Dáil Éireann díospóireacht -
Wednesday, 6 Mar 1935

Vol. 55 No. 3

Committee on Finance. - Vote No. 73—Compensation Bounties.

Minister for Industry and Commerce (Mr. Lemass)

I move:

Go ndeontar suim ná raghaidh thar £5,020 chun íoctha an mhuirir a thiocfaidh chun bheith iníoctha i rith na bliana dar críoch an 31adh Márta, 1935, chun Deolchairí ar shiúicre ar n-a dhéanamh de bhiatas dúthchais, ar thobac ar n-a dhéanamh de dhuilleoga dúthchas agus ar íleacha éadtroma híodrocarbóin minearáil dúthchais, ar a n-íoctar ais-tairac.

That a sum not exceeding £5,020 be granted to defray the charge which will come in course of payment during the year ending 31st March, 1935, for bounties on sugar made from home-grown beet, on tobacco manufactured from home-grown leaf, and on home-made mineral hydrocarbon light oils, on which drawback is paid.

This is an additional Estimate for the current financial year, and it is in respect of a new Vote. It is required to meet the payment of compensation bounties on sugar made from home-grown beet; tobacco manufactured from home-grown leaf and home-made mineral hydrocarbon light oils, on which drawback is paid. In respect of the bounties on sugar made from home-grown beet, the sub-head has been opened to provide for the payment to manufacturers of goods containing sugar of bounties to compensate, in respect of goods exported on drawback, for the loss which will arise consequent on the use of sugar made from home-grown beet, the Excise duty on which is 16/4 per cwt. less than the Customs duty on imported sugar.

The necessity for payment of compensation may briefly be stated to be due to the following reasons:—(1) The duty-paid price of sugar to the manufacturer in Saorstát Eireann is the same for home-grown and for foreign sugar; (2) the rates of drawback payable are (a) in respect of foreign sugar, 18/8 a cwt.; (b) in respect of home-made sugar, 2/4 a cwt.; (3) the exporter is consequently at a disadvantage in the foreign market to the extent of 16/4 a cwt. by the use of home-made sugar. The rate of compensation bounty has, accordingly, been fixed at 16/4 a cwt., which represents the difference between the Customs and Excise rates of duty on sugar of a polarisation exceeding 98 degrees. The actual periods during which the reduced drawback rates based on the Excise rate of duty will be operative during the year 1934-35 are somewhat conjectural, owing to the existence, when the Excise duty of 2/4 a cwt. was imposed on 13th October, 1934, of stocks of manufactured and partly manufactured goods and of imported raw sugar, all of which will rank when exported for drawback at the rates operative on that date and of the grant since then of special import quotas to certain manufacturers in respect of sugar exceeding 98 degrees polarisation.

In view of recent developments, it is advisable to make provision for possible large purchases of home-made sugar by industrial users, some of which may rank for bounty before the end of the current financial year. To be in a position to deal wth any sudden rush of claims for bounty payments in respect of early special exports of goods manufactured from such recent purchases, a provision of £5,000 has been made. The whole of that sum may not be required.

The same considerations apply in respect to tobacco. As regards the bounties on tobacco manufactured from the home-grown leaf, this compensation to tobacco manufacturers is necessitated by the fact that, although the price, inclusive of duty, paid by manufacturers for any particular grade of tobacco leaf is uniform, the drawback allowable in respect of stalks and other refuse thrown off in the processes of manufacture is less in the case of home-grown leaf than in that of imported leaf. As stalks represent some 10 per cent. of the original leaf on which duty is paid, the consequential financial loss to manufacturers would be appreciable if no compensation were available.

The basis of the bounty is the difference between the Customs and the Excise duty rates. In general, this difference is 10d. per lb., and as the quantity of leaf thrown off as waste is about 10 per cent. of the original purchases the relief to be afforded is 1d. per lb. on the home-grown leaf taken for manufacture. Under the Tobacco Act, 1934, the whole of the home-grown crop is to be absorbed by manufacturers, and the total relief in respect of the 1934 crop will necessitate payment of £3,750. So far as the current financial year is concerned, there is little likelihood of home-grown leaf from the 1934 dutiable crop being manufactured before the close of the year and a token provision of £10 has been made in consequence.

In respect of home-made mineral hydrocarbon light oils, this sub-head has been opened to provide for the payment of compensation to exporters of home-made mineral hydrocarbon light oils which will be mainly exported in aircraft or motor vehicles. The basic reasons are similar to those applying in the case of exporters of home-made sugar. Owing to the fact that the Excise drawback is 2d. per gallon less than the Customs drawback, home-made mineral hydrocarbon oils are penalised to this extent in competing for use abroad. The present rates of duty are Customs, 8d. per gallon, and Excise, 6d. per gallon. The rate of compensation has, accordingly, been fixed at 2d. per gallon. At present the average quantities exported on drawback are 55 gallons monthly. With the Excise duty operative from February 1st of this year, bounty will fall to be paid for only two months in the current financial year, and the suggested provision of £10 should prove ample to meet all requirements.

Mr. Dillon

The bounty to provide for drawback in respect of sugar content in manufactured confectionery leaving this country may cost us £5,000 and I take it that will be an additional charge on the general scheme of sugar manufacture in this country?

Mr. Lemass

Yes.

Mr. Dillon

I should like to ask the Minister if he has any idea as to the nature of the bulk of the confectionery in respect to which this drawback will be available?

Mr. Lemass

Biscuits and condensed milk mainly.

