Dáil Éireann díospóireacht -
Thursday, 19 May 1932

Vol. 41 No. 15

In Committee on Finance. - Motion for Approval with Modifications of the Customs Duties (Motor Car Bodies) (Provisional Variation) Order, 1932.

Minister for Industry and Commerce (Mr. Lemass)

I move:

That the Customs Duties (Motor Car Bodies) (Provisional Variation) Order, 1932, which was made on the 5th day of May, 1932, by the Executive Council under Section 1 of the Customs Duties (Provisional Imposition) Act, 1931 (No. 38 of 1931), and a copy of which was laid on the Table of Dáil Eireann on the 11th day of May, 1932, be approved with and subject to the following modifications, that is to say—

(a) the duty mentioned in paragraph 1 of the Schedule to the said Order shall not be chargeable in respect of any article which is chargeable with the duty mentioned in paragraph 4 added to the said Schedule by this Resolution;

(b) the following paragraph shall be and is hereby substituted for paragraph 3 of the Schedule to the said Order, that is to say—

"3. Seventy-five per cent. of the value of the article on the following articles, that is to say—

Component parts and accessories of motor car bodies which, in the opinion of the Revenue Commissioners, constitute at importation an assembly or partial assembly of such parts or accessories."

(c) the following paragraph shall be and is hereby added to the Schedule to the said Order, that is to say—

4. Seventy-five per cent. of the value of the article or the sum of thirty-seven pounds ten shillings, whichever is the greater, on the following articles, that is to say—

Every motor car body imported as part of a complete car and so imported for sale by a trader in motor cars where the value of the chassis of such motor car does not exceed the sum of one hundred and twenty pounds and such motor car is imported on or after the 6th day of May 1932 and before the 7th day of August 1932 and is, in the opinion of the Revenue Commissioners, at importation a new motor car constructed, designed, and intended for the carriage of persons otherwise than for reward.

An Ceann Comhairle

Owing to a typographical error Deputies will observe that the last line on page 3, and the first three lines on page 4, must be deleted in the original Order. These lines are a duplication.

Mr. Lemass

This is the Resolution which increases the duty on bodies of motor vehicles. As I said originally, the imposition of this duty has brought results in a shorter period of time, and to a much greater extent than even I hoped when it was decided on. Every motor manufacturer whose cars sell in any quantity in this country has made, or is making, arrangements to have the bodies assembled here, with one or two exceptions, and I have no doubt that these one or two firms which have not yet made arrangements will proceed to do so in the near future. In the case of some of the firms, arrangements are in contemplation to include not merely the assembling of the bodies but the chassis, and it is anticipated that very considerably increased employment will be given in centres in which the existing works are or in which new works will be established, and that as a result of the assembling of the bodies here, and the decision of the Executive Council to remit entirely the duty chargeable on the parts of bodies, motor cars will be cheaper when these Irish bodies are available than they are at present or have been in the past.

The Order was imposed for similar reasons as the Order in respect of horse-drawn vehicles. In consequence of events, considerable importations of cars were anticipated and the figures which were available showed that, in fact, some increase had taken place. The Executive Council was satisfied on my report, that the Order should be made, and the Order was made. The Dáil is now asked to approve of it with the modifications set out in the Resolution. These modifications relate to the following Resolution on the paper, and it would be, I think, much more convenient for the Dáil, if both were discussed together. Number 4 on the paper is the Resolution designed to remit in part the duty chargeable on the chassis of a private car when imported as part of a completed car before 7th August next. The decision to make that remission was arrived at when I was satisfied that all those concerned in the importation of motor cars here were going to co-operate fully with the Government in having a body building industry established. I am not sure to what extent the remission is necessary. In the case of some makes of cars, there is reason to hope that the Irish built bodies will be available before the date mentioned in this Resolution. However, we have decided upon it, and I have received from the firms engaged in the importation of motor cars a specific guarantee that they will not, during the period of the remission, import a larger number of cars than were imported by them in the same months last year. The second part of the Resolution relates to the remission of duties heretofore chargeable on parts of bodies. These parts were always subject, since the establishment of the Free State, to a duty of thirty-three and one-third per cent., with a two-thirds preferential rate. We are remitting that duty entirely, so that unassembled parts required in the construction of the body will come in here, free of duty, and it is in consequence of the fact that the assembly of the body should not cost any more in this country than in any other country, that we expect a reduction in the price of motor cars to take place.

