I move this Bill with a great deal less pleasure and much less satisfaction than I have ever moved any Bill in this House before. There are three things in it. In Section 6, sub-section (2) a sum of two million pounds is mentioned. I am asking for leave to have ready for advance to the Board two million pounds. In Section 4 a sum of two thousand pounds is mentioned. I am asking that the Board may be directed to pay that two thousand pounds in the manner stated. In Section 3, sub-section (1), the phrase occurs in relation to the sums of money previously mentioned, that there shall be advanced "as and when requested so to do by the Board all such sums as the Minister for Industry and Commerce shall from time to time certify to be reasonably and properly required by the Board." Those are the three main things in the Bill. With regard to the sum of two million pounds I wish to have it at my disposal for the Board's purposes. Instead of that sum being handed over as in the previous Acts in certain half-yearly sums on a demand made by the Electricity Supply Board, I propose that it shall now be handed over as the Minister for Industry and Commerce shall from time to time certify to be reasonably and properly required by the Board.
In addition to these three things which are in the Bill, there are two other matters which are somewhere in the shadow of the Bill. One is the question of why the Executive Council accepted certain resignations of the members of the old Electricity Supply Board and secondly, what is the position of the present part time members or, as they are generally called, the business representatives who are associated with the Board in a part-time way. All these five things are somewhat tied up with the past history of the Electricity Supply Board and of the Shannon scheme, and I propose to give that history so as to secure the perspective in which these matters should be discussed.
There have been put to this House two main Bills dealing with the Shannon, one in 1925, the Shannon Electricity Act, which was amended in 1929, in its financial provisions, and secondly the Electricity (Supply) Act of 1927, which was amended in 1929 in certain small respects, and amended further in 1930. As far as the first of these Bills is concerned, it has very little if anything whatever to do with this general measure, but I refer to it to get the scheme properly set out. In the first Bill, the Shannon Electricity Act, the sum of £5,200,000, afterwards raised by the 1929 amending Bill to an effective sum of £5,700,000 was given for the construction of what was described and defined in that measure as the Shannon Works.
In addition there was a certain sum of money, which in the 1929 Act became £156,000, set aside to meet deficiencies and interest in the non-productive years. There were therefore the sums of £5,700,000 if we take the second Act plus this sum of £156,000, and for that there had to be constructed the whole Shannon Works as described in general in the Siemens Schuckert plan of many years ago. The sum of money I mentioned, £156,000, was supposed to be the sum which, with the revenue derived from the sale of current sold in bulk, would remunerate all the expenditure necessary in connection with these works and their construction, provide the interest payments, repayment of principal, depreciation, renewals, repairs, management and so on. Some of these things were not to be brought into account in the non-productive years, but it was estimated that if the maximum current that, in a dry year, would be produced for sale at the outskirts of towns and villages, namely, 134 or 138 million units, could be sold at a figure established by the experts, a sum of money, roughly £500,000, would be secured, and that would be sufficient to pay all I have spoken of, the interest, sinking fund, renewals and repairs, management and operation and other expenses of that kind. That was the first system, the Shannon system properly so-called.
I stated when the 1929 Act was under consideration that the sales figure of .84 of a penny mentioned by the experts, in their report, and taken as the basis of the calculation in the 1925 Act, had obviously suffered an enlargement and would now have to be raised to .9 of a penny. The position then was stated to be that if a sale of 138,000,000 units could be secured at .9 of a penny, we would have secured the all important sum of £500,000, which would meet all the Shannon construction expenses, interest on advances, repayment of capital and so on. That was the Shannon Bill proper. There was an Electricity Supply Act which dealt with distribution as apart from generation and long distance transmission. I want to go in more detail into the provisions of that Act. Under that Act a sum of money was voted—two and a half million pounds. It was voted to the Board to enable them to carry out all the purposes that were stated in the 1927 Act. It was the sum that was estimated to be the proper sum to enable them to carry out all the obligations imposed on them under the 1927 Act. They were to carry out all distribution, where it meant new net works to build new net works, and where there were old works to take them over, and if they were privately owned to take them over at a fair valuation, which in default of agreement was to be decided by an arbitrator, and to reconstruct such old net works as had to be reconstructed. It enabled them, or it was supposed to enable them, to have money free for house wiring, for the purchase of appliances for sale, for the provision of show-rooms, to engage in manufacture and to meet their own management and office expenses—that and the revenue they would derive as they went along.
