Seanad Éireann debate -
Wednesday, 3 Jul 1963

Vol. 56 No. 15

Private Business. - Taiscí Stáit Teoranta Bill, 1963— Second and Subsequent Stages.

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

Minister for Finance (Dr. Ryan)

The purpose of this Bill is to obtain legislative authority for the establishment and financing of a Finance Company whose main function will be the provision of loans on preferential terms in part substitution for grants for large-scale industrial projects.

A new grants scheme was given legislative sanction in the Industrial Grants (Amendment) Act, 1963 and the Undeveloped Areas (Amendment) Act, 1963 which became law on 20th February, 1963. These Acts lay down special conditions for cases involving grants by An Foras Tionscal in excess of £250,000. Included in the conditions are limits of up to 50 per cent of the cost of the fixed assets or £1,000 per worker employed in the industry, when in full production, whichever is the less. Grants within these limits might not be sufficient to attract to this country industries of a high capital cost with relatively low labour content. On the other hand we could not contemplate giving grants of up to 50 per cent of the cost of fixed assets in every case as these could amount to millions of pounds for some projects involving very little employment. The Government have examined various possibilities and have come to the conclusion that for cases involving very large expenditure the best arrangements would be to supplement the reduced rate of grant by a special loan.

There are grounds for arguing that part of the financial assistance to be provided by the State in such cases should be by way of subscription for share capital. Provision is being made in the Bill to faciliate arrangements of this kind. Equity participation by the State has been suggested to a number of industrialists interested in establishing factories here, but the response has not always been favourable. Insistence on a share in the equity capital in all cases where large grants are provided by the State might, as the Committee on Industrial Organisation recognised in a recent report on industrial grants, take from the attractions of the grants scheme and hinder the efforts being made to attract worthwhile projects to the country.

The special loans scheme was thus devised as a partial alternative to equity participation. It implements one of the recommendations in the CIO report to which I have referred. The scheme is better in some respects than equity participation. The special loans will rank before all shareholders in the event of a liquidation, and provision is being made for a sharing in the profits in so far as dividends in excess of 7½ per cent are paid.

Promoters will be required to provide at least one-third of the cost of fixed assets and the State agencies concerned will be in a position to provide the balance of up to two-thirds. This arrangement will mean that the promoter of an industrial undertaking will be responsible for providing the working capital and at least one-third of the cost of fixed assets. Such an order of participation will be a guarantee of the promoter's confidence in the viability of the project and will be a strong inducement to make a success of the enterprise.

The grant constituent of the funds made available by the State will, of course, be subject to the statutory limits. Any balance to be provided by loan from State sources will be partly by way of a contract loan given by the Industrial Credit Company at normal interest rates and repayable within a period of up to 12 years with no capital repayment for the first two years, and partly by way of an unsecured special loan provided by the new company, repayable only at the option of the borrower, and free of interest for a period up to 7 years. Thereafter the special loan will bear interest at the same rate as applied to the contract loan, plus additional interest at the rate of ½ per cent for each 1 per cent per annum paid by way of dividend on the promoters' investment in excess of 7½ per cent. Promoters will be able to avoid the payment of this higher rate of interest by redeeming the loan. The arrangement ensures, therefore, that for successful projects the State will either participate in the profits or secure the return of the loan capital provided.

There are two reasons why it is necessary to form a new company. Firstly, it is outside the functions of the Industrial Credit Company to provide loans of the kind contemplated. That Company operates in accordance with the normal commercial criteria of a finance house and it would not be appropriate to require it to engage in this new type of business. The Credit Company provides special loans for re-equipment and expansion to meet conditions of free trade on terms which include waiver of interest and deferment of capital repayments for up to 5 years. These special loans are, however, secured loans and are in a different category from the unsecured loans redeemable only at the option of the borrower which the new company will provide.

Secondly, the new company will have other functions specified in the Bill. It would not, as I have explained, be practicable in general to secure for the State an equity interest where substantial financial assistance is provided by the Exchequer but it is desirable to take power to enable shares to be so acquired in any case in which equity participation would be a desirable and acceptable manner of providing finance. The new company will be responsible for holding any such shares on behalf of the State.