The main opposition to the application by the coach-builders was based on the impossibility of manufacturing in this country the steel stampings out of which these motor car bodies are built. In certain types of cars, for which there is a very large sale, the bodies are now constructed entirely of steel, and huge stamping plants are required to manufacture the parts. It is not intended that we should have these parts manufactured here. They will be imported free of duty, and assembled here, and by far the greater part of the labour involved in the making of a motor car body is involved in the assembly, and not in the making of the parts. That labour will be engaged here rather than abroad.

In respect of omnibuses and commercial cars of all descriptions, Deputies who have read the Tariff Commission's report, even though they recommended against the application, are aware that there was no opposition to the application, and that the Irish firms engaged in this industry were competent to supply better bodies for commercial cars and omnibuses than could be imported, at a price not exceeding that at which imported bodies were available, and it was anticipated, and admitted, that following a development of the industry, after the imposition of the tariff, prices here would tend downwards, so that we would be able to get these bodies at prices lower than we got them heretofore. The competency of the industry to supply all our requirements in bodies of commercial cars and omnibuses has never been questioned. Even the Society of Irish Motor Traders did not oppose the application for the duty in respect of this class of bodies.

The third part of the Resolution relates to the change in the law which it was desired to effect, and which would have been made, irrespective of whether the duty was imposed or not. It facilitates a person who comes into this country with the intention of residing here permanently, to import a motor car, previously used by him, free of duty. I move the Resolution approving of the Variation Order, with the modifications suggested, and the Financial Resolution giving this remission in respect of the duty on the chassis. The Financial Resolution is:

(1) That the duty imposed by Section 11 of the Finance Act, 1928 (No. 11 of 1928), as amended by subsequent enactments, shall be charged, levied, and paid on the following articles at the rate of an amount equal to fifteen per cent. of the value of the article in lieu of the rate mentioned in the said Section 11, that is to say—

On every motor car chassis which is imported for sale by a trader in motor cars on or after the 6th day of May, 1932, and before the 7th day of August, 1932, and is so imported as part of a complete motor car which is, in the opinion of the Revenue Commissioners, at importation a new motor car constructed, designed, and intended for the carriage of persons otherwise than for reward.

(2) That the provisions of Section 8 of the Finance Act, 1919, shall apply to the duty mentioned in the foregoing paragraph of this Resolution with the substitution of the expression "Saorstát Eireann" for the expression "Great Britain and Ireland" and as though the articles mentioned in that paragraph were included in the Second Schedule to that Act in the list of goods to which two-thirds of the full rate is made applicable as a preferential rate.

(3) That the duty imposed by Section 11 of the Finance Act, 1928 (No. 11 of 1928), as amended by subsequent enactments shall not be charged or levied on any of the following articles imported into Saorstát Eireann on or after the 6th day of May, 1932, that is to say—

Component parts and accessories of motor car bodies which, in the opinion of the Revenue Commissioners, do not constitute at importation an assembly or partial assembly of such parts or accessories.

(4) That whenever the Revenue Commissioners are satisfied in respect of a motor car which is being imported into Saorstát Eireann on or after the 6th day of May, 1932, and is in their opinion constructed and designed for the carriage of persons, that

(a) the importer of such motor car resides or intends to reside permanently in Saorstát Eireann, and

(b) such motor car had been previously used (otherwise than for the carriage of persons for reward) by the importer or by his family or household, and

(c) such motor car is being imported for the use (otherwise than for the carriage of persons for reward) in Saorstát Eireann by the importer or by his family or household,

the Revenue Commissioners may, subject to compliance with such conditions as they may think fit to impose, permit such motor car to be imported without payment of the duty imposed by Section 11 of the Finance Act, 1928 (No. 11 of 1928), as amended by subsequent enactments, including amendments made under the Customs Duties (Provisional Imposition) Act, 1931 (No. 38 of 1931), in relation to the rates at which such duty is chargeable.