The sum of money, as I say, was £2,500,000. Based on that sum, the scheme of the 1927 Act was this: A board was set up, a board which was declared to be independent from day to day inquisition either in Parliament or elsewhere. The consideration—and I stated that several times during the course of the debate on the 1927 Act— for this great freedom which the board was to be given was that there should be the fullest publicity possible of all their activities and, in particular, that there should be special publicity with regard to their accounts. The Dáil decided that there were certain accounts which must be produced. They detailed those. They said: These must be brought forward with regard to the Board's activities in a certain year. They said further that there might be produced such other statistics and returns as the Minister for Industry and Commerce thought fit, under a certain section, to demand. There was independence balanced by publicity and particularly by publicity on the financial side.
The Board was to have a maximum term of appointment of five years. In the clause establishing them, there was a sub-section to say that the members of the Board were subject to removal at any time by the Executive Council if in their opinion the effective and economic performance of the functions of the Board rendered dismissal necessary. Again, counter to that, was the fact that, if a dismissal took place, a statement of that fact and the reason for it had to be put before both Houses of the Oireachtas.
There are several sections which dealt with the accounts. Section 7 is the main section dealing with these. Section 32 is the section to which I have referred already, the section which ordained that an annual report must be made, and which also gives the Minister power to demand certain statistical and other returns as he may require them, and to publish these if he thinks fit to demand them. The Board were given £2,500,000, but they were not given any borrowing powers. They were limited to the sum of money set down, that is, £2,500,000 and this was to be advanced in certain instalments—or at least not more than a certain amount of it would be claimed in half yearly instalments. The interest was to be paid on each advance as made, but repayments of advances, that is to say, sinking fund arrangements, were not to begin until after the appointed day. The appointed day was to be the end of the year 1932, or such later day as might under stated conditions be determined. The Act looked to an appointed day, unless otherwise determined, of the 1st January, 1933. Interest on anything given to the Board had to be paid running from the date upon which each particular advance was made. Repayments of capital were not to start until after the first of the new year, 1933. Similar conditions held with regard to the Shannon Works, and the moneys involved in them as and when they were handed over to the Board. As each piece of the Shannon Works, representing a certain capital sum, came into the hands of the Board interest began to run on from that date. Repayment did not start till after the appointed day.
The Board was given a direction as to its operations under the Act—rather it was given an order as to its operations on the finance side. Section 21 detailed the system of charges that were to be made.
The first sub-section laid down that the charges must be such before the appointed day as would conduce after the appointed day to certain conditions being met. These are detailed in sub-section (2) of Section 21. That sub-section provides that charges for electricity, goods or services, should be
"fixed at such rates and at such scales that the revenue derived in any year by the Board from such sales and services together with its revenue (if any) in such year from other sources will be sufficient, and only sufficient (as nearly as may be) to pay all salaries, working expenses, and other outgoings of the Board properly chargeable to income in that year (including the payments falling to be made in such year by the Board to the Minister for Finance in respect of interest and sinking fund, payments on advances out of the Central Fund), and such sums as the Board may think proper to set aside in that year for reserve fund, extensions, renewals, depreciation, loans, and other like purposes."
Later sections gave power to the Board to acquire existing undertakings. Section 39 details the process and the results of acquisition of authorised undertakings. Authorised undertakings were distinguished into two types, authorised municipal undertakings and authorised private undertakings. As far as an authorised private undertaking was concerned the Board might make a vesting order, and after certain formalities that are detailed had been attended to, a fair value was determined, fixed by a certain process, if not by agreement. On becoming possessed of such property under the order the Board had to set aside the determined sum. In regard to municipal undertakings the Board had power to take these over. There did not vest in the Board the liabilities of the previous undertaking, but the Board under Section 39 of the Act was bound to indemnify and keep indemnified the undertakers against all undischarged liabilities, borrowings, etc., previously made for the purposes of the undertaking.
That is, more or less, the scheme of the 1927 Act. I would like to summarise it. There was to be set up a Board, independent but subject to removal. The Board was bound to publicity, especially in regard to its finances. It was bound to the production of certain specified accounts. It was bound further to produce, at the request of the Minister, certain statistical reports. These were to be published under certain circumstances. The Board was bound to take over all the undischarged liabilities of authorised municipal undertakings on condition of indemnification and was bound to set aside a sum of money equal to the fair assessed value of privately-owned authorised undertakings. The Board was bound up by the limitation of the sum of two and a half million pounds given to it. It had no borrowing powers given to it, and therefore it had no borrowing powers under the law. It was given an instruction that its charges must be such as to conduce to meet all the things I have detailed: salaries, working expenses, interest, sinking fund, reserves, extensions, renewals, depreciation and so forth. It was clear from that, I think, that the indication that Parliament gave to the Board was that it must run the scheme on the basis of supplying people at cost, but at a cost which had to include all the items that are specified in the particular section to which I have referred. The costs were certainly to include these items after the appointed day and before the appointed day the charges must be such as to conduce to these expenses being met afterwards.
