I am reluctant to treat the House to a long dissertation on the provisions of this Bill and terms of the report, because of the fact that the Order made in this case and the general character of the report in respect of this trade is pretty well on all fours with the procedure adopted by the Fair Trade Commission in its approach to the problem of the radio trade. All the information I can give the House is already down in the report, which, I presume, each Senator has read. My speech, therefore, would consist very largely of paraphrasing what is already in the report, and as no doubt every Senator has already read that report, I will not keep the House for half an hour or 40 minutes in doing so, particularly as we have spent so long discussing the other parts of the report and so long discussing the Fair Trade Commission and the approach adopted in the report of the commission. I will therefore content myself with speaking to Second Reading of the Bill, but I will be most happy to clarify any points raised by any Senator.
Restrictive Trade Practices (Confirmation of Order) (No. 2) Bill, 1955—Second and Subsequent Stages.
I think the Minister is quite correct in not asking the House to have a full discussion on this measure, in view of what has been said already in relation to the other measure that was before the House this afternoon and this evening; but I submit at the same time that it is a pity that the discussion that took place could not have been of a more general character and that the House should have been put in the position of having to curb its thought and ideas in connection with this matter, because of one particular case that was brought to our notice. However, I am in agreement with the Minister that any further discussion on this would be unrealistic now, and in any case I suppose we will have an opportunity of dealing with this matter on another occasion.
I do not propose to intervene at any great length, but I think it ought to be mentioned that this Order also is one which will very definitely serve the community. I think it is quite obvious that all of us are interested in the prices of building materials and components, and must necessarily be disturbed if there is any suggestion that the prices of such things are being kept artificially high for the purpose of more generously lining the pockets of those who deal in such materials. I myself was surprised by the things that came out at the Fair Trade Commission examination of some of the witnesses before them, in relation to this particular report. I remember—I do not want to mention names—one body that came before them. It was revealed in public—grudgingly, I thought —that this body had had up to a short time before the setting up of the commission, a little committee one of whose purposes was to fix prices. Then they held a hasty little meeting and removed that "purpose" from their sub-committee's reasons for holding such a committee, and it seemed to me that it was apparent that the price fixing would nonetheless go on, although it would not be admitted even in their own terms of reference for their subcommittee. This same little committee had a very prominent secretary before the Fair Trade Commission sat, and then the secretary suddenly resigned from the committee. The committee continued apparently without a secretary and without much visible purpose. Now on page 9 of the report reference is made in paragraph 5 to the terms and conditions on which builders' materials were available to builders' merchants and so on. This says: "The weight of evidence was to the effect that up to a short time before the start of the inquiry purchasers had been confronted with a uniformity of prices that indicated collusion between merchants regarding the selling prices of a large range of commodities essential to the building industry."
I think that was a very soberly put point, but it is one that must concern us all, that quite clearly, by the weight of evidence, there was collusion on pricing, and this ceased shortly before the beginning of the inquiry. I think it is equally obvious that were the recommendations of the inquiry not to be implemented by the Minister, as he is doing by the Bill, that sort of collusion and price fixing would start immediately again, and I think it is something of which we should be immediately aware in welcoming this report and this Order.
Again on page 10, paragraph 6, the sentence about eight lines from the top reads: "There is a marked similarity of phrasing in the rules and by-laws of certain of those associations which was particularly evident in the changes made in certain rules after the introduction of the Restrictive Trade Practices Bill, 1952." Again on page 11, there is a reference to a particular association having "a national price list which sets forth minimum retail selling prices and maximum discounts to be allowed to trade purchasers". Again, on page 12 the report says that "the organs of the association include a national pricing committee", and, even more startling, perhaps, a sentence half way down on page 12 says: "The provisions of the national price list did not extend to sales to the Department of Defence, Dublin Corporation (except for housing schemes)." The price fixing did not extend to the Department of Defence or Dublin Corporation "except for housing schemes", which means ultimately that the inhabitants of these housing schemes would be paying for the artificially inflated prices of these basic building materials.
