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Seanad Éireann debate -
Thursday, 21 Jul 1955

Vol. 45 No. 5

Electricity (Supply) (Amendment) Bill, 1955—Second and Subsequent Stages.

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

The principal purposes of this Bill are: (i) To authorise an increase from £16,000,000 to £25,000,000 in the statutory limit of expenditure which the E.S.B. may incur on rural electrification and to provide for the making of advances from the Central Fund accordingly; (ii) to extend the borrowing powers of the board so as to authorise it to obtain moneys required for rural electrification from sources other than the Central Fund; (iii) to terminate the subsidy for rural electrification.

The remaining provision is a minor amendment of the 1954 Act which is required to make it clear that a guarantee given by the Minister for Finance under Section 9 of that Act may extend to the payment of interest on, as well as to the capital repayment of, borrowings made under Section 4 of that Act.

Section 7 of the Electricity (Supply) (Amendment) Act, 1954, authorised an increase from £8,000,000 to £16,000,000 in the total of advances which could be made to the board from the Central Fund for rural electrification and at the time that Act was enacted, it was anticipated that the provision then made would suffice until about March, 1956. As a result, however, of the considerable increase in the rate of development which has taken place in the meantime, both expenditure and commitments incurred on the scheme have increased more rapidly than was anticipated. Within the existing limit of £16,000,000 the total already advanced to the board is £13,600,000 and in the year 1955-56 the board's requirements for rural electrification alone are expected to total £4,000,000. The board's total expenditure and commitments at the end of May, 1955, in respect of the scheme were £15,057,769.

It is clear that at the present rate of activity the total of expenditure and commitments on the scheme will have exceeded the existing statutory provision of £16,000,000 by the autumn of this year. It will be appreciated that the statutory provision at any particular time should be sufficient to cover not only expenditure actually incurred on the scheme but also commitments which have to be entered into in advance and which are inherent in the nature of the scheme. It is essential, therefore, that additional legislative provision should be made as soon as possible. Taking account of the balance of £2,400,000 still available, the additional amount of £9,000,000 which it is now proposed to provide, will, it is expected, be sufficient to cover expenditure and commitments until 1958.

The fact that it should be necessary to seek the approval of the Oireachtas for increased provision for rural electrification so much earlier than was originally anticipated is a reflection of the considerable increase in the rate of development which has now taken place. In other words, development is now proceeding at a rate double that of two years ago. The following statistics illustrate the progress. In the year ended 31st March, 1953, 49 rural areas were completed; 60 were completed in 1953-54 and 75 in 1954-55. The estimate for 1955-56 is 100 areas. At 31st March, 1955 the number of rural areas completed since the inception of the scheme totalled 364.

In all there are approximately 780 rural areas in the country and as development in the current year and in future years is expected to proceed at the rate of 100 areas per annum, there is every prospect that the scheme will be extended to all areas by the 31st March, 1959. As further legislative provision will be required before that date the House will have an opportunity then of reviewing further the progress of the scheme. Even with the increased rate of development there is no evidence of a slackening in demand for extension of the scheme. In 1953-54 the average percentage of householders who agreed to take supply in the completed areas was 67 per cent. as compared with 65 per cent. in 1952-53 and 60 per cent. in 1951-52. The urgency of making additional provision now is therefore self-evident.

The Government have decided that the continuance of subsidy for rural electrification from State funds is no longer necessary or justifiable and subsection (2) of Section 4 of this Bill is designed to give effect to that decision. There seems to have been a good deal of misunderstanding about the effects of this decision and in particular it has been asserted that it will result in either a slowing down of rural electrification development or an increase in rural charges or both. That, of course, is not the case. To clarify the position, I think it would be desirable that I should give the House an outline of the history of this subsidy provision and of the considerations on which the decision to withdraw it was based.

The problems of rural electrification were examined in a report prepared by the E.S.B. which was submitted to the Minister for Industry and Commerce towards the end of 1942. This report was published as a White Paper in 1944 and copies of it are available in the Oireachtas Library. In dealing with the economics of rural electrification, it was estimated in the report that the annual capital charges, namely, interest on advances, the provision of a sinking fund to repay the advances together with provisions for depreciation of the assets and for other costs, such as, maintenance and supervision, would amount annually to 12 per cent. of the capital cost of providing supply.

On the best estimate that could be made at that time the annual revenue from fixed charges was expected not to be likely to exceed 9.7 per cent. of the capital cost. There would be, therefore, an annual deficit of 2.3 per cent. of the capital cost. Of the total annual charges of 12 per cent., interest and sinking fund charges were estimated to total 5.5 per cent. It will be appreciated that these interest and sinking fund charges would not arise if the State provided the capital required for the scheme as a non-repayable grant which would be the equivalent of a 100 per cent. subsidy.

On the assumption that the capital required would, as in the case of capital for the board's general purposes, be provided by way of repayable interest-bearing advances from the Central Fund the measure of the subsidy required to make the scheme economic from the board's point of view was the deficit of 2.3 per cent. expressed as a percentage of the interest and sinking fund charges of 5.5 per cent. or 41.82 per cent.

