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Dáil Éireann díospóireacht -
Wednesday, 22 May 1946

Vol. 101 No. 5

Public Business. - Imposition of Duties (Confirmation of Order) Bill, 1946—Second and Subsequent Stages.

I move that the Bill be now read a Second Time. The Emergency Powers (Imposition of Duties) Act, 1932, is an Act which gives the Government power to impose or amend duties of customs by Order, but requires that any such Order shall be the subject of a confirming Bill within eight months. The Order which imposed the duty of Customs on glue, gelatine and size, was made on 10th October, 1945, and it is consequently necessary, if the duty is to remain in force, that confirming legislation should be enacted by the Oireachtas prior to 10th June. The manufacture of glue, gelatine and size was a development consequent on the establishment of tanning industries in this country. The raw materials used in the manufacture of these commodities are the waste products of tanning factories. It was intended to promote the establishment of this industry prior to the war and a company was established and came into production in 1941 for the manufacture of these goods. At that time, owing to circumstances caused by the war, the supplies of glue, gelatine and size from abroad ceased and we were, in fact, dependent upon the output of this company for these commodities during the war years. The situation has changed now and imports are tending to resume.

It is true that the company established at Dungarvan is at present selling its products or most of its products at prices below the prices of the imported products; but it can only maintain economic production on the basis of the full utilisation of its productive capacity. It was considered, therefore, desirable to afford protection by way of a customs duty. The customs duty provided for in the Order which is to be confirmed by this Bill is at the rate of 45 per cent., with a 30 per cent. preferential rate, which is, of course, the effective rate. The maintenance of the duty is conditional on the company establishing the industry on the most efficient basis, installing up-to-date plant and equipment, and placing the commodities on sale at prices comparable with those prevailing in Great Britain. The number of persons at present employed in the production of these goods is 75, and the concern proposes to produce on a scale capable of meeting the pre-war demand for these goods. It is probable, however, that the post-war demand will be generally higher than the pre-war demand and that consequently it will be necessary to have an expanded output in normal conditions, which, however, will not be practicable until the new plant, which I understand is on order, has been installed. There is, of course, a free field for any other firm that wishes to engage in the production of these goods and the maintenance of the duty upon them will be dependent at all times upon a supply of the goods being available in adequate quantities and of suitable quality at reasonable prices.

I cannot understand the Minister saying that there is a free field for any other firm to engage in the manufacture of these commodities when he tells us that it is only possible for this firm to carry on if they can produce to full capacity and tells us in the same breath that that full capacity will be equal to our pre-war requirements. The Minister stated that even at present this firm, without the aid of the more up-to-date plant which they hope to get in the near future, are able to produce and put on the market these commodities at a lower price than that at which similar commodities can be imported. I take it from what the Minister said—I am assuming this— that the quality of what is produced in this country is equal to the quality of the article that is being imported. Those may appear to be articles of not very great importance, perhaps, but I submit they are, because they affect in the main, so far at least as glue is concerned, furniture and other household equipment; they affect the price of it. Size is also used in connection with housing and we are hoping there will be a very big expansion in that respect.

I do not want to deny to any Irish industry, or any firm that has sufficient enterprise to start an industry, a safeguard if that safeguard is required; but I do not think the Minister has made a case for the 30 per cent. effective tariff. I do not think he has made a case for it particularly when, up to the present, according to the Minister, this firm is able to produce goods in competition with the imported articles and sell them at a lower price. If that is so, and if they hope to be in a better position very soon when they get more up-to-date machinery, and will be able to produce with that machinery greater quantities of goods than they are producing even at the moment, it seems to me there is not a case for a 30 per cent. effective tariff. From our experience, giving a 30 per cent. effective tariff to a firm is, to say the least of it, putting a temptation there to increase the price and, God knows, the cost of living in this country is already high enough.

I should like to ask the Minister whether he would not adopt some kind of formula that would give the House confidence that proposals of this kind have been fully examined and that information of a particular kind had been collected and was being given to the House because, as Deputy Morrissey says, the cost of living is extraordinarily high. I see that the tendency, in Great Britain at any rate, is for the cost of manufactured articles to go even still higher. There seems to be a prospect that manufactured articles and a number of commodities that will be required here will increase in cost in the immediate future rather than decline. Something, apparently, happened in October last which required the putting on of a duty of this kind, but the Minister has not told us anything about it and, if this duty is required, it is unfair to the Minister's proposition and to the industry itself not to give the facts fully to Parliament, so that we will be persuaded that the tariff is necessary.

The Minister says there are 75 employed in this industry. He has given no information as to the amount of gelatine or glue or size turned out annually; he has given no indication as to the wages bill, or as to the amount of any of these commodities that was imported in 1945, before the Order was made imposing a duty, or since then. These, surely, are matters that are available and I suggest it should be easy to adopt a formula for giving a certain kind of information to the House in every case where an Order of this kind is being made. It is an extraordinary method of putting a tariff on a commodity like this. We get five pages of a printed Order in English and Irish and a couple of pages of a Bill and out of the whole of that amount of printing we get practically no information. The Minister's statement is not helpful either.

