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Seanad Éireann debate -
Wednesday, 28 Feb 1968

Vol. 64 No. 10

Industrial Grants (Amendment) Bill, 1967 (Certified Money Bill): Second and Subsequent Stages.

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

As Senators will see this Bill is purely an administrative measure to enable An Foras Tionscal to process applications for adaptation grants made to them before the 30th September, 1967.

Under section 2 of the Industrial Grants (Amendment) Act, 1966, it was provided that applications for grants for enlargement or adaptation of industrial undertakings had to be made to An Foras Tionscal before 30th September, 1967, and approved by them before 31st December, 1967. This provision applied whether the application for the adaptation grant came under the Industrial Grants Acts or the Undeveloped Areas Acts.

The period of three months provided between 30th September, 1967, and 31st December, 1967, was to give An Foras time to process and deal with the applications received prior to 30th September.

There was a heartening response to the exhortations to firms to undertake adaptation measures to meet free trade conditions and a considerable number of applications was received particularly in the weeks before 30th September, 1967. This was a welcome development but the volume of cases was more than An Foras could deal with within the time limit of 31st December, 1967, as required by the Act.

At 30th September, 1967, An Foras had 757 grant applications of this kind on hands, almost equal to the number which had been approved in the four years ended 31st March, 1967. It is now necessary to provide additional time for An Foras to get through these applications, and the sole purpose of the present Bill is to extend the date for approval of those applications, made prior to 30th September, 1967, from 31st December, 1967, to 30th June, 1968.

This Bill does not touch on the question of extending the time for making applications for grants by existing firms proposing to expand or adapt their undertakings. This question forms part of the general review of the grant system at present in progress, and will be dealt with when, in due course, and I hope at an early date, amending legislation of a general character is proposed to the Oireachtas.

I recommend the Bill to the Seanad and look forward to its passing through all Stages so that An Foras Tionscal can continue their consideration of the applications for adaptation grants which they still have on hand.

We have no difficulty in welcoming and accepting this proposal. The Minister said it is heartening that there should be this volume of response to the Adaptation Grants Scheme. It is a somewhat belated response. It indicates the merit of having a deadline of some kind which makes people think very seriously as to what they should be doing. The fear of missing the opportunity of getting State aid for adaptation and modernisation makes people consider their situation more seriously than when they feel they can postpone indefinitely consideration of their position. The Government were right to have the deadline. Its effectiveness is demonstrated by the response it has secured.

One must be concerned at the lumpiness of the flow of investment implied by this response. Assuming that these applications are fairly serious and that the proportion approved will be fairly high, the volume of industrial investment implied by this figure is very great indeed. One must in some degree be concerned that, in these circumstances, one is liable to get a very sudden jump in industrial investment in a period of a year or so of a somewhat temporary character with perhaps a falling-off in that respect afterwards. This type of distortion in the trend of investment could impose strains on the economy because of the sudden demand for investment in a short perod. It could impose, also, considerable strain on the Government's capital programme. Assuming that these grants are of no smaller order than preceding grants, the scale of investment required in the years ahead could be very great indeed.

What is the total sum involved in the 757 grant applications? On the assumption that the proportion approved is the same as it has been in recent years, what will the total investment be and over what period is this investment likely to be undertaken? Does the Minister feel that, once these grant applications are approved, investment will take place immediately or have some been put in in order to get approval while the firms concerned may not proceed with the investment for some time to come?

Is there any requirement under the legislation or in the administrative system which the board is applying which will necessitate this investment being made in a relatively short time or, having sought approval and got this approval for these grants, can firms postpone the investment for some years? How soon do they have to carry out the investment in order to secure the grant? The sooner they carry it out the better, if it is sufficient investment to merit the payment of Government grant.

If all this investment is made together, I think it could impose certain strains. What is the Minister's policy? What total sum will be required in respect of Government grants if the same proportion is approved as was approved in the past? How big a sum will have to go into the Capital Budget, approximately, in the year ahead or in the following year to cover this? The Minister must have assessed what the scale of the investment is likely to be. I think this House is entitled to know how much is involved.

I have the fear, which I believe to be quite widely shared in industry now and for some time past, that there has been a certain over-emphasis on these adaptation grants. Because adaptation grants are capable of quantitative measurement, because this is something that one can add up, so and so many hundred grants were approved and this relates to so many hundred firms which are such and such a percentage of the total number of firms in the country, there is a tendency to regard these grants as a measure of the performance of Irish industry in preparing for the freeing of trade. But that is only one aspect of the preparations for the freeing of trade, an important aspect but one which should not be taken out of context. Indeed, there is a danger in the Minister's own Department and in An Foras Tionscal that concentration on handling these applications, which is, of course, a huge job administratively, will divert attention from more fundamental approaches to the whole question of adaptation.

