Seanad Éireann debate -
Wednesday, 3 Dec 1947

Vol. 34 No. 15

Irish Shipping Limited Bill, 1947—Committee and Final Stages.

Sections 1 and 2 agreed to.

SECTION 3.

Question proposed: "That Section 3 stand part of the Bill."

Mr. Sweetman

I think this is the appropriate section for me to raise what is in my mind. I am not quite clear whether I should raise the matter on this stage or on the Fifth Stage, but no doubt I will be pulled up quickly if I am transgressing. I object to the Minister acquiring these shares in this company, not because of the company itself, but because the company is being utilised to control other commercial enterprises. The Minister and I had an argument—and I return to it in respect of one particular point— on this matter on 16th April last at column 1582 of the reports of this House. The Minister in that debate stated that the shares of the Insurance Corporation of Ireland, Limited, which were held by Irish Shipping Limited were shares which were transferred to Irish Shipping Limited from the Industrial Credit Corporation. I challenged the Minister at the time, but he said he did not agree with me. Immediately after that debate, I had an opportunity of ascertaining the facts, and the facts are as stated by me, namely, that a holding of the Insurance Corporation of Ireland, Limited, shares, sufficient to create a majority and to control the company, were specifically created and given to Irish Shipping Limited, in consideration of the transfer of the marine insurance. That is the fact, and I want that fact to go on the record, in view of what occurred on the previous occasion. I do not see now why, particularly having regard to the present condition of the Irish Stock Exchange, in which there is a complete shortage of suitable industrial holdings, when it is without question a market in which the Minister could get rid of these shares at an advantage to the State, it is necessary for Irish Shipping Limited to retain control of a purely commercial and industrial undertaking like the Insurance Corporation of Ireland.

The Minister told us also on that occasion that having the secretary of his Department as chairman of the Insurance Corporation of Ireland was a purely temporary arrangement. Apparently the Minister's view of the word "temporary" and mine differ, because six months have passed, and, so far as I am aware, the position is still the same. It appears to me quite clear that it would be to the advantage of the State, to the advantage of the public, in pursuance of the powers taken in this Bill over Irish Shipping Limited, if the Minister directed the company to place on the market, with such restrictions as may be desirable —with a provision that the shares should be held only by Irish nationals; I would not object to that in the slightest—for disposal amongst the ordinary Irish investing public the control at present exercised through Irish Shipping Limited by the Minister over what should be an ordinary commercial undertaking. If that were done, I feel that it would redound to the credit of Irish Shipping Limited.

Mr. Lemass

Personally, I cannot see the point of that. Irish Shipping Limited, as I explained, went into the marine insurance business because nobody else would do it and it served a most useful purpose by its action. It was considered undesirable, and I think it will be agreed for obvious reasons to be undesirable, that a shipping company should be in the marine insurance business, and, consequently, the company was urged to dispose of that business in such a manner as would not impede the growth of the business in this country, because, up to the advent of Irish Shipping Limited there was no marine insurance market here. Now there is such a market, a market of growing importance which is already producing an income from abroad of significant size and an income which is expanding rapidly. Irish Shipping Limited carried out their decision in that regard by transferring that business to the Insurance Corporation of Ireland in consideration of the transfer of shares.

Why should Irish Shipping Limited sell these shares? They are worth probably a lot more than their nominal value because of the business which Irish Shipping Limited transferred to the company. There is also the problem of reinvestment. The only reason advanced why they should sell these shares is that somebody else wants to invest in them—that is what Senator Sweetman is arguing. If Irish Shipping Limited sold the shares, they would have the problem of reinvesting the money in something else and it is obviously far better to leave the money as it is.

With regard to the arrangement whereby the secretary of my Department is chairman of the Insurance Corporation of Ireland, I want to say that I do not desire that arrangement to be continued and neither does he. I have been urged by the board to allow it to continue for a further period because of the importance they attach to it in promoting the growth of this insurance business, but obviously the arrangement will have to be terminated because the individual in question has far more work to do than he can reasonably carry and I have notified the board of the company that it will have to be terminated, despite their wishes to the contrary.

Mr. Sweetman

The first part of the Minister's argument, that Irish Shipping Limited would have difficulty in reinvesting, would be very sound and very good, if it were not for the fact that Section 2 is in the Bill. The whole purpose of this Bill is to give Irish Shipping Limited more capital. That is the purpose of introducing this Bill.

Mr. Lemass

I explained that there is no necessity at the moment for Irish Shipping Limited to seek more capital.

Mr. Sweetman

But Section 2 has been introduced in case there may be a necessity for Irish Shipping Limited to seek capital. If and when Irish Shipping Limited need more capital the proper way of securing it would be for them to get rid of their holding in the Insurance Corporation of Ireland shares and not to deal with it in the manner in which the Minister has dealt with it.

Mr. Lemass

It is a reasonable assumption that they will do so.

Mr. Sweetman

If that is so, I shall put down an amendment on Report Stage to delete Section 2, because the Minister has blown the case for that section sky-high.

Mr. Lemass

Except that the amounts involved are substantially different.

Question put and agreed to.

Sections 4 to 11, inclusive, agreed to.

SECTION 12.

Question proposed: "That Section 12 stand part of the Bill."

Sir John Keane

I am not quite clear as to the power of the Minister for Industry and Commerce, or the Minister for Finance, to make advances.

Mr. Lemass

It is the Minister for Finance.

Sir John Keane

It makes no difference to my argument which Minister is involved. There is no reference whatever in the earlier part of the Bill to any advances, or any power to make advances to the company—to acquire shares in the company, yes, but not to make advances. This is the first reference in the Bill to advances and there does not appear to be any authority——

Mr. Lemass

Subsection (3) of Section 3.