The Government approved of the report from the E.S.B. in August, 1943, and decided that the scheme should be commenced as soon as materials became available and that the board should be recouped the amount by which the annual fixed charges fell short of the annual capital charges. Effect was given to this decision in Section 41 of the Electricity (Supply) (Amendment) Act, 1945, under which capital for the scheme was made available and which also provided that one moiety of the sums advanced to the board from the Central Fund for rural electrification should be repaid by the board and that the other moiety should be repaid out of moneys provided by the Oireachtas at such time or times as the Minister for Finance should direct. The subsidy was fixed at 50 per cent. instead of the 41.82 per cent. originally estimated in view of the increases in costs which had taken place in the meantime.

The scheme commenced in 1946-47 and it was arranged that one half of the sums advanced to the board in any calendar year should be repaid to the Central Fund from voted moneys in the succeeding financial year. This payment was charged to the Vote for Industry and Commerce and in the financial years 1948-49 and 1949-50 a total of £550,000, representing one half of the advances obtained by the board in the calendar years 1947 and 1948, was repaid to the Central Fund from that Vote.

In 1950 the Minister for Finance decided that the amount falling due for repayment to the Central Fund in the financial year 1950-51, and in succeeding years, should be funded and be repaid by way of an annuity payable half-yearly and extending over 50 years. These were the terms of repayment which applied to the moiety of advances which were repayable by the board and it was felt that the benefit of these terms should be extended to the taxpayer also. In 1952, the Minister for Finance decided to revert to the procedure of repaying the outstanding moiety to the Central Fund from voted moneys in one sum and, accordingly, in the financial years 1952-53 and 1953-54 one half of the amount advanced to the board in the two preceding calendar years was repaid to the Central Fund in lump sums totalling £1,300,000.

In February, 1954, a further modification of the system of repayment was decided upon. The net result of the previous arrangements was that at the end of March, 1954, the total amount remaining outstanding in respect of the moiety repayable from voted moneys, including the undischarged portions of annuities fixed to repay the 1949 and 1950 advances, was £2,110,213 and it was decided that this should be repaid by way of simple instalments without interest over 25 years, and that this arrangement would also apply in future years. The present position is that the board has obtained a total of £13,600,000 by way of advances from the Central Fund and that of the moiety of £6,800,000 repayable from voted moneys a total of £1,974,400 has already been paid. In other words, rural electrification has been subsidised to that extent.

I think that in considering this question of subsidy, it is essential that regard should be had to the circumstances which prevailed when it was originally decided on and to the considerable alteration which has taken place since then. In 1943, as a result of the unsettled conditions and the difficulties in securing supplies, the board was operating at a loss and, in fact, continued to operate at a loss right through the remaining war years. It was not until 1948-49 that the accumulated deficits of these years were finally wiped out. When the decision to provide a subsidy was taken in 1943, there was every indication that the difficulties under which the board was operating might become greater and even with the return of peace might be aggravated by the necessity of overhauling, in an era of inflated costs, the arrears of construction which had accumulated during the war years. It was only natural, therefore, that the board should not be expected to undertake any operations particularly rural electrification, the economics of which were then uncertain.

To-day, however, the position is vastly different. Since 1948-49 the board has been able to produce a surplus on its operations in every year with the exception of 1952-53 in which there was a deficit as a result of inflated fuel costs, and this has enabled it not only to make adequate provision for interest on advances, capital repayments and depreciation of its assets but also to provide other reserves which at 31st March, 1955. amounted to nearly £2,000,000.

In the year ended 31st March, 1955, the gross surplus amounted to £928,659. The provision for interest and capital repayment on the moiety of advances for rural electrification for which the board was liable in that year amounted to £260,567. It will be evident, therefore, that the board could have borne the full charges for rural electrification in that year and still have shown a substantial surplus. It was in the light of these altered conditions that the Government decided that the continuance of subsidy was no longer either necessary or justifiable.

An important feature of the results of 1954-55 was that the rural revenue account showed a surplus of £44,130 as compared with deficits of £9,988 and £30,610 in the two previous years. The increased rate of development should result in a considerable expansion of sales of current in rural areas and it would be obviously absurd to continue to provide subsidy for a service on which there was every likelihood that surpluses would continue to be produced as long as the subsidy continued.

The Government felt that the board had attained the position in which, taking its operations as a whole, it could not only bear all the charges on this service in the future, but could also take care of the undischarged liabilities. In this connection it is important to bear in mind that the board enjoys exceptionally favourable terms for repayment of its liabilities to the State as such repayment is spread over a period of 50 years.

Electricity development in this country has now reached the stage at which electricity consumers and taxpayers are largely the same persons. There would, therefore, be no point in arranging, on the one hand, for a relatively slight reduction if any reduction were possible at all in the price of electricity to consumers, and on the other hand imposing taxes on them to provide for a continuance of subsidy. The logical way to look at this is to regard the board's undertaking as one unit which by prudent management has reached the stage where it is self-supporting, and can bear the full charges for rural electrification from the surpluses realised on its other activities.