It seems to me it is quite obvious, when you read that kind of thing, that there has been arranging and enforcing of artificially high prices, which have put up the price of housing and, consequently, the price of rents in this country in past years. The list at the time of the inquiry, for example, required a profit margin of "not less than 50 per cent." on the price to be adopted in the case of wood mantels and so on, according to the example given on page 14. The whole report is full of that type of example. It is a most detailed, careful and competent report, and I suggest it is a frightening document because it takes the lid off a section of our business community and shows the conscienceless manner in which they have been arranging to take more than a just profit or to fix artificially high prices for vitally necessary materials.
There was no competition there, anyway.
The question of competition simply did not exist. They "arranged" prices at a high level. I do notice that occasionally there is a little breath of competition in it. In the middle of page 15, for instance, it says:
"The South of Ireland Timber Importers' Association decided in April, 1953, that, in view of the possible competition from Dublin and increasing competition from outside importers, prices will have to be free for a limited period."
Apparently somebody in the South got scared and said: "We will have to free prices for a limited period." I do not want to delay the House, but I do suggest that nobody, having read this document—this carefully prepared report based on a very full inquiry, with ample evidence and cross-examination —could fail to approve the implementation of the very sober recommendations of this commission in defence of the community, here on another front, this time concerned with building materials. In passing, I might say, in regard to the cross-examination at the inquiry, that the answers were revealing; and I might also say that the loss of temper by some of the witnesses was equally revealing.
The great value of such a tribunal has been twofold; first, in showing up the sort of back-room arrangements that have been going on at our expense —the public—and, secondly, in the clear and courageous recommendations given. I believe the Government is to be heartily congratulated on implementing so promptly the very courageous and clear recommendations of the commission.
Mr. Douglas
I should like to assure the House that I will be as brief on this Bill as I was long on the first one, and, in fact, I am going to find myself in rather a different position from the other one. I really want to ask the Minister one or two questions for clarification. I read the report some time ago and I actually read through most of the transcript of the evidence. I confess I made no notes on it, except to note that every person who gave evidence at this particular inquiry said he was perfectly satisfied that, as far as the scope of the report of the inquiry was concerned, it did measure up more or less to the evidence which was given before the commission. To that extent, it seems to be completely different from the radio trade report. If I remember correctly, it is mentioned in the report of the inquiry that representatives of only six out of some 680 cement handling firms gave evidence, and I believe that in the other House at least one Deputy expressed the opinion that it seemed rather strange to accept the evidence of merely six out of 680 representing the cement distribution trade. There has been a certain amount of misgiving in connection with this report and, in particular, in connection with the supply of cement. It is on this point I am hoping the Minister will give me clarification.
The report suggests that local authorities should be supplied by Cement Limited, and in the report the commission stated that the cost to the local authorities is enhanced because margins are allowed by the company and taken by the distributors who perform no indispensable function. I agree with the commission that everything possible should be done to ensure that local authority housing can be carried on at the lowest possible cost to the community. I think we all share that point of view. I think, however, that the commission did overlook the fact that the margin allowed to the distributors on present prices works out at about 3.9 per cent. on costs, and out of that the distributor is expected to maintain his staff, pay overhead expenses, rates and so forth. As well as that, he has in the past given credit to his customers sometimes as far as three or six months ahead. I gather that—and again I am speaking subject to correction—it was made perfectly clear at the inquiry by the six cement handling concerns that cement was handled at a loss, but was carried by most of these firms as a convenience for their customers and not because there was any profit to be made out of it.
What I want to find out from the Minister is this: I assume that up to the present the local bodies have been getting their cement supplies through cement handling firms and they have been getting possibly three to six months', or longer, credit on those supplies. If they get it direct from Cement Limited, I assume they will have to pay for that on the terms of Cement Limited, which, I believe, are short credit and very strict credit. Will the local bodies be able to pay their accounts, or will they find themselves in the position of owing money to Cement Limited and thus unable to get further supplies? If that is the case, will the Minister take steps, either to see that local authorities have sufficient money available to pay those accounts promptly, or to see that there will be no danger at all of any slowing up in the housing programmes of the local authorities? I do feel that every one of us, no matter on which side of the House he is, is vitally concerned in the housing programme of the Government; and no one, whether he is in the building trade or outside of it, wishes to see any action taken which may in any way affect our housing plans. That is the only question I wanted to ask the Minister on this Order.