It also provides in the Bill that the company will have the powers of—

(i) taking up shares and debentures in hotel companies to which a grant or guarantee of borrowing has been or to be given under the Tourist Traffic Acts;

(ii) taking up shares in Aviation Development Limited, the development company established by the Potez interests in connection with the project to manufacture commercial aircraft in this country;

(iii) taking over from the Industrial Credit Company the shares and debentures held by it in Industrial Engineering Company Limited, Dundalk;

(iv) guaranteeing borrowing of companies to which An Foras Tionscal make grants.

In two hotel cases in which large grants and guarantees of borrowing have been approved, it was found desirable that the State should participate in the equity and this has been effected through Aer Rianta and the Industrial Credit Company. This opportunity is being availed of to make specific arrangements to provide for any further cases that may arise.

As regards the aircraft project, two companies have been formed, one a development company to be jointly owned by the Government and the Potez concern and the other a manufacturing company to be owned by the Potez interests. One half of the capital of the development company equal to the proved cost of the special tooling, but not exceeding £1.5 million, will be provided by the Government, and the special tooling will be the property of the development company. An equal amount of capital will be held by the Potez interests, representing the development work carried out by them, and the corresponding assets, including all the designs and prototypes, will also become the property of the development company. For the first ten years half of the profits of the manufacturing company in excess of £100,000 a year will be paid to the development company and no dividends will be paid by the manufacturing company to its shareholders until the amount provided through the development company has been recovered by it.

The Industrial Credit Company Limited holds shares to the amount of nearly £½ million and debentures totalling about £2 million in the Industrial Engineering Company Limited, Dundalk. The Credit Company's participation in the Dundalk undertaking arose out of Government policy for the utilisation of the engineering works of the Great Northern Railway when these works became separated from the transport concern. It is considered, in the circumstances, that the new company, when established, would be the more appropriate body to hold the shares and debentures on behalf of the State. These will be transferred to Taiscí Stáit at a realistic valuation which will take account of the losses incurred by the Dundalk company.

The provision authorising the proposed company to guarantee borrowings by companies to which An Foras Tionscal make grants is complementary to the power to issue loans.

The Bill provides that Taiscí Stáit will not take up shares or give loans or guarantees of loans except on the direction of the Minister for Finance, given after consultation with the appropriate Minister. The projects with which the new company will be concerned (with the exception of the Dundalk undertaking) will already have been examined by either An Foras Tionscal or Bord Fáilte as the case may be; in addition, projects involving special loans will have been examined by the Industrial Credit Company in connection with an application for commercial loans.

I would like to assure the Seanad that these arrangements will not complicate the grants and loans arrangements or add to the bodies that promoters have to deal with. To secure economy in administration, the new company's affairs will be managed by the Industrial Credit Company. Consequently, persons seeking loan facilities from the State will, as hitherto, have to deal only with that company. Subject to the necessary detailed arrangements being worked out, it is contemplated that the Industrial Credit Company, having satisfied itself as to the merits of an application, will divide the approved loan into two equal parts, one of which will be provided by the Credit Company itself in the normal way and the other half by the new company. Applicants will thus have no direct dealings with the new company and there is no reason to fear that the arrangements will complicate the work of industrial promotion.

The new company will thus be a channel for State investments undertaken on the basis of an examination of the projects by autonomous State agencies. It will have the duty of watching over the progress of concerns in which it holds shares, debentures or loan capital on behalf of the State and to bring to the notice of the Minister for Finance any development likely to affect those investments.

The company will have a nominal share capital; it is proposed to finance its operations by repayable advances from the Exchequer within a limit of £7½ million. A sum of £1½ million will be required for the investment in Aviation Development Limited and, subject to the valuation I have mentioned, up to £2½ million in respect of the transfer from the Industrial Credit Company of their shares and debentures in Industrial Engineering Company Limited. This leaves a balance of not less than £3½ million for the other purposes of the Company.

Taiscí Stáit will be required to furnish with its annual accounts, for submission to the Houses of the Oireachtas, a copy of the balance sheet and (where the Company is entitled to receive a copy) the profit and loss account, duly audited, of each company, whether public or private in which it holds 50 per cent or more of the equity capital. This will cover the two companies mentioned in the Bill and any other company in which Taiscí may acquire 50 per cent or more of the equity capital. Under the new Companies Bill it will be a requirement that private companies furnish a profit and loss account, as well as a balance sheet, to their shareholders. This arrangement will not cover loans but information about these will be given in the annual Report. The Minister for Finance will have power to direct the form of the Report and it is my intention that the Report will give particulars of any shares acquired, loans issued during the year together with the total amount approved and outstanding in each case, loans guaranteed and any amount paid, and remaining unpaid, on foot of guarantees, the purposes for which moneys are used and the terms and conditions on which the various financial facilities are provided. Publicity regarding loans issued by Taiscí will thus be on par with the publicity given to grants by An Foras Tionscal.

