expenditure by these companies as is exercised over expenditure by a Government Department, I think their idea is completely impracticable.

It is true that there are Government Departments doing what might be described as commercial work, Departments which have to come to the Dáil with estimates of receipts and expenditure for the year under the various headings on which estimates are based, salaries, wages, travelling expenses, postages, telephone and similar charges. The practice of such Departments is to get a Vote of public moneys to cover all their outgoings and to bring in as Appropriations-in-Aid the revenue which they expect to get from the sale of the goods or services they produce.

It may be undesirable to change that practice where it has been established, but if we are embarking on new commercial activities, we should try to get something more akin to the normal type of commercial organisation, which will have the freedom of day to day activity which the normally privately owned commercial organisation has. I think if we were to attempt to do work of this character, particularly mineral development work, by subsidising private enterprise, we would come in for far more criticism than is likely to apply to this type of organisation.

Sir John Keane

May I ask if the Minister has considered the extension of the principle on which the cement company works?

Mr. Lemass

I was going to deal with that later. The cement company is operated for profit as a private enterprise.

Sir John Keane

Under control.

Mr. Lemass

The reason for control there is because it is a monopoly undertaking, the profit-taking arrangements of which must be restricted in the public interest.

Sir John Keane

And quite fair.

Mr. Lemass

Senator Sir John Keane asked me if we were contemplating the extension of Governmental organisations engaged in commercial enterprise after the war. I think it has been made clear that the Government prefer to see industrial development through private enterprise. But I think that there is a case to be made for the establishment of a greater measure of Government control over commercial companies which are in a monopoly position, whether that position is secured through legislation or is the outcome of circumstances not due to Government action. It has been argued that where a monopoly position exists, public ownership should exist, but I think that the application of that principle in all cases would lead us into difficulty. I go no further than saying, that where there is anything akin to monopoly, there must be a greater measure of public control than would ordinarily be deemed prudent where competitive conditions operate. These companies were established to do a type of commercial work in which, at the time, private enterprise was not interested. It would not be true to say that private enterprise is not interested in mineral development, because particularly in the case of coal mining, private companies have been profitably operating for a number of years without Government assistance or protection against competition from abroad. The difficulty which arose at Slievardagh was due to a peculiar set of circumstances relating to the ownership of the deposits and the exceptional circumstances of the time. These conditions appeared to suggest that, if action was to be taken for the development of the deposits, it would have to be taken by the State.

I may say that, subsequent to the stage at which the Slievardagh mine came into production, proposals and suggestions were made to the company concerned and, through the company, to the Government, that private enterprise would be prepared to buy out the mine. These proposals and suggestions were considered but I came to the conclusion that the sale of that mine to a private company at present would be bad business. I should not like to suggest that the idea would not be entertained later but, at the present time, when a great deal of money has been spent on development work and when the circumstances of the mine are such that we could not hope to get back from a private buyer the full amount expended, it would be bad business to sell. I think that we should, certainly, wait until it is possible to establish the commercial potentialities of the mine by the installation of up-to-date machinery, working under normal conditions. If the amount expended by the State upon the exploration and development of the deposit could be recovered and the mine offered as a fair, commercial proposition, then, in response to a firm offer, we might consider sale, under conditions, to a private company.

Mr. Duffy

Would the Minister consider an offer from a rival company which might buy the mine to close it down?

Mr. Lemass

I deliberately inserted the two words "under conditions" in my statement and I had in mind the necessity for imposing, as a covenant in any such agreement, an obligation to keep the mine working. When the State gives a lease of mining rights to a private company, there is always in the lease a condition as to working. In the case of the Avoca deposit, circumstances are entirely different. We have got expert reports upon that deposit which appear to indicate that the quantity of ore available for working is very substantial. But they also indicate that the proper commercial development of that ore would involve its working on a very large scale—far greater than is being done at present and far greater than has been contemplated for the future. The difficulty about working on the scale at which, in the opinion of experts, successful commercial development would be possible, is that we have not in this country at present a market for the products. This is a composite ore, which, when broken down, would yield pyrites, copper, zinc, lead and certain other minerals. We are now working the mine for pyrites only because that is the only product we can use——

Mr. Crosbie

Where are you working for the pyrites?

Mr. Lemass

At Avoca. It would seem inevitable, therefore, that the working of these deposits upon the scale which the experts recommend would involve either the exportation of the ores or the establishment of industries for the processing of the ores. That, in turn, would involve a very substantial expenditure which could not be embarked upon without a very full examination of the commercial risks involved.

