I move amendment 40 :—
In sub-section (4), line 40, to delete the words " on or."
I move amendment 40 :—
In sub-section (4), line 40, to delete the words " on or."
Before you pass from this amendment I think the whole of that section has got to be reconsidered.
We will come back to that.
It says here " on or before the 17th day of March." If there is objection to payment in this form on that date, I think now is the time to discuss it.
We will discuss it on the section.
I move amendment 41:—
In sub-section (7) to delete the words " on or " in line 4, and in line 5 to delete the word " on " and substitute in lieu thereof the words " in the year in respect of," and in line 7 after the word " as " to insert the words " on and."
The question now is : " That Section 27, as amended, stand part of the Bill."
I shall try to be as brief as possible in dealing with this section. I should have put in an amendment, but if the matter is not dealt with now it has to be dealt with in the Dáil on the Report Stage. You have here, as regards the question of the fees, specified in the Third Schedule, that the fee amounts to 1d. on each complete 28 lbs. of butter.
May I suggest that we are not dealing with the amount of the fee, but whether there shall be any fee, and if we assume that there shall be a fee, the amount of the fee does not arise under this section, but rather on the Schedule.
May I point out that we have an amendment dealing with the fee later.
The first payment has got to be made in advance when the creamery is registered. Then it has got to be paid in the succeeding March every year. It has to be paid in advance.
This has to do with the method of paying the fee, not the amount.
It has to deal with the method, and the method prescribed is that the amount payable is based on the output of butter in the preceding year. At the end of the year then you have got to square the account, whether you have been charged too much or too little. Is not that so ?
I object very much to that. I have facts regarding twenty-seven creameries before me. Some of these creameries deal with 680,000 gallons of milk, but the net profit on one of them is £275. You have a creamery dealing with 1,500,000 gallons of milk, and the net profit is £305. On another creamery the net profit is £81. You might say that they pay the price to their suppliers and that the net profit of £81 may represent their overdraft in the bank, or be intended to meet alterations in machinery or plant. Three of these creameries about which I have facts have been working at a loss. One lost £166 last year. Another lost £1,000, which was utterly bad management, or something worse. Another lost £49. Other profits were—£122, £190, £380 and £176. A creamery that turned out 221,000 lbs. of butter had a net profit of £172. I will not go further into that. You mean to collect in advance at the start of the year before those creameries have got anything like their supply of milk, or before they are in a position to earn any money. They have made nothing up to that time. Probably they have had a staff in handling, as our friend, Deputy Heffernan knows, a small quantity of milk in March or in April. Some of them have a full staff in in February, keeping their places in working order. You ask them to pay 1d. on every 28 lbs. of butter turned out. They probably have an overdraft in the Bank, and is it likely to get the creamery managers and suppliers in sympathy with the Bill to know, before they have made anything, that they have to pay this money in advance. I think that is an objection that every member of this Committee should see is a valid one. I say it would be a much better way, instead of asking them to pay, or, rather, insisting on their paying, an advance and basing the payment on their output of the previous year, if your inspectors went in and examined the books and got them to pay on the butter turned out every quarter. Many creameries supply milk to Dublin, and they have been getting a shilling a gallon for their milk. I say the inspectors ought to go in, because it is not in the creameries that all the work will be done. You will find the grading question will have to come up, because some of them will have to be taught, if you want to get Irish butter up to the standard it should attain.
I know of two creameries that have been giving advances for many years. One creamery advances £3,000 to the farmers at the start of the year. They advance the money pretty much the same as egg collectors do. There are very few creameries in certain parts of Tipperary, Waterford, and even in Cork and Limerick, that in the month of February do not advance money to farmers to get them going. They have to pay interest to the banks, and they are not in a good position to pay these fees in advance. I do not think it is fair, and I think it will give them a very solid opportunity for kicking. I suggest that the payment should be every three months. Inspectors should examine the books and see that the fees are based on the actual amount turned out. They certainly should not, at the start of the year, base the fees on the figures of the previous year. It would mean a lot of complicated book-keeping.
I would like to support Mr. D'Alton in that matter. I will not go into it at great length. I think it inadvisable to ask them to pay before they earn the money. I think the date might be put forward to the first of August, as money will be very scarce in these creameries from the 17th of March.
I think there is some point in Deputy D'Alton's contention. The first annual fee to be paid shall be paid before registration takes place. That is to be based upon an estimate of a year's output. I think it is fairly well known, notwithstanding the statement that Deputy D'Alton has made, that creameries advance money to the farmers. To do so they must borrow money from the Bank. They do not usually have high cash reserves. It will simply mean in the main that this amount for registration will also have to be borrowed from the Banks. I think it is reasonable—and it would show the good faith of the applicant—that registration should be secured by a deposit of money. I think that may well be an estimate on a quarterly output. That is to say, a sum estimated as the quarterly amount should be deposited as a guarantee of good faith, and then there should be quarterly payments according to the actual output.
That is reasonable—the first quarter in advance.
I think the contention that the first annual fee should be paid before registration, and that that fee is to be based on a year's output, is asking the creameries simply to go into debt for the purpose of registration.