There has been a tendency in statements from his Department and I think from himself personally, although I would have to go over the record to be sure of that, to equate or to imply the equation of industrial adaptation grants with preparations for the freeing of trade and seemingly to suggest that if only 20 per cent of firms in a particular industry have sought those grants that the industry is not getting ready for free trade or if 80 per cent have applied that the industry is well prepared. In fact, of course, in all our industries there are firms which will not need adaptation grants, which are already prepared for the freeing of trade or which will not suffer stiffer competition in free trade conditions because of the particular circumstances of what they are producing or where they are producing it. At the other extreme there are firms which could not survive the freeing of trade no matter how much money was poured into them and in between there are firms which are capable of surviving but do require a considerable investment in modernisation and in those cases these grants are useful.

However, it would be a mistake to concentrate too much on these adaptation grants and to appear to equate the proportion of firms applying for them with the proportion of firms preparing for the freeing of trade and the general degree of preparation of Irish industry to meet free trade. There is much more than that required and a much more sophisticated approach is required to the whole problem. One of our difficulties has been that our whole approach both to fresh industrialisation — the setting up of new industries —and the adaptation of existing industries to free trade has been unsophisticated to a degree. No adequate appreciation has existed, to my mind, in the country as a whole, in industry or, indeed, in the Minister's Department of the fundamental character of the changes in the structure of industry that will be required to meet the freeing of trade. All of us have made the mistake, the CIO, in which I myself participate, the Department and industry itself of thinking in terms of each individual firm doing a bit of modernisation, doing a bit of re-equipping and then selling what it is now producing in the export markets or competitively in the home market as a result of this slight adjustment when, in fact, what is required is in many cases nothing less than the complete restructuring of industry.

What is required is that the existing structure of industry, orientated towards the domestic market, concentrated on the production of a very wide range of goods at a relatively low degree of economic efficiency, perhaps technically efficient but economically inefficient because of the wide range of goods produced in small numbers, be re-orientated to the production of a narrow specialised range of goods, the vast bulk of which would have to be sold in export markets. The restructuring of industry will mean the merger of many existing firms, the disappearance of some firms, the creation of new ones. We have all taken much too unsophisticated a view of this problem and I fear that in An Foras Tionscal and in the Department there has not been a sufficient appreciation of the magnitude, extent and depth of the changes that are required and that there has been a tendency to think we can meet this problem by tinkering with it. I do not think the Department or An Foras Tionscal are to be blamed particularly for this. I think we are all to blame.

Those of us who are involved in industry in any capacity, involved in committees like the committee on industrialisation, the NIEC and all those who have been even peripherally involved in this matter, have tended I think to take this problem in too simplified a form. We have failed to appreciate sufficiently the degree of technical and economic expertise that will be required to achieve this restructuring of Irish industry and in the Department and An Foras Tionscal and the IDA I do not think enough has been done to ensure that we have the level of expertise necessary to tackle these problems. What is required here is something which cannot simply be tackled by administrative civil servants without business experience, without the assistance of people with experience in this field or in the consultancy field. I feel we have to consider a vast strengthening of our administrative forces by the introduction of expertise of a business character if we are to tackle this problem effectively. It is all too easy to set up a system of adaptation grants with firms applying for them and churning out the grants where firms meet certain minimal requirements, but not taking the problem as a whole. If I may take an example, you get a case of an industry in which there are half a dozen or a dozen firms producing exclusively for the home market.

In that industry there is, perhaps, over-capacity. I am thinking of a particular industry, though I do not propose to name it. It is clear to everybody in the industry and, indeed, would be privately admitted in the Minister's Department that only three of those firms are likely to survive or, to put it another way, that it is unlikely that an industry comprising more than three firms could be competitive. It might even be thought that only one firm could survive because the scale of activity would be such that to have more than one would be to operate below a minimum economic level. I wonder what has An Foras Tionscal done to evaluate that situation. My own limited experience has been that they have not found it possible to tackle this effectively, that faced with that, they have attempted, not very effectively, to press on the firms that they should get together and sort out what, in fact, would be the economic size of the industry and how many firms there should be in the industry for it to be effective but that if there is an unwillingness to agree as to which is to commit suicide they have simply ladled out grants to all six or eight or ten firms in the industry though they know and the industry knows and everybody concerned knows that of these grants a significant proportion — perhaps the majority of them — are going to be ineffective because they are simply pouring money into firms which everybody knows will not survive in free trade. I do not make this criticism in a carping way because I fully appreciate the difficulty of the situation. My own experience as chairman of two adaptation councils has convinced me that for anybody who is not extremely expert in the industry to attempt to make the decisions involved as to how many firms will survive and which they will be is, in fact, impossible. Personally, I would not be prepared even with the insight which I acquired in regard to particular industries to make that kind of evaluation. I have not got the technical expertise to do so or, indeed, the business experience and I can quite understand why the administrative civil servants in An Foras Tionscal or in the Department dodge that decision. If I were in that position frankly with my limited capacity in that field I would feel obliged to do so also. I would not feel with my limited knowledge I had the right to decide which firms should get grants to survive and which should not. However, I do not think we should dodge the issue simply by saying we are not competent to decide. One must accept the fact that those decisions have to be taken and if some of us are not competent to take them we should ensure that people are employed who can give the expert advice necessary to ensure that money is not wasted because we have not the necessary competence in the matter.

