Seanad Éireann debate -
Wednesday, 19 Nov 1986

Vol. 114 No. 16

Worker Share Ownership: Motion (Resumed.)

Debate resumed on the following motion:

That Seanad Éireann (a) supports the concept of wider share ownership by workers in their firms and by members of the public generally in productive industry; (b) notes that the Finance Act of 1986 contains provisions promoting profit sharing, share option schemes, the improvements in the Business Expansion Scheme; (c) calls on all Chambers of Commerce, Trade Unions, Employer Organisations, and other economic organs to involve themselves in the establishment of funds to use these tax relief provisions for job creation.

——(Senator Browne.)

Mr. Fitzsimons

I am glad to have the opportunity to make a contribution on this motion, not indeed because I feel I have anything original to contribute but because it is an important motion in some ways. While it is positive, I do not really think that debating it in this House, spending three hours on it, will do anything with regard to the unemployment problem we have.

I listened with great interest to all the contributions, as well as the Minister's speech. The Minister has the capacity to sound as if he is right; it is hard to discount any part of his speech — it is hard to contradict what he said. Yet at the end of it I felt myself very much like the man in the Gospel who was blind from birth and was cured by Christ. The Pharisees tried to discredit Christ by cross-examining the man who was cured. All the fortunate man could say was: "All I know is that whereas I was blind I can see now".

All I know about this situation — I am not an expert by an means on it — is that it is getting worse all the time. Our unemployment problem is getting worse as the years go by. From that point of view I take with a pinch of salt most of what the Minister, Deputy Bruton said. With regard to some of the words of congratulations which were said last Wednesday, throwing out compliments is the same as congratulating a surgeon, who failed in a major cancer operation, on an operation for a pimple.

We have a major cancer of unemployment, and this motion is making a minimal contribution. For that I welcome it. I fail to understand how anybody could go overboard about it. My belief is that we should aim for full employment. I know many people, scribes and others who are an authority or who claim to be an authority on the subject, say that the time of full unemployment is gone. I do not believe that. I believe in the concept of full employment. Perhaps some of the conditions will have to be changed, the hours may be shorter, other areas may be introduced, but I believe we should aim at giving employment to everybody who is fit to work.

I said in the Minister's presence that I felt the Government should be able to organise a scheme whereby people over 18 years of age who are able to work would get a living wage and for that they would have to work in the various productive areas, whether it be making roads, cleaning drains, building houses, manufacturing, or whatever it is. I went into that in detail before. I do not have to repeat it. Somebody asked me how it could be done. That is a matter for the Government — that is what the Government are for. In this regard it is necessary to carry out research and I congratulate the Minister on his approach to research. Research is necessary in order to reach that target and for that reason people should be encouraged to make suggestions, not only here in the Houses of Parliament, but outside.

There should be a section of the Government set aside for this, a section of a Department, or even a single officer who would invite suggestions. It is extraordinary what ordinary people can think of and what suggestions they can make. I use the adjective ordinary in inverted commas. I do not believe there is such a thing as an ordinary person.

As I said many times in this House, in housing schemes and in various areas where I was involved I have been saved on many occasions by going to the man working the spade and shovel — the man who was not supposed to know anything. On many occasions he is the man the scheme depends on — the man mixing the concrete, the man putting in the foundation. These are the people who should be encouraged to make suggestions. I ask the Minister to consider setting up a section of a Department or an officer to look for suggestions and pay people if necessary for worth while suggestions.

The Minister said:

There is a great deal of concern in Ireland about our failure to develop the food industry and other aspects of our material resources. The real problem here is marketing. We have the raw materials. Our fresh food is better than that produced in most other countries.

What we lack is sufficient investment of money in marketing.

I think this is an exaggeration. There is no question whatever that there is a problem in this area, but it must be looked at in context. I could cite several instances of small businesses that failed not because of marketing but for other reasons.

I can refer to one farmer who grew cabbage. One year he had probably the best crop that could be grown. He brought it to the Dublin market and could not sell it because cabbage was available all over the country at that time. There was nothing he could do about that. The next year he grew a crop of peas but they could not be harvested because of the weather. There is another instance in my county of a small businessman who erected a very large glasshouse and grew tomatoes, but he could not sell them because there was a glut at the time.

I do not think marketing can do anything for that. In the Barleyhill and Ballyhoe areas we have damson trees growing wild. They could be harvested to give employment. They never have been and probably never will be. The lake of Ballyhoe is a great tourist attraction and is in an important fishing area, but marketing has done nothing for this beautiful area. Though I agree that marketing is necessary, to blame everything on marketing is not to understand the problem. If somebody looks at it and does not understand the real problem, I fail to understand how it can be cured. It is not marketing in every instance. It is sufficient to say that marketing is necessary. Sufficient funds should be devoted to marketing but there is a limit to what marketing in itself can do.

The Minister said some of our best talent is wasted. This is so on a very large scale. The Minister referred to poverty. Paddy Kavanagh, the poet, wrote about poverty as being a condition of the mind. This may be so for an individual but, if that individual happens to be married and has children, it is different. The Minister went on to say that poverty takes many forms, the most obvious being lack of funds to support an adequate living standard. A more pervasive and equally damaging form of poverty is the sense of non-involvement in society. Those who are unemployed, sick or housebound suffer not only some material deprivation but an even greater sense of being cut off from the mainstream of society. I am in full agreement with the Minister, and yet we have conditions in Ireland in which the unemployed are better off than the employed.

