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Seanad Éireann debate -
Wednesday, 18 Mar 1981

Vol. 95 No. 12

Joint Committee on State-Sponsored Bodies Report on CSE: Motion (Resumed).

Debate resumed on the following motion:
That Seanad Éireann pursuant to the Order of the Seanad of 18 February, 1981, takes note of the report of the Joint Committee on State-Sponsored Bodies on Comhlucht Siúicre Éireann, Teoranta which was laid before the Seanad on 5 February, 1981 and which contains a request for a debate thereon.
— Senator Hillery.

I should like to say a few words on this motion. It is a significant one as it is the first debate the Oireachtas have had on a report from the Joint Committee on State-Sponsored Bodies. We can all recall that for many years Members of the Oireachtas felt a great sense of frustration at the inability of the Oireachtas to become involved in this particular sector of Irish life. The practice grew that when questions were asked in relation to State-sponsored companies for the Minister to say they were autonomous and that he had no responsibility.

Members of the Oireachtas were annoyed that bodies, which were in receipt of large amounts of State funds by way of capital or subventions, apparently were being excluded from overview by the Oireachtas. The eventual setting up of the committee was very welcome. It is significant that the work of the committee is brought to the floor of the House and that we now have the opportunity to debate for the first time in detail the activities of an important company in the State-sponsored sector.

The view, unfortunately, that the members of the committee have had to form with regard to the various companies has been, if not universally gloomy, very nearly so, because they are all beset with various problems, which chiefly have to do with the imbalance of the financial structure which now prevails in most of the corporations concerned. I can only think of one of them which is profitable in the commercial sense, yet those companies or their managements. There may be some exceptions to that, on which a report has yet to come. In fairness to the companies it is only right to say that.

Those of us who have given them their brief have been confused about the precise nature of their brief. We have given them a mixture of a social and a commercial brief but it is not spelt out clearly what precisely their responsibilities are in regard to each area. We have expected them to discharge a social obligation while providing them with commercial funds. This is very evident in the report on the Sugar Company. It will be seen that much of their activity has been to provide employment in areas of the country which might not have had any industry if it were not for the setting up by the Sugar Company of their plants in those areas. With the passage of time, the growing sophistication of Irish industrial and commercial life and the complexity of the world in which the Sugar Company are operating, some of the plants are now clearly to be seen as social only and their commercial future is very limited indeed. In regard to Tuam we were quite blunt in the report. Tuam does not appear to have a commercial future.

We suggested in the report that the time has now come for the Government to differentiate with regard to the Sugar Company as to what role they want the Sugar Company to play. If the Sugar Company are to play a social role, in fairness to those who are working in the company this should be spelt out clearly. If the role is to be a social one funds should be made available for the company to discharge their social obligations. It is not fair to allow a company such as this to be put in a position that when their annual report is published a loss is shown, because the people reading the papers just notice the loss. The amount of publicity the report gets might not be very great or the attention paid by the casual reader sufficiently detailed to appreciate that the factors going into making up that loss are not purely commercial ones but that it is compounded by the social role we have forced on to those State-sponsored companies.

It is damaging to the morale of the people who work in those companies if they feel that they are being blamed for losses which are commercially unavoidable because of factors which are totally outside their control. The Sugar Company find themselves with a crazy debt equity ratio at the moment. Over the years the funds which would normally have been available for reinvestment were carrying losses in one of their divisions. It was clear for a long time that that was an unprofitable division. I do not believe any Government could have tolerated the thought of doing what a commercial enterprise would have done, excising the loss-making area totally. It was an expectation that the Sugar Company would carry this particular division and in fact they did so. The upshot of that policy was that the finances of the company went completely out of control. They have now to make a large amount of further investment if the company are to continue profitably on the sugar side alone. The sugar side was consistently profitable over the years but, unfortunately, it is now falling into an unprofitable state.

The Sugar Company have asked for a considerable amount of equity to remedy this state of affairs but there are other problems in the company besides the question of more equity. They have constraints now in that whole area arising from our membership of the European Community. There is difficulty with their growers and there is a certain lack of morale among the farming community which may reflect itself in deliveries of supplies. Even if the investment were to be made and the plants modernised those areas still have to be tackled.