I should like to ask a question which I asked in regard to the other Bill and that is: are those reports and recommendations of the Fair Trade Commission unanimous reports or are they majority reports which are accepted by the commission as a whole?
I should like to make one or two small observations on this Bill. The first is that, although we have had this inquiry, I should like to know what advantage it has conferred. Has it tended to reduce the cost of housing? My view is that this inquiry ought to go very much further than it has. It restricted itself to the people providing certain types of building materials. I have suggested on more than one occasion in this House that there should be an investigation of the whole cost of building a house. Every form of restrictive practice should be investigated. Every scientific approach and every type of modern machinery and labour-saving device that could be used to produce a good house at reasonable cost ought to be utilised here, because the greatest burden on the working classes and on the middle classes is the cost of building. In fact, the cost of building is one of the greatest deterrents and one of the most retarding factors in the development of our economy.
Building forms a large part of the overheads of all productive enterprises and it draws from the various groups a large part of their incomes. As well as that, I believe that building has been the least progressive of our industries. Science has been used to a much lesser extent in building than it has in other walks of life. I commend the Minister for his efforts in having this inquiry instituted, but I would like him to bring the inquiry to its logical conclusion: I would like him to inquire into the whole question of building, its modernisation and the introduction into it of general efficiency. I think it is very vital in the national interest that this should be done.
I am obliged to the Seanad for the way in which they have facilitated me in their consideration of this Bill, thereby shortening the discussion considerably. There is one matter I should like to bring to the notice of the House before I go on to deal with the point made by Senator Douglas. Since this report proper was made, I have received a supplementary report from the commission under Section 10 of the parent Act of 1953. In that report, the commission say:—
"Further to the commission's report on the inquiry into the supply and distribution of building materials and components and, in particular, to paragraph 48 of Chapter 4 and paragraphs 74, 75 and 76 of Chapter 6, it has recently come to the commission's notice that, after an interval of some three years, Dublin merchants appear to have resumed as from some time in January, 1956, the practice of submitting identical tenders for timber contracts, at least for Government Departments and large public bodies. Particulars and information which the commission have obtained in this matter are given in the attached schedule. Firms A to H are all located in Dublin and firm I is a provincial firm. The commission have not considered it necessary or desirable to make any direct inquiry from the firms concerned in existing circumstances."
They go on to say that the recommendation of the commission is:—
"The commission's views on noncompetitive trading are set out in the report, paragraph 48, Chapter 4, and paragraph 80, Chapter 6, in particular. They consider that it is contrary to the public interest. They feel it is not necessary at this stage to make any recommendations additional to those contained in the report but they consider, nevertheless, that it is desirable to acquaint the Minister with the facts stated in this report."
And then we get an interesting light on competition and on how healthy competition can be. I will take one case, the Dublin Corporation. The Dublin Corporation invited tenders on 18th of last January. Four groups of firms tendered. In one group, there are firms whose identity is described by the letters A, B, C, D and E.
An Leas-Chathaoirleach
Is it the intention of the Minister to make this document available in the Library?