The availability of the company to serve as a holding body for certain State investments will fill a gap in our financial institutions. The special loans being provided under the Bill will enhance the attractive incentives now available to persons establishing new industries here and should reinforce the impetus given to industrial development by these measures.

I recommend this Bill for the approval of the House.

Mr. McGuire

As the Minister has told us, the purpose of this Bill is to obtain legislative authority for the establishment and financing of the Finance Company whose main function will be the provision of the finance and loans on preferential terms to certain companies who already, I understand, have loans advanced to them, of over £250,000. You will notice that the main point of difference in this Bill is that the terms will be preferential. The Industrial Credit Company at present, of course, provides loans on ordinary commercial terms. Now, this Bill gives more powers and freedom than exist under present legislation for the provision of finance by the State for these large industrial projects. I think we would all agree to give extra powers to the State to encourage industrial and commercial development here, especially in these cases where the development has already been pretty large as it must be in the cases that are envisaged under the proposals but we feel that these powers should only be used where and when it is absolutely necessary and commercially justifiable to do so.

State participation in industrial projects can be for political reasons or for social or economic reasons but I think we have now reached the stage where we are all agreed that the economic reasons should be the overriding consideration in any industrial activity from now on. Indeed, I think the Government have committed themselves to that proposition, that commercial viability rather than political or purely social considerations are the governing factors. There is only a limited amount of capital available in our State and already the Government, both national, local government and State bodies of all kinds, are monopolising the lion's share of the capital. I think it is only right and it is only desirable that as much capital as possible should be left to private enterprise, especially considering we subscribe to the proposition that private enterprise is to be our main system of operating our economy. This, in fact, is a method of providing capital from Government sources to private enterprise businesses.

The Government have, in fact, been giving a certain amount of help to private enterprise through existing financial institutions. Of course, we all agree that it is of the greatest importance that our capital resources should be intelligently and properly utilised, that is to say, as I have already said, that we should see that anything we put our capital into from now on should be commercially viable, and, therefore, justifiable commercially.

I notice that this Bill was welcomed in some quarters as a spur to State initiative in the industrial sphere in cases where private enterprise does not seem to be able to do the job or appears to be unwilling to do the job. To me it seems that that is a misreading of the purpose of this Bill. The State is not going to initiate anything here. It is merely giving an extra help to something that has already been started by private enterprise initiative. In a way there is something ironical about this Bill and, in fact, it may be the wrong way to do things. Whereas I say we subscribe to the ideal of private enterprise as being the main driving force in our economy at all levels, it is ironical that the Government are making it so difficult for private enterprise to operate through the heavy taxation which it meets at all angles now. In the recent Budget the tax impositions make it very, very difficult for the private enterprise part of the economy to operate successfully and be commercially successful.

Furthermore, the Government are monopolising, as I already said, in different spheres of local government, national Government and loans of all kinds, something in the 90 per cent area of the capital available in the country and it does seem ironical then that it should be charged that private enterprise is failing and that the State should go on taking more and more sums in all sorts of ways. In this particular case it is taking sums of money to prop up enterprises, which, if they were not so heavily taxed, would probably not need this sort of subsidy at all. However, let us take the Bill in itself and for the good that is in it.

As I say, this Bill is directed to help and encourage private investment in this country and to bring in further private investment from outside. For that it is to be welcomed. It is only fair to say that there is much apprehension and distress about the very large sums of money put into projects of doubtful commercial value in recent years. Some of those would almost certainly not attract capital investment of private enterprise where businessmen have to risk their own savings. In some cases many millions have been utilised with little regard to the doubts expressed and questions asked by businessmen, economists, Deputies, Senators and the public generally. Furthermore, large sums have had to be advanced through Government agencies to prop up and assist undertakings that were of doubtful value and should not have been started at all, especially where there had to be very heavy reliance on high protective measures to make them viable, and all this in view of the fact that we were trying to get into the Common Market where all those tariff walls would have to be taken down under the rules of that organisation.