There may be inquiry made as to how this sum of two and a half million pounds was arrived at. There were many checks put on that sum when it was first considered. I mentioned on the Second Reading of the 1927 legislation that certain groups outside this country had shown a tendency to come in here with a view to securing the service of electricity in the country, and that one group in particular had advanced to the point of making very detailed calculations as to the amount of capital that would be required for purposes similar to those that were afterwards incorporated in the electricity supply legislation. I had that particular financial statement in my possession and discussed it with a person who afterwards became a member of the Board. I had from him memoranda prepared on various points which indicated that for all the purposes set out in the legislation the sum of two and a half million pounds should have been not merely sufficient, but amply sufficient, to meet all that the Board had to do. I had, in addition, material for a further test which was applied at that time. I had before me the capital accounts of a great many undertakings in many parts of the world, and from those it was clear that the ordinary disposal of capital was almost in equal one-thirds as between generation, transmission and distribution. As we had previously set out a very carefully considered and expertly advised scheme to provide £5,200,000 for generation and transmission, our next calculation was that the sum of two and a half million pounds should be taking it as a rough figure, a proper sum for the purpose set out in the 1925 Act. That was the legislation, and that was the sum of money. These were the directions that to my mind the Oireachtas gave to the Board to be appointed, with regard to this duty.
The Board was in due course appointed. I found myself at a very early stage in the Board's life faced with the question of what exactly was my responsibility for the Board, and if I had any responsibility at all how was it going to be exercised. There was the section in the Act, to which I have already referred, giving the Executive Council power to dismiss, in the interests of the effective and economic performance of the duties of the Board, any member or all the members of the Board. It seemed to me that where power to dismiss was given, in other words power to decide when the interests of the effective and economic performance of their functions by the Board demanded certain people's dismissal it was part of some Minister's duty and his right to satisfy himself as to the effective and economic performance of their duty by these people.
There was an accidental circumstance which happened at that time and which drew me into very close contact with the Board. The construction works were not complete. There were certain works which I was still carrying out and was clearly bound to carry out under the 1925 Act. I had contractors on the scene for the purpose of carrying out these works. It was represented to me that there were certain other works which the Board required and which could most effectively be carried out by my contractors with the plant that was on the spot at the time and under the expert supervision of my contractors and my own engineering staff. The Board put it to me that acting for the Board on an agency basis I should get my contractors to undertake specified work for the Electricity Supply Board. That led to a certain amount of investigation as to what these works were and to the type of control to which I was myself properly subjected on the construction of the works. Consequently I had to exercise a limited supervision over the works which the Electricity Supply Board requested my Department to have carried out for it.
In that way I was thrown into certain touch with the Electricity Supply Board, probably closer touch than I would have insisted on having if I was merely operating the section which gave me power to dismiss. But, let me repeat. Nevertheless, I hold that under the 1927 Act unless the power to dismiss was only an empty threat, then the people who might have to use that power in certain circumstances must have some right of investigating how the affairs of the Board were going.
At a very early stage in the Board's career, I sent letters to them stating that the construction works had got to a certain point, that the finances of the construction works to that point were amounting to a certain figure, pointing out that the final cost of electricity depended, not merely on the cost of generation and transmission, but the cost of distribution, and asking for an assurance that they were optimistic— no further than that—that they could, within the limits of the money granted by the Oireachtas, carry out all the work put upon them in such a way that at the experts' price sufficient units were likely to be sold as would recoup the money expended on the whole scheme and meet all necessary outgoings. I got very little satisfaction from the early letters. I did not expect a great deal of satisfaction then from letters written at the end of 1928, but in the course of correspondence that followed one fact clearly emerged, and that was that the Board felt that the sum of two and a half millions which they were entitled to demand from the Minister for Finance did not include any undischarged obligations that they took over from municipal undertakings. I had some conferences and wrote some letters on that point. In the conferences I pointed out that the undischarged liabilities were clearly in the sum which the foreign concern had decided to expend if it were allowed to electrify the country, and as that was the basis of our calculation, the undischarged liabilities were clearly intended to be within the sum put at the disposal of the Board. I argued that the undischarged liabilities, whatever they might be at the date of the vesting of the municipal undertakings in the Board, must be subtracted from the two and a half millions, and that the residue was what the Board might demand.