I hope the Minister will take what I am saying as constructive criticism. I do not think I am being unfair to the Department or to An Foras Tionscal. The people there are doing an excellent job in their own way but they have not got the business experience to take the kind of decisions that need to be taken any more than I have or any more than the Minister has and I do not think we have taken this seriously enough. In Italy, in Britain or France the relevant organisations responsible for industrial adaptation or rationalisation — the IRC in Britain, the IRI in Italy and the equivalent organisation in France and other countries — are highly equipped to deal with these problems. They employ people with business experience, people with great experience in the merging of firms, in the rationalisation of industry. They employ them to help in this work of ensuring that a competitive structure of industry emerges from the work of adaptation, whereas here in this country we are content to leave this task to administrative civil servants who have not business experience and who should not be asked to undertake something which they are not in a position to do. Even if I suggested bringing in economists it would not help either because this is something which goes beyond the range of experience which an economist or a civil servant has.

We have not approached this problem properly. I should like to see a radical restructuring of the existing system so that it would be capable of coping with these problems and that we would get away from the present arrangement under which effectively An Foras Tionscal have very little alternative but to give an adaptation grant to any firm which makes in its own right a reasonable case even though eight reasonable cases individually will add up to one unreasonable case altogether. Every single individual firm could make a case that if it gets this grant it will survive but if you give the grant to eight firms you are giving it to five firms, perhaps, which are not going to survive.

An Foras Tionscal is not geared to take that kind of decision. I do not think much can be done at this stage. All they can do at this point in time is to process the remainder of the 757 grant applications as rapidly, as effectively and as efficiently as possible, as they have been doing. I think extra staff has been drafted in there and I feel that this is very necessary to get this job done in time because it is bad that those applications should be left hanging over for a period. Industry may be a little bit impatient at the moment at the slow speed with which the applications have been dealt with but I think industry accepts, nevertheless, that if industry itself is going to shove in in a few months as many applications as in the previous four years industrialists cannot expect them to be dealt with as rapidly as if they had put them in more smoothly and in good time. It is their own fault that they have come in in this form and that it has taken so much time to deal with them.

The Minister I think has taken steps to try to speed up this process and it is clear from the Bill that he expects the job to be done within six months. That is a reasonable target and I do not think we can fault him for having to look for this extension, the extent to which industry lags behind in putting in those applications. The volume of applications that occurred in the last couple of months was much greater than one could reasonably anticipate and he could not possibly have geared up An Foras Tionscal to cope with this unnatural flow with the same speed and efficiency as they were doing previously. Some time lag is inevitable and the time lag that is involved in this Bill seems reasonable to me and I would not fault him on that.

I accept it is not going to be possible in the middle of this crisis of handling the applications to adopt a more sophisticated approach. I would press on the Minister that he would try to get away from the traditional approach under which those matters are handled by people who have not got the experience of business, of mergers, of the industrial rationalisation required in this kind of work and that we adopt a more sophisticated approach to this matter, otherwise we simply will not be prepared for free trade. We will have many firms with adaptation grants, many firms with new machinery but not firms which can survive. In fact, it has been the case in the past that in certain industries at certain periods Irish industry far from being under-equipped and lacking modern equipment has had too much.

I myself was involved in a survey of one industry in which it was clear that the industry had over a long period of about ten years or so equipped itself with modern equipment. Nobody could complain that the industry was badly equipped. There were, of course, many individual firms who had not moderised but, on the whole, the level of modernisation of the industry compared favourably with other countries but they had, if anything, over-bought. Every firm had modernised on a one shift basis, whereas, of course, we could not operate efficiently and economically without working at least two shifts. They had, if anything, twice as much machinery as they needed. If half the volume of machinery they had were concentrated on half of the firms working on a two shift basis it would be far more economical than the over-equipment.

We can place too much emphasis on the simple business of modernising equipment. There is more to it than that. The industrial adaptation grant system, while it was desirable in its time, was certainly useful in generating additional industrial investment, had the defect of over-concentrating attention in this particular area and not concentrating enough attention on the structure of adaptation, which is the fundamental concern.

Irish industry has largely been founded since 1932. In fact, it is relatively modern by the standards of other countries except countries whose industry was wiped out in the war and which modernised since the war. Our problem has not been that we are a very old fashioned industry. It has not been long enough there to be old-fashioned. Our problem is that its structure is entirely inappropriate to modern trading conditions with free trade. Adaptation is something which will not be met, and can even be confused, by excessive re-equipment in too many individual units with machinery suited to a large number of small units quite unsuitable to the type and scale of activity that will be required in the years ahead.

I would, therefore, ask the Minister to look at the whole approach to this problem and to be prepared to take drastic steps to review the administrative structure that handles our whole industrial adaptation programme or else we will find that we are left behind and we will find that Irish industry, which is really capable, if properly adapted, of surviving in the free trade conditions and in which I personally have confidence despite what is said by many of its critics in different camps, will face very serious difficulties which need not occur if the problems had been approached and tackled in a more sophisticated manner.