I find it not easy to speak about the report of the Vocational Commission in respect of its observations upon matters of this kind. I have read the report of that commission on more than one occasion and I have been unable to come to any conclusion as to whether the querulous, nagging, propagandist tone of its observations is to be attributed to unfortunate drafting or to a desire to distort the picture. The commission spent a great deal of energy upon its researches, and a very long time in preparing its report, and I think it is unfortunate that the report, when published, should be such a slovenly document. I think that that is a fair description of it, because it contains an extraordinary number of mis-statements of fact which could easily have been rectified by a telephone inquiry to the Department or organisation concerned. In some respects, its recommendations are self-contradictory. I re-read the observations of the commission on these Government commercial organisations because I knew the matter was to be raised here to-day. Again, I am not quite clear whether or not the impression left on my mind was the impression the commission intended readers of the report to get. I felt that they wanted to be nasty about these organisations, and, yet, re-reading their observations, I am not sure that they did. It may be that I got a wrong impression because of an unfortunate method of wording. The observations of the commission on these organisations, their references to the possibility of patronage, the possibility of the abuse of Government powers and the misuse of public moneys were completely unjustified. There was no attempt on the part of the commission to show that these dangers existed or to produce any evidence that Government organisations of this kind had been so conducted in the past as to justify fears of that kind. It is true that, where the Government has power to make appointments, some element of patronage must enter. I do not think that that is necessarily objectionable. On the contrary, it is a means by which the Government can bring into the public service or make available for the development of particular industries persons of ability who might not get that opportunity through private enterprise.

I do not think it can be said that any of the Government companies operating have been at any time directed for a purpose other than the maximum commercial results that could be secured. It is, of course, perfectly true, as Senator Duffy said, that most of these companies were established to undertake commercial enterprises that private persons were not interested in because of their speculative nature. In respect of these two companies, there is even more to be said because the boards of these companies came to me after they had been established and said that if purely commercial considerations were to apply they should close down and remain closed down until the war was over, when proper equipment could be procured. There was no doubt as to the wisdom of that advice if purely commercial considerations were to apply, but I had to decide that other considerations had to be taken into account, and the most important of these was the need in present circumstances for the minerals which these companies were working. So much importance did I attach to it that I instructed both companies to proceed with the maximum output regardless of cost, to produce coal and phosphate rock regardless of cost, and to endeavour to secure only that the maximum quantities would be made available during the emergency. They had been involved in a loss as a result, due to the fact that the method of working is uneconomic, and also to the fact that we fixed the prices at which they were to sell without regard to cost of production. We fixed the prices solely with regard to the prices at which we wished the products which these companies were producing to be sold. In fixing the price of phosphate and pyrites, which are the raw material of agricultural fertilisers, we arrived arbitrarily, first of all, at the price at which agricultural fertilisers should be available, and then we proceeded to adjust the prices of the constituent products so as to enable the manufacturers to produce at that price. In order to do that, the mineral company has been required to produce at a loss. Both pyrites and phosphate are produced by an extraordinarily costly process, which involves actual hand-picking so as to get the type of material which the furnaces in use can deal with. Nevertheless, it is available at the price which is lower than the price we pay for the Spanish pyrites we import.

In the case of the coal mine, again the situation was the same. The coal was sold at the price which we fixed, and the price had relation to the price of coal as produced from other mines, and had no regard to the circumstances of the company. This decision to maintain the output of these minerals, irrespective of other considerations, was of special note in regard to these companies, because unlike ordinary companies they are working a wasting asset. A company producing woollen cloth or boots can continue to produce so long as the raw materials are available, and the very fact that it is producing does not lessen its productive capacity for the future. That is not true of a coal mine. Every ton produced there is one ton less which it can produce later on. Therefore, the decision to keep on working irrespective of commercial considerations involves not merely immediate loss in the present but some deterioration of the commercial possibilities of the company at a later stage. That applies in respect to the phosphates, but it hardly applies in the case of pyrites because in relation to the total quantity available the amount we are taking now has no significance.

Sir John Keane

Is the quality of the coal likely to be acceptable in normal times?

Mr. Lemass

I think so. It is anthracite. We never produced enough anthracite for our own needs, and we were importing anthracite before the war.

Sir John Keane

But the quality is all right?