There is also evidence that the company are suffering from the fundamental malaise of the Irish industrial sector generally, low productivity or bad workmanship. The throughput in the factory per worker is significantly lower than in the UK which does not stand very high in the reputation of having an energetic work-force either. There are obviously some basic problems which have to be tackled before we can look on the Sugar Company with the optimism we would like to look on them and before we can say that this company, which were profitable for so many years in the past, will, with an injection of capital and new management plans, suddenly become profitable again.

There are many difficulties. However, we are impressed in the committee that there is management expertise within the company to overcome these difficulties. This management expertise needs the support of the Government by way of encouragement and, more importantly, by way of extra equity. I am pessimistic about the capacity of the Exchequer to supply the equity needed. We cannot send the company down the borrowing road because to do so is only to compound the imbalance of their balance sheet.

Because of our position on the committee, we have been able to get an over-view of the capital requirements of the whole State-sponsored sector. The amount of money needed to make that sector viable commercially is frighteningly large and beyond the capacity of the Exchequer to supply it even within a reasonable time. Nervertheless, for a company such as this, every effort should be made within the constraints on the Exchequer to supply the capital needed by this company.

In our report we were gloomy on the question of the food division of the Sugar Company. Undoubtedly they have been beset with problems for years. There is no simple answer to these problems or to improving the situation. If one were to be entirely commercial, obviously the future would be bleak and short. One cannot be commercial with regard to the food processing industry in a country like Ireland. When we consider the staggeringly high amounts of vegetables imported into this country, we must stand back and have a look at ourselves, and ask ourselves are we crazy, in that we cannot so organise our own affairs as to provide those vegetables ourselves. The figures are quite staggering.

The vehicle we will have to use to improve that situation is probably the food division of the Sugar Company. It is readymade to some extent, but obviously it will require a fair amount of reorganisation. There is the point, too, that the home market is comparatively small. While the amounts being imported are high, nevertheless in terms of total market, they are quite small. That division will have to be able to export as well if it is to be viable commercially.

The problems of the Sugar Company are many. They are problems shared by other State-sponsored companies. Our examination of the company and our confrontation, as it were — and I do not use that word in any adversary sense — our meeting with representatives of the company entitle us to give grounds for optimism for their future. The management expertise is there. The energy on the part of those in charge is high. I suppose the provision of money can be arranged.

The morale within the company is an important matter. One way in which that can be kept high is by a clear brief from the Government and the Oireachtas as to what is expected from the company. If some parts of their operations are social and political, as an expansion in the vegetable area might be at this stage, this should be clearly spelled out. It should be indicated to the company that the Government's expectations take into account that there are unusual commercial difficulties in the way of commercial success as judged by the normal criterion of a good bottom line.

This is a problem not only in regard to this company but also other companies in the State-sponsored sector. We are not clear in our own minds what we expect from them. Some type of an accounting mechanism should be devised pointing out clearly to the public that where they have a clear commercial role they are successful but where it is clouded by a social role a differentiation has to be made. In fairness to those operating the company, this is necessary.

One must congratulate the company on their years of success. Speaking in terms of success having regard to the bottom line, the success has been significant in a very vital area. The company operated where the private sector was unable or unwilling to do so at the time of our national development. It is only right that we should recognise that and indicate to the company that their efforts are appreciated, their present difficulties are understood, and that in this report from a committee representative of the two Houses there is an understanding of their problems and a willingness to assist in whatever way possible towards their solution.

I should like to compliment the joint committee on the extremely useful work they are doing. In recent years there has been a huge proportion of State activity in the semi-State sector. In terms of democracy where there were semi-State bodies with immense power but outside direct parliamentary responsibility, this led to very serious problems when one thought of the amount of State financing and employment in the semi-State field. Of all the Oireachtas committees this committee have been very successful. There were misgivings initially that the confidentiality which applied to work of the semi-State bodies might be breached in certain circumstances, and that there might be an uneasy relationship between the senior executives of the semi-State bodies and Members of the Oireachtas. The experience has been extremely good in terms of give and take, and the quality of the reports has been excellent.

I want to make a few remarks on this report on Comhlucht Siúicre Éireann Teoranta. They relate to the west of Ireland and the sugar company in Tuam. I am aware from reading this report, and I have been aware for some time, of the very serious problems with regard to the economics of the Tuam sugar factory. I note the remarks made by the committee in that section of the report. The comments I want to make relate largely to social matters rather than purely economic matters.