It is not that we have an industrial structure which it too young, too new, too small or basically too weak to survive. We have an industrial structure, much the greater part of which will survive under free trade conditions if it is adapted to the very different marketing conditions of free trade. That adaptation is something which it can only undertake if it gets assistance and help from the Government, not only assistance in the form of grants and help for adaptation but assistance and help in the form of a lead, in the form of the kind of lead which has been given to industry in England by the Minister in question, by the IRC recently in regard to several major industries where the direct intervention of the Minister and the IRC have led to mergers which have greatly strengthened English industry, mergers which would not have taken place without that intervention.

This is where the State can play a useful role in intervening to rationalise the industry and not be pushing people around and telling them how to run their business but in employing people with the necessary expertise to point to where there is a particular change that could be made, a restructuring, a merger, a rationalisation that could achieve results, then to use the negotiation skills of those people or the Minister himself to bring together people who hitherto have not been prepared to work together, to bring them together effectively to achieve those results.

I do not believe we have begun to attempt this yet. There is a good example beside us in Britain. There is a good example also of much that has been done in Italy which has, indeed, faced, because it is the poorest of the Common Market countries, problems very similar to ours and from which we could learn a lot. I do not think we have begun to face up to this adequately here.

This is an opportunity, when we are now coming to the end of this adaptation grant scheme and when as the Minister has said other arrangements are in contemplation, to revise this radically. I hope the new arrangements the Minister will come to us with before long and to which he refers here today are likely to mature at an early date, will be ones that will follow along the lines I have indicated. I can say now if they do and if they provide a radical breakthrough in this matter than the present totally inadequate administrative structure, then they will be welcome on this side of the House. If they do not, I shall be repeating in much more stringent terms the criticisms I have been making now, criticisms which I do not press beyond certain points at the moment because we are learning as we go along.

We are learning from those lessons now and there is no good looking to the past and saying it should have been done years ago. Everything should have been done years ago but none of us appreciated the problems fully. We appreciate them now. There are enough people now who understand those problems and I do not think there is any excuse for failing to solve and tackle them now. If the Government do not come forward with radical proposals along those lines they can and will be faulted and will be strongly criticised from this side of the House. I hope that the Minister who has now had long enough in his Department to come to grips with the very many and varied problems there will look at this problem in a fresh way and will not be hidebound by precedent, will not feel he has to carry on with the existing structure, will not consider that the present arrangements must not be disrupted because there would be personal inconvenience of some kind or because people will object to changes of this kind but will be prepared to make the necessary changes. If we can take such drastic, and, indeed, in some respects absurd decisions concerning the policy making functions of Government Departments in towns a long way from the capital city where the policy making functions should be concentrated, we can certainly take the necessary decisions to restructure our organisations operating in Dublin in this field, even if this means some disturbance of some individuals in the kind of work they have been doing. We must let nothing stand in the way of doing it. Too much is at stake. People have too many jobs at stake here for us to allow the convenience of administrators, to allow the present administrative structure, to stand in the way of radical reform. We expect from the Minister, therefore, a radical approach to this problem within the next few months. If he shows signs of that he will certainly receive our support and if he does not he will receive our very severe criticism.

There is no objection as far as the Labour Party is concerned to the measure before the House but it does give an opportunity on this occasion to comment on the Government's dependence over the years on private enterprise and the major idea of contributing to industrial expansion and development in the country.

This Government have, shall we say, nailed their colours to this mast. They believe that private enterprise aided by State grants is the best possible way to planned future industrial development. In this particular field they deal with adaptation grants. We see now the fallacy of depending on private enterprise to carry out this most vital task on behalf of the community.

The Minister in his opening statement has admitted that he has now on hands over 757 applications for adaptation grants, as many as have been considered in the previous four years. That would give me, at any rate, the impression that some type of extraordinary mentality obtains among our so-called industrialists. If the Minister is in a position, I hope he will explain. Was it, as Senator FitzGerald said, due to the dateline which was laid down in so far as adaptation grants are concerned or was it something else which caused this sudden surge as far as these applications are concerned? It does denote a most erratic form of planning on the part of private enterprise. A Government which set themselves a five-year plan and continue to suggest to the public that they have a second programme and will have a third programme of development, even if they had such a programme, would be in an awkward position if they were to depend on private enterprise as shown by their response to the grant inducements over the last four years.

Members of the Government have in the last two to three years exhorted industrialists to take advantage of these grants. It would appear that their exhortations went in one ear and out the other. Can the Government in those circumstances any longer depend on private enterprise to do the job to which I have referred?

Is it not time for complete new thinking on the part of the Government? Is it not time to realise that the State must bear the burden of responsibility if any major breakthrough in industrial development is to take place? I think the Minister has attempted here to bring it home now to the rest of the Government that they cannot depend on private individuals in industry to deliver the goods.

The whole problem as far as the Government are concerned is they have nothing clear in their own minds. Deputy S. Lemass when Taoiseach was always talking about private enterprise. Whether he believed it or not I do not know. Whatever he said goes with the present Cabinet. They are long enough off the bottle now to think for themselves. When they see this petty thinking and coddling of private enterprise are they men enough to change the adaptation policy, to change it before things worsen further?