It is only fair to say that there has been rather careless use, to put it mildly, of our capital resources in the past. A danger present in State financing of commercial enterprises which is frequently forgotten is the unfair competition that can be created with private enterprise concerns which have no State financial assistance and are operating in the same sphere of business. These non-State financed ordinary private firms must rely on their own technical knowhow and financing resources. For example, the financial propping up of certain industrial undertakings has to my knowledge caused much inconvenience and even financial cost to people in the drapery trade in recent years. Certain industries and particular concerns were set up and propped up and they caused much expense and difficulty in trading to people in the drapery trade, both fellow manufacturers and people in distribution.

There is another point I should like to make about these companies. The Minister told us that certain provisions are made for a company set up or assisted under this Bill to produce accounts and balance sheets. It appears, however, that the balance sheets that will be submitted for the Houses of the Oireachtas are only in a very limited category, where the company holds 50 per cent or more of the equity capital. On this whole question, it would seem to me that the public are kept too much in the dark where public funds are given to private companies in one way or another. I see no difference between where a firm has to go to the State for finance and where a firm has to go on the public market. On the public market full details of the firm's financial and trading position must be given before public subscriptions will be forthcoming. I see no reason why State financing of business concerns should not be subject to the same degree of revelation of the financial and trading position of the recipient. If in my own business I need £50,000 or £100,000 I have to go to the bank and reveal my position before they will give me money. If I go on the market, I must produce a public statement of how I have traded and my earnings and so on. Up to now, very large sums, running into many millions, have been forthcoming from the Exchequer of the taxpayers' money and nobody knows how much is given and the position of the company concerned, which seems to be all wrong. That is a thing that calls for some change in the future.

I fully agree with Deputy Sweetman who, speaking on this Bill in the Dáil, said at column 304 of Volume 203: "The whole method of disbursement of public funds through State companies of one sort or another has now reached such a proportion of our total capital resources as to require new thinking as to its method of control." In the light of past experience there needs to be a new look and new thought about whether and how and why funds are being invested. As I said already, more open bookkeeping is urgently required on the State and on the recipient side of industrialist or commercial operations. Open lending and open borrowing or financing would of itself impose a greater care in the selection of projects to be supported. If before money is forthcoming a proposition has to be justified publicly, there would be much more care taken and less money handed out than there has been up to now. It is to be hoped that the powers in this Bill will be used in a highly responsible manner with the greatest care and that the best advice will be utilised. Subject to these remarks, we support this Bill.

Mr. Murphy

I support this Bill in so far as it goes. It is another step in the efforts of the State in furtherance of our national policy of expanding industry and providing employment. The proposals envisaged and provided for under this legislation are to my mind very generous. As I understand it, this new company will be empowered to provide unsecured loans repayable only at the option of the borrower and free of interest for a period of up to seven years. That is my understanding of the Bill and of what the Minister said here this afternoon. Nobody could describe that as anything but very generous.

I have some doubts, however, as to whether it is really good practice to advance money like this without having some more control. After all, this money is not coming out of the wind. It is not the Minister's or the Government's. It is the money of the ordinary people, the property of the nation, got by way of taxation, savings or what have you. In such circumstances, the people responsible, namely, the Government, should have some say in the direction of the companies which are given these interest-free loans. This money is being invested free of interest for the first seven years. I am not criticising that. I am just underlining the generosity of what is being done. It is the same thing as if you were to invest £100 in a company. It is not recoverable unless perhaps you sell your shares. But in investing your £100 you have some direction at least to the extent of the £100 in the management and policy of the company.

But here we are providing the citizens', the taxpayers', our own money in interest free loans and at the same time we are not securing any control over the direction and management of the company in which this money is being invested. I think the Bill is to be welcomed as far as it goes. It is very generous treatment and I hope that it will succeed in promoting, in helping to promote, many more industries in the country, but I reserve the doubt whether we should not at the same time as we advance the taxpayers' money have more control over the companies in which the money is being invested.

