This Bill, which is in the usual form, is to confirm a number of Orders made during the course of the past eight months, imposing customs duties on certain commodities or increasing customs duties on others. The commodities to which these Orders relate are set out in the third column of the Schedule. I have given some examination, though not a very detailed one, to the circumstances which led to the decision to impose or increase these customs duties and in all cases it seemed to me that there was justification for the action taken. Certainly it would be undesirable to allow the Orders to lapse now as they would if this confirming Bill were not passed. In view of the circumstances in which the Orders were imposed it is not necessary for me to say anything more on the subject, but if there is any point on which any Senator would like clarification I shall be only too glad to explain matters to him.
Imposition of Duties (Confirmation of Orders) Bill, 1957 ( Certified Money Bill )— Second Stage.
Mr. Douglas
This is very similar to the previous Bill which came before the House. I do not think anybody on either side opposes imposition of duties which will give protection to our younger industries. However, I do feel a little bit perturbed that we should continue to impose protective duties at a very high rate. For instance, in the present Bill we are imposing duties which, in a number of cases, amount to 75 per cent., or 50 per cent. preferential. I feel strongly that where industries have been established over a period of years they ought to be able to produce goods in sufficient quantities to enable them to compete with goods imported from abroad at a reasonable rate of protection.
I have never felt that any industries should be established here which require permanently a protective duty of, shall I say, over 25 per cent. or 33? per cent. In a small market such as ours, it is necessary to have a certain amount of protection, but I believe Irish labour is just as competent as that in any other country to produce goods of first class quality at a price which should be able to compete with the markets of Europe. I hope the present Minister will give serious consideration to the protective tariffs which are at present enjoyed by many of our industries, to see whether it could not be possible to reduce that protection and still ensure that we can produce here goods for export which are up to the quality and the standard of similar goods produced in other parts of Europe.
This question must be considered in conjunction with that of a free trade area in Europe. If we in this country are to survive within that free trade area, it is essential we should produce goods which will compete with those produced by other countries within that area. I am convinced we can do it, but it is well that the situation would be reviewed if we are to join with those countries in free trade conditions and if we are to continue to be a prosperous nation.
Senator Sheehy Skeffington mentioned while speaking on the previous Bill the question of prices which are, of course, tied up with this Bill. He mentioned the price of grocery goods in Dublin. Prices of groceries have fallen in Dublin, but I think both the present and previous Governments have been endeavouring to the best of their ability to decentralise industry from the city. It is a policy with which I am in entire agreement. During the past fortnight or three weeks I have visited some of the remote parts of the country and have been told that in the villages and towns prices of groceries have not fallen. People have been grumbling that the Fair Trade Commission have been able to effect a reduction in prices for these goods in Dublin. If we are to decentralise industry, we must also provide equal opportunities for city and country people. I feel very strongly that we should keep prices more or less on an equal level throughout the country. For that reason I feel these duties, while we must accept them at the present time, should be reviewed by the Minister. I hope he will do so within the next few months, not only in the case of duties imposed under this Bill but in the case of other duties as well.
I have just one point to make. It is one which I put to the Minister's predecessor during a debate on a similar Bill. The point is that an occasion exists for the Minister to have a look into the system under which these duties were imposed. Secondly, the Minister should see whether the duties were imposed on the profits and not on the cost of the articles. When that point was under review in the House previously, the reply given was that we had to take the cost of the duty as well as the cost of the article itself into consideration. I submit that, if duties are necessary and if it is the responsibility of the Government to impose them, the Government also have a responsibility to ensure that the effect of the imposition will not result in increased profits as well as increased prices—that increased duties will not also mean increased prices for the people who can least afford to pay. I would urge on the Minister that this is a problem which should have his careful consideration.
Another point which I think I should raise is that it would be desirable, in the interest of all concerned, to introduce a system for the display and sale of articles on which duties of this kind are imposed. I should like to repeat the suggestion I made earlier that, apart altogether from the actual retailer's cost of the article, the Government would be wise to insist that retailers selling goods on which duties of this kind have to be paid should be compelled to show, in two separate figures, the actual cost of the article and the amount of the duties paid.