I want to support this, too. I know creameries that could not possibly be expected to meet the liability on the 17th of March if they were called on to do so. Some of them would have to choose whether they would apply for registration at all, or not. The fees would be a considerable sum of money to them, especially to those who have considerable overdrafts at the moment. I think the Minister ought to consider the suggestion to take the fees quarterly in advance. It ought to meet the case from his point of view, and it would be more convenient, I think, for the creameries as a whole. It would be much better than asking them to pay the full sum, either at the end of the season or the beginning of the season.
As the Chairman has pointed out, this is a question of the method, not of the amount. The 17th of March is the latest date. They are really expected to pay before the end of the calendar year. I do not know really whether the objection is to a specific payment once a year or ——
Payment in advance.
Or whether the objection really is to the time of the year in which the payment has to be made.
Payment in advance is the objection.
Payment in advance is only made on the first occasion. You must make some payment in advance. Of course, we can meet each other, whether the advance is going to be the full sequent to the year in which the fee is payable.
For the year subsequent to which the fee is payable.
We need not quarrel about the payment of the advance. It is only for the first year. If the objection was to such a large payment on the first year in advance, we could meet that. We need not delay time over it. Let us regard that as settled for the moment. Then the payments from that on, are recurrent payments, made at the end of each year, and made at a time when the creameries are not particularly short of money, if the fee be paid in the ordinary way—that is to say, coming in to the winter. I suppose they would have more money in August than at any other time, and probably least money about the spring. The particular payment would become due in November or December, after the summer trade was completed; so that really the objection seems to be to payment once a year instead of three or four times a year.
The average payment would be about £25 per creamery. That is, of course, very rough. You would have the big creameries paying more and the small creameries paying somewhat less. Creameries with a turnover of £12,000 would pay £25 at the end of the year. That is what it comes to. A creamery with a turn over of £24,000 pays about £50. In the case of a big business, with a turn over of £25,000 or £30,000 a year, do you really think that we should make an arrangement by which they would pay instalments for three months. It looks extraordinary if you have got to do that, that a business with a turn over of £30,000 will have to pay about £50 by instalments every three months.
It is not run on the lines of other business.
That is the trouble.
It is run for the supplier.
I am well aware of that. Businesses do not usually complain because their turn over is £100,000. It is the fact that the suppliers get most of the profits from co-operative institutions. That does not alter the fact that the profits are there. They are divided among the suppliers, and there is a certain amount of profit over afterwards. It seems an extraordinary thing that for a fee of £25 or £50 they should have to make arrangements to pay three times a year. Looking at it from a business point of view, I do not believe any business man would make any serious difficulty about paying at the end of the year instead of paying quarterly. I am trying to harrow it down to what is really between us. We need not quarrel about the main instalment that has to be paid the first year in advance, and we need not quarrel about the time of the year that it is to be paid, because it has to be paid coming towards the end of the year, when the business year will be over. I am thinking now of the recurrent payments, when the creameries will have made a certain amount of money as a result of the summer trade.
Are you quite right ? The Bill says: " Every subsequent annual fee shall be payable on or before the 17th day of March in the year in respect of which the fee is payable." That is for 1925, it will be payable on or before the 17th of March, as far as I can see.
I think the contention is, if you can come to an agreement about the amount to be paid the first year, there will be no difficulty about subsequent payments.
The Deputy is right when he says that that payment is in respect of that year. The payment must be made not later than the 17th of March, but it will be made in the ordinary way of business previous to December or the 1st of January.
My point is that it is made for the year the output of which is not yet known, with the result that it will always be a payment in advance.
It will be a payment in respect of the coming year, but it will be a payment out of the previous year's profits.
It does not matter where it will come out of.
I thought your objection was to paying it at this particular time of the year. We can arrange that, as I say.
Still, it is a payment in advance.
Supposing there is accommodation come to about the amount to be paid the first year. Supposing it was something like a half-year, or only a quarter, on £25, you would pay £6 10s. You would pay £25, therefore, for the whole working of the year, though it is in respect of the coming year. In reality, you would have paid very little. You are paying out of the money of the year that is just passed. It is really largely a matter of words once accommodation is come to.
I suggest there is more in it than that. I am not intimately acquainted with the actual working of the creameries, but I have some idea of the way it is done and of the way the accounts are squared at the end of one season. I suggest there is a psychological defect in this procedure. It is a matter of book-keeping as to whether the money that is paid before the 13th of March is for the current year, payable in advance out of moneys borrowed, or whether it is last year's profits. The last year's profits are easily exhausted in some other way, and you are really starting a new season. The managers of creameries and committees of creameries really think in terms of March to October.
On a point of explanation, no. I think expressly what will happen is that they will have to pay the estimated fee on the previous year's trading, and as a matter of course, it will be included in that year's outcome.
I suggest that that is not going to work out the way the Minister would like it. It will be the same thing in essence, but it will be grit in the machine.
Psychologically. It will appear to be a payment out of the succeeding year's funds—out of money that has yet to be earned— instead of something that has been saved out of last year's trading. I suggest, if we could agree on something like this, " every subsequent fee shall be due to be paid before the 17th of March," and that, in practice, it will be like money that will come out of the current year's trading, and will not appear to be a lump sum paid in advance of the earnings.
The difficulty about that is that there will be no trading up to the 17th of March.
I move that we now adjourn until to-morrow morning.
The Committee adjourned at 12.5 p.m. till 10.30 on Saturday, July 5th.