Some people have opted for unemployment. A very close friend of mine in Meath had two young boys working in a factory which went on a three day week and those who were in that factory were better off by about £12 a week than those who worked in an adjoining factory for a full week. The result was that those other workers tried to get on a three day week in their factory. Those two boys have gone to America and on the day those two boys left him the father called to me, a very desolate man. The father is now going to America. He gave 55 years of his life to this country and now he has to go to America.

I could go in great detail into the tragedy of the 100,000 people who have emigrated. One good thing about emigration is that people who go are better off then they were in the past. They have education at least. This is an area where much could be done. Recently when arrangements were being made to increase the numbers of those allowed into America from Ireland the Government did nothing. That was a disgrace. They had an opportunity to make representations to see that the number allocated would be increased. I would like to develop that subject. If the Government tried and failed the people would have appreciated it. The Government did nothing and they should be ashamed.

There are many more areas I wanted to go into; I thought I would get more into my time than I did. With regard to planned profit sharing this is an area that would take much longer than 15 minutes to develop. There is a very useful book by John I. Fitzpatrick called Planned Sharing, Practical Profit Sharing which, unfortunately, I was not able to lay my hands on. I got a review of it in a periodical. It is unfortunate when we look for some books in the Library here that most of them came from Trinity College, Dublin. I want to pay a tribute to Trinity College, Dublin, for this wonderful facility but, unfortunately, it takes some time to get a volume. I do not understand why those books are not available in the National Library. I know they may be available to Members who can go there, but I think something should be done to make those books available at shorter notice. I say that while paying tribute to Trinity College. We would have to agree to the motion, but in reality it does nothing for the problems we have. Time should have been spent discussing something of a more positive nature.

Mr. O'Leary

I second the motion proposed by Senator Browne. A valid criticism of the motion is that it is seeking to cover too wide a ground. There is too much in the motion for any Member to develop sensibly and coherently during the course of a 15-minute contribution. I noticed that in particular during the contribution of Senator Fitzsimons in the past 15 minutes. He usually develops his views in considerable detail and could obviously only touch on a small portion of what he felt it was necessary to say. For the same reason I will only touch on the matters that I think have not been given sufficient consideration by the House.

First, it would be well if the Members who read the motion had read it carefully because there are quite a number of things covered by the motion. There is the concept of wider share ownership by people in their own firms and by members of the public generally, two separate and distinct things. While the ground work has been laid for wider share ownership by workers in their own firms I hope to deal with the fact that members of the public generally are being denied any opportunity to increase the variety of shares which are available to them as members of the investing public.

The motion goes on to deal with the various beneficial aspects of the Finance Act, 1986, in dealing with the business expansion scheme, various share option and profit sharing schemes encouraged by that Act. Last, it calls on the various economic partners and economic organs to involve themselves in the establishment of funds to help to create jobs. Probably two of those five concepts are somewhat controversial. They are the methods by which the members of the public generally can be given an opportunity to expand the share ownership, and the call on trade unions, chambers of commerce, employers, etc. actually to get involved in job creation.

I will leave those two to the end and deal with the others first. I could not deny that the concept of encouraging people, by the establishment of tax and other regimes, to own shares in the firms in which they work should be encouraged. The 1986 Finance Act contains provisions which, even though there are one or two problems with their implementation, problems which we can consider during the course of the next Finance Bill in this House, nevertheless are a positive development. People should be encouraged to take up share option schemes that are available, and companies that have no such schemes should create schemes for the purpose of ensuring that people working in the firms can acquire a stake in the firms in which they work. That stake would add to their commitment to that firm's prosperity. The prosperity of such firms would add to the general prosperity.

I referred in the House in an earlier debate to the business expansion scheme. This is a scheme, Members will be aware, whereby a sum up to £25,000 per annum can be invested by an individual, effectively tax free on an annual basis, to ensure the expansion of manufacturing and similar type business activities. This can be done in such a way as to provide new facilities or, indeed, to preserve existing manufacturing jobs. This scheme should be promoted, but a very serious problem has come to light in this business expansion scheme. It is not actually in the technical operation of the scheme which has been widely discussed and the problems associated with it teased out. It was greatly improved by changes in the Finance Act, 1986.

The problem is that many of the people who have surplus money on a year by year basis to invest are very fully committed as regards time. The two things, with regard to the business expansion scheme, which you need in order to make a sensible investment are time and expertise to consider an individual investment. Quite frankly, the various funds established have not adequately met the problems of the professional person who does not have the time to investigate a business himself or herself and is afraid to invest £25,000 or any portion thereof because of lack of confidence in the investigative procedure and in the venture in which the proposed investment is to be put.

Some method whereby a greater number of these funds can be investigated will be an important part of establishing the success of this business expansion scheme. I recommend that a substantial number of these additional funds should be encouraged and that the rules with regard to the timing of the investment in these funds should be relaxed to encourage people to establish the funds and to make a prudent investment in schemes over a period. Unfortunately, it must be recognised that no matter how you draw the rules with regard to these funds, these investment groups, there will be a residual group of people who will not feel like taking the risk associated with investing in what very often are new and high risk investments. There is a market for those people with spare money. There is a market for investment in shares in a more traditional sense. I will deal with that problem later on.

