Seanad Éireann debate -
Wednesday, 18 Apr 1956

Vol. 45 No. 19

Tea (Importation and Distribution) Bill, 1955—Second Stage.

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

Minister for Industry and Commerce (Mr. Norton)

The Bill is a further step in the direction of allowing the Supplies and Services (Temporary Provisions) Act, 1946, to expire. It re-enacts the provisions of the current Orders relating to tea made under that Act, the effect of which is to prohibit (a) commercial importation of tea by any person other than Tea Importers, Limited, and (b) wholesale dealing in tea by any person who is not the holder of a tea wholesaler's licence issued by the Minister for Industry and Commerce. Senators will wish that I should indicate the circumstances that gave rise to these Orders.

Prior to the 1939 war the bulk of the tea consumed in this country was purchased in, and imported from, London. On the outbreak of war the distribution of tea was controlled by the British Ministry of Food which promised that this country would be given its due proportion of the available supplies for which there was an unanswerable case in view of the prewar practice. The British Ministry of Food failed to implement this promise and in consequence from the early months of 1941 there was an acute shortage of tea in this country which involved the community in serious hardship. In order that this hardship might be relieved so far as possible, Tea Importers, Limited, a State sponsored non-profit-making company, was set up in April, 1941, for the purpose of purchasing and importing from every available source supplies of tea to supplement the meagre allocation from Great Britain. The company's purchases were financed from a bank overdraft guaranteed by the Minister for Finance and their efforts were successful resulting in appreciable additions to the weekly tea ration when most needed.

At the end of 1946 the Governments of India and Ceylon took action which precluded the British Ministry of Food from purchasing tea for re-export and this country was duly advised by that ministry that all allocations from London would cease as from the 1st April, 1947. Production of tea in 1947 was still substantially lower than demand necessitating the continuance of rationing here and elsewhere. In the circumstances arrangements for the importation of our tea requirements from origin had to be brought into operation as a matter of urgency. At that time the total production of tea had not caught up on world demand and it was considered undesirable that there should be competition for the limited supplies available between Irish buyers with the necessary financial resources to operate on their own account on the Calcutta and Colombo markets. It was also considered necessary at that time to ensure that the smaller Irish wholesaler was not placed at any disadvantage in securing a fair share of the available supplies at reasonable prices. Accordingly, in agreement with the wholesale tea trade it was decided that for the time being Tea Importers, Limited, should be the sole purchasing agency as from the 1st April, 1947. It was also decided at that time to restrict the issue of licences authorising the carrying on of a wholesale tea business to concerns which were conducting all the operations of a bona fide tea wholesale business from premises located in this country as it was considered that the admission of external wholesalers would increase the cost of tea to the consumer by introducing an unnecessary additional link in the chain of distribution. In the latter connection I should mention that it is the intention to bring in at a later stage an amendment designed to strengthen Section 6 of the Bill.

A subsidy to keep down the retail price of teas was introduced on the 1st November, 1947, and this development was an additional reason for maintaining Tea Importers, Limited, as the sole importer of tea.

Up to 1950 world production of tea continued to fall short of demand and as the tea issued by Tea Importers, Limited, was heavily subsidised there was no incentive to any individual trader to import tea on his own account. But in 1950 there was an improvement in the world supply position which enabled Tea Importers, Limited, to put on sale unrationed tea at a price which yielded a profit which was offset against the subsidy. These developments provided the incentive to the individual trader to endeavour to obtain supplies of tea outside this country for sale at the unrationed price thereby depriving the Exchequer of the benefit of the profit which would otherwise accrue from sales made by Tea Importers, Limited. Accordingly, it was decided to prohibit commercial imports of tea except under licence and to restrict the issue of such licences to Tea Importers, Limited.

Following abolition of the tea subsidy and tea rationing in July, 1952, consideration was given to the question of restoring freedom to the trade to purchase and import this country's tea requirements subject to direct importation from the producing countries. Proposals made in this connection by the Wholesale Tea Dealers' Association for the replacement of Tea Importers, Limited, and involving continuance of the prohibition of commercial imports of tea except under licence have been under examination but progress has been slow because of the complexities and uncertainties of the general tea situation.

In addition to the fact that the proposals made by the association contemplated retention of the restrictions on commercial imports of tea, it is recognised that the absence of these restrictions would involve Tea Importers, Limited, in serious risk of being unable to dispose, without loss, of heavy stocks of tea purchased for supply to the wholesale trade with bank advances guaranteed by the Minister for Finance.