Mr. Dillon

I would also like to ask him, in connection with the special price that this sum is designed to maintain for sugar in this country, a question that I addressed to the Minister for Agriculture to-day. The Minister for Industry and Commerce, in arriving at these figures of 18/8 and 2/4, was led to them by the price determined upon by the Executive Council as a reasonable price for sugar in order to finance its production. In making that calculation he provided for a certain scale of wages to be paid to the workers in beet sugar factories, and the protection he afforded to sugar was largely appropriated to that end. When he was making that calculation in his costings, did he take into consideration the wages that were to be paid to the agricultural labourers who were going to raise the beet, or did he leave the costings of that portion to the Minister for Agriculture?

Mr. Lemass

The price to be paid for the beet was taken into consideration.

Mr. Dillon

When this scheme was first adumbrated it was explained that the old scheme was a direct subsidy and that the new scheme was that everyone was going to be asked to make a contribution, and by raising the price of sugar, increasing the efficiency of manufacture and reducing the price of beet, a joint contribution was going to be made to make it possible to manufacture the sugar without any contribution from the central exchequer.

The Minister was concerned in the price that the Executive Council would permit to be charged for this commodity. He was concerned to investigate the efficiency in the industrial units that would manufacture the commodity. Did his interest go further than that, and did he look into the costings of the production of beet in order that a fair contribution from the beet growers might be fixed upon when the reduction in the price of beet was under contomplation? If he did, I want to ask him this question: Why did he insist—I think he was right when he was insisting upon this —upon trade union wages inside the factory if he was not prepared to go on and say, "A scheme in the promotion of which I am concerned will also provide a similar standard of living for the agricultural labourers who produce the beet?"

You have secured for the labourers who manufacture the beet trade union wages and conditions which will, say, afford them a wage of approximately £2 or 50/- for a 44-hour week. But the men who are producing the beet itself, an essential element in the operation of producing the sugar, are getting, with the approval of the Minister's colleague, the Minister for Agriculture, 25/- per week for a 54 or 60-hour week. How do the Government stand over that differentiation between two bodies of employees, both engaged in an essential part of a scheme for the costings of which the Government themselves are responsible? Surely the time has come when the Minister should press upon his colleagues the absolute necessity of so revising that scheme as to ensure that labourers employed in the production of beet will get just as good a show as the labourers employed in the manufacture of the sugar. I put that suggestion to the Minister in all sincerity because I think it is a gross injustice that you should have an agricultural labourer, who is unorganised and comparatively defenceless, working under conditions which approximate to slavery, while his organised neighbour, who is working inside the factory, is getting a decent wage.

The inability of the agricultural labourer to organise effectively should commend his cause to the Executive Council and should make them peculiarly solicitous to secure his rights. Unless the Executive Council are prepared to exert themselves to that end there is no bottom to the depth to which the agricultural labourer can be pushed in order to leave, out of the 37/6 per ton which has been given for beet, some margin of profit to the farmer. There is only one way out of this problem and that is to provide for the farmer a higher price for his beet on condition that he will give to the labourers producing it a reasonable rate of wages. I am perfectly satisfied that there will be no difficulty whatever in securing that if the Government will secure for the farmer a price which will make it possible for him to pay the labourer such a wage as this House would wish him to get.

Mr. Smith

That question I understand was to put the Minister for Agriculture by Deputy Dillon on the Vote for the Minister's Department, but, of course, Deputy Dillon could not sit in to hear the Minister's reply. It seems to me that just in order to hear himself talking again he puts the same question to another Minister.

Mr. Lemass

I just rise to point out to Deputy Dillon that in determining the finances of the beet sugar scheme the Government assumed the payment of rates of wages in the sugar factories in future similar to those which had prevailed in the Carlow factory in the past, and the payment of wages to agricultural workers continuing as at the date on which the decision to extend this sugar manufacture was taken. I do not think it is practicable to devise any scheme and to operate and supervise a scheme designed to secure that agricultural workers employed upon beet production will be paid at substantially higher rates than agricultural workers engaged on any other form of agricultural production, I take it that what Deputy Dillon is contending is that the general level of agricultural wages is too low, irrespective of whether the labourers are employed on beet production or wheat production or any other form of agricultural production. I am inclined to agree with him on that. The task, however, of securing an all-round increase in the wages of agricultural workers is not going to be an easy one, and I invite the Deputy on some occasion to give us the benefit of his suggestions on the matter.

Mr. Dillon

May I point out to the Minister that to draw an analogy between the situation with which he found himself confronted in Carlow with the old factory and the situation which obtains now is quite fallacious? The Carlow factory was a purely experimental undertaking and his predecessors in office took the view that the thing was absolutely uneconomic and unworkable and determined to go no further with the development of beet sugar manufacture in this country. His Government took a diametrically opposite view and determined to make sugar manufacture from beet a permanent factor in the body politic in this country. Now, when the Minister determined to do that he must accept responsibility for making the thing a fair proposition. He did not attempt to make it an economic proposition. He jettisoned all hope of that, but he ought to have ensured that everybody would get a fair crack of the whip out of it. If he did not, the scheme is a rotten one.

After all, the scheme covers the beet from the moment of planting until it comes out as sugar into a bag. If his scheme, costing, as it does, the community over £1,000,000 per year, provides a decent livelihood for only 20 per cent. of the people affected by it, surely he cannot maintain for a moment that it is a defensible scheme. Surely the responsibility devolves upon him, who fathered it, to devise a method by which all the people who are affected by this enormous expenditure of public money will get a fair deal. It is unreasonable for him to say: "You who decided that the plan is uneconomic and determined to oppose it and to turn your back upon it must propose to me a plan for making my scheme effective although you warned me when I first embarked upon it that it would not work."

Mr. Lemass

That is not what I proposed at all.

Question put and agreed to.