Since in future there will be no distinction between capital required for general purposes and for rural development in so far as liability for repayment is concerned there is no longer any reason for the board to rely solely on the Central Fund for its rural capital requirements. Provision has, accordingly, been made in Section 3 of the Bill to authorise the board to borrow, from sources other than the Central Fund, moneys which they may require for rural development. This is an extension of the powers conferred on the board by Section 4 of the 1954 Act.

In case any doubts on the subject should still exist, I should like to take this opportunity of assuring rural consumers that there will be no increase in electricity charges as a result of making the board bear the full cost of rural electrification nor will there be any reduction in the rate of progress in carrying out the scheme. In fact, the position now is that, as a result of the increase in the rate of development, those who are still awaiting supply may expect to receive it all the earlier.

The speedy enactment of this Bill will ensure that the board can go ahead with rural development at the present greatly accelerated pace and will hasten the day when practically every member of the rural community will have available to him this modern amenity and aid to increased production. I think it will be agreed that the board deserves to be congratulated on its achievements in this field and on the success which has attended it efforts. I, therefore, confidently recommend the Bill for the approval of the House.

The Bill before us, as the Parliamentary Secretary pointed out, provides three separate proposals and the most important from the point of view of the Minister for Finance is that relating to the removal of the subsidy on rural electrification. We are all pleased at the progress made by the E.S.B. and many of us would wish it had been even more rapid in the past. When the Government in 1952 or 1953 considered proposals for rural electrification the E.S.B. prepared a case for it and, as the Parliamentary Secretary said, the case was issued in the form of a White Paper which is now available to members in the Dáil Library. The case they made to the then Government was based on the procedure adopted in practically all the small countries of Europe and in the great half-continent of Canada. In each case that the board put before the Government the Governments of these countries provided a subsidy for rural electrification apart from whatever proposals were made for the general supply of electricity. In Canada, as far back as 1921, the provision made was as high as 50 per cent. for transmission purposes and they later went so far as to provide loans for rural dwellers and to subsidise wiring and provision of meters out of State funds.

Because that information was put before them, the Government then decided that it was essential to bring light and power into rural Ireland. To do that the board made the case that it would be necessary to provide subsidies and, as the Parliamentary Secretary pointed out, that subsidy has been paid and the proposal here now is to remove it. The Parliamentary Secretary assures us its removal is not going to have the effect of increasing the prices of electricity to rural dwellers and is not going to cause the slowing down of the extension of the system. It is very easy for the Parliamentary Secretary to say that this particular action will not increase costs because whenever they are increased another reason can always be provided and the reason probably will be the increased cost of coal or increased demands by employees. But no reference will be made to the removal of the subsidy.

The Parliamentary Secretary referred to the present financial position of the board and said it was now in a position to take the full weight of rural electrification without any subsidy from the Government. The report just issued shows the board made a profit of some £800,000 last year but practically £600,000 of that was attributable to the fact of the very bad weather which, while it was a serious disadvantage to the country and the farmers particularly, seems to have been a blessing to the E.S.B. who were able to save practically £600,000 on the purchase of coal. However, that leaves a very small margin to work on, a profit of some £200,000.

£928,000 was the surplus.

Out of the £16,000,000 provided I believe that some £15,000,000 of that is practically accounted for by expenditure and commitments in connection with rural electrification. We are now giving authority to the board to procure money from sources other than the Government, to go to the public and borrow money for the purpose of the main work it carries on and also for the rural electrification scheme.

In connection with this question of borrowing, will the Minister for Finance, having fixed the rate of interest that the banks will pay, also insist that these moneys be provided for the E.S.B. for this very essential work at a rate of interest fixed by him? The Minister tells us 49 areas were completed in one year at the start and that that has been stepped up to 60. That is only natural. When works of that kind are begun one does not expect a large number of areas to be completed in the first year and to have a reduction in the number in the following year. It is only natural there should be a big step-up in the number of areas and the amount of work carried out.

While we all appreciate the benefits of rural electrification I think the House will agree that if there is any part of rural Ireland to which we should give priority of attention it is to the Gaeltacht areas. These are the areas where inducement should be held out for the starting of industries and one of the first essentials is power. We cannot have that power if rural electrification schemes are not brought into the area. Up to the present I think the board requires that some 69 per cent. of the residents in the area should be prepared to take the supply when the canvass is carried out or otherwise that area is not connected up. I refer particularly to a very thickly populated part of Connemara, that is from Knock to Carraroe, and I would ask the Minister to use his influence with the E.S.B. to have them reconsider the position in connection with this very important area. You would have 69 per cent. of the people in some thinly populated areas but here you have a very thickly populated Gaeltacht district and 50 per cent. there would be equal to 75 per cent. in a more thinly populated district.