(5) That any duty which has been paid before the passing of this Resolution and is by virtue of this Resolution not chargeable shall be repaid.

(6) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

Mr. McGilligan

It is very difficult at short notice like this to deal adequately with the resolution, and I am not going to pay much attention to the precise figures of the duties chargeable under the Resolution put before us. I simply want to give a statement of the case as it was made in the recommendations of the Tariff Commission, when the application previously came before it, and to give, very briefly, what the position was, as they viewed it, and to base on that, inquiries for information hereafter, as to the respects in which the situation has changed in such a way as to warrant the imposition of these new duties. The Commission more or less divided out their findings on bodies of motor vehicles into three sections. In the first category they placed bus bodies, and in the second, bodies for private motor cars, and in the third category they made three divisions in respect of commercial vehicle bodies. They divided these into bodies made, more or less, to order, and of a special pattern, bodies that are made of standard type, of the closed standard type, and, thirdly, the open type of fitting, the open truck or lorry body.

I have not yet considered these Orders, but I am assuming that all of these come within the scope of the duties—bus bodies, bodies for private cars, and all commercial vehicle bodies. With regard to bus bodies, the situation is much as the Minister has stated, that by reason of the effective use of the powers given under the Road (Motor Vehicles) Act, the situation had come to the point that very few buses were being imported here, and that was stated in the Report. There was a further statement in the Report that a tendency which had shown itself was likely to develop, the tendency being that the big firms who were going to engage in motor transport of the bus type were likely to manufacture the bodies for these buses and not rely upon imported articles, as was previously done, and that that tendency would have been accelerated by the amalgamation of certain groups of companies even though there had been no element of coercion put upon them through the interpretation of the powers given under the Road (Motor Vehicles) Act.

The situation therefore is, that as far as bus bodies are concerned, Irish firms were getting almost the entire work to be had on this type of manufacture. The manufacture was going out of the hands of ordinary private firms and getting more or less into the hands of the two or three big transport companies in the State, and that was a very desirable tendency. In fact, it was stated several times by representatives of some of these outside firms who gave evidence that in the end they did not regard contracting for bus bodies as a very lucrative side of the business; that, in fact, they had to cut prices, and found that the cutting was so severe that in the end they had to get themselves into what amounted to a ring to decide upon the price which they should offer, and to stick to that price. By reason of that, of course, the inevitable development took place that the big companies decided that they would build for themselves, and that is what they are doing.

The only effect that this tariff can have on bus bodies is not to give more employment, but to put a weapon into the hands of the workers in the three big companies mentioned, either to get a greater return by reason of the tariff in the way of a demand for increased wages, or else to get that in another form by reason of decreased output when they are at work. The only possible use there was of the free market or of the freedom of importation of bus bodies was that if and when workers did proceed to operate again they were in a closed market and there was always there the fact that when they pushed prices above a certain point the importation would again come in and you would have economic considerations applying once more. So far as getting extra employment or benefit to the country is concerned, it was not there. Obviously the Order is useless or nearly so. As far as bodies built to a person's own design for commercial vehicles are concerned, the Irish firms were getting as much of that as there was in the country. Whether they were efficient or not and up to the requirements of the people who gave the orders, I cannot say. There was not a sufficient number of these orders being placed to allow any great conclusions to be drawn on the matter. The imposition of this tariff will not help the industry or workers in any regard in respect to this type of body.