As an instance of the confused thinking of this Government, I might point out that for the past number of years we have heard about the necessity for mergers and that the future of industry depended on major concerns being set up in certain areas. That has been the line of the Government for a number of years past. In the middle of that we have this sudden change-over, especially on the part of the Minister for Industry and Commerce, with the idea that proposed small industries could be the solution to the problem in many areas. We have this confusing picture. You have big business, big this, big that and big the other on the part of the Government and now we have a special committee created in the last 18 months to deal with small industries.

Yet, we run the two ideas side by side or is there a volume of opinion which believes that small industries properly planned can be beneficial and help, particularly in the undeveloped areas, to keep people in the provincial towns? We do not know what the Government view is on this but I do know that as a result of the sudden rush of applications we have a shortage of staff to deal with them. I do not blame the civil servants in any sense for this. They cannot be expected to process four times the number of applications they were used to dealing with over the last four years.

We have this sudden rush of adaptation grants and we also have a sudden rush for small industries, there is a bottleneck and it is not possible at the present time to investigate physically the applications made. I feel that many of those applications are well worth an immediate investigation. It is a pity that due to this sudden rush in Industry and Commerce we have a bottleneck occurring and that first-class propositions are to be found down the list and God knows when they will be dealt with. There is no planning there.

I do not know who is responsible. I do not know whether the Minister will accept responsibility or whether he will say private enterprise has let him down. I should like him to elaborate on the figure of the 757 applications that have been dealt with. Could he give us an indication of what proportion come under the Undeveloped Areas Acts and would he indicate whether many of the applications come from, say, the Province of Connacht and the Western seaboard?

I think Senator FitzGerald asked the Minister to tell the House the amount of capital involved. I should also like to know whether in some of these industries there would be a question of an increase in the number of employees or a reduction. Would the Minister be able to clarify the position in connection with some of the applications that have been made? I am of the opinion that in a number of them the adaptation grants which are sought are for automation which in itself is an excellent idea but we would like to know how many people are being dispensed with. How many people's services are being dispensed with in the automation programme involved? Is there to be a big reduction in the number employed or is it envisaged that the 757 applications for adaptation and enlargement will give a high employment content?

Outside of that I do not want to repeat what I have already said except to say that the Government are seriously lacking an industrial development policy, and I welcome at any rate the Minister's statement in his final paragraphs that there is a general review coming up, as he hopes, at a very early date and that legislation of a general character in connection with industrial development is on the stocks at the moment. Having said that, I should like to urge the Minister to see that priority is given to this matter of industrial development over and above many of the things which are at present getting Government attention.

I should like to welcome this Bill particularly for what is indicated by it, namely the courage and determination of Irish businessmen to take their part in the Europe of the future and their confidence that they are capable of taking such part. I may say also that while I disagree completely with the policy advocated by Senator McQuillan, nonetheless I admire his courage in stating it. He states unequivocally, as I understand it, that all private enterprise for all practical purposes should be abolished and that all the means of production, exchange and distribution should be vested in the hands of the State, and that otherwise the country cannot and will not progress.

I personally believe in private enterprise. I believe in the entrepreneur, his courage, his ability and his determination to plan ahead, knowing that he is gambling with his own money. I can visualise that there would at this stage be perhaps more applications than usual. A deadline has been set, but new machines are constantly coming out and what is up-to-date at the present time may be completely out-of-date in three years' time just as what was up-to-date three years ago is completely out-of-date now. Therefore, the average businessman will not without the greatest consideration and investigation decide the type of mechanisation in which he will indulge.

We have been told by Senator McQuillan that in this regard the Government have no policy. Quite frankly, I fail to see in what regard the present policy of the Department of Industry and Commerce could be improved. To begin with, as regards markets we have the Irish Export Board, and we have seen their report recently. I think that they do a really wonderful job. I have watched them in action on the Continent. I have watched them in action in New York. I have been over there and have studied their methods, and I must say that their complete dedication to their work is something that made me feel proud of them. For the small industry of which Senator McQuillan has spoken there is a special section in the Department of Industry and Commerce where they can get expert advice at a fraction of the cost which it would take to call in efficiency consultants. I must say from personal experience that the advice they get is far more objective in many cases and far more accurate than can be got from efficiency consultants to whom approximately five times the fee is paid.

Again we have had the suggestion that you cannot have large businesses combining with small businesses. There is in this country, as in every country, an opening both for the large and the small business. I was rather surprised to hear criticism by Senator FitzGerald that there may be cases where there are at the moment seven or eight industries competing with one another, overproducing, and that they would all be looking for grants. We must realise that businessmen are not fools. The maximum grant any industry will get for modernisation is 25 per cent. For every five shillings that is put up by the State a businessman has to put up out of his own pocket 15 shillings. If each of those industries requires, say, £100,000 to modernise you are not going to get eight business people to lend £600,000 merely to get £200,000 from the State. No businessman will do that without the closest investigation, without making sure that he personally will not lose, and if all eight of them make sure that they will not lose then more luck to them, and of course they must look for an export market, for that, too, is most important.

Senator FitzGerald referred also to the fact that the approach of An Foras Tionscal is to some extent perhaps inexperienced because they have no practical businessmen among them. I must say that, having on more than one occasion considered the type of investigation in which they involve themselves, if they have not practical business experience they certainly know how to ask the right questions.