The importance of the two areas I have referred to is connected with the fact that the Galway County Vocational Committee have erected two very fine vocational schools, one in each place. The full benefit of these schools cannot be given to the boys and girls there if you have not electric power. A great number of those young people will be forced to seek their livelihood across the water and it is most important that all the facilities should be made available to them to receive the very best training that the vocational committee can provide for them so that if they do seek their livelihood in the cities or towns here at home or if they are forced to seek a livelihood abroad they will be as well equipped as we can possibly make them.

We all know how reluctant a great number of our farmers are not alone in congested areas like Connemara but in other districts, to sign a contract that they are going to take in a particular service until they first see that their neighbour has it and discover how it works out. I have no doubt that if the board made a decision to-morrow to proceed with the scheme in these two areas, in a very short time the great majority of the people there would become subscribers.

That is one of the requests I would make to the Parliamentary Secretary: that, in regard to the Gaeltacht areas particularly, the board should be more liberal and not adhere too strictly to the results of their canvass. I think their experience in the other places they have already wired up has been that the persons who were reluctant to accept supply have all come into the scheme now and are probably more satisfied than those who first signed.

Sub-section (2) of Section 4 provides:—

"The total amount remaining due to the Central Fund at the passing of this Act in respect of advances already made under that section together with the total amount of moneys hereafter advanced shall be repaid by the board."

What is the amount that this section provides will be paid back by the board?

£4.8 million.

This Bill, with just a few sections in it, does two very important things as far as the Minister for Finance is concerned. It saves a sum of £85,000 to the Government, provided in the Book of Estimates, and it also provides for the repayment to the Minister for Finance of £4,000,000.

Spread over 50 years.

This is a very nice income to provide for in a simple measure of this kind. While the Minister assured us that the passing of this Bill will not bring about an increase in the cost of electricity to the consumer, I wonder has the Minister given any consideration to what will result from the decision in Britain to increase the cost of coal by 18 per cent. If the board is compelled to import coal at the increased price they will be very anxious to have another very wet year and up to the present I do not think it looks as if they will be met as generously in that regard as they were last year.

It has been held over the years that one of the great inducements to industry is to have cheap power. The 1927 Act provides that the board must pay its way and we are now putting the responsibility on the board in paying its way. If there has been a profit made by the E.S.B. from the ordinary work for which it was first set up and if the E.S.B. is in such a strong financial position that it can now carry on without the assistance given out of the Central Fund for rural electrification, I think that one of the first steps that should have been taken was to reduce the cost of power and light to the consumer. It is all very fine to say that the E.S.B. has been a very efficient organisation.

The E.S.B., of course, has a monopoly and when a semi-State board finds it necessary to increase the cost of its product, it does not have to go before the Prices Advisory Body or even before this House. It is put on automatically, and that is all about it. When the Minister is asked a question about the working of this body he says he has no function in the day-to-day activities of the board. It is quite easy for a board carrying on under such conditions to build up reserves and have the appearance of being a very efficient body. But there is another aspect to the activities of the board. I do not wish to discuss all the activities of the E.S.B. under this particular measure, but there is one aspect of the board's activities which is causing some uneasiness. I refer to the engaging by the E.S.B. in sales of electrical equipment in competition with other sections of our people. Many hold the view that this activity on the part of the E.S.B. represents unfair competition.

I think it is to be regretted that the Minister is removing the subsidy for rural electrification. I am not satisfied that the effect of that step will be to speed up rural electrification because the board will now have to meet all its demands out of its own revenue and make provision therefor. I am afraid that the effect of this will be to slow up rural electrification and to spread it out over a much longer period. There will not, of course, be any general abandonment of particular areas but the board will be more reluctant to push ahead than it would be if the State were to give the same subvention as in the past. It has been found good policy to subsidise rural electrification in Denmark, Sweden and other countries. Admittedly, these countries had a much earlier start in developing rural electrification than we have had, but I think it is bad policy on the part of the Minister to remove the subsidy here at this stage particularly in view of the fact that this will affect the more remote rural areas. The possibility is that the board will be somewhat reluctant in the future to widen the scope of its activities because of the increased costs involved.

I support this measure and, in doing so, I would like to endorse the remarks of the Parliamentary Secretary congratulating the E.S.B. for the marvellous progress made in relation to rural electrification which has brought such benefits to the country generally. I think I am in order also in congratulating those men who originally conceived this idea and, in face of everything but encouragement, gave effect to a scheme which has now the enthusiastic support of every section of our community. I think the E.S.B., too, deserve congratulations on the manner in which they work and the manner in which the operating staffs carry out their duties throughout the country. Their application and their energy in the discharge of their duties sets a very excellent, if difficult, headline for other servants of public bodies and even for the servants of the State. I know of no section of the community which gives such a fair and reasonable return for wages as do the workers employed by the E.S.B., especially those engaged in rural electrification.

Exception has been taken to the section in this Bill which is designed to make the E.S.B. self-supporting in future. It is stated that the stage has now been reached when this service requires no further subsidisation out of public funds. That is only to be expected considering that the service has been operating at a profit over a very long period. I think there was only one year in the past ten in which anything in the nature of a loss occurred. Reading the report we find that this year there is a surplus of almost £1,000,000 and the board has reserves amounting to over £12,000,000. In addition to that, there is a contingency fund of £1,000,000, a fuel reserve and some other small reserves totalling almost £2,000,000. With all that capital at their disposal the action of the Government in withdrawing further subsidisation is perfectly correct. This enterprise is now a paying concern.