No matter how we deal with the business expansion scheme I feel that there will be a residual problem because a substantial number of people will wish to invest in a more traditional way in shares.

One area I think is more controversial in this motion is the proposal that the chambers of commerce, trade unions and employer organisations should establish funds to use the relief provisions for job creation to which I have already referred. Trade unions do not exist to create new jobs — that is not their purpose. Neither do chambers of commerce or employer organisations have that as their objectives. It would be a contribution towards the development of this concept if some trade unions, obviously the larger ones, or their umbrella organisations, whether they be the Congress of Trade Unions, the Dublin Council of Trade Unions or the Cork Council of Trade Unions would get involved, possibly in association with the chambers of commerce, in ventures which would increase the number of manufacturing jobs available in the community. Many of these larger organisations, like the Irish Congress of Trade Unions, have been referring to expertise with which to assess the projects, the financial expertise and the time, which as I pointed out earlier, is an essential prerequisite for a sensible investment, should get involved. I recommend that should be done because that kind of investment is likely in the long run to bring about the social consensus which is an important part of the enhanced quality of life to which we all aspire.

There is one other matter to which I should like to refer, that is, that portion of the motion which deals with the spreading of the concept of wider share ownership by members of the public generally. That is quite separate from the concept which is also dealt with of workers owning shares in their own firms. This motion goes a little bit further than that, and is a little controversial. It says that it seeks support for the concept of wider share ownership by members of the public generally. It is true to say that wider share ownership by members of the public generally is a policy which has gone into reverse over the past 20 years. The number of individual people owning shares in public quoted companies has decreased over the past 20 years. Certainly, the number of vehicles available to members of the general public has decreased substantially.

In that regard the change in the rules of the Stock Exchange and the opening of the various second and third level systems of investments are to be welcomed as examples where members of the public generally can be encouraged to get involved in share ownership. We should not necessarily stop there but should look at the experiments that have taken place — I deliberately used the words "experiments that have taken place"— across the water with regard to wider share ownership and what lessons these wider share ownerships might have for us.

I am very critical of many of the policies pursued by the Government of the United Kingdom in the course of the past six or seven years. That Government have taken economic decisions, including the decision not to go into the EMS, which have had very adverse consequences for this economy. That does not mean everything that Government have done is contrary to our best interests or, indeed, has been incorrect in some other way. I invite Members of this House to give some consideration to whether or not the concept of wider share ownership by members of the public generally is served by the type of developments which we have seen across the water with the expansion of the number of shareholders in companies like British Telecom and British Gas. Is there a lesson there for us? Leaving aside the individual companies, has that moved money from the nonproductive sector into the productive sector of the economy and, if so is it something which we should look at?

The overwhelming evidence is that it is taking money in the initial stages from people who have a few thousand pounds or a few tens of thousands of pounds to invest and who do not feel confident enough to invest without additional professional advice. These people have been encouraged and have responded by investing in what were formerly companies owned by the Government. We should give serious consideration to the assets, if any, which we have which could be examined to see whether the time has come when in exchange for cash, ownership of those assets could be shared within the community at large. I am willing to discuss it in the context of there being provisions to ensure that a small number of people do not get control, and the various controls which many of us would like to see in this regard.

Having said that, there is an important lesson to be learned and considered by the general public and by the politicians. If we believe in the concept of wider share ownership by members of the public generally, serious consideration should be given to which of our assets can be used for the achievement of this policy objective. I welcome the motion and recognise that people might differ on its interpretation, but it was deliberately framed to ensure that a productive discussion could take place without hindering Members in the various approaches which they have to problems of this kind.

Mr. Ross

I welcome the opportunity to debate this motion although I find it a little bit detailed and complex for three hours of the Seanad's time. The areas with which the motion deals tell us something about the Government's philosophy, the Government's intentions and tells us in particular about some of the beliefs of the Minister for Finance.

While I welcome the concept behind this motion I think it does not go far enough. I welcome in particular the symbolism in that the Minister for Finance. Deputy Bruton, is a beacon of private enterprise in a Cabinet dominated by people who are quite happy to spend the State's money in any way that appears suitable to them at the time. In that sense I will be interested to hear what Senator Higgins says in reply.

An Leas-Chathaoirleach

The Senator should make his contribution and Senator Higgins will speak for himself.

Mr. Ross

In that it is a symbolic motion supporting private enterprise members of the Cabinet I will be supporting it this evening. To some extent it counters the difficulties and the absurdities of the National Development Corporation which the Labour Party pushed through the Cabinet. I also welcome it because that was possibly the biggest white elephant in the history of the State. I was sorry to see the Minister introducing it in this House because it was patently obvious that he did not believe in it himself.

The measures referred to in this motion are a welcome commitment and a declaration of intent, but that is as much as they are. I believe they are limited, restricted and all they do is point us sentimentally in a particular direction.

I should like to deal with a point touched on by Senator O'Leary when he was talking about the benefits of wider share ownership and said that in the past 20 years shares in public companies have fallen into the hands of fewer and fewer people. That is the case in a very strict form, but where does he think the money from people's pension funds goes?