Sir John Keane

That answers my point.

Question put and agreed to.

Section 13 and Title agreed to.

Bill reported without amendment.

Agreed to take remaining stages to-day.

Question—"That the Bill be received for final consideration"—put and agreed to.

Question proposed: "That the Bill do now pass."

Mr. Sweetman

I merely want to make one point clear. Section 2 provides that the capital of the company may be increased to £5,000,000. The amount involved in the discussion which the Minister and I have had is roughly £500,000, because there are about 225,000 shares which could be put on the market at between £2 and £2 10s. 0d. per share. With regard to the further funds of this company, the extra £500,000 would be of the greatest advantage, but even apart from the fact that Section 2 and the necessity for it demolish the Minister's argument, the Minister demolished it in another way, because he most specifically started off by saying that he did not desire Irish Shipping Limited to dispose of its insurance holding and then turned his argument to suggest that, when further capital was required, they would dispose of it.

We must remember that, in regard to a matter of policy, it is the policy of the Minister at the time which will operate and his policy apparently is to ensure that, through his control of the shares of Irish Shipping Limited, control of the Insurance Corporation of Ireland Limited will be kept and effected. I regard that as an extremely bad thing. I regard it as a control which may lead to very undesirable results, no matter who may constitute the Government at a particular time. I feel that the investing position of Irish Shipping Limited should be an investment in ships and that the other capital—what I might perhaps describe as working capital— if it needs temporary investment should not be held in a lock-up investment such as the type the Minister visualises. That is not going to increase confidence in Irish enterprise. It is going to mean the spreading of the tentacles of the Department into every activity of commercial life. The Minister may, as he does, pay lip-service from time to time to private enterprise, but when he gets the opportunity, he does the exact reverse. He encourages State regimentation and control in commercial enterprise and I think it would be a good day for us all if that ended.

Mr. Foran

I thought that Senator Sir John Keane would have intervened in this debate but I was surprised by his silence. If Senator Sweetman, as a lawyer, is taken as an authority on finance then Senator Keane knows nothing about it. Senator Sweetman's argument is that because Irish Shipping Limited has certain reserves invested in a profitable undertaking these reserves should be put on the open market for the man in the street to buy, thereby depriving Irish Shipping Limited of a very valuable source of revenue. He goes on to say that this should be in the hands of private enterprise the reason being of course that it is a money spinner and a profit-making industry. There was no mention by Senator Keane that Slievardagh should be in the hands of private enterprise. Oh, no. The people, and by that I mean the Government, should hold the baby when there is money to be lost but when there is profit to be made, when there is something valuable at stake, it should be handed over to private enterprise. Senator Keane was very critical of the Government's management of Slievardagh but he had nothing to say about Irish Shipping Limited which is a very valuable asset to the nation not only from the financial point of view but from the point of view of service rendered during the emergency. It has proved itself during the emergency. Now let us exploit it in peace time. The Minister told us that it was considered entering into the field of cross-Channel shipping. There is an opportunity for investment in the very near future but by disposing of its shares in the insurance corporation, Irish Shipping Limited will be so much the poorer. I am amazed by the silence of Senator Keane on such an important issue.

Sir John Keane

The Senator need be amazed no longer, but why he wants to tie Irish Shipping Limited up with Slievardagh is beyond me. They are two totally different matters. I agree with Senator Sweetman. I accept that Irish Shipping Limited is only a synonymous term for Irish Government. It is not an independent commercial enterprise. It is a company in which the Government owns all the shares and over which the Government has effective control, and I do object to the Government, through Irish Shipping Limited, owning a controlling interest in the Irish Insurance Corporation. If the Senator thinks my silence implies agreement he is mistaken. Certainly it does not. I am fully in agreement with the attitude that Senator Sweetman took up and I am largely apprehensive of the ramifications of a Government enterprise through a company in which it has a controlling interest.

Mr. Lemass

Irish Shipping Limited is investing its reserve funds in new ships as rapidly as it can. At the present time, as people in the business know, it is not possible to buy ships. No country will agree to transfer the registration of existing ships, and, consequently, it is only by getting new ships built that Irish Shipping Limited can expand its fleet. It is getting those new ships built and we hope that by expanding its operations it will absorb not merely its financial assets but will be required to call on the capital that this Bill provides. For the first time the company is being given a basis in legislation. It was originally started under an emergency powers Order with a capital of £200,000 and that is probably worth 20 times its nominal value now. When it is being given a basis in legislation it is proper that the nominal capital of the undertaking should be given some relation to the assets of the company as well as providing for further advances from the State if the growing activity of the company requires it to get new capital.

With regard to the company's investment in the Insurance Corporation of Ireland I want to say one thing which I think is important. I have mentioned that a growing market for marine insurance business is being established in this country. That market is not growing except at somebody's expense. The business that the Insurance Corporation of Ireland is getting and the business that other insurance companies, following its lead, are getting is business that other companies would have got. I certainly would advise Irish Shipping Limited that in no circumstances should it dispose of its shares in these companies until it was satisfied that this business was firmly established here. I would not regard a mere provision that the shares could only be sold to Irish nationals as a sufficient safeguard for protecting this business because there are people who may have very substantial interests in destroying it. Until that risk has disappeared it would, in my view, be better to have the company call upon the capital for which the Bill provides rather than to dispose of its shares in the Irish Insurance Corporation.

Question put and agreed to.

Ordered: That the Bill be returned to the Dáil without amendment.

An Cathaoirleach

I understand the Minister for Agriculture will not be available for some time. In the meanwhile the Minister for Justice will take Nos. 5 and 6 on the Order Paper.