Early in 1955 when the question of the purchase of 1955 season teas was under review the Wholesale Tea Dealers' Association made representations to the effect that the arrangements whereby Tea Importers, Limited, purchased and imported this country's tea requirements should not be discontinued earlier than December, 1956. It was pointed out by the association that the bulk of the demand in this country is for Indian tea and they represented that on account of the seasonal nature of the Indian tea market it would not be possible for the successors of Tea Importers, Limited, to commence to land before December of the year in which it was bought sufficient suitable quality Indian tea to meet the full demand. I agreed that the company should continue to be responsible for securing our tea requirements for a further period. In order to enable the company to continue to discharge this responsibility until arrangements of a permanent nature can be brought into operation, it will be necessary to maintain the present controls on the importation and wholesale distribution of tea. This is the sole purpose of the Bill, the life of which it is proposed to restrict to a maximum of two years. It is anticipated that a period of two years will be sufficient to enable arrangements to be made for putting the importation and distribution of tea on a permanent basis.

I ask the Seanad to give favourable consideration to this Bill.

Dr. Sheehy Skeffington

I am a little puzzled about one or two points in connection with this Bill and, perhaps, the Minister might clarify them for me. First of all, the period of two years he has just told us is provided in order to give the Minister time to make more permanent arrangements for the future import of tea into the country. I should like a little amplification of that, because, in my opinion, the bulk buying of tea by Tea Importers, Limited, for this country has proved of great benefit. I am quite convinced that the continuance of some such system will give better value to the consumer than the competition, or the theoretical competition, shall we say, between private interests importing tea. In other words, I am not convinced that the restoring of the buying of tea to purely private interests will result in competition which will be effective on price and which will benefit the consumer. I should prefer to see the continuance of some system of bulk buying and bulk importation of this commodity and, consequently, I am a little worried by noticing that the Minister asks for the continuance of this Bill only for two years—only up to 1958.

I wonder whether he considers that that represents, perhaps, the life of the present Government, or whether in 1958 he envisages bringing in some such other Bill, or alternatively whether he thinks he will at that juncture be able to pass on the headache to some succeeding Minister. I should like the point cleared up as to what these two years are necessary for; why should he not decide on his intentions to-day; and whether he has yet made up his mind to have some method of bulk buying for the benefit of the consumer, because I believe it to be for his or her benefit.

There is only one other point I want to ask about. I notice that in both Sections 4 and 7, sub-section (2) of Section 4 and sub-section (3) of Section 7, the Minister may attach to an import licence such conditions as he thinks fit. That is the kind of clause that one hopes will never be abused. One hopes that such conditions will be reasonable conditions. Nevertheless, it is such a wide clause and contains no explanatory matter in it that I think the Minister might perhaps, even for his own sake, give us some idea of what kind of conditions might reasonably be attached to either the import licence or the wholesaler's licence. I think he might give us some idea of just what kind of conditions he has in mind might be necessary and might be attached to the licence by him.

Éamon Ó Cíosáin

Níl móran le rá agam ar an mBille seo ach oiread. Ceist an-achrannach is ea an cheist seo agus ní foláir dom a admháil nach móran tuiscint atá agam ar na cúrsaí sin. Tuigim, mar sin féin, gur dhein an Coiste nó an Comhlucht so—pé ar bith ainn a glaotar air—Tea Importers (Eire), Limited.—obair mhaith i rith an chogaidh dheireannaigh agus gur dhein siad a ngnó go maith tar éis an chogaidh freisin, ach amháin gur cuireadh isteach orthu i slite áirithe agus i slite nár chiallmhar, ag féachaint siar ar cad a thit amach.

This appears to be just a temporary measure to deal with the situation we have here in relation to the purchase of tea. What the Minister has said about the position that existed before the establishment of Tea Importers (Eire), Limited, is quite correct. I am afraid it has to be said, even at this hour, that during the earlier years of the emergency, the British did not treat the people of this country in the way that was expected. No doubt it was necessary to have an organisation of our own to deal with purchases of tea from abroad and to have those purchases effected through channels other than those through which they had been made previously, that is, through British channels. It must be admitted by any fair-minded person that Tea Importers (Eire), Limited, did their job fairly well during the difficult years of the emergency——

Dr. Sheehy Skeffington

Hear, hear!

Mr. Kissane

——and that were it not for their efficiency and vigilance, the tea situation here during the emergency, especially during the latter years of the emergency, would not have been as satisfactory as it was. I think it can be claimed, as far as supplies of tea were concerned here during the emergency, that despite the default of the British in the matter of tea supplies to this country, the people of this country were better served than the people of many other countries who had to depend on foreign supplies.