Virtually every pension fund in the country would be invested in those blue chip shares like Allied Irish Banks, Bank of Ireland, Cement Roadstone, Carrolls and Waterford Glass. All those places would contain your pension money. Senator Higgins' pension money and everybody's pension money. There is a wider share ownership under the guise of pension fund money and Merchant Bank money.

The business expansion scheme which was greeted and paraded as an enormous breakthrough in new investment for manufacturing industry has not been a great success in that sense because it is too restricted in its form. It is restricted purely to manufacturing industry. It is copied from the United Kingdom Act and it is not applicable in this country.

I suggest the Minister should sit down with those various components of Irish industry and trade unions to try to thresh out a better way to develop the business expansion scheme. It is a good idea, but in its workings it is very restricted. Indeed, the first thing that should happen in the business expansion scheme is that a market in the shares should develop, because the primary difficulty for those investing in a company under this scheme is that they are not allowed to deal in the shares in which they are invested. There is nothing wrong in withholding these shares for five years; nobody complains about that. They ought to be allowed to switch from one company to another in which they are invested which qualifies under this scheme. That would attract a great deal more money into this scheme which, in its embryo stage, is an extremely good idea.

All the business expansion scheme has done, except in a few limited cases recently, is to provide big fees for accountants and lawyers. The real problem about getting investment into productive industry, which is what this motion is about, is the disincentives which exist on the taxation side. I believe that 60 per cent capital gains tax is the greatest disincentive to investment in capital industry which exists in Ireland. I deal with it day in, day out and I have people saying: "My God, I have to pay 60 per cent on this. I am not going to bother. I will go and put my money in the post office or in Government stock." They do not bother to buy shares in Cement Roadstone. If they make a profit, they will have to pay 60 per cent. As a result, they do not invest in Irish industry and Irish industry suffers. This makes it difficult for Irish industry to expand. I see it day in, day out; it is a disincentive. We may not like it, but it is. We are not talking about large sums of money being made. We are talking about small sums of money being made.

The other real disincentive is that so much money is diverted into Government stocks. This could be dealt with by cuts in public expenditure. The reason so much money goes into Government stock is that the Government need the money. If the Government get that money by offering a rate which is attractive to investors and which is more attractive than investing it in Irish industry and employment giving industry, and if there were cuts in public expenditure, that money would be released and would have to find a home. One of those homes would undoubtedly be Irish industry in its various forms. The Government and the Minister realise that. The Labour Party, unfortunately, are actually increasing unemployment by their insistence on increases in public expenditure. The money which goes into this public expenditure could easily be diverted into giving more employment in productive industry. I am sorry to have to say that.

Another matter the Government should consider in order to release funds for more productive industry and for employment is privatisation of institutions like CIE and other semi-State institutions. Competition, with profit-sharing for employees if necessary, would provide a stimulus for the economy which would provide more employment and release those funds which we need to provide employment elsewhere. State companies at present are far too inefficient. This would thin them down and release money for the private sector.

Mr. M. Higgins

I welcome Deputy R. Bruton to the House in his new capacity as Minister of State. Indeed I thank him for responding in part to a resolution proposed by my own party in relation to credits some time ago. I think there have been significant advances.

I found the previous speaker's remarks interesting, but they are not — I am afraid he will be disappointed — the full content of what I have to say. Nobody in this House understands more than Senator Ross and, indeed, presides more over the regular transfer of money into speculative purposes rather than productive purposes in the Irish economy. The history of Irish investment is one of avoiding productive abuses and, indeed, of manipulating stock exchange transfers for quite immoral gains. Let us leave it to the words of a distinguished former Member of this House, Senator Dr. T. K. Whitaker who in the seventies expressed as one of the most serious concerns facing the Irish economy what was taking place in the Irish stock exchange at the time, the rise of a new form of wealth which had nothing to do whatsoever in relation to added value in the classical sense in economics but was really based on the glorified form of gambling which stockbroking is at its worst.

On the motion, I support the idea that the different investment incentives should be made more efficient. We would all like to see a response to the Finance Act, 1986, where it offers business expansion possibilities. We would all like to see different State institutions and groups of individuals deciding to take risks, but I am afraid when you read the motion carefully it tells a very sad story. Despite the most generous incentives in the world — there used to be some south east Asian incentives which were better — we cannot get people to take risks in Ireland. I have sympathy for some of these people because it involves dealing with a credit system, modelled entirely on the British credit system, which is not risk taking in orientation, requires far too high a degree of collateral and also has an investment time span which is relatively short. There is very little orientation towards investment in technology. All of these are very serious impairments towards the borrowing which in turn might lead to investment in Irish industry.

In the brief time available to me I want to point to a number of very fundamental contradictions. Comments which I think drew disgrace upon us in recent years were those offered on the company directives that came from the European Communities. I am referring specifically to the Fourth Company Law Directive commented upon in the proceedings of the Joint Committee on the Secondary Legislation of the European Communities. We singularly excepted ourselves from even taking seriously the suggestions about workers sharing in information in their own firms. For example, Report No. 20, from the Joint Committee on Secondary Legislation of the European Communities on the Fifth Company Law Directive published on 3 September 1985 paragraph 16 states:

The Confederation of Irish Industry and the Federated Union of Employers have both expressed to the Joint Committee their opposition to the proposals relating to employee participation.