If I had any fault to find with this particular body, it is that some of the profits should be utilised to make charges on consumers somewhat more reasonable than they are at the present time. There is one particular charge which is a matter of concern to a number of people. I refer to what is called the overhead charge, the charge originally fixed on a valuation basis. Some time ago that particular charge was varied and, instead of fixing the charge on a valuation basis, it was fixed on the number of rooms serviced. As far as I recollect, the E.S.B. at the time the change was made notified consumers that the difference would be very little. I know that in my own particular case the change has meant an increase of 33? per cent. I think that is too much. During the summer months many people, especially in the towns, where valuations are pretty high, are paying for a service that they do not use at that period.

There is another fault that has been brought to my notice. In fact, I am aware of this from my own personal knowledge. Where householders are removed from built-up areas the service will only be extended to their new dwellings if they agree to pay increased charges. I do not think that is fair. If we are to have rural electrification there should be no differentiation where charges are concerned. I hope some means will be found of providing this service for people whose houses are remote from centres of population, where those centres of population are brought within the scheme. If that snag can be overcome there will be very little to complain about and this amenity will be provided for people who are at present deprived of it because they cannot afford the extra charges imposed on them.

The main purpose of this Bill, as explained by the Parliamentary Secretary, is to remove the subsidy on rural electrification. It is, undoubtedly, a drastic step and, possibly, the last one would expect from a Government which in the past so frequently and so fluently denounced the removal of subsidies or the reduction of subsidies on necessaries of life.

Food is, of course, a necessary of life. So, also, is fuel. In this matter, a previous Government, taking all the circumstances of the case into consideration, decided that it was desirable to subsidise to the extent of 50 per cent. the capital cost of installing electricity in rural areas. It was a wise decision. It was a decision which was applauded by everyone at the time. It was recognised that considerable cost would be involved in installing electricity in widely separated and remote rural areas and that it was right, therefore, that the State should come to the assistance of the consumers in these areas by ensuring that half the capital cost of installation would be borne by the taxpayer.

Now the Parliamentary Secretary makes two promises in regard to the removal of this subsidy. The first promise he makes is that the removal of the subsidy will not slow down development. We may take it that, in a general way, that promise will be fulfilled, not, perhaps, fully, but in the main. The Parliamentary Secretary makes the second promise that there will be no increased charge as a result of the removal of the subsidy. That is a promise which, as Senator Hawkins has pointed out, will, in all probability, be evaded sometime in the future, if necessary, because if costs increase in one way or another, either through the blessing of fine weather or through an increase in the cost of imported fuel or for some other reason, the charges will be increased and the increase will be attributed, not to the removal of the subsidy, but to what they would describe as these "adverse circumstances."

There was one promise that the Parliamentary Secretary was very wise and very careful not to make. He did not promise that the automatic reduction in charges which would have taken place if the subsidy had continued will now take place. We all recognise that if, as a result of favourable circumstances, the E.S.B. has a surplus, then, counting on this income from the State by way of subsidy, the board would have an increased surplus and there would be an obligation on them to pass that surplus on to the consumer, since the E.S.B. is not a profit-making concern. If there were a surplus as a result of the sale of current and as a result of their income from the State subsidy, it would be their first duty to pass that surplus or profit on to the consumer, who badly needs some relief.

As a result of governmental action, this certain reduction in the cost of electricity to consumers will not take place. This represents a tax on consumers of electricity, not only in rural areas but in urban areas because, if there were a surplus arising from income from all sources, it would have been possible for the E.S.B. to give relief wherever it was needed, whether in rural or urban areas.

Senator Ruane, having congratulated the E.S.B on their efficiency and successful working, found it necessary to complain of the very high and unreasonable charges that are being levied on the consumers. He complained, in particular, of the heavy overhead charges, both in urban and rural areas. If there was some profit accruing to the E.S.B., the first people to benefit should be the people who suffer as a result of those high and unreasonable overhead charges.

There is another section of the community who have been crying out and whose case does cry out for relief. They are people in isolated areas, pockets of residents throughout the length and breadth of rural Ireland. We find them everywhere. Because the location of their homesteads is inconvenient from the point of view of the E.S.B., these people can secure light only by making a very high additional contribution. They are called upon to contribute the entire capital cost of the additional expense involved in installation. They are promised, of course, that if additional development takes place in the area they may be recouped at a later stage. In mountain areas, such as there are in some parts of Wicklow and other counties, and remote bog areas, one finds people who are not in a position to make the additional contribution and who, therefore, must do without the service provided by the E.S.B. The Government has taken action now to ensure that those people will be left out for all time, as far as it is in the power of the present Government to do so. It is a dastardly move and one which could not be justified under any circumstances, certainly not by a Government that has claimed so frequently to be in favour of subsidising the essentials of life.