I must agree with Senator Sheehy Skeffington that we are somewhat in the dark as to the future policy in relation to the purchase of tea. I regard this question of tea supplies as one of the utmost importance because many families throughout the country prefer tea, for the most part, to anything else. Because of the importance of that beverage, we should like to get some indication from the Minister as to the future policy of the Government in that regard.

This measure is designed to deal with Tea Importers (Éire), Limited, for two years. Is it proposed to give them a free hand for the next few years and then to dispense with their services altogether and have some other organisation to carry out whatever purpose the Government may have in mind? I think it is agreed that Tea Importers (Éire), Limited, have done a good day's work for the country. If, in recent times, things occurred in relation to the purchase of tea and the fixing of the price of tea, the responsibility for that can hardly be laid at their door. The Government stepped in and dealt with this tea question in a certain way which did not prove beneficial to the country and I suppose this non-profit making organisation had to fall into line with whatever the Government suggested. I firmly believe, and I will give expression to my belief, here, that if Tea Importers (Éire), Limited, had not been interfered with by the Government, the price of tea in this country to-day would be much lower than what it is.

There is not very much that can be said on this Bill, but I would again ask the Minister to give us some indication as to the long-term policy in connection with this all-important matter of the importation of tea. I appeal to him to tell this House whether or not the Government intend to keep Tea Importers (Éire), Limited, in existence for longer than the two-year period mentioned in the Bill.

Mr. O'Gorman

I think everyone is in agreement that the work that devolved on the shoulders of Tea Importers (Éire), Limited, during the emergency years was very well done. They certainly prevented sharks who at that time were able to import tea through diverse ways into this country from charging 20/- and 30/- a lb. for it. I think that no commodity, relatively speaking, commanded a higher price here during the war years than tea. Therefore, it behoves every one of us in this House to pay a tribute to that organisation for doing their job so very well.

At present, one hears quite a lot of talk about the quality of the tea we are bringing into this country. The general opinion is that it is not up to the standard of the tea we got here in pre-war years. No matter what line of business we may be engaged in, we are in a very competitive world. It is incumbent on the Minister to ensure, as I have no doubt he will ensure, that the tea we import will be of a very good standard and quality. As every one of us is aware, the Irish people are recognised perhaps throughout the world as great connoisseurs of tea. It is one of the staple beverages of this country, and it behoves the Minister to ensure that the quality is of the very highest possible standard. I should like to ascertain from the Minister whether we deal directly with India, Calcutta and Ceylon, or do we deal through agents in Mincing Lane or in Dublin, or anywhere else. What exactly is our contact?

Mr. Norton

Direct from the country of origin.

Mr. O'Gorman

That is very good. The Minister is safeguarding the position of our tea supply for the next two years, at any rate, and I hope that at least by that time the world may find itself in less turbulent conditions than it has been for the past 12 or 15 years. Nobody can disagree with what the Minister is doing in this Bill.

Mr. Cogan

The Minister, in his clear and brief statement introducing the Bill, did a service, inasmuch as he vindicated very clearly the action taken by his predecessor in setting up Tea Importers, Limited. There is no doubt that, as the Minister's predecessor very often pointed out in Dáil Éireann, the British Government, or the interests concerned, broke faith with this country during the war, and failed to give us the supplies of tea we were entitled to. The Minister then occupying the position of Minister for Industry and Commerce, or Supplies, did take immediate action and set up Tea Importers, Limited, and that company did successfully supply this country with a supply of tea which was not entirely unsatisfactory all through the period of the emergency and at a price which, having regard to all the circumstances, was not excessive.

That is something in regard to which we ought to feel some satisfaction and a certain amount of pride, that we were able to set up an organisation in those difficult times and meet our people's needs, because I have often listened in Dáil Éireann to the Minister's predecessor being bitterly attacked by some members of the present Government—not the Minister here present—who denounced him for setting up Tea Importers, Limited, and demanded that he should return the tea trade into the hands of the merchants in Mincing Lane, London. They demanded that the trade should be transferred to those people, and said that they were the only people who knew how to import tea, and that we should put our trust in Mincing Lane again.

The Minister knows that that case was made by one of his colleagues in the present Government. It was made between 1945 and 1946, and possibly in 1947. But, as he himself here to-day pointed out, that course is not open to the Government, and it is not open to the British merchants now to re-export tea to this country, so that the person who made that claim, and denounced Tea Importers, Limited, in such strong terms at that time, was entirely misinformed and completely unjustified in the action he took and the case he tried to make.