I add in my comment here. This was the idea of keeping out of the boardroom employees other than those in the elected semi-State sector where there were worker directors, but more than that, keeping them away from information that affected their daily lives. This was an outrageous, antiquated 19th century idea. I continue the quotation:

The Confederation believes that there is a basic misconception in seeing a board of directors as a supervisory body rather than a body with responsibility for strategic policy initiation as well as control. In its view even if a representative body had no power of veto it would have the capacity for causing undesirable delays and unless the shareholders retained the right to dismiss directors an inappropriate vote structure would be the result. It went on to say in section 18:

The Department of Industry, Trade, Commerce and Tourism has also expressed its opposition. The Department believes that the legislative imposition of rigid worker participation structures would discourage investment from abroad and stifle investment at home. It considers that if EEC companies were subject to restrictions from which their competitors were free their competitiveness would be affected. The present unemployment problem might well be exacerbated if companies were tempted to reduce staff to avoid the application of the worker participation provisions, or to break up or re-structure groups towards that end.

What we are left with in that report is an extraordinary view. It had been decided upon at European level that there should be a move towards the sharing of information. I think it had its origins in a political basis that the rights of democracy extended beyond the political franchise into the economic realm and that, following decades of debate about industrial democracy, many would regard it as a basic right that they understood what their company was doing. The attitude of the representative voices — I am afraid in a far less strident way than the previous speaker — was that they did not want to have information as a matter of right being made available to their workers. It was one of the blackest most disastrous days when these submissions were made. It reflected a view of ownership and a view of control in Irish industry that was more reflective of the 19th century than of any developments that have taken place in the 20th century.

I offer this as the context in which I have to try to evaluate this motion because, when the debate took place on similar directives in the British House of Commons, other kinds of remarks were made — Britain was going to be restructured on the basis of a property owning democracy. I laughed at that notion when I read it first because the idea was that, let us say, a postmistress in Inverness owns 20 shares in ICI and, of course, the managing director as part of his emoluments gets an allocation of equity. Before the managing director takes a policy decision he will want to hear the view from Inverness in relation to an acquisition or closure policy by Imperial Chemicals. It is a totally absurd notion built entirely on a kind of tokenism, I am sorry to say the idea being that it was good to own a share and so on. I agree it is good to own a share but what is the value of it unless it is translated into control?

We have considerable literature on this issue and I am pleased to be able to tell the House that what I have to say is entirely drawn on that empirical literature. In shareholding individuals participate in an indirect sense. Indeed, Senator Ross's view was rather like the Catholic school managers' view of how they represent at two removes Catholic parents. The idea that the pension funds, in so far as they involve the pensions of everybody who contributed a pension are all in an indirect way participating in some investment decision is the most curious kind of casuistry that I have seen other than in the theological realm I have referred to.

The fact of the matter is that where shares have been allocated they have been allocated almost entirely to people in the middle and upper ranges of income. They have often been allocated right at the top in order to substitute for certain kinds of increments in income which would be taxable. There is no evidence of the disbursement of shares down through the ranks of workers and they, in turn, being effected into some kind of information control, access decision making, and so on.

Paragraph 21 of report No. 20 on the Fifth Company Law Directive has a definite view on this. It states:

The Confederation of Irish Industry has expressed the opinion that "the unitary board structure containing representatives elected by shareholders and employees would tend to promote conflict rather than consensus in the board room".

I am glad Deputy Bruton, the Minister in Cabinet, has a different view from the Confederation of Irish Industry in this regard. The fact of the matter is that in sticking to this motion there is a danger of mythology being built around the notion of share dispersal.

Let us stick to the facts. The facts are that those who control significant blocks of shares and who are closer to significant management decisions are the people who affect the policy of companies rather than the dispersed smaller shareholders across the entire economy. Put more clearly and sticking to my example from ICI, which is perhaps unfair, is it not more reasonable to expect in relation to a policy initiation that the chief executive would be more in consultation with a significant larger shareholder who might be represented on the board than with any individual small shareholder or any group of small shareholders? The whole philosophy of this is built around an interesting notion. It is reflected in the Minister's opening speech. There are no more class differences. We are all going to achieve an equality through gradually owning more shares. The assumption is, of course, that shares are being shed by those in whose ownership they are concentrated already. This is something that manifestly is not occurring.

The next part of this notion is that, if this is the case, we have replaced what he regards as conflict by a new kind of consensus. It is a form of neo-corporatism. All of us have an interest together in the firm doing better. I like the ethical approach of that to a point, but the evidence is not in its favour. I was quite shocked to find that the Department referred to in the discussion on the Fifth Directive offered a political opinion. In fact, I encouraged them for it because I had long suspected that they had a political opinion. It is an ideological opinion of great force and I loved the honesty with which it was stated. The Department of Industry, Trade, Commerce and Tourism have expressed their opposition. It is not an opinion, not a comment; they have expressed their opposition to the Fifth Company Law Directive.