I should like very much to support some of the points made by Senator Douglas in relation to imposition of duties. I do not support what he said about grocery prices and I do not think that would come very relevantly within the scope of this Bill. What he said about this imposition of duties, however, about the European Common Market and about protective tariffs I would support, and I should like to hear from the Minister something, at any rate— nobody can expect him now to give a general survey—of the Government's general attitude towards the imposition in future of such protective tariffs and duties as are confirmed in this Imposition of Duties Bill.
Senator Douglas made the point that there is such a thing as over-protection of industries, and that once an industry has got under way it seems a bit surprising that it should require a protective duty of more than 25 per cent. I think that was the figure he mentioned, whereas some of these duties are 37½ per cent., 50 per cent. or, in the second instance here, 75 per cent.
Could the Minister say whether the Government has under consideration the possibility of having something like a descending scale of duty for the protection of a given commodity being newly manufactured in this country! It seems legitimate to me that we should give reasonably efficient new industries starting here a measure of protection in what one might call their formative years, the years when they are being set up, installed and are exploring markets and perhaps learning a little by their mistakes. It seems quite legitimate that we should give them perhaps even a high measure of protection, but it is equally legitimate that we, as representatives of the people, should expect that, if the industry is thriving and has in fact been learning, it will improve down the years in efficiency, and, as it improves in efficiency, will require a decreasing amount of protection.
Has the Minister considered reviewing the position of some of our protected industries in the light of such a contention, which seems to me to be a valid and unanswerable one, and asked himself whether the high rate of protection given to some of them in their earlier years is not now too high, and may even be so high that it is sapping their initiative and removing from them the competitive incentive to improve their methods of production and marketing? If the cold wind of competition is kept entirely off our industries, they may wax fat, but they become unhealthy, and perhaps be quite unprepared to enter such an adventure as the European Common Market would provide.
That is why I think Senator Douglas is right when he thinks that with the possibility at some future date— perhaps a not so very far distant one —of participating in the European Common Market, in order to do so, we shall have to have efficient industry. Some of our industries are extremely efficient, both the old and the new, but others are, shall we say, not so efficient. I attribute at least a measure of their failure to reach high efficiency, to the fact that we have been too prone to give them over-protection and not to examine afresh after a period of years whether an industry, which at the start required a protective tariff of 50 per cent., could not after five years do with a protective tariff of 30 per cent. or 20 per cent. I should like the Minister to shed some light on that point: whether he is prepared to state Government policy on it and whether he would in general agree with what Senator Douglas stated on that issue.
I believe it is usually held that one of the values of private enterprise as a productive machine is that it acts under certain incentives, that it must be efficient in order to survive competition, and so on. However, if you build up a big tariff barrier around it, then the "must" is not so strong, and the incentive is, in a parallel way, weakened. Therefore, we should be careful about the extent to which we give State protection to industries which do not require the extreme measure of protection which we so lavishly bestow upon them, to the extent even, in some of these cases, of 75 per cent.
If I may, I should like now to question the Minister about one or two of the items to which this Bill relates. I realise it is not quite fair to cross-examine him, as it were, in detail upon matters that have been before him for only a very short time, and if it is not possible for him to provide an immediate answer, I do not propose to press for it. However, there are some points upon which he might be prepared, even on such short notice, to give us an opinion.
I notice, for instance, that the first of these duties relates to "powerdrawn agricultural machines comprising certain ploughs, disc harrows and mowers and component parts." It is obvious that such a duty as this is increasing production-costs for the farmer, for the agricultural producer. This is held to be largely an agricultural country. A great deal of lip service is paid to the agricultural community, but I have often been disappointed on previous occasions, in particular in connection with the imposition of duties on milk cans, for instance, to find how little support is given, in practice, by votes in this House to the view that to place a duty of this kind upon a commodity that will have to be bought by the farmer is to give an advantage to the industrial community at the expense of the farmer.