Mr. Lemass

The quality is all right for certain purposes. I should like to differentiate between the purposes for which anthracite is used. Sometimes it is used mainly as a fuel for the raising of steam or generation of heat, sometimes it is used in the process of manufacture, and no other coal can be used. The coal must have certain physical characteristics. We have never had any difficulty in disposing of all the anthracite produced. Before the war we had a commission which was set up to investigate the possibilities of increasing the output of anthracite in order to meet the growing demand. As Senators are aware, the demand is increasing very rapidly, not merely in this country but everywhere. Consequently, the possibility of developing our anthracite deposits is important, and we can contemplate substantial development after the war. It is notable that during the war very large numbers of private firms have interested themselves in the working of coal deposits. This company which investigated portion of the North Leinster field in the Carlow area has since surrendered its lease to a private company which is about to work the deposits, and which is repaying the company a substantial proportion of the money previously expended in exploration.

Mr. Duffy

Would the Minister agree that it is very largely a question of having boilers suitable to consume the fuel whatever it may be?

Mr. Lemass

Certainly. As Senators are aware, the use of anthracite is growing rapidly, and it is likely to grow still more rapidly after the war. I do not know the company Senator Sweetman referred to when he made reference to a person who earned £12,000 in two years. I did not see the court reference, and I know nothing of it.

Mr. Sweetman

If I send the Minister the details will he look into it?

Mr. Lemass

Certainly.

Mr. Sweetman

For obvious reasons I did not like to mention them across the floor of the House.

Mr. Lemass

Senator Duffy said that the introduction of the Bill meant that we had taken a wrong step in 1941, when the Minister for Industry and Commerce got permission to establish two companies. I do not think that is entirely correct. If we had worked on the basis of one company we would have made much less progress than we did with two companies. A very great deal of development work had to be undertaken rapidly and the work proceeded simultaneously in Slievardagh, Avoca and at the phosphate deposits in County Clare because we had these separate organisations. A stage was reached when the coal mine at Slievardagh came into production and it became obvious that there were certain aspects which would limit the output of coal. At that stage I decided that the coal output was never likely to be able to carry alone the superstructure of a managing director, board of directors and a mine manager. Nor did I think it necessary once development stage was over. I decided a combination was desirable, and to abolish a separate organisation for the working of Slievardagh mine. I do not think it would have been possible earlier. I think Senator Duffy was wrong in saying that the same persons were directors of both companies at an early stage. That is not so. It is only since last year that the same persons were appointed to the boards of each company and the same staff utilised.

Mr. Duffy

Did that not take place in 1943?

Mr. Lemass

In 1944. The companies were originally separate organisations under two separate managing directors who were officers seconded from the Electricity Supply Board and with separate staffs and technical advisers. Now there is only one organisation under one board of directors and one managing director, with separate managers, however, for each of the mining activities in which they are interested. I do not know whether Senator Sweetman requires me to give the names of the directors of the company.

Mr. Sweetman

Not to-day. I want their qualifications, not their names.

Mr. Lemass

Their main qualifications were that they were considered the persons best suited to run this enterprise. I could not say more than that. There is amongst them a professor of engineering. I do not want to say that he is the best professor of engineering in the country. He was appointed because of certain personal qualities as well as on account of his professional qualifications. There is also a coal merchant who happens to be a very representative coal merchant. Again I should not like to say that he is the best coal merchant we could secure, but I think his personal qualities and his representative character justify his appointment. In the selection of those individuals, the matter was eased for me by reason of the fact that I had twice the number to choose from the members of the former boards of both companies. When they were amalgamated a number of former directors had to cease to be directors and I limited the selection to those who were directors of one or other of the companies at the time.

Mr. Sweetman

What is their remuneration?

Mr. Lemass

The remuneration of the directors is £150 each.

Mr. Sweetman

And of the managing director?

Mr. Lemass

The managing director has £1,400.

Mr. Sweetman

Is that for the two companies?

Mr. Lemass

There is only one managing director now in charge of the whole enterprise and he gets one remuneration, £1,400.

Mr. Sweetman

The same applies to the directors receiving £150?

Mr. Lemass

Exactly.

Mr. Baxter

What were they getting in the two companies before?

Mr. Lemass

I think they were getting the same.

Mr. Duffy

I suppose you could not get any of these gentlemen to give their time free?