I cannot agree entirely with Senator Sheehy Skeffington when he says that bulk buying is in the best interests of this country. It was certainly in the best interests of the country during the emergency and it may continue to be in the best interests of the country for a time, until the trade can be handed back to private enterprise, and Irish wholesalers can deal directly with the producers in India and Ceylon. But, taking the long term view, if world conditions are normal, it is better that our wholesalers here should be permitted to import directly from the countries of origin, and I understand that that is what the Minister intends to do. I think he is doing the right thing.

There is one matter on which the Minister might give some information, that is, the position of Tea Importers, Limited, having regard to the commitments in which they were involved when they were compelled by the Government to seek a very large overdraft and to continue to sell tea at a price below what was economic. The position, I understand, is that that overdraft is now being repaid through a levy on the price of tea, but I assume that that overdraft is being repaid by Tea Importers, Limited, and if the company is wound up, I am just wondering what will become of the overdraft.

Mr. Norton

Senator Sheehy Skeffington inquired what was intended by the provision in Section 7, sub-section (2), which says that the Minister may attach to the tea wholesalers' licences such conditions as he thinks fit. This sub-section is designed to facilitate the repetition on future licences of the conditions which attach to the present licences, and nothing new or occult is intended by the sub-section. The present conditions which are imposed on licence holders provide for the period of validity of the licence, the production of the licence to the customs authorities when importing tea under licence, an obligation on the licence holder to notify loss or destruction of the licence to the Minister for Industry and Commerce, and the return of the licence to the Minister for Industry and Commerce on its expiration or revocation. These are the simple and innocent conditions now imposed, and I do not intend to have the sub-section used for any conditions other than these simple regulations.

On the question of bulk buying of tea, and what is the future tea policy, if we were in a position to say that, this Bill would not be necessary—we would have permanent legislation. It is because the way is not open to us at the moment, and the tea situation is bristling with uncertainties, that it has been necessary to come to the Dáil and say to the Dáil: "In case the Supplies and Services Bill were to finish this year, we want you to permit us in this separate Bill to continue for a maximum of two years to do what we would be doing since Tea Importers, Limited, was set up during the war years." The position, therefore, is that the advocates of bulk buying of tea have in this Bill an assurance that the present bulk buying practice will continue, and that nothing will be done to depart from that until such time as proposals for such departure are brought before the Oireachtas. Therefore, they cannot be taken unawares as to what the change of policy may be, nor is there any danger that they will wake up in the morning and find that we have abandoned entirely the whole question of bulk buying.

What the future policy will be has to be thought out in the light of a number of difficult problems and some uncertainty, and this Bill is really one designed to continue the present practice, until we can make up our minds what is best to do in all the circumstances. That is the answer I must give to the point raised by Senator Kissane—that we are to continue the present position, and there will be an adequate opportunity of seeing what the change is, because no change will take place overnight. A change will take place only on the introduction of a Bill into the Dáil and on its passage through this House. I think, therefore, that Senators have all the assurances they want in that respect, and they may feel satisfied that no change will be made, unless, of course, they are party to it by means of enacting the necessary legislation.

Senator O'Gorman raised the question of the quality of tea and I have given directions that this be discussed with Tea Importers, Limited, so that we can find out the best possible thing to do and what steps are necessary to secure a revision of the situation and what is the best way of doing it.

Senator Cogan raised the question of the financial position of Tea Importers, Limited, in case we decided to make a change to some other method of buying tea. Since it was set up, Tea Importers, Limited, have operated on a substantial overdraft guaranteed by various Governments and they have continued to buy on an overdraft. Whether they buy on an overdraft or whether individual tea importers buy on overdrafts, somebody has to pay for the overdraft. Whoever is buying the tea, if they buy in advance and have to get accommodation from the banks, somebody has to pay the interest and it is the consumer who always has to pay the interest on the overdraft. That happened, of course, to a greater extent a few years ago than it does to-day and it is normal trade operation.

Briefly, the position is that if any goods are bought on accommodation provided by the bank, somebody has to pay the interest on that accommodation, a perfectly normal trade operation, and that is what happened in the case of Tea Importers, Limited. I hope that, by the time Tea Importers, Limited, go out of office their liabilities will be substantially reduced and that against them they will have easily encashable assets.

Question put and agreed to.

Committee Stage ordered for the first day of sitting next week.

Business suspended at 6 p.m. and resumed at 7 p.m.