Would the Minister give us his view as to what it is that prompts a Government to put so high a duty as 37½ per cent. full and 25 per cent. for the U.K. and Canada on these agricultural implements, which are a necessary part of any reasonably capitalised farm to-day? Is he happy that he should have to sponsor this—because it was made up for him by his predecessor? Is he happy about imposing these fresh tariffs upon agricultural implements to the detriment of the farmer? I am aware, of course, that it could be contended that our own product in these industries is every bit as good as the foreign product, but if it is every bit as good, which I am prepared to accept, could it not be made a little cheaper? Does it really require a protective barrier, if it is every bit as good, of 37½ per cent.?
The second point I should like to deal with is in relation to the same kind of thing. It relates to the second of these statutory instruments, No. 229, referred to in the second paragraph of the explanatory memorandum. It deals with the question of locks and lock fittings. We all know that an excellent series of locks is being made in this country by a relatively new company to-day. I have no reason to believe that their efficiency is not extremely high and that the products are not comparable with anything made abroad. I do realise that, as a new company, they may be facing certain difficulties of installation and adaptation, and that, therefore, it may be necessary to give them temporarily a large measure of protection, say, for the next few years, and that that may be the justification for giving them under this Bill a protection of 75 per cent. duty, with 50 per cent. for the U.K. and Canada.
I should like to ask the Minister, in relation to this specific item, is it the intention of the Government to reduce that protective tariff in respect of this commodity in a few years' time, when the industry has been given a chance to get on its feet and establish its own markets? I am asking the specific question here—the same one as I asked in a general way just now—does he envisage a descending scale of tariffs for the protection of this commodity?
The fifth paragraph in the explanatory memorandum relates to a very common or garden item of household expenditure—wooden clothes pegs. It is an item about which it is rather difficult to work up very much emotion. I do not think there is very much political importance to be attached to the production of wooden clothes pegs; nevertheless, I should like to ask the Minister to give us some comment on what it was that necessitated the putting of a 50 per cent. full duty upon wooden clothes pegs. I think it should be possible for us, with our industrial processes and skilled labour, to compete fairly favourably in a field like that. I wonder do we need so high a duty as 50 per cent.
The seventh paragraph in this explanatory memorandum relates to a customs duty of 50 per cent. ad valorem on card clothing for use on textile machinery. I confess I do not really know what that means, but I should like the Minister to tell us what it means and why it has become necessary to impose this duty for the purpose of protecting industry. Perhaps this is a raw material coming in that is used by some of our industries and not by others. In that case, are we protecting some of our industries at the expense of others, and how does it come about that we are putting 50 per cent. duty on card clothing for use in our own textile machinery which, presumably, the Minister wants to keep turning?
In 1952 or 1953, I initiated a series of tariff reviews which were undertaken by the Industrial Development Authority. A number of these have been completed. I have not read the report of the Authority in all cases, nor can I state what action was taken on them, but that process of reviewing the developments that have taken place in each industry under the protection which is afforded is taking place and will be continued. I think it is desirable that it should be a continuous action of the Department of Industry and Commerce. There have been some instances of customs duties being reduced and others of customs duties being abolished, in consequence of reviews carried out either by the Department or the Authority.
This Bill does not provide for the confirmation of any Order reducing or abolishing customs duties, but there have been Bills of that kind submitted to the Oireachtas in the past couple of years. I mentioned in connection with the Supplies and Services Act that a number of duties which had been imposed are now suspended. One of the reasons why the Supplies and Services Act is desirable is to permit examination of those particular duties, leading to decisions as to whether they can be dispensed with altogether or need to be re-enacted in a new form. I do not think it is possible at the present time to give a useful statement of policy with regard to industrial development, in the context of protective duties, having regard to the position in relation to the free trade area proposals. Any statement would have to be conditional upon the outcome of the discussions now proceeding and which have not yet reached the stage in which their probable outcome is clear enough to permit of decisions being made with regard to future policy.