There is another aspect of this matter. It has been pointed out that progressive countries all over the world have found it necessary and desirable to subsidise rural electrification. There is a reason for that. It is an attempt to bring the standard of living in remote rural areas up to that prevailing in the built-up areas and in the large towns and cities. We all have deplored and must deplore the fact that there are still many houses in rural Ireland that have not the amenity of electricity. Even where the current is brought to the homes of small farmers, they often find that, having paid the overhead charge, the most they can find out of their limited income is sufficient only to provide light whereas, if the charge could be reduced, as it would have been reduced if the Government had not cut the subsidy, it would have been possible for those smallholders in rural Ireland to purchase increased amenities, such as the installation of water in their house. If the charge were reduced people would be able to use more electricity. They would be able to use it to heat their rooms, and so forth. In that way they would raise their standard of living.

It is not true to say that the cost of electricity supplied to the average smallholder and to the agricultural worker in rural Ireland is very cheap. It may seem cheap to a person with a large income but, to the small farmer or to the agricultural worker or to the casual worker with a small wage, the overhead charge he has to meet every two months plus the charge for current is a heavy outlay. If something could be done to reduce that outlay it would be a national benefit. It is something urgently needed to tilt the scale in favour of the poorer classes in rural areas. If some relief could be given in the electricity charges on people with valuations under £50, on the small farms and on the agricultural homesteads it would be of immense benefit.

These are things which could have been done if the subsidy had not been withdrawn, as it is being withdrawn in this Bill. Many reliefs, large or small, could be given. Even if they were only small reliefs they would still be very much appreciated by people in the lower income groups. Even if we only got the relief I mentioned in the first place, that is, the provision of electricity and the linking-up of isolated homesteads at the standard rate rather than at the excessive rate it would be a benefit. If the Minister could promise that no matter where a person's homestead was located it would be linked up at the standard rate, then that would be a very valuable concession. It is a concession which the Parliamentary Secretary has not promised and which I have reason to fear will not be granted now because of the withdrawal of this subsidy. If the subsidy had not been withdrawn I think that concession at least—and it is only a small concession —could have been made without the slightest difficulty.

There is another economy which the E.S.B. have practised down through the years. I do not know whether or not it would be possible to change it now because rural electrification has continued to a considerable extent. However, in the erection of poles and in the general extension of the service, no compensation whatever is given to farmers—or, if it is, it is of a very nominal nature—for damage done to their lands. That is an economy which has been achieved by the very drastic monopolistic powers which the E.S.B. possess. They could possibly have done something in regard to that if this subsidy were continued.

Another aspect of this matter which I think appears to have been lost sight of is the very great need for providing cheaper electricity in rural areas in order to promote the establishment of small industries in outlying areas. Electricity is the one thing, more than anything else, that can help in the decentralisation of industry. Many of us who live in rural areas and who know the problems there and who deplore the rapid depopulation of those areas would like to see small productive industries springing up there serviced by electric power. There are quite a number of concessions which it would have been possible to make to consumers generally both in urban and in rural areas if this subsidy had not been withdrawn. Those of us who looked with pleasure to the fact that the E.S.B. were paying their way looked forward to some relief being given to the consumers. That relief must now be deferred for a considerable time, if not for all time, because of the action of the Government.

A great deal of the profit that has accrued to the E.S.B. in the last year came about by reason of weather conditions. The excessive rain which ruined the farmers' crops and which caused widespread loss to the farmers brought some profit to the E.S.B. The fact that some profit came to them is now being used as an argument to withdraw the subsidy that was being given to rural areas. The rural areas are being hit both ways. They were hit last year by the adverse weather conditions and now they are being hit by the Government in taking advantage of the increased profit to the E.S.B., as a result of those adverse weather conditions, to reduce their income from State sources. This is a mean and underhand method of raking in additional revenue to the State. It is typical of Coalition methods of hidden taxation wherever it can be imposed—underhand, secret taxation which does not appear in the Budget Statement, which does not appear as an increased tax but which has exactly the same effect.

The Government's predecessors, who introduced this principle of subsidising rural electrification, would never under any circumstances have withdrawn it. If money accrued to the E.S.B. as a result of the subsidy and as a result of improved working conditions then that profit would have been passed on direct to the consumers and steps would have been taken to pass it on to the consumers who needed it most —to the consumers who were the most heavily burdened by present charges.

Mr. Douglas

I think that most Senators will have welcomed any extension of rural electrification. I hope that, in the not too distant future, we shall see electricity extended not only to the whole of the Twenty-Six Counties but to the whole of the 32 Counties. The E.S.B. is a virtual monopoly. I hope that the increased moneys which we are providing for under this Bill will not be used to extend their activities any further into what I might call the realms of private enterprise. Prior to the setting up of the E.S.B., we were very well served by the electrical trade throughout the country. In recent years, they have been exceedingly perturbed by the fact that the E.S.B. have extended into what I might call unfair competition with private enterprise.