Mr. Lemass

I do not think it would be desirable. The most embarrassing type of assistant I think, speaking from experience, is the one who gives his time free. I much prefer in cases of this kind to have people remunerated for their services. I should like to look upon it as a general rule that the Government should insist on remunerating people for their services.

Mr. Baxter

Even Senators.

Mr. Lemass

I put members of the Dáil and Seanad in a different category.

Mr. Sweetman

Not when they act as directors, I hope.

Mr. Duffy

It does seem rather significant that the Minister and Senator Sir John Keane are in agreement in regard to this matter.

Mr. Lemass

Senator Sir John Keane wanted to know whether these companies would be continued in existence after the war. I want to make it quite clear that we are not establishing this company as an emergency company and it is intended that these enterprises will be continued after the war. It is hoped that after the war we may recover some of the money lost on them. Certainly, so far as Slievardagh is concerned there should be no difficulty in maintaining an increased output and selling it remuneratively if the necessary machinery can be obtained. I would be less confident about Clare phosphate. Apart from the fact that the phosphate rock there is particularly costly to win because it has to be done by mining, the known area of the deposit is limited and I raise as a general question the desirability of exhausting that deposit in times of peace when supplies can be obtained from abroad, rather than leaving some portion of it as an emergency reserve against a similar situation which might arise in future, when imports could not be procured. I have mentioned that the Avoca deposit, which is the only one worked at the moment, is the subject of an expert examination, and the experts' report seems to indicate that it has very definite commercial possibilities, provided it is worked on a scale far larger than we had previously contemplated.

Mr. Sweetman

Would the Minister answer this question? A report has been laid on the Table of the House in regard to this company. That report deals with nine separate trading ventures. Does he obtain from the company concerned a trading account in respect of each venture so that he and the Department can judge each venture on its own?

Mr. Lemass

I was going to say, arising out of Senator Douglas's remarks, that there is probably no shareholder in a private company who is so insistent on obtaining information, or who is so critical of the administration of the directors of each company, as the Department of Industry and Commerce is, in relation to these companies or that other Government Departments are in relation to companies for which they are responsible. I think that in so far as constant inquiry as to progress or pressure of criticism can produce efficiency in an organisation, it is more likely to be operative in the case of these companies than in the case of an ordinary privately-owned concern. It is true that the Government, having embarked on an enterprise of this kind, does not like to withdraw from it, but it would be wrong, however, to say that it never withdraws from it. In fact there have been such withdrawals in the past. I officiated at the winding up of one State enterprise in the last two weeks.

Mr. Baxter

What was that?

Mr. Lemass

I shall send the Deputy a note. Others may be wound up in future. Neither do I think it would be incorrect to say that the Government has never shown any hesitation in replacing directors or managers whose competence or whose work was shown by experience to be open to question. I should like to say, in replying to an observation of Senator Sir John Keane, that Irish Shipping, Limited, engages in marine insurance and war risk insurance in full competition with the whole world, not excluding Lloyds. Any business it gets in marine insurance is got in competition and by quoting rates equal to or below those quoted by other insurance companies. If they offered to insure cattle going to France at a rate of 15/- per head——

Mr. Sweetman

£15 per head.

Mr. Lemass

——or £15 per head it was because they assessed the war risk at that figure and probably the persons concerned, if the shipment had taken place—it did not take place— would have been unable to get insurance against war risk at a lower figure in present circumstances on a shipment to the West Coast of France. I do not think there is anything else I want to say in regard to this Bill. The main purpose of the Bill is to give legal effect to an amalgamation of the two companies, which has already been carried out administratively, and to permit of the raising of the limit of the advances that can be made to the company. May I say that the actual advancing of money to the company cannot be effected until the Dáil has approved of it? The raising of the limit fixed by the statute merely sanctions the making of the advance but until the Dáil has voted the money there can be no advance. In fact, there is now before the Dáil a Supplementary Estimate to sanction the advances that have already been made under the existing limit. However, the raising of the advances is due solely to the recognised need of acquiring machinery for the proper working of those deposits when the war is over, and it does not provide for any further development in the activities of this company. If it decided to embark upon new commercial enterprises, to open up deposits in some other area, or to work any of those deposits on a substantially larger scale than at present, then there would have to be further legislation which would give the Oireachtas a full opportunity of expressing, its views upon that enterprise.

Question put and agreed to.

Committee Stage ordered for Wednesday, 7th March, 1945.