Similarly with regard to the open body truck or lorry, there was pretty good evidence that the Irish firms were able to supply the demand that there was in the country, and that the only thing which, apparently, was lacking was sound business push in the way of advertising what they could do, because it was clearly demonstrated before the Commission that where any of these firms had pushed themselves and made known what they could do, they got orders almost immediately. Evidence was given by one firm, in particular, that they had abandoned the practice of getting open bodies anywhere except in this country. I think these people even said that they had, by advertising for the manufacture of these bodies, increased the sales for them. The only thing that was at the back of any lack of manufacturing in that item was, therefore, the lack of business push in the sense of advertising on the part of the people constructing them.

There were two points upon which the majority of the Commission were quite definite in their report. One was with regard to the provision of the standard closed body for commercial vehicles and the other with regard to the private car bodies. The Commission were definitely of opinion that the Irish manufacturers could not produce at anything like the same price, if quality were taken into consideration, as those which could be brought in from outside, and they gave very excellent reasons for the belief that they asserted. They did state, I think, that the ordinary output of even the smaller firms in England that catered for the standard closed body for vans amounted from 5,000 to 7,000 per annum, and that that seemed to be the smallest economic unit of manufacture possible. When related to the needs of this country that one fact itself established that if these bodies were going to be made here, they were going to be made at an increased cost eventually to the purchaser, or else there was going to be some modification in the standard type which was not going to produce as good an article or an article that would wear as well.

The same thing very nearly was said with regard to the bodies for private motor cars. Most of these are standardised amongst the different makes. The element of mass production entered into it more than anything else probably. With regard to the saloon body for the private motor car, it is not a question of having the production of 5,000 to 7,000 in the year, but something which would amount to either double or treble that. Unless there is going to be a disposition in the country to restrict the types of motor bodies, I do not think there is very much hope that the purchaser, hereafter, of a motor car is going to have, apart from the same variety of type, the same quality at anything like the same price as he had with the other.

As a matter of fact, that was investigated to the point that about five years ago when, tentatively, a suggestion, I will not say an offer, was made to one firm as to whether it would not pay them to set up an assembling factory in this country if they got the entire monopoly of the business, and the answer was that it would not pay them. If that be the position, what is the likelihood of increased charges if we are going to have the same choice as before and going to have all these companies coming in with assembling plants, which will cost a certain amount to put up in this country, and going to produce these so-called standardised bodies in this country? It is going to mean a very big increase in the cost of the finished motor car here. It is going to be more so in present circumstances than even when the Tariff Commission reported, because in these days it was not just quite clear whether or not the public fancy was going to turn away from the fabric body or to remain with it. But the tendency does seem definitely to have gone away from the fabric body, and unless we are going to return to that in this country, and that will make the final cost still more heavy and expensive, there is no great possibility of having any assembling, unless it is just the last remnant of assemblage, done in this country.

On that point one must turn to the other consideration of the employment to be given. I have not the exact details of the calculation at the moment, but a calculation has been made. If you take the elements of the work that go into the production of a motor car, the chassis and body, and even divide the body work, taking it as a separate item, amongst the proportion of the items afterwards assembled, I do not think that as much as 20 per cent. of the work goes into assembly. And that is the extreme limit of what can be got here, and it will be got, as I say, under conditions of extreme expense and possibly hardship to the community. Even if we are going to get a good amount of assembling done with increased expenditure to persons who buy, it is going to have the inevitable result that the price will rise in the country, that there will be a slackening off in the demand at the increased prices, that the slackening off in the demand will react on the previously increased prices leading to a still further increase of price. Eventually we will get the price up to a point that even a tariff like this, which is meant to be crushing, will not have the desired effect, and despite the attempt made by your crushing import to get assembly in the country it may be more profitable for people still to import the finished car from outside.

I am not speaking with any degree of accuracy on these Orders because I have not had time to relate one to the other. It is also very difficult, seeing that we got this last financial Resolution as usual only in our hands this morning to make the relation. This point with regard to the amount of cost can be very much more easily challenged at a later stage when it will be possible to take the report of the Commission in relation to the Orders, and to get at the items of prices and the percentage of work and so on. Also we may be able to get some better information as to the possibility of even an assembly business being started in the country. I again call attention to the Order and to the peculiar phrase in paragraph 5 re importation of a thing which had not been imported previous to its exportation. I would like again to have an answer to the question how you can re-import a thing which had not previously been imported.