The electrical trade throughout the country, generally speaking, is not under the control of big industries. Generally, it is the small man who has been trained as an electrician and who sets up a small shop or office from which he is able to conduct installations throughout the country. In these jobs, he now finds himself not only in competition with a great many of his neighbours, but with this virtual monopoly, the E.S.B. It seems to me that a monopoly of this kind should not compete in a service which can be rendered by private individuals who have given up to the present quite a good deal of employment throughout the country.

The E.S.B. has the advantage of being able to offer refrigerators, wireless sets and even electric irons and kettles on hire purchase terms and it costs the E.S.B. virtually nothing to put it on the bill. Only yesterday, I got my own bill from the E.S.B. and enclosed with it was a little advertising card saying that they would be glad to supply me with an electric kettle or iron for so much every two months. That goes on the bill and there is no additional cost, so far as the E.S.B. is concerned. The small electrical supplier has to make arrangements to finance these hire purchase facilities, but he is able to do so, and I suggest he is able to give just as good service to the people as this monopoly. Installations by private firms are now carried out in direct competition with the E.S.B., but there again they are under the definite disadvantage that, when an installation has been made, it has to be passed and approved by the E.S.B. before the current can be connected. I consider that that is an exceedingly unfair activity for a monopoly.

I believe that when the E.S.B. was first set up—was it in the year 1927?— its intention was to provide electrical current throughout the country and to allow the small man in the electrical trade to carry on with the work of making the installations and providing fixtures and fittings. I hope that, when this Bill has passed, the additional money we are providing will not be used to enable the E.S.B. to go further into competition with the small man throughout the country and with private enterprise.

I am very pleased with the reception this Bill has got. I cannot say that members welcomed it completely because they had a certain amount of criticism to make on it. Senator Hawkins quoted Canada and spoke about the subsidies given there, but the conditions in Canada are very different from those in Ireland because there they have to travel long distances and there are very thinly populated areas. The Government felt that a subsidy was necesary at the time the rural electrification scheme was first mooted. At that time—it was during the war—the E.S.B. had shown a deficit over the previous two or three years and they felt that they could not ask the E.S.B. to take on new commitments without a subsidy being provided; but times have changed since then and we are all very pleased to see that in all but one of the past ten years, the E.S.B. has made very substantial surpluses, totalling practically £2,500,000. The position is now much different from what it then was.

The E.S.B. also have reserves, as I understand, running into £14,000,000 or £15,000,000, reserves which they can use for any purpose. It has been stated that last year was a very good year for the E.S.B. and that due to the suitable weather, from their point of view, they were able to make a surplus. Senator Hawkins said that that surplus was £80,000, but the surplus last year was £928,000. They have established a fuel equalisation fund of £500,000 to meet any unexpected fuel costs. It has been suggested that the increased price of coal will reduce the profits during the next year but the use of coal by the E.S.B. has been going down steadily every year. More electricity is being produced from hydroelectric and turf-burning stations and the Pigeon House is now the only coal-burning station in the country. It is being used only during periods of peak loads, so that the price of coal will not have such a direct bearing on the cost of electricity or the profits or losses of the E.S.B. during the coming years.

Senator Hawkins also said that 69 per cent. of acceptances must be available before the E.S.B. will supply current. There is no particular percentage that an area must show before supply is connected. The country is divided into different centres—I think about ten or 12 in all—and it is all according to which area in a centre shows the best percentage of acceptances. That is the area that will be accepted. The Senator mentioned especially the Carraroe area and I believe the acceptances in that area were very low entirely—about 35 per cent. The board, however, have accepted a much lower percentage than 69 per cent., although at present some of the acceptances are up to 70 per cent. and 80 per cent.

Senator Cogan spoke of the removal of the subsidy and said that the present Government were altogether against the removal of subsidies. We all know that they were against it, where it would put up the price of a necessary article, and if the removal of subsidy would have put up the price of electricity, whether in cities or country areas, the Government would be altogether against it; but when they see an organisation, an organisation which we are glad to say has proved itself very efficient, showing a surplus and having shown a substantial surplus continuously over the past ten years, the Government do not think it right and see no reason whatever to continue the subsidy. This is an organisation 75 per cent. of the activities of which are profit-bearing and 25 per cent. not so profit-bearing, although that 25 per cent. has shown a profit of £40,000 last year.

Senator Cogan said that concessions should be given to consumers if there is a surplus, but the Government felt that if there was any concession to be given, it should be given to the taxpayer. The Government do not feel that the taxpayer should be called on to subsidise an organisation which is able to pay its way on its total activities, and, if there is any concession to be given, they felt that it should be given to the general taxpayer in a reduction of taxes. I am sure Senator Cogan, when speaking on the Appropriation Bill here, would have been in agreement with the Government on that point of view.

Senator Ruane mentioned the charges. These special charges are a feature of the E.S.B. scheme since it was founded. They must establish a certain amount of special charges which they need to meet a certain amount of overheads. It would be wrong for any Minister to intervene in fixing these charges or to dictate to the board in such a manner as to interfere with its functions under the 1927 Electricity Supply Act.