I got a statement from the Board at one time which showed a certain expenditure to that date and certain commitments beyond that date, and when I added the undischarged liabilities as estimated by me—for I had no precise knowledge of them—I found that the total sum had gone substantially higher than two and a half millions. A letter was again sent calling attention to what we felt was the intention of the Oireachtas with regard to this, but, nevertheless, asking if they could show us that this money could be remunerated. I stress this latter point as the main demand ordinarily made by us. In conversations or correspondence I had with members of the Board I frequently said or implied that once any stage of the Shannon had been completed in such a way that the accounts could show that it was financially sound, it would be an easy matter to get money for further development. I instanced the type of Bill that is brought frequently here with regard to the Telephone Capital Account and said there might be debates as to whether or not the telephone system was properly functioning but there was no hesitation in granting further moneys, because people knew where they were under that particular system.
My endeavour was to get some stage of the Shannon completed and its finances rounded off, showing the units being sold, the price at which they were being sold, the money that had to be remunerated, capital spent on it and all other charges met. As soon as that was shown it would be easy to provide further money for development. Although I raised the undischarged liabilities point at the very beginning, the moment I heard that undischarged liabilities were not regarded as being in the two and a half millions, nevertheless, I wrote to the Board asking it to show how this capital sum of two and a half millions, plus the surplus which I saw they had announced they were likely to require, was likely to be remunerated, the basis upon which the calculation that it would be remunerated rested. Again, I got no satisfaction on that point.
Eventually I took the opportunity offered by the introduction of a Bill in 1929. I had previously written to the Board to say that if the two and a half millions was not clearly to be read as including undischarged liabilities on acquired undertakings, then I would put that clearly into the Bill and go with it to the Dáil. I felt that that was the only thing that could be done. Deputies who were here at the time will have to search their memories for these debates, but I certainly was under the impression that I had left the House under the impression that the two and a half millions was the full capital sum the Board would have to remunerate, that it was inclusive of the undischarged liabilities, and that they certainly had not two and a half millions, in addition to the other sums. I argued to myself that that was clear and I used this argument to others to demonstrate to them our clear intention. What was the good of imposing finance restrictions, and not giving borrowing powers if the Board had this way of easing its financial position, that they could as controllers of authorised undertakers, and they had power to control, make these undertakers incur certain expenditure prior to being formally acquired, regard that fresh expenditure as an undischarged liability, and so free a larger amount of the two and a half millions for their own building expenses? Finally, arguments not having been much good, I brought in my 1929 Bill. I called the Board together and told them that I was going to insist on moving two amendments. One was a clause making it quite clear that the two and a half millions did include undischarged liabilities, and the other was that in Section 12 (1), which says: "the Minister for Finance shall advance" I was going to put in the word "may" instead of "shall" and by this change have a definite declaration in the Bill that until the construction period was over, as long as there was overlapping, and as long as I had certain contact with the Board's operations, I was clearly faced with responsibility. The Board met me under these circumstances and made an appeal to me not to put in the two amendments. They gave a written guarantee that they would scale down their expenditure so as to keep within the two and a half millions, minus the undischarged liability of the acquired undertakings. They made certain arrangements with regard to liaison, so as to keep a better flow of information between my Department and the Board, and on these two guarantees being given, I agreed not to bring in these amendments to the 1929 Act.
That meeting was held in the beginning of July, 1929, and the agreement was reduced to writing in August of that year. After that, operating on the new liaison arrangements, I asked again for certain information. The information I asked then and later can nearly all the time be summed up in the request put in letters during August or September, 1929, to this effect, that we wanted an assurance that the Board could, within the moneys given to them by the Oireachtas, carry out all the work put upon them, and that they could do that in such a way that the charges they would fix would remunerate all the capital put into it, and enable them to pay all the other expenses set out in the Act. Always we persisted in this, that we wanted a clear picture of their finances. Letters passed and certain information was given—certain very incomplete and unsatisfactory information was given. Finally, making a calculation from figures put before me in a letter in the early part of 1930, I issued a letter stating that in my opinion the Board had definitely gone beyond the sum of money which they had agreed was at their disposal. In the month of April, 1930, I had a letter from the Board proving—at least the letter began by saying that the purpose of the letter was to show that the Board had kept within the bounds of the two and a half million pounds, minus the undischarged liability. In the month of June, 1930, the Board made another approach to me, stating that they felt that they could not any longer keep within that limit unless they were to close down abruptly on certain schemes, and they felt that a sudden stoppage would cause wastage, and they asked that they should be relieved from any agreement they had given. I think somewhere about a month later they advanced to a further point, not so much that they could not any longer keep to their agreement, but that they had not kept to the agreement. Later I got a letter which announced to me that it was then clear that in December, 1929, the Board had passed the limits of the expenditure sanctioned—that at least in January, 1930, they had gone beyond the limits of the money that was allowed to them.