Those of us who come from the west of Ireland have been arguing for years that we are talking about a part of this country which is unique and in which circumstances are completely different, and no more so than in the agricultural sector. When we talk about the grasslands in the south and the east, and the heavy milking counties, we are talking about a totally different social picture, of congested holdings, of small holdings, of problems with regard to alternative employment which, in my view, make the issue of the Tuam sugar factory completely different from the issue in other factories and an issue which should be treated on social grounds.

In a much broader sense, some of us sought politically during the time of the previous Government to have a western development board established to be charged with the economic development of the five counties of Connacht together with Donegal. The purpose of that related to the social circumstances of the west where we envisaged that the western development board would be responsible to a Government Minister who, in turn, would be responsible to the Cabinet, so that the buck would stop there. We suggested that that board would get their funds annually from Dáil Eireann and would decide within a western context how they would dispose of these funds.

Had that board been established the social issues we are talking about relating to the Tuam sugar factory would have been discussed by that board. We appreciate that the responsibility of the board of Comhlucht Siúicre Éireann Teoranta to the Minister relates to economic issues, agriculture, cost of inputs, cost of outputs, mechanisation in the sugar beet field and tonnage of beet in specific areas.

Apart from that there are the social factors which are unique and which are the business of the Government. I appreciate that, within the narrow context of their brief, the-Sugar Company may feel they have to make hard economic decisions.

On the broadest possible political ground we are dealing with issues relating to Tuam, which essentially concern political decisions. We are talking about a wider area and, frankly, on this wider area, for the reasons which I have mentioned, the retention of the Tuam factory has my full support.

The possible approach to it, again expanding my social view to the agricultural end, we have circumstances where we are paying a great deal of money in unemployment benefit and unemployment assistance from which we are getting no return as a nation. This system obtains for social reasons to allow people in less well off parts of the country to survive, people who would not otherwise be living in this country or in the west but in Birmingham, London, Chicago or New York. That might be a little imaginative thinking but it is not within the ambit of the Sugar Company vis-á-vis the Tuam plant, where you are talking about the production of sugar beet with a lesser level of mechanisation, without the same possibilities for income because of the size of the farms. Possibly the social answer is in a western context because the essence of the Tuam factory is that there is not a sufficient amount of beet grown in the west to feed that factory and that is the major consideration.

Possibly the way a Government, in the broader sense, should look at this specific issue is to get back to fundamentals, get back to the land and to sugar beet and see, perhaps, if within these western counties they might not provide the incentive at source to the farming community in an attempt to have more beet grown in the area which in turn should help the economics of the Tuam factory.

I compliment the Sugar Company on the work which they have done over the years. I know many of the personnel in the Tuam factory and of their attempts at diversification in the grassland area and, more recently, in the energy field in the turf area. Recently I have had personal discussions with the people in Tuam concerning bogland issues and they have taken very considerable initiatives. I know that they are doing their best to diversify from what has been a very difficult base and I wish them well in that context. I urge Government to look at this issue in Tuam in the broadest possible sense so that an equitable solution rather than a disastrous social decision will be made which will have welcome consequences.

Before making some concluding remarks on the debate on the Sugar Company, I should like to extend a warm welcome to Deputy Michael Smith, Minister of State at the Department of Agriculture, on his first visit to the Seanad. His appointment is deserved and I wish him every success in his new and onerous position.

Senator Cooney has underlined that this is the first report of the Joint Committee on State-Sponsored Bodies to be debated in either House of the Oireachtas. Listening to the debate has proved the work of the committee to have been a healthy and positive exercise. As a member of the Joint Committee, I thank the Minister for Agriculture, Deputy MacSharry, and, indeed, several of my fellow Senators for the generous remarks they have made about the work that has gone into producing this report on the Sugar Company.

There is general agreement in the House that the company are a major industrial concern of national importance. The Minister's speech was a constructive and comprehensive contribution to the debate. I feel confident that the Sugar Company will continue their task of compiling a programme of action to return the company to profitability. The Government, as the Minister underlined in his speech last week, will not be found wanting when the company have put forward a suitable programme for restoring themselves to full viability.

Question put and agreed to.