Senator Douglas said he trusted the board would not go into private enterprise any more than it has done already. I am pleased to tell him that the board has made agreements with the Irish Society of Electrical Traders under which any trader in the country can offer any apparatus—electric cookers, washing machines or other appliances—at the very same price as the E.S.B. They have, one might say, underwritten a number of the electrical traders so that they can give the same facility. There is nothing in favour of the E.S.B., nothing that is not available to ordinary electrical traders. I think the Senator will agree that that is a rather happy position to have brought about—and that has been done in the last 12 months.

We have all seen that in the last year the E.S.B. sold over £1,000,000 worth more of electricity than it sold up to that time. In January last there were 40 crews working throughout the whole country, as compared with 29 or 30 the previous year and 21 in the previous January. That will show that this present Government is anxious that every consumer in the country should get an opportunity to enjoy the amenity, first, of electric light, which is very necessary instead of the bad light they had previously, and then that they should have this great aid to production.

Senator Cogan mentioned that at one time the charges were very high and that people might find them very hard to bear. When these people are able to bring electricity to the aid of production, they will find they will get much more profit and that the work will be much easier than before. I think that I have answered all the points raised in the course of this debate and that I need not say anything further.

Question put and agreed to.
Agreed to take the remaining stages to-day.
Bill considered in Committee.
Sections 1, 2 and 3 agreed to.
SECTION 4.
Question proposed: "That Section 4 stand part of the Bill."

I want to ask the Minister one question. Is it not true that, if the subsidy were not withdrawn as it is proposed to withdraw it under this section, it would be possible for the E.S.B. to give substantial reductions to the consumers in the very near future?

The reduction would not be substantial by any means—it would be only one two-hundreth part of a penny per unit. Over the past three years, due to the increased consumption by the rural community, the average cost per unit to rural consumers from 1950-51 to 1954-55 has been reduced by 22 per cent.

Arising out of that, might I ask if the relief that could have been given were not given on a flat rate but were given to special cases—cases of people who are now charged a very high excessive rate, as Senator Ruane put it—would it not have been possible to give relief to a substantial number?

That is a very new principle. Under Section 93 of the 1927 Act, preferential treatment is not to be given to any particular section in an area. That has been carried out by all Governments up to this. It has been the policy of every Government up to now. The E.S.B. has been left a free hand as regards equating the charge according to the distance from the lines.

Is it not true that what I am asking for is not preferential treatment but that people charged an excessive rate over and above the standard rate should have their charge brought down to the standard level and put on an equal footing?

They are brought up to that rate because the capital cost of bringing a supply to them is much higher than in the case of the normal person. That is why they have to pay a special charge.

In other words, this provision for the withdrawal of the subsidy is actuating a bias against people in the remote rural areas.

This withdrawal of the subsidy will have no effect whatever on them. If the subsidy were kept on for ever more, it would not remove these charges at all. These charges have been imposed for many years, when the subsidy was given. Therefore, even if the subsidy were removed, that would have no effect on them.

May I submit that while the Parliamentary Secretary claims credit for the progress which the E.S.B. has made over the past few years, the increasing rate at which they——

I did not claim that.

He gave the figures for 1950, 1951, 1952, 1953 and 1954.

Yes, he gave figures by which he sought to convey that since the present Government took office the development has been speeded up. He sought to claim credit for the move, which was a natural development in any efficient company such as the E.S.B. Their progress would tend to extend from year to year. While he claims credit in that respect, he completely disowns all responsibility in regard to what are admitted by Senators on both sides of the House to be injustices inflicted on certain people by the E.S.B. He says the Government ought not and should not and will not interfere. They can always interfere if they wish, by legislation.

I did not say the Government ought not and should not and will not interfere. I did say that has been the custom, their modus operandi over the whole period since the E.S.B. was established, and it has continued up to the present time.

A lot of things can be reformed.

Quite. Possibly that will have to be reformed. I can assure the Senator that I complained about the E.S.B. myself at one time and objected very much to some things.

Question put and agreed to.
Sections 5 and 6 agreed to.
Title agreed to.
Bill reported without amendment.
Question—"That the Bill be received for final consideration"—put and agreed to.
Question proposed: "That the Bill do now pass."

On this stage, I would like to make a second appeal to the Parliamentary Secretary and, through him, to the E.S.B. to reconsider one particular matter. In reply to my request on the Second Reading, in relation to the areas of Knock and Carraroe, he informed us that the canvass there returned only 30 or 32 per cent.

Thirty-five per cent.

That may have been the position but, again, I would like to point out that it is a very populous area. Apart from the benefits to the persons themselves, I urge upon the board to take into consideration the two vocational schools. It is very important and essential that these schools should be connected up with power and light. There should be made available to the teaching staffs and the pupils such things as electric cookers and all the other up-to-date electrical apparatus if the schools are to fulfil the purpose for which they were provided by the vocational committee and the county council.

I can assure the Senator that I will bring his remarks to the notice of the E.S.B. and ask them to give the matter their very favourable consideration, especially in regard to the electric cookers, for the training of the local people.

Question put and agreed to.
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