Mr. Fitzpatrick

I should like to make only one net point. The purpose of this Bill seems to be to make available to companies which have already received grants in excess of £250,000 interest at preferential rates. I suppose this is a desirable thing. As I see it, however, there is nothing at all in the Bill for the undeveloped areas. The last two Bills dealing with grants which came before the House were the Industrial Grants (Amendment) Act 1963, and the Undeveloped Areas (Amendment) Act, 1963. I think it is a fair summary of those two Acts to say that they made available grants of £250,000 and upwards on the same terms outside the undeveloped areas as within them. The result of those two measures, therefore, was to attract the larger companies to the eastern counties, to attract them to settle in the vicinity of Dublin. I think this measure will give further encouragement to these large concerns to settle outside the undeveloped areas. At the present time the undeveloped areas need a lot of encouragement and concerns need a lot of encouragement to come to them. In my opinion, since it is apparent that we are not going into the Common Market for the present at any rate it is very difficult to attract industrial concerns to the undeveloped areas and there seems to be a complete standstill in the industrial movement towards the undeveloped areas. If I am right in my interpretation of the effect of the Industrial Grants (Amendment) Act, 1963, and the Undeveloped Areas (Amendment) Act, 1963, then I think the fact that this Bill will make money available to these large concerns at attractive rates will leave them with nothing whatever to gain by coming to the undeveloped areas and will, in fact, ensure that they will come to what are regarded as the most convenient locations of the country. The whole trend of Government policy in those two Acts and in this Bill seems to be more or less to abandon the undeveloped areas.

Professor Quinlan

When the present Bill was promised by the Minister on recent industrial Bills the setting up of a finance company was mentioned to aid in financing industry and development. We got the company but it is rather difficult to find out very much about it. At first sight it does seem a rather neat arrangement by which Foras Tionscal is responsible for the affairs of the company and its management. That does obviate the necessity for a company seeking a loan or grant submitting two requests to two different bodies. On the other hand, there seems to be a split personality here because we are told very clearly by the Minister that the Industrial Credit Company has operated as a business company where proposals put up to it were judged strictly on a business basis. Now this finance company is to supplement the grants that are given by the Industrial Credit Company so I presume that obtaining one from the Industrial Credit Company would be a prerequisite to getting anything from Taiscí Stáit. Yet we are told by the Minister that the Industrial Credit Company is going to operate on the same principle as before, that is, on a strictly business assessment of a project. The project, before it can qualify to get anything from Taiscí Stáit, must be passed by the Industrial Credit Company as a strictly business proposition. That is what worries me because we have the necessity for industrial promotion and the necessity of engaging in certain enterprise that may not pass the severe test as a strictly business enterprise and yet may be highly desirable from the national standpoint.

In fact, one of the major ones mentioned here is the national aviation company which is to absorb over two million pounds of the capital provided for. We are all in agreement no doubt that this is a field we want to get into, commercial aviation, but I very much doubt whether such a project would stand as a strictly business proposition. You would have to give considerable weight to the national factors involved in making a decision. The decision is a matter for Taiscí Stáit in this case but I am posing the question whether similar concerns coming along in the future will put the Industrial Credit Company in a very difficult dual role unless some Minister of State is to say by some means or other, which I cannot see here, to Taiscí Stáit that the Government want this project.

I believe that the proposals here do not go far enough to meet our needs for industrial promotion. At this stage of our development there is, I think, a general consensus of opinion that more money must be provided by the State to help industry, money for both modernisation and to meet the dislocation of the Common Market. Something more radical and overall is called for than the Minister has provided.

I think the stage has come where there should be a Minister for Development added to the Government whose concern would be for an overall national development and whose decision it would be to say whether the State is prepared to gamble or get into such an enterprise because he judges that it is for the good of the State, even though the proposition at the time may not appear to be strictly a business one. I think something akin to that is needed. I know the Minister for Finance is trying to fulfil that function at the moment but I think it is a rather unfair burden to put on him; with his concern for the day-to-day financing the other would be too much of a burden. There should be a Ministry set up which would have its own special allotment—so many millions— for industrial promotion. It should be the function of that Minister to look into the affairs and prospects of industrial commitments.

Perhaps, I can give one specific example here. We see the high financing that is required in a national airline. We are constantly being asked for more State money for this. We know that in a year or so we will be asked for 3, 4 or 5 million pounds to keep the airline going. We agree that is good. We agree that that has to be done. But what is wrong is that such a valuable instrument of the State should be allowed to ply with vacant seats. In short, the money that is required for capitalising that company in place of being given by means of a loan, when it is necessary to buy new aircraft, should already have been poured into that company through some means of filling those vacant seats, like, for instance, grants given ostensibly to tourism, thereby filling up the vacant places on our national airline. These grants would, in effect, cost the State nothing if used just merely taking up vacant places in the plane.