How do you know that they are the right questions?

I know from practical experience. You may as well say that because an inspector of taxes is not a chartered accountant—he does not necessarily have to be one—that he cannot catch you out if you endeavour to defraud in your income tax. I think there are very few inspectors of taxes who are chartered accountants but I know very few accounts which would pass them if they are fraudulent even though they might get through the accountants.

The approach of An Foras Tionscal, from what I have seen, seems to be on much the same lines. Certainly from the experience that I have had of them in various industries I would like to congratulate them, if they are not businessmen, on the searching manner in which everything is investigated, their insistence on seeing that the balance of the capital is available, on seeing that either consultants have been called in and on seeing their reports or that if consultants are not called in personally that advantage is taken of the most efficient body of consultants of the lot, that is the independent body associated with the Department of Industry and Commerce. You have to show them what your possible market is, you have to submit to them costings and to verify your costings, before they part with one pound for every three that you personally have to put up. They certainly make a most full investigation and I should like to congratulate them in general. I should like to say a word of congratulation on the general manner in which they co-ordinate with the Export Board, and in particular I should like to congratulate the Irish businessmen of today on the progress they are making, which is reflected in the increase in our exports.

As I anticipated, there is general welcome for the Bill which, as I said, is really just an administrative measure. I do not know that the sudden rush of applications coming up to the closing date is a ground for despondency, having regard to human nature and deadline. We all know that whenever there is a deadline in any field of activity human nature tends to leave the matter to the last minute when you see the deadline coming rather than rushing to meet it. I would prefer, of course, that the thing had gone on a very smooth basis, but life does not work like that. You are dealing with human beings, and it is human beings who make the applications, not the machines they employ in their businesses. I cannot say whether these applications will have any major effect on our financial situation. I cannot say it positively on past experience. I do not believe it will. We know from past experience that whenever such applications are approved, the actual implementation of the schemes will not take place at the one time. They are spread over a period.

How long a period? Is there a time limit?

Two years.

Some, certainly, will be two years. Many applications are for stages of development. There is not any time limit imposed.

Only that it be spent within a specific period.

But two years is the typical period?

I should say that going beyond two years would be unusual. Senator McQuillan asked for some details of the applications which are pending. I cannot give these details to any extent. They are applications which are pending, which are not processed, and, therefore, we do not know at this stage the kind of capital investment involved in the applications, whether they would involve further improvement. I can say that the report of An Foras Tionscal for the period up to 31st March, 1967, gave details of adaptation grants approved by them up to that date. The report shows that the total number approved up to then was 793 and the total amount of grant involved was £13,897,540. This represented an estimated capital expenditure in the various schemes involved totalling £63,000,000, of which £21,300,000 was in respect of sites and buildings and £41,700,000 in respect of machinery and equipment.

As Senators will appreciate, this relates to grants up to 31st March, 1967. It does not relate to pending applications for adaptation grants about which I cannot give details.

The Minister will agree that if all those applications are similar in character to those already processed, altogether we are talking about a total investment of £60 million approximately, of which the State contribution would be in the region of £14 million, the balance to come from the country's available resources.

I cannot say positively, but I do not think this will create any undue problems for us. Neither the Minister for Finance nor myself had undue fears in this respect. We can only wait and see.

Why wait and see? Why not find out?

How can we find out?

I must protest against this continued interruption by Senator FitzGerald. It is turning this debate into a sort of question and answer session. The Minister should be allowed to make his reply and he should be listened to the way he listened to Senator FitzGerald.

I did not mean any offence. If the Minister thinks I am interrupting unnecessarily——

It is very annoying to hear this question and answer business.

They are reasonable questions to put.

We cannot, without processing the adaptation applications, give details of them. We can operate on the rough basis of past experience. On that basis we are not unduly worried about this. The suggestion was made by Senator FitzGerald that there has been too much emphasis on physical adaptation and he said he thought that statements issuing from my Department or, perhaps, from me, follow this line of assessing our adaptation to free trade on the basis of whether a certain percentage of firms had obtained adaptation grants.

This criticism is not entirely justified in the sense that in the first place the only objective way in which one can assess physical adaptation is on the basis of the adaptation grants related to such information as we have from the CIO reports on various industries. During a considerable time past in various statements I have been making, I have been laying great stress on the fact that physical adaptation is merely one aspect of adaptation to free trade and in many cases that it is not the most important —that such things as rationalisation, mergers and other aspects of non-physical adaptation can be vitally important in certain industries.

I should not like Deputy FitzGerald or anybody else to think that this is a problem new to us, that we are not aware of the difficulties involved in effecting mergers or in trying to rationalise production as between various firms and industries; nor should I like him to think that what has been happening in Britain is a headline. We have been ahead of Britain. They, of course, are operating on a much larger scale but their approach to this problem is of quite recent origin, whereas we have been operating on them for a considerable time in the industrial reorganisation of my Department. They have been directly responsible for some of the mergers which have taken place in industry here in recent years and while they have a great deal of expertise, more than might be thought by people not familiar with the work they do, they do not rely entirely on that. They have been using their influence as far as they can to ensure that in certain groups of firms within a particular industry consultants were called in, recommendations were made for rationalisation in those firms. In some cases, as Senator FitzGerald has said, some firms had virtually to go out of existence.