Turning again to this motion we have some evidence from this country as to what would happen. I do not want to take from the well meaning intentions of this motion but only last week I was dealing with an interesting situation. Forty five workers are due to be made redundant in a factory in the city in which I live. They know not by whom that decision was taken. It could have been the board of the company, Irish Medical Industries in Dublin, or it could have been the larger parent company ICI. They do not know. They spent six weeks trying to find out why the decision was taken. They have been totally precluded from any information.

In an atmosphere where we are throwing people out of work, where more and more the economy is a world economy and where large trans-national corporations are not located within the boundaries of the State, how can you say you are going to transform society on a share ownership basis? There is a touch of Victoriana about it. Maybe there are people who want to do this but I could bring the point to the absurd and ask: what about a company that is going to close down and what do you do with your share when the company has closed? Do you invest your redundancy money once again in Irish industry and hope for resilience?

I worry about the Minister's contribution to this debate. He spoke about manufacturing in services. I fear what is true in relation to services. This word "services" is a disguised word and it includes a spectrum ranging from people who turn over hamburgers on a spit to people who take decisions on the movement of capital with means that are electronic. What is meant by the services term? I worry about these kind of phrases. While I support the intentions of the movers of this motion to make all of these instruments effective so that productive investment will take place and jobs will be created, overall it is a deflection from the unemployment problem and from the investment crisis that exists.

In conclusion, I should like to refer to the silly remarks made in relation to the State sector and particularly in relation to the National Development Corporation. I will ask questions I have often raised in this House and in the other House when I was a Member. What is the record of the private sector in research and development? What is the record of the State sector in research and development? What is the record of the private sector in technology innovation and what is the record of the State sector? I am getting bleary eyed from reading Confederation of Irish Industry submissions prior to budgets and at other times. They have the usual pathetic listing. After months of gestation they can only come up with fixing their little greedy eyes on bits of what has been established by State employees, State investment, State research and State commitment. Would it not be nice to have a bit of Aer Lingus, Bord Gáis and Guinness Peat? Where is the innovation in that? Where are all those people who are bursting for the climate to change so that they can blossom as full blown entrepreneurs and investors in the Irish, European or international sense?

Acting Chairman (Mr. J. Higgins)

I want to remind the Senator that his time has expired.

Mr. M. Higgins

Thank you. I like the ethical motivation that the movers of the motion had in putting it forward. Senator Ross blew their cover by suggesting that you could go past the resolution, make the case for privatisation, and speak about getting bits of the State sector.

I shall conclude with one sentence which I would like to place on record because it was mentioned in relation to British Telecom. We know who invested in British Telecom. It was not the individual worker with no chance of investment up to then. There was a rush to invest and it was decided on a lottery basis. The people who invested were those who were moving from gold, silver and other kinds of hoarding wealth, into what they now felt was a bit of the State. They felt they had got this through the courtesy of a Prime Minister with views that are prior to the flood.

Mr. Fallon

This is an attempt to encourage people to get involved in the area of job creation. It is an attempt all of us should welcome. We have a crisis in the area of job creation in Ireland. Many of our highly educated young people are leaving the country and many more are without jobs and with no prospects of getting jobs. There are many agencies working in this direction but, unfortunately, the results do not seem to be coming. For example whilst the IDA create jobs, as fast as they do so they are being lost in other areas where they were formerly created. It is vital that conditions for job creation in terms of incentives and general cost environment should be better than those offered in other countries.

The major concern must be that if we wish to prevent unemployment rising we have to encourage investment from whatever source we can get it and as much productive investment as possible. This is the only way to ensure that the output from the productive sector is increased sufficiently to generate more jobs and more income. Given the difficulty we are experiencing in stimulating investment in industry, it is time we opened up the conditions for grant-aiding such investment. Given the seriousness of the problem, the role of the IDA should be expanded to allow for the form of development to which I referred.

The motion before us asks us to note that the Finance Act, 1986, contains provisions promoting profit sharing, share option schemes and improvements in the business expansion scheme. This is highly praiseworthy and we should all support it. The motion is totally acceptable and we should all strive for its implementation.

Disincentive for investment, lack of confidence and the £1.6 billion of capital outflow, all of which affect confidence in job creation, have been mentioned in the debate. There is, however, another important aspect of this which I will touch on — the distrust which exists between management and workers in Ireland. This is an impediment to the implementation of the motion, particularly in relation to the share option concept. This distrust is based on a number of bad experiences suffered by both parties. The worker sees himself as abused and oppressed by a system run and owned by management. Management, on the other hand, see the worker as having no genuine interest in the business. He is seen only as maximising his wages and taking no risk.

In reality neither of these perceptions is correct because the vast majority of workers and management have exactly the same goals for the well-being of their company. Individual and isolated abuses on both sides have created a basic distrust which makes each party sceptical of one another. This can be solved only by educating both sides. Management must be more forthcoming with company information, which future legislation on disclosure should bring about. Workers must feel they are part of the organisation and be willing to take risks. Trade union officials have added to the problem, for example, by driving a wedge between management and workers which has not been helpful. If this distrust barrier could be broken down and management provided the information I referred to — where profit and all aspects of management were made known to the workers — the worker would respond and share in the risk. The whole economy would benefit from this. The system of all parties working together in common cause would be of benefit to all.