Mr. Lemass

On the last point raised by the Deputy I will not offer an opinion. On the main case he made I have this to say that I am really astonished that a person who held the position of Minister for Industry and Commerce in this country for ten years should have such very little knowledge of one industry that is or should be one of the most important in the country. I understand now why it was that when I came to the Dáil after the Tariff Commission Report was published with a resolution asking the Dáil to disagree with the Tariff Commission's Report, why, after having made a case for the resolution, the Minister as he then was, sat silent, and got the Dáil to vote down the resolution without offering any explanation for his action. It is quite obvious now that it was because he had no case to make against the motion, if the only case that he could make against the tariff is the one he has voiced. First of all, so far as the importation of omnibuses is concerned he is wrong in saying that there is no importation here. Secondly, so far as commercial cars are concerned the Deputy is wrong in saying there is no importation of them—there is, as anybody who studies the trade and shipping statistics will find out for himself. Thirdly, as to the open truck, it is true that the completed open truck is not imported in quantities, but the only work which the importers do not do is to put the wooden box in at the back. It comes in with the hood and cab and driver's seat and everything as part of the chassis. This must stop. The work can and will be done here.

As far as the standard closed van is concerned it is quite true the Tariff Commission said this cannot be made at a competitive price here. The Tariff Commission were wrong. The Deputy will remember that when the Tariff Report was published one coachbuilder challenged him and the Tariff Commission and the Department of Industry and Commerce to submit him to the test in his own works under the supervision of officials of the Department of Industry and Commerce, and he would build one of these vans. "I shall build one of these vans, and complete it out of parts entirely in my own works, and you can take into account the cost of parts and the labour and allocate a certain portion of my overhead charges, and I will build that van at a price that will enable me to sell it at a reasonable profit and at the same price as the imported van is produced. So that mass production methods can be solved." The challenge was not accepted. I have no doubt that the coachbuilders here are in a position to produce that class of body at a price that would enable them to sell at the catalogued price which the importers are offering here.

Mr. Dillon

When the Minister spoke of the chassis, does he include the wings and the dashboard?

Mr. Lemass

No, the chassis includes the mud guards, in accordance with a definition adopted here. As far as private cars are concerned there are several points on which the Deputy was wrong. The first is as regards the labour costs in the assemblage of parts. I refer him to Paragraph 16 of the Minority Report:—

It is important to note that in some instances the value of labour in assembling of standard parts as compared with the value of labour in making those parts, is as four to one; in one case at least, the value of labour in assemblage runs to 90.5 per cent. of the total labour costs on the body of the vehicle. In only one case of the many examples supplied to the Commission does the value of labour in the assemblage of the body of the motor car fall below 50 per cent. of the total labour costs involved.

The Deputy doubts whether it is possible to get produced here, under the duty, bodies with the same quality, and at the price at which they can now be imported. He is wrong, and I think that fact will be demonstrated to the satisfaction of the members of the Dáil before long. There is no country in the world, to my knowledge, in which the motor body assembling industry does not exist except this. We are now going to get it here, and the Irish coachbuilders and their skilled workers are as competent to do that class of work as the workers of any other country.

It is true certain motor manufacturers have popularised the all-steel body and the manufacture of parts for all-steel bodies is not possible here, but it is equally true that the assembling of these parts is frequently done by those manufacturers in different works from those in which they are manufactured. If the parts can be transported from the factory in which they are made to a factory in another part of the country in which they are assembled across the water, they can also be transported across the Irish Sea and assembled here and this is what we propose to do and manufacturers are making the necessary arrangements to do the work. The cost of assemblage here should not be higher than anywhere else, and the fact that the duty will have been remitted upon the parts and that bodies assembled here will pay no duty whatever will enable them to be sold cheaper in competition with the imported bodies. I am quite satisfied that if there is a single tariff which the Government has imposed which justified itself to the full in the shortest possible space of time this is that one. Within three months we shall have reached a position in which no new motor car will be offered for sale in this country except with an Irish built body.