That branch of my Department have gone further in trying to have these recommendations implemented and they have been successful in a number of cases. More work of this kind is going on at the moment. I do not say that the scale of activity on which we have been operating is sufficient but I do say it has been reasonably extensive and has been going on for quite a long time.

I should like to point out also that physical adaptation is in many cases the first stage of adaptation for free trade—that there will be further stages after that—but in many cases we can only think of rationalising and mergers because of the physical adaptation that has taken place as a result of this grant scheme. One cannot do effectively the whole job at one time and we are reaching the stage where we can fairly effectively go into the non-physical stage of adaptation now in many sectors where we could not do it before. The problem to which Senator FitzGerald referred, about adaptation grants being given to a number of firms within a sector of industry where, perhaps, taking an over-all view of the sector, it would be wiser to give grants only to some of the firms concerned. This, of course, is a problem with which we are very familiar.

Let me say that An Foras Tionscal attempted in one industry to do this. The net effect of their attempt was that, for one and a half years, no firm in that industry got a grant. In the end, in order to allow some of them to survive, they had to agree to give the grants. They are conscious of the fact that, in that particular industry, indirectly as a result of grants they have given, there is a certain type of equipment installed in a number of the firms which, put together, is much greater than the capacity we need. It is a difficult problem. It will not be solved, in my opinion, by strong arm methods. I think it can be solved only by inducements and by making as clear as possible to all those concerned where their self-interest lies.

In this connection, I have over the past few months been meeting representatives of different sectors of industry each week and discussing the various problems arising for industry, particularly in the context of freer trade. One of the matters which has been coming up and on which I have been laying great stress—as, indeed, great stress has been laid by the Federation of Irish Industries—is the weakness of the organisation of Irish industry on a sector basis. It needs very great strengthening in that regard.

It is also true that, from the point of view of the State, the kind of assistance we can give to industry could be considerably more effective if there were strong sectoral organisations within industry. For example, it may well be that, in certain industries, none of the firms concerned is big enough or strong enough to organise and pay for a worthwhile programme of research and development whereas, working together, it might be possible to devise a scheme whereby the State could assist in providing the necessary aid in that sector. I have pointed that out to representatives of the industries concerned. Having given a good deal of thought to it, I believe that only by way of inducement or carrot shall we succeed in getting this kind of organisation and that any attempt to force this by way of Government decree, order, or something amounting to that, is doomed to failure.

I do not wish to dwell unduly long on the question raised by Senator McQuillan with regard to private enterprise versus public enterprise. This has always seemed to me a very unreal approach to business and to life. I am utterly pragmatic in this regard. To be dictatorial means to throw away many of the advantages one could have. My concern is to discover the best way to do the job. If public enterprise is the one to give us the best results, in our circumstances, I shall go for public enterprise. If, in other circumstances, private enterprise is the one, I shall go for that or, in the third kind of case—a combination of public and private enterprise—I shall go for that. I do not care which one it is so long as it does the job.

There seems some contradiction in what Senator McQuillan was saying. In the first place, he said, or seemed to me to be saying, that private enterprise had failed and that this was clearly demonstrated by the rush for grants and by looking at the situation in Irish industry. The Senator would do well to have a look at the history of mining activities in this country where originally it was under State enterprise and where it is now dealt with on the basis of private enterprise with inducements from the State. Let me compare the results. I defy the Senator to say that, in that particular industry, private enterprise is not by far the best way to do the job.

Because the State failed.

This is what I mean.

Whose fault was that?

Any thought about the mining industry indicates that it is one which requires a great deal of capital and risk-taking and a certain kind of mentality which we cannot expect to get in public enterprise. I do not say that this is true of all sectors of industry. I say that one should look at the particular industry concerned and determine the best way to do that particular job and not to be doctrinaire about it.

I am glad Senator McQuillan seems to approve of the small industries programme. It is progressing satisfactorily. I do not think it has much to do with this Bill.

As far as I can see, the House is pleased to accept the provisions of this Bill to enable An Foras Tionscal to go ahead and process the applications for adaptation grants.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill considered in Committee.
SECTION 1.
Question proposed: "That section 1 stand part of the Bill."

The Minister, in his remarks just now, said that very often physical adaptation is the first stage and that this would justify the approach to the adaptation grant in the first instance as is provided in the section which extended the period, leaving over the question of structural reform until later. I am not happy about that. The problem we are discussing shows that there are many instances where structural reform should take place first. It is true that, if it does not, one is faced with the dilemma whether to provide no grants at all or grants for the lot of them, thereby enabling them to undercut and undermine each other. It is the very fact that that is the case that makes it essential to approach the problem of structural reform first and adaptation grant second. That is why I fault the Government on having approached the problem basically the other way round when grants would have been more useful if the alternative approach had been adopted.