In the motion, we are referring specifically to the Finance Bill, 1986. A major pitfall of that legislation is that it is pitched far above the average man's head. I presume that, of necessity, a Finance Act must be a technical document but the various individual sections and parts of the Act should be explained more clearly.

The motion refers specifically to the share option concept. I should like to ask the Minister of State what attempt has been made to market this share option concept since the Act was brought in? At present the average working man with a small amount of disposable funds has absolutely no incentive to invest in his company. He knows better than anyone that he can earn three times the present rate of inflation in a bank or building society deposit in what is a straight and very simple transaction.

Share ownership, as defined in the share option in the Finance Act, 1986, is seen as a complicated area for him, a risky business and one which he would prefer not to get involved in when he has the option of the simple transaction with the bank. This should be overcome if only because of the fact that our history dating back to the Land League of the last century shows it is a peculiarity of the Irish race to have home ownership and asset ownership and so on. They should be more involved in this kind of share option concept. Given that this concept is right, there is most certainly a place for all parties and organisations to educate themselves and the people they represent on the benefits and incentives available. These benefits and incentives should be available to all equally. If this were done, the people would all be beneficiaries.

The share option concept has not been marketed sufficiently. Until that is done, it will remain a section of the Finance Act, no more and no less. Until it is stressed time and time again, and encouraged at every opportunity by the Government, chambers of commerce and all the other groups referred to in the motion, it will remain a non-event. That would be a pity because it has obvious advantages for all concerned.

I support the motion. It has my party's total support. While the concept is there and is beautiful, other things could be done by the Government to make these aspirations in the motion part and parcel of the overall commercial life of the country.

Acting Chairman

I would like to remind Senator McGonagle that he has three minutes and Senator Browne has 15 minutes to conclude on behalf of the sponsoring party of the motion.

Mr. McGonagle

If I speak for three minutes and Senator Browne concludes, is that the end of the debate?

Acting Chairman

Yes.

Mr. McGonagle

To say something in three minutes is going to be very difficult. I support the concept of share ownership. It will be very difficult to bring it about. It seems that clause (c) is the important clause because it is the implementation clause of (a) and (b). The aim set out in clauses (a) and (b) cannot be implemented unless clause (c) is put into operation. It is aimed at job creation. Therefore as labour people, as trade unionists, as people who are well informed about justice, we must back and support any concept of job creation. We live in a mixed economy which means we dare not reject any ideas from the private entrepreneur because of ideological hang-ups we may have from time to time.

I praise the Minister for his emphasis on the small business concept and less dependence on foreign capitalists. A substantial exploitation of indigenous materials behoves us to have a strong industrial base based on ourselves — a kind of Sinn Féin policy. I support that. I also support wider share ownership. The Minister thinks that having workers owning part of the business in which they are employed might improve industrial relations. I hope he is right.

I have some reservations. We require improvements in industrial relations. I am speaking as a trade unionist of 30 years standing North and South. By using phrases such as "worker participation", "worker directors" and "worker involvement" we are touching upon industrial democracy without knowing clearly in our minds what we mean. I will try to tell Senators what I mean by it. Worker involvement and worker participation mean that at the point of production and at the point of distribution, the worker has a say in decisions, not necessarily his union official or his trade union. When he takes part in the decision making process he will feel he is enjoying industrial democracy. If that is absent, all the shares in the world do not count.

He should feel part of the game in which he is involved, either in the State or private enterprise. That is what involvement means to me. If the worker on the factory floor, in the field or at the dock side is not involved then the experiment in worker ownership will fail. Someone said that lack of access to information, lack of knowledge on accountancy marketing and research, and closed minds on the part of management have caused more industrial problems than the closed shop. The man who thought that one up was right. If the workers are not aware of what is going on in a company, how can they be expected to become involved without full decision making knowledge and professionalism laid on for them? That is what I mean by improvement in industrial relations.

Mr. Browne

Tá mé an-bhuíoch de na Seanadóirí ar fad a labhair anseo agus freisin seachtain ó shin, agus tá an-áthas orm go bhfuil siad i bhfábhar an rúin.

I am very glad so many people have taken such a positive line on this motion and have been so complimentary to the Minister who, in his own way, has given such a dramatic lead on the whole question of workers being involved. Senator McGonagle said they should be involved in a very serious way, not just in a paper way having shares or some such thing. The Minister's views are well known. I would be justified in reading from the first paragraph of the Minister's speech:

I am a strong believer in the merits of promoting such ownership as a means of generating more investment and more employment. This will ultimately create a situation in which everybody owns a stake in the wealth-creating sector of the economy. I see this not so much as a desirable option but rather as a necessity, if we are to achieve the scale of growth in the economy that we need in the years ahead.

Some people found fault with the actual practicalities of this. In the long run once a Minister has the right idea there is hope that things will happen. We have heard a great deal about unemployment and the importance of employment. That is very true. The Minister said that creating new jobs in the public sector is no solution; We need self-sustaining jobs. This is not a choice but a necessity. Further on he talked about marketing which we always hear has fallen down slightly: we can produce the goods but we are not marketing them. He said that not enough money was invested in marketing. He highlighted the problems and the concept of research and development which are a major part of what should be going on in the country. If we have research and development and marketing there is hope that this awful unemployment problem will go. If we have research and development we have some hope that we will have new products. This is what is happening in Europe at present. The Minister outlined the importance of developing new products. Whether it is butter being maintained at the same percentage of milk production now as when we joined the EC, whatever it is we have to change. That is very important. He outlined the growth in some of these schemes and the business expansion scheme which started off with an investment of £1.53 million in 1984-85. This year it is heading for an investment of £15 million. Senator Fallon said there was not enough publicity. These things are slow; they cannot happen overnight. That is a dramatic growth.