Mr. Good

Can the Minister say that within three months it will be possible to get a car assembled here at the same price that that car was imported? If so, is he prepared to introduce a clause into the Finance Bill that will guarantee, provided we pass this Resolution, that such will be the case, in other words that he will see that what he has stated here will be carried out finally?

Mr. Moore

Would the Minister explain with regard to the new paragraph 4 that is added, what is the object of excluding cars which are imported for the carriage of passengers otherwise than for reward? Apparently the idea is that the car must not be sold to a hirer. I do not know how that could be guaranteed. I do not know how that could ever be arranged. The importer can only get an assurance from the purchaser that he is not going to use the car for hire and if he were to get such an assurance, it would be probably worthless. Then again, a car may not be a week sold until it is resold. I would like to know what is the idea behind this paragraph or am I right in assuming that it is intended that such cars as are brought under the special privilege cannot be used for hireage purposes?

Mr. Lemass

The wording is "in the opinion of the Revenue Commissioners at importation a new car constructed, designed and intended for the carriage of persons otherwise than for reward." In other words, the intention is, of course, that this concession will apply only in respect of a passenger car. The wording there gives to the Revenue Commissioners that discretion. The car must, in their opinion, not have been designed, constructed or intended for the carrying of passengers for reward.

Mr. Moore

Must not it be different from the ordinary private motor car, so different that it would suggest use for hireage purposes?

Mr. Lemass

Yes.

Mr. Moore

There is just one other question that I should like to ask with regard to Imperial preference. Up to the present, when it was proved that the complete car was manufactured within the British Commonwealth to the extent of 25 per cent., it became the subject of the privileges of Imperial preference. Now there is going to be separate valuation for the car and chassis. Will the Minister say, in estimating whether the car is entitled to the Imperial preference duty, that it will be the complete car that will be considered in future, as it has been in the past, or will the body now be valued separately from the chassis? Must the chassis be in itself the product of at least 25 per cent. of British Commonwealth labour and similarly must the body have the same proportion of British Commonwealth labour?

Mr. Lemass

I assume the Revenue Commissioners will administer the duty so as to regard the body and the chassis as two separate articles. To get the preferential rate 25 per cent. would have to apply to the chassis and the body.

Mr. Moore

Seeing that this concession that has been given will operate only for a short period, I would ask the Minister to consult with the Revenue Commissioners with a view to the avoidance of that, because I think it would necessitate two separate invoices. That would obviously be particularly troublesome to importers of American cars, because these things cannot be fixed up by a concessionaire in this country without consultation with the manufacturers, and by the time he had consulted with the manufacturers and arranged the routine of these separate invoices the period of the concession would have elapsed. I would ask the Minister particularly to try to arrange that that would not be necessary.

Mr. McGilligan

Will the Minister say that the Deputy is right in saying that 25 per cent. is the percentage?

Mr. Lemass

It is not.

Mr. Good

Would the Minister give an answer to the point I raised?

Mr. Lemass

What is the point?

Mr. Good

To embody in legislation subsequently, that is, in the Finance Bill, some clause to the effect that when the Order is passed excluding foreign-built bodies, the public will be protected against any rise in wages here, a short clause that will ensure that we will get a motor car produced under the new arrangements at the same price as that at which it is imported at the moment.

Mr. Lemass

I think that would be a most undesirable precedent to have established. It is the intention of the Government to allow the free play of competition to fix the level of prices.

Mr. Good

How are we going to have competition if we exclude the imported article?

Mr. Lemass

There will be, in my opinion, adequate internal competition.

Resolutions Nos. 2 and 3 approved.

Resolution No. 4 agreed to.

The Dáil went out of Committee.

Resolutions reported.

Report agreed to.