In turn, if those free passages, or assisted passages, for tourists, say between here and America or here and England, were used as prizes for selling our foodstuffs abroad — whether by means of a draw or a raffle of numbers attached to our food products—it would stimulate the sale of our products abroad. The net result would be that the money would be in the coffers of Aer Lingus to buy their new aircraft through what was a legitimate trade channel rather than through a loan from the State.

Such an overall view of our economy can only be taken, I submit, by a separate Ministry which has its own budget and is given the task of national development. I think it is high time we had such a Ministry here. If we have such a Ministry I suggest that the right arm of that Ministry should be an Oireachtas committee, because many in both Houses are disturbed at occasional rumours about State assisted companies, about rumours that things are not going so well, not proving as good as previously, and so on. At the moment, the only channel open to people concerned about those rumours is the staff of the Houses themselves, where a certain amount of damage may be done by questioning a Minister or giving voice to certain rumours that are fairly current. That type of work today, I submit, should be done properly in an Oireachtas committee and by that means we might supply the spark and the dynamo that seems to be missing today.

I know that the Department of Finance have found it necessary to set up a special sub-division dealing with this type of development, and investigating future development. But I submit the time has come to make a change and put that out on its own and supplement it with an Oireachtas sub-committee. The Oireachtas subcommittee could go even wider still, if necessary, and could have the advice of certain outside bodies or experts to help them along.

Another point I want to make on this is the question of loans. We have already provided for grants up to a maximum of £250,000, but many of the loans proposed here are free of interest for seven years. Have a good look at what that means. Take a loan of £100 on which you will not pay interest for seven years. Then if you allow 6 per cent per annum compound interest in seven years, you have run up a debt of £150. There would be £50 accrued compound interest for the seven years. At the end of the seven years, we say—now you start paying interest from here on, not on £50 which you owed, if you had to pay your interest over the seven years, but on the original £100. Thereby, you are writing off one-third of the obligation of the person concerned. That is just as effective as giving him an outright grant at the start of the period of one-third of the loan you have advanced him. Actually, there is more than that involved.

We all know at the moment of this inflationary financing by large states. Not alone we here, but states all over the world deliberately have a policy of controlled inflation. Over the past decade this worked out, I think, at around 2 per cent per annum loss in real money value. It means that every seven years the original £100, even if we pay it in full, loses about 15 per cent of its real value. Due to inflationary financing, you lose another 15 per cent. In short, you have remitted one-third and eroded away 15 per cent, which means, in point of fact, you are only getting back a decreased percentage of the original amount you advanced. Call it by what name you wish, but the provision here is essentially a provision that those sums labelled "deferred loans" are actually 50 per cent free grants; that for companies running into large figures, like the National Aviation Company of £2 million, it can amount to a considerable sum.

All these would be large enterprise grants, which means they are not located in the undeveloped areas. I endorse Senator Fitzpatrick's plea that the scales are being tilted against the undeveloped areas and that we need something fresh to try and recreate the attractiveness of those areas. By and large, the sums mentioned here give little if anything to areas classed as undeveloped areas.

An Leas-Chathaoirleach

Will the Senator move the Adjournment please?

Tomás Ó Maoláin

It has been represented to me that it would meet the convenience of the Minister and the House if we went through the business without adjourning for tea.

An Leas-Chathaoirleach

Is there any objection to that? Does the House agree to that?

Mr. L'Estrange

Senator Murphy wishes to speak on item No. 4. Does Senator Murphy agree? We can hardly wait for him.

Tomás Ó Maoláin

I spoke to Senator Murphy.

Professor Quinlan

There are just one or two other points. We are setting up here a new company, Taiscí Stáit, and we are debarring, as usual, the members from either House of the Oireachtas. In Section 19 of the Bill, even if they become candidates for election to either House they cannot be directors of this company. I have searched the Bill high up and low down and nowhere can I find any indication as to how many directors are to be in this company. We are setting up a company with an initial capital of £7½ million. Seeing that we have pledged £4 million of this, which leaves only a balance of £3½ million, I expect that it will have to be augmented very shortly to much more than £7½ million. Yet, we have no indication whatsoever of the intention of the Government on the composition of this board. I think that we should have written into the Statute the composition of the board, the number of directors et cetera.

I welcome the Bill as far as it goes but it is high time to divorce this work from the Department of Finance and set up a fully fledged Ministry for National Development to give us the push along we need in the sixties.