I want to highlight what the Minister said when he talked about the idea of two sides which has come through from many other speakers. You cannot have two sides in industry, a "them and us" attitude where workers are on one side and the management on the other. The Minister said: "The idea of two ‘sides' in industry is a time wasting phenomenon. If workers were share owners as well as providers of labour, both management and unions would be on the same side." We all mentioned in the earlier part of our speeches the importance of workers having a sense of belonging and a sense of pride. Senator Conway mentioned that in his working experience in the early sixties there was a great sense of confidence and joy working in a firm that was going well. These are the things we hope will happen to some extent right throughout industry and workers will feel part and parcel of a very important group producing goods and selling them and making a profit. The Minister reminded us that the share option schemes went from £1.8 million in 1983-84 to £8.2 million in 1985-86. That is a very encouraging sign of what is happening in these schemes.

Senator Hillery in a very positive contribution outlined the good in the schemes and welcomed them. He had some criticism of things like the disincentive of the DIRT. The Minister replied on the spot that he did not agree. This is one area where there are two very different views. One is that the deposit interest retention tax has ruined the country. The Minister said the Government got £5 million more than they had expected which was proof that all this money had not left the banks. Senator Hillery emphasised the need for profits to enable people to invest in companies. That is a very sensible idea. There is no point in dreaming that people will invest in companies which will lose money and perhaps they themselves will lose their investment as well. His speech was a very positive one. He mentioned the question of costs.

Senator Conway was very positive. He talked about encouraging risk-taking and highlighted the fact that Henry Ford was a one man band who created an empire. He mentioned the impact on business of faceless revenue officers and any politician will know what he was talking about. Many companies experience pressure if they have fallen behind. He was very complimentary to the Minister on his whole attitude.

Senator McDonald outlined the decline of industry in Laois. Since 1924 the numbers in employment have gone down. In Offaly he took a trip around the industrial sites with the Minister and found a very happy workforce there. He should change his abode and switch from Laois to Offaly.

Senator Fitzsimons gave us a quotation from the Gospel. "Godspell" means good news. Senator M. Higgins linked Senator Ross with the bishops. We had a funny combination of industry and religion. Senator Fitzsimons was concerned about the worsening unemployment problem. Senator O'Leary felt that the motion was too wide and that it was not possible to deal with it in the time available to him. The whole idea of owning shares was quite laudable as far as he was concerned. He felt the business expansion scheme was difficult in that people did not have time to weigh up the merits of where they were going to invest their money. He suggested it was easier to invest in blue chip shares than in something that might be a risk. He was concerned that individual trade unions would not be able to deal with the problem and that an umbrella group of trade unions or the employer organisations might be able to step in and give advice. He questioned the whole idea of share ownership in factories and suggested we should expand it to the stage where we would have it in semi-State companies. That is something new.

Senator Ross was very much in favour of the motion. He felt that the expansion scheme was too restrictive. On the other hand, from the figures I have given, this year we expect £15 million to be invested so perhaps that criticism is not valid. The Senator also raised the question of the disincentive of a 60 per cent capital gains tax. The Minister dealt with that. He said:

... the reduction in the rates of capital gains tax to a flat 30 per cent for shares disposed of on the smaller companies market of the Irish Stock Exchange will have a two-fold benefit. It will encourage companies to come to that market and at the same time increase after-tax returns for shareholders realising gains. The capital gains tax rates for gains on shares acquired under the BES are also being reduced to that rate.

Perhaps this scheme may be the answer to the disincentive Senator Ross was worried about — that it was 60 per cent and people would not invest their money. People would not invest their money if they had to pay 60 per cent on their capital gains, but if it was 30 per cent it should be a lot more attractive. He felt that the accountants and the lawyers would gain.

Senator M. Higgins spoke about the need for incentives. It is not easy to get people to take risks in Ireland. He was very critical of the EC directives being imposed. Workers were not being given information, a view also expressed by Senator McGonagle who said workers were not being accepted. Senator McGonagle said the view of the Confederation of Irish Industry was that it would tend to promote conflict. He cited an example of 55 workers who do not know why they lost their jobs. He worried about critics who want certain things done. I thought he was going to quote "Oh, to have a little house" when he started off on, "Oh to have Bord Gáis" and so on.

Senator Fallon spoke about unemployment and the distrust between management and workers which the Minister dealt with. He felt the Finance Act was above the head of the average person and reader and that it was very important that it should be marketed in a big way. Senator McGonagle was very keen that workers would have a real say no matter whether they were producing or at the port getting the goods out. It should not be a pretence that workers had a say but would be in there able to get information and be involved in the actual job.

Overall it was a very wide-ranging discussion, cordial and positive. I want to thank all the Senators who spoke for being so courteous and helpful.

Question put and agreed to.