I could not attempt to give detailed reasons for the particular rates selected and imposed in the Orders scheduled to this Bill. Obviously, circumstances will vary from case to case and from commodity to commodity, and the duties selected must be enough, and no more than enough, to give effective protection. There certainly will be cases where a higher rate of duty at the beginning of an industry might be regarded as necessary, even though there could be at the time a determination to reduce it later when the need to interrupt trade connections and to turn the minds of buyers to the need for securing their requirements from Irish factories has been made.
I think many Senators fully understand that the continuation of trading arrangements involving the importation of goods does not always turn on the quality or price of Irish goods which are available. It often turns on the intimate personal contacts established over the years between buyers of Irish firms and representatives of suppliers outside. Not infrequently, it turns upon understandings which secure for one firm goods or designs which are not available to others or which are sold under a trade name which has a commercial value. It has been found in the past that quite substantial rates of duty are needed at some stage to break these established connections and particularly to offset the commercial advantages of a well-known trade name.
I am not quite sure what Senator Crowley was referring to but I do not think it would be at all practicable to require retailers to show on the price labels the amount represented by import duty. With regard to specific duties mentioned by Senator Sheehy Skeffington, I can give him some information with regard to agricultural machinery. The Order was made at a time which would have enabled it to be included in the last Imposition of Duties Bill but at the time there was considerable controversy on this very question of whether agricultural implements should be subject to protective duties or not and there was probably some reason at that time for postponing the confirmation of the Order.
In my view, it is desirable that we should avoid putting upon the agricultural community any increase in the cost of material or equipment which they use. It is also desirable that they should use Irish equipment particularly when it can be got at prices equivalent to those at which they can be imported. In the case of the machinery to which the Order applies, my information is that the Irish firms can supply at or below the imported prices. There have been assurances given that there will be no increase in prices without consultation with the Department of Industry and Commerce. The factors which might continue to induce the importation of these goods, even with protection, are numerous and complex. It is a situation in which I think the imposition of a duty was quite justified, even though the firms making these goods could, if they got the whole of the market, be quite competitive with the firms making the same goods abroad.
In the case of the duties upon locks and lock fittings, that is one of the instances to which reference has already been made—a new industry recently established producing a variety of goods which is less than the variety previously available to buyers here from a multitude of manufacturers round the world. In order to secure the development of that industry here, quite a substantial rate of duty is probably required in the initial stages. As it happens, the firm, which is quite an efficient one, has already effected successive reductions in its prices as its manufacture extended and it may be that in the course of time, when the practice of using its products has been established, some review of the duty will be possible.
I am not prepared to represent the manufacture of clothes pegs as a major industrial development. The price of the pegs here is higher than imported pegs and will always be higher, mainly because the manufacturers abroad have certain advantages, particularly in regard to timber prices.
With regard to the duty upon card clothing, that is one about which I have some doubts. The manufacture of card clothing, which is a rather important development, was undertaken here many years ago. When I was dealing with the matter formerly as Minister for Industry and Commerce, the firm concerned specifically asked not to be given protection by way of tariff but arrangements were made by which any firm in the textile trade desiring assistance in any form from the Government were told that they were expected to use the products of this particular industry.
I am not quite clear about the circumstances which led the firm to accept protection, but I think it is a type of industry that we should try to develop and in so far as problems may arise, and, to my knowledge, have arisen, for some firms, where a specialised type of product is required, that will have to be dealt with by means of a duty-free licence provision. There is a substantial quantity of these machine parts used in the textile trade here, and, as the textile industry has itself received a great deal of assistance from the community under protection, it is not unreasonable to expect them to use the products of this firm at Swords when it is practicable to do so.
For the information of the Senator, card clothing is a textile or other base on which wire is threaded and which is fixed to the frame of a combing machine and is used for the combing of wool or cotton as part of the process of manufacture. It has nothing to do with keeping the machines warm.