This Bill is designed to increase the statutory limit on the borrowing powers of the Industrial Credit Company and also to increase the limit on the extent to which the Minister for Finance can guarantee the company's borrowing.
The existing statutory limit on borrowing by the Industrial Credit Company is £30 million. Actual borrowing is now £23.5 million and a further substantial rise is in prospect because of the rate of expansion of the company's business. On the basis of firm commitments already entered into by the company, it is probable that the statutory limit will be exceeded in the second half of 1974. It is therefore necessary to raise the statutory limit on borrowing in order to enable the company to meet the demands for finance for industry. The new limit proposed in section 2 of the Bill is £75 million. While this is a substantial increase, it reflects the growth in ICC business and the likelihood that the upward trend will continue.
For the period April to December, 1974, the company have budgeted to provide financial facilities totalling £14.6 million for industry. In the previous 12 months the company disbursed £13 million which was in itself a record figure. Of the £14.6 million which the company will advance up to December next, £5.5 million relates to their subsidiary company, Shipping Finance Corporation, which provide loans for new shipbuilding. The balance will be disbursed by the ICC for the benefit of industry in general. Most of the capital used by the ICC for their own purposes is secured from non-Exchequer sources and it is hoped that this position will continue. The capital required for the operations of the Shipping Finance Corporation is provided from the Exchequer.
The Minister for Finance has power under the existing legislation to guarantee borrowing by the ICC and it is proposed in section 3 of the Bill to raise the limit on his power of guaranee from £30 million to £75 million to correspond with the new limit on borrowing. At present the total amount borrowed under guarantee is £6 million and it is unlikely that the Minister will be called on to guarantee all borrowing by the company. It is the usual practice however to fix the same limits for borrowing and guarantee purposes.
The Industrial Credit Act of 1933 conferred wide powers on the company enabling them to underwrite capital issues, to provide issuing house facilities and to make large and medium-term capital available, particularly for the establishment of new industries. While the Industrial Credit Company operate as a commercial undertaking and have been a profitable enterprise since their establishment, their primary aim is to contribute to national economic expansion. They examine sympathetically every project brought to their notice having regard particularly to economic soundness, employment potential, possible contribution to the reduction of emigration, importance to the proposed locality and utilisation of indigenous raw materials and of the services and products of existing industries. Their facilities have been availed of over the entire range of industry and in all parts of the country by large, medium and small undertakings.
In the last decade the ICC have considerably expanded their activities. The company have extended their services to include the provision of hire-purchase facilities for plant and machinery, equipment leasing and finance for distribution. In addition to the provision of capital, the ICC have also a subsidiary company, Mergers Limited, which specialise in the field of mergers and takeovers by undertaking share evaluations and by advising in negotiations for mergers between firms. As I have already mentioned, they are also concerned with shipbuilding finance through their other subsidiary company, Shipping Finance Corporation.
Since our entry into membership of the European Economic Community, the demand for ICC facilities has expanded rapidly. Given the trading opportunities now open to us and the need for increased industrial investment to sustain economic growth, there will be a continuing demand for the facilities provided by the company. I am most anxious therefore that the company should be in a position to contribute to industry the financial and organisational expertise which they have built up over the years in addition to financial assistance. The present legislation, when enacted, will enable the company to maintain a reasonable flow of funds to industry.
Because of the high demand for industrial finance and the capital intensive nature of modern industry it will not of course be possible for the company to provide all the funds which industry is likely to require. In seeking funds from the Exchequer, the company's requirements will have to be balanced against demands on behalf of other important services. It is hoped therefore that the commendable initiative shown by the company in the past in raising capital from non-Exchequer sources can be maintained.
In the past few years the company have made significant advances in tapping sources of capital abroad. They have established a very valuable association with the World Bank, with which they have negotiated a loan. It is also confidently expected that our membership of the EEC will redound to the company's advantage by enabling them to draw on the resources of Community institutions such as the European Investment Bank and to make contact with the national development banks and other financial institutions in the other member states.
In this regard I am pleased that the company have completed negotiations with the European Investment Bank for a loan of £2½ million, the full details of which will be announced in the near future. They have also recently signed a co-operation agreement with the other institutions specialising in long-term credit in the European Community.
The main purposes of this agreement are to foster joint studies and an exchange of information and to enable projects having a European significance to be financed by the various parties to the agreement. It is envisaged that one of the practical effects of this would be that the ICC might be invited to assist the financing of a transnational project in another member state and that the other development banks would participate in a project of direct benefit to this country.
For more than 40 years the ICC have been to the fore in the financing of Irish industry. At present the company have more than £30 million invested in industry. Many of the successful industries established in the past 40 years started from modest beginnings with the assistance of finance provided or arranged by the company. Facilities are provided for the establishment of new industries as well as the expansion of existing firms and the company have a tradition of giving special attention to proposals in regard to small projects. The continuing increase in the demand for the company's facilities is proof that their importance has in no way diminished with the enlargement of the industrial and financial sectors of our economy. The present legislation will enable the company to continue their important role in the development of the economy and I confidently recommend the Bill for the approval of the House.