Yes. The firms A, B, C, D and E tendered for the supply of flooring-boards for houses in Dublin at a price of £3,327 3s. 9d. and every one of the five firms quoted the same price. And that is competitive tendering! Another firm quoted £3,247 19s. 4d. Another firm quoted £3,327 3s. 9d.—the same as the first group of firms; and another quoted £3,134 8s. 5d. We come on then to another tender, an order for more timber flooring, on 31st January last; firms lettered A, B, C, D, E, F, G, H all tendered at one price, £121 17s. 6d. Then there is another one for a Government Department in which firms A, B, C, D, E, F and G all tendered at one price, running into thousands of pounds. Then we come to another Government Department, 15 items for timber; tenders were invited in January last and firms A, B, C, D, E, F, G and H all tendered at a price of over £2,000—there not being one halfpenny difference in the quotations from all these firms. We come then to Bord na Móna. Bord na Móna invited tenders on 6th March and firms A, B, C, D, E, F, G and H all tendered, and the price of all that group of firms was £2,793 5s. 2d., and the odd twopence was shown in every one of the individual tenders.
And then we are told that free enterprise and free competition is the best basis for everything.
The twopence must have been the stamp for the receipt.
This is the justification for the Fair Trade Commission. This is the kind of practice against which the public must be protected. When one remembers that these people are not above stifling all competition in relation to houses which are occupied by ordinary working people, who are finding it hard enough to pay the rent, the position is all the more serious. But that does not matter to these people engaged in this conspiracy, who submit one tender and who are not concerned with how that tender impacts on the rent, or how hard it is for the Dublin Corporation to raise loans, or to collect rents and rates to pay bills, which must obviously be inflated bills because of the stifling of competition in tendering. And where the tenders are fixed, as they are in these other cases, in respect of Government Departments, it is this House and the Dáil which have to find the money because these gentlemen get together to eliminate any form of competition.
It is a conspiracy.
I do not think that is good enough and I think the public should know what the practice is. I think it is essential that public opinion should be lined up behind the Fair Trade Commission in its efforts to deal with problems of that kind. I do not know what Senator Douglas wants elucidated in respect of cement, but I would call his attention to paragraph 172 of Chapter 20, which states:—
"A large amount of cement is at present consumed by local authorities and an increasing quantity is devoted to direct labour schemes. At present the cost to local authorities is enhanced by the fact that margins are allowed by the company and taken by distributors who, in effect, perform no indispensable function. The credit-worthiness of a local authority could not be in doubt. The authorities at present seek tenders for cement although, in fact, the price is fixed, and at least one authority was stated to rotate the business between distributors in its area. It seems to the commission that Cement Limited should not necessarily limit themselves to supply only through merchanting channels but that, in the public interest, and subject to the orders being of a suitable magnitude, it should be open to any local authority which desires to do so to obtain the supplies directly from the company."
I think that answers the point Senator Douglas has raised but, if there is any other point on which he requires clarification, I shall be glad to have it clarified subsequently.
The particulars which the Minister read out seem to indicate that there is considerable collusion between timber merchants.
An Leas-Chathaoirleach
Is the Senator asking a question?
I am making a suggestion, if that is permissible.
An Leas-Chathaoirleach
Because the Second Stage concludes with the Minister's speech.
I just want to say one or two more words. I want to suggest that if—I am sure the Chair will allow me to make the point— collusion exists between merchants, the ground might be cut from under these merchants if native timber merchants were invited to supply native timber. I am afraid that that is not being done, although we talk a lot about forestry, and we all agree that forestry is desirable.
I think this Bill is a justification for the main Act which was passed through the Dáil. At the passing of that Act, most Deputies had in mind a picture of very large business interests which had considerable financial resources and had under their control large supplies of materials and were believed to be conspiring together to hold those materials. Members of both Houses were not so much concerned with the smaller people, but with those big commercial interests which have been brought to light in the report submitted to the Minister. Having regard to the fact that the report submitted under this Bill was signed by the three members of the commission, I would ask the Minister if the report was a unanimous one.
The commission is empowered, as the Senator knows, to regulate its own procedure. It is entitled to do that within the terms of the 1953 Act. In this case, the report was signed by the three members of the commission. I do not know whether it was a unanimous report, but the fact that the three members of the commission signed it indicates that they agreed with it. People of that standing would hardly be coerced into signing a report recommending a course of action with which they did not agree. To my mind, the fact that three signatures were appended to that report constitutes a prima facie case for the belief that the report is unanimous.