Dr. Ryan

I agree with Senator McGuire when he said that we have a limited amount of capital in this country, and, therefore, we have to be careful how we dispose of that capital. He said, on the other hand, that a good lot of our capital was being used for public purposes and for State companies and that he was afraid it might create a shortage for private enterprise. Time and time I have made inquiries about that point. So far, I do not think there has been a shortage of money for private enterprise. If it ever occurred, it would have to be dealt with very effectively and very urgently too. Naturally, we could not allow the situation to arise where private enterprise would find it impossible to carry on. As Senator McGuire pointed out, the State does not initiate industry in this case. It only helps it. In practically all cases it will be private enterprise. I suppose you could hardly call the Dundalk Manufacturing Industry private enterprise. Apart from that, it will be private enterprise in time to come.

The Senator went on to talk about the difficulties of companies here on account of the higher taxation. I think we will postpone that point until the Finance Bill comes along. I think he is a bit unreasonable in saying that these companies should give information which would be published when applying for a loan from the Industrial Credit Company and this new Taiscí Stáit. After all, the analogy he gives is not exactly fair. He says, for instance, if he were floating a company he would have to give full information. Of course, these people are not floating a company. They are looking for a loan and if they went to a bank they would have to disclose it to the bank but they would not have to disclose it to the bank shareholders. It will be in confidence to the bank who are dealing with them. However, we are providing in this Bill that all companies which are helped in this way will have their balance sheets audited and submitted to the Minister for Finance and he will in turn lay them before each House of the Oireachtas and a profit and loss account can be got also. As I mentioned in my introductory speech, this will apply where the new company holds 50 per cent or more of the share capital. The members of the Oireachtas, therefore, will get fairly full information—in fact just as full as they have got in all cases where grants have been given, and I think even a bit fuller in certain cases.

Senator Murphy, of course, is right in saying that the terms were generous. He said that we should not be so generous without having a certain amount of control. That is where the difficulty arises, of course. The CIO in their report recognised that there was real difficulty in looking for control of these companies coming in. The people who come in to start these industries are very averse to having the Government putting in equity capital. It is put to them in practically every case that they should agree to that. They do not like Government interference and they do not like interference even from an organ which is controlled by the Government. For that reason, we thought we should try to adopt some other measure whereby we could get some better arrangement than paying grants. It is better to give a loan than a grant even though the loan may be on favourable terms. I could find no fault with Senator Quinlan's calculations as to what his loss would be in regard to his loan but it struck me that I should like to have Senator Quinlan tell me privately some time if a man lent £100 for 100 years what would he lose?

Mr. L'Estrange

He would not be alive to get it back.

Dr. Ryan

The difficulty is that these people are frightened by the Government coming into their business by way of giving capital. Up to this, it was a question of giving grants. We want, if possible, to save ourselves and the country from giving very high grants in big propositions. This is the best alternative that could be suggested, of giving this type of loan which is very helpful to a company which is building up, and which, when they do get prosperous, they can easily pay it back. On the whole, I think it is the best that can be done.

In answer to Senator Fitzpatrick's complaint, legislation was before the Seanad lately with regard to the undeveloped areas and other areas and it did give the advantage, as we are all aware, to the undeveloped areas. As far as this Bill is concerned, it does not make any distinction but, of course, it leaves the advantage to other areas. That is all I can say. It does not make any distinction at all. It only purports to deal with the bigger cases, giving a loan whether in an undeveloped area or not. Therefore, we are not interfering with the measures which the Minister for Industry and Commerce brought in some time ago giving better terms to the undeveloped areas.

I want to correct a slight point of Senator Quinlan's. The company is not getting a capital of £7,500,000. The capital will be only nominal, say £10, and the other will be by way of loan.

As regards the board, these matters are usually settled by the articles of association. The intention is to put in, say, three members who will really be like trustees because the Industrial Credit Company will do all the business and they will have no control of policy. The Minister directs policy. They have only to mind the money.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill considered in Committee.

Sections 1 to 16, inclusive, agreed to.

SECTION 17.

Question proposed: "That Section 17 stand part of the Bill."

Professor Quinlan

I should like to appeal to the Minister to ensure that this new company is not going to give us another of those glossy reports. I have shown in this House previously that the more gloss in many of these reports the less factual information we can get. It is a waste of public money to go in for this over-elaborate type of report that we get. We got one in the mail today.