The Minister said we are ahead of the British in the work, for example, of the CIO Branch and that the fact that adaptation grants are now being extended under this section is in advance of British initiative. This is true. We have tended to be quicker off the mark in this country with schemes of this kind, as schemes, but we are very often much slower at putting them through and achieving results. The mere fact that we start something does not prove very much.

I was most concerned—it is very much relative to this section in relation to extended period so that very large sums of money can be authorised in grants within the next six months—at the Minister's statement that, while he is not sure that a scale of additional grants which will have to be given under the section will not create problems, the Minister for Finance does not think they will. Should this House, in conscience, allow to pass without protest a section of the Bill authorising the Minister to approve grants on this scale—which looks like being of the order of £14 million in grants encouraging £60 million of investment—without any attempt to establish if this is the scale of investment involved or greater, and whether this will be done within two years? If this step will create problems for the economy and the Exchequer, then it is irresponsible.

I would have thought that if the Minister were doing his job and if An Foras Tionscal were doing their job they would be accompanying the process of approving grants as fast as they can with keeping a tally of the total amount of grant approvals that are being sought and making an estimate based on the average ratio of grant approvals of grant applications which is fairly constant, they would be making a running estimate of what exactly they are running themselves into. I would have thought the necessary preparations would be made to ensure that the resources can be made available without overstraining the economy. To my mind the scale of what is involved here, the scale of investment that we are authorising by agreeing to this section of the Bill, could be of such a character that unless room is made for it within the next two years by re-ordering our priorities the economy and the Exchequer could be overstrained and the whole business of the development of credit in the economy could be overstrained.

I am horrified and very surprised to hear that the Minister and the Minister for Finance are so irresponsible and so unconscious of the need for forward planning that although they have available to them in 750 pieces of paper which could be gone through in a couple of hours to see what is the total sum involved and although the balance of credit in the next two years may depend on this and although it may be necessary because of the urgent priority of this money this money should be voted, though I believe it may be necessary to restrain public capital expenditure in other areas in order to leave room for this, they have not even bothered to find out how much is involved. This is disturbing and it confirms fears I had that the Government have no idea of economic planning. Here they are faced with data readily available to them which in a couple of hours could yield information vital to forward planning, information on which the future balance of this economy will depend in the next two years and they have not bothered to find out what it shows. I cannot understand how a Government who purport to have heard of economic planning, never mind practice it, could act in such an irresponsible manner.

One approach would be to refuse to pass the section. However, I shall not press that point because to my mind this investment is top priority. I know that some of it will be wasted, some of it will be put into firms which will not survive because of inadequate expertise to deal with the matter. Nevertheless, the bulk of it will be well spent and it is of such vital importance to us that it must be given priority. Therefore, I do not propose to oppose the section but I urge on the Minister to get one of his officials to spend a couple of hours doing a check on this to see what is involved and then refer it to the economic planning people in the Department of Finance and the people concerned with the capital programme so that they may see what the implications are and consider it urgently both in respect of the year ahead and the following year. We know we can overstrain our economy by excessive lumpiness of our investment programme as happened in the past. One of the problems that arose in 1965 was an excessive growth of the building industry in that year which inflated the economy and caused the difficulties we have suffered since. There is a danger that something similar will happen here unless steps are taken to co-ordinate this massive investment programme in industry with the rest of the programme. The information is readily to hand. It is simply a matter of carrying out this exercise. I urge on the Minister if we pass this Bill to take this step and not to act in the irresponsible manner to which he has publicly admitted here today.

Senator FitzGerald is getting himself worked up into a lather about nothing. Certainly his concern must be based on a misunderstanding. First of all, let me tell him that to take the 750 odd applications and add up the amount involved will give you the amount claimed in these applications.

It will not, of course, tell you either the amount of money that you are going to pay on these when they are processed nor will it tell you the period over which you will pay it. I am sure the Senator will appreciate that it is very likely that in a rush of applications as we have had, there is likely to be a higher percentage of applications which might be rejected or applications which might be exaggerated than one would normally have but allowing for these variations we know from the figures I quoted up to 31st March, 1967, when the total of grants approved was £13,897,540, and up to that time the amount actually paid for adaptation grants on foot of those approvals was £6,112,089; the approximate amount we are going to have to pay in the future and the forward planning for this, in fact, covers a period of three years of our estimate of what it would take is on the basis of a forward estimate of three years. I may have misled the Senator when I said two years. We calculate over a period of three years ahead on each year.

Is the Minister now saying that a calculation is, in fact, being carried out? I understood him to say earlier that the amount involved had not been calculated, that no calculation had been made.

What I said was that we could not say it with any degree of accuracy having regard to the fact that we have not processed the applications but if Senator FitzGerald means, as he now appears to mean, that we have not any calculation of what is involved——

——of course, we have.

I am very relieved to hear it. In fact, I made this clear at the beginning. What I was talking about was an approximate calculation of the applications that had been made and had not been processed. Obviously until they are processed you cannot know for certain that they will be paid. I was talking about an economic forecast in this respect. If the Minister is saying that the estimate has been made I am relieved to hear it but this was by no means clear from his original statement.

Question put and agreed to.
Section 2 agreed to.
Bill put through Committee, reported without recommendation, received for final consideration and ordered to be returned to the Dáil.
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