Dr. Ryan

Right.

Question put and agreed to.

SECTION 18.

Question proposed: "That Section 18 stand part of the Bill."

Mr. L'Estrange

This section says that as soon as may be after the end of each accounting year the company shall make a report to the Minister and the report must be laid before each House of the Oireachtas. Subsection (2) says that the company shall, if so required by the Minister, furnish him such information as he may require in respect of any balance sheet, account or report of the company, or in relation to its policy and operations. It does not state whether this information will be laid before either House of the Oireachtas. Is it only for the Minister's own information?

Dr. Ryan

I suppose there might be two reasons. One, the Minister might be suspicious of things which would be going on but it might be a bad thing, at least for a while, to do anything publicly. Secondly, it might be that he was not very clear about the accounts and might want some small point cleared up.

Mr. L'Estrange

I see.

Question put and agreed to.

SECTION 19.

Question proposed: "That Section 19 stand part of the Bill."

Mr. Desmond

A question has already been asked about members of either House of the Oireachtas not being elegible for the company. I should like to know how many are in the company, where are they to be drawn from, and could we get more information about the formation of the company?

Dr. Ryan

This has gone into every Bill dealing with State companies for many years back. It was considered some years ago that it was better not to have members of the Oireachtas on these companies. We shall not go into reasons now, but it might be awkward to have one member here knowing all about a company and nobody else knowing anything about it.

Mr. Murphy

Better that all of us should know nothing about it.

Dr. Ryan

As I said, probably the board will consist of three or four members, but they will only be trustees to watch the accounts and keep the money. They have nothing to do with policy and nothing to do with management.

Professor Quinlan

If they have nothing to do with policy or management, will they then be full time officials, or able to carry on some other avocation?

Dr. Ryan

They will be only part-time, of course.

Professor Quinlan

They will be part-time officials with part-time salaries?

Dr. Ryan

I do not know whether it will be necessary to pay a salary or not.

Professor Quinlan

Again on this section I want to draw the attention of the House to this very iniquitous provision that immediately anyone is nominated as a candidate for either House of the Oireachtas he shall cease to be a director of the company. That is certainly taking it too far. There might be some case to be made for providing that, on election to the Oireachtas, a director might have to retire altogether or retire for the duration of his membership of the Oireachtas. This is certainly carrying it much too far. Surely he could stand suspended until after the election or something like that. It is a very unwise business to be putting all these obstacles in the way of people going forward for public office, seeing that so many are now in State employment or members of State boards and consequently all that vast section are by the terms of their employment prohibited from even seeking election to either House. I believe that this is a very dangerous provision and one that should be remedied pretty soon.

The Government do not seem to have a fixed policy on this. It varies quite a bit in the various Bills. This is an extreme form of Toryism that we get here. I thought that by our attacking previous cases the Government would have second thoughts on it. In some recent legislation they seem to have had, but now they are going back to the extreme form.

I find that in the most liberal case, which is An Bord Bainne, actually a member of this Seanad is a sitting member. I do not think that that is in any way taking from his duties either as a Senator or as an official of the board.

Mr. L'Estrange

Who is he?

Professor Quinlan

Senator Prendergast, who was elected at the last election. As a matter of fact, I am a member of a State body myself, as a member of the board of the Institue for Advanced Studies. Again, I do not think there is any necessity for having it there and I would appeal to the Minister as the senior Minister of the Government to look into this restrictive practice and see that in future the bar is at least lifted from those seeking membership of the House —whatever about imposing a bar when they become members.

Dr. Ryan

I have no very strong feelings about this point at all, I must say. There is a difference, of course, between An Bord Bainne and the new company because no Minister has any power to appoint to Bord Bainne and that is the important point. In this Bill you are giving power to appoint the board. You are not asking the power to appoint a TD or a Senator. In the beginning there was a point made about this.

Professor Quinlan

The Minister has appointed a certain number, four out of 12, to Bord Bainne and the rest are elected but this famous clause, this apartheid clause, was for some curious reason omitted from the statute setting up Bord Bainne.

Mr. McGuire

Section 19 is the only one in which I see the word "director". Where is the provision for the appointment of the director? Under what section and under what condition?

Dr. Ryan

Section 6. The articles of association provide for appointment.

Question put and agreed to.

Sections 20 to 22 inclusive agreed to.

Title agreed to.

Bill reported without amendment, received for final consideration and passed.