If we are to have any kind of economic development we must have additional industrial development. The basis of that industrial development may be an extension of our agricultural industry, but it is a well known fact that as far as employment is concerned thousands of men have been lost to the agricultural industry during recent years and even a very great development will hardly bring back into employment in agriculture as many men as have left it during the last ten or 12 years. If we are to have increased employment in the country we must depend upon industrial development to bring it about and we shall have to secure that the industrial development that will take place will have a fair chance of public support, and whatever advantages we give to persons initiating industrial development we must fully understand what these advantages are and how necessary they are.

I think it is an occasion, being the first of this kind, when we might review the considerations that were reviewed in the past when the Tariff Commission set about the examination of an application for the imposition of a tariff in order to report on whether a tariff of the kind applied for should be given. I will direct the attention of Deputies to the reports of the Tariff Commission in the past to give, as it were, a kind of outline of thought that might be brought to bear upon what we are doing. It could be simplified and brought up to date in accordance with the modern ideas of the desirability of developing industries here for social or other purposes and in accordance with the desirability of developing in every possible way a condition of full employment.

Under the old Tariff Commission procedure a report was made in every particular case on ten points. The first point was: "The efficiency, extent and relative importance of the industry in respect of which the application is made, the amount of capital invested therein, the number of persons employed therein, the total annual value of the goods produced by the said industry and the cost of production of such goods in Saorstát Éireann as compared with such cost in other countries." The second point reported on was: "The cost, efficiency, conditions of labour, and rates of wages in Saorstát Éireann in the industry in respect of which the application is made as compared with such cost, efficiency, conditions and rates in other countries." The third point reported on was: "The effect which the granting in whole or in part of the concessions asked for in the application would be likely to have on the several matters mentioned in Paragraph 1 of the Schedule"—that is, the efficiency, extent and relative importance of the industry, the amount of employment it would give and the total value of the goods produced.

The fourth point reported on was: "The effect which the granting, in whole or in part, of the concessions asked for in the application would be likely to have on other trades and industries in Saorstát Eireann." The fifth point was: "The effect which the granting in whole or in part of the concessions asked for in the application would be likely to have on the consumers of goods produced by the industry in respect of which the application is made and on the cost of living." The sixth point was: "The effect which the granting in whole or in part of the concessions asked for in the application would be likely to have on the public revenues of Saorstát Eireann." The seventh point was: "The prospects, if any, which the industry in respect of which the application is made has of establishing itself eventually on a permanent basis without the continued aid of a customs duty or with a modification of such a duty after a period."

The eighth point was: "The minimum amount of customs duty which would probably be necessary for the successful conduct in Saorstát Eireann of the industry in respect of which the application is made." The ninth point was: "To what extent, if at all, the competition from imported goods to which the industry in respect of which the application is made, is exposed, is unfair by reason of currency depreciation, or the grant of subsidies or bounties in the country in which such goods are manufactured." The tenth point was: "Such other economic, industrial, and administrative aspects of the application as appear to the commission to be relevant to the determination of the merits and demerits of the application."

That gives a fairly full background of thought, when considering the granting of tariffs for the purpose of systematically and thoroughly developing staple industries. It was pointed out, and was accepted, that the system was unwieldy in its application, and that a case could be made for taking decisions with less publicity, so that in the beginning of the establishment of an industry there will not be dumping of any kind. The whole sequence of thought in the report is sound. Even in paragraph 10 there are such considerations as the desirability of establishing an industry that might raise the cost of living, whether it was from the point of view of full employment or otherwise. All these considerations are in the plan that has been sketched out. Where under emergency or other provisions, use is made of the Emergency Imposition of Duties Act to put tariffs on in respect of particular commodities, it should be possible to have a formula by which a certain amount of statistical information would be available to the Dáil, and certain ordered reasons given as to the effect on unemployment, or the effect on other industries that a tariff would be expected to have. I recommend very earnestly to the Minister, when dealing with matters in this particular way in future, that he would approach the situation in the spirit in which we ask him, and that systematic information will be given to the Dáil.

Paragraph 6 gives the Minister for Finance, after consultation with the Minister for Industry and Commerce, power, through the Revenue Commissioners, subject to certain stated conditions, to import without duty any of these commodities. I should like to know whether the Minister can give information as to the extent to which these commodities have been imported without payment of duty. Is it the intention that the company making these commodities at the present time will be allowed to import ad lib without payment of duty, but that other persons wishing to import them will have to pay duty? In that way is the proposal affected by the application of Section 15 of the Financial Agreement with the United Kingdom, 1938, or is the agreement with the United Kingdom in active operation at the present time?

As we are producers of live stock and heavy meat, there is definitely a basis for an industry such as this, seeing that we have the necessary raw material. There is also a possibility that we shall have still more raw material as we develop the export of dead meat and produce of that kind. The Bill provides a basis for the establishment of this industry. It will be accepted that such an industry requires some such safeguards as are provided by the Bill. On the other hand, it will be readily agreed that the consumer is also entitled to safeguards. That is particularly necessary in regard to this industry, as the commodity produced will, probably to a large extent, form the raw material of other industries. Is the Minister satisfied that the safeguards provided for consumers or users of the goods to be produced are adequate? Is there adequate provision in regard to the Prices Commission or any other machinery to be set up to ensure that there will not be overcharging or anything of that kind? In a matter of this kind overcharging is not the only thing to be feared. There is also the danger of inefficiency in the industry, which would raise the cost of production. Provided that adequate steps are taken to guard against those dangers, the House will have no difficulty in passing this Bill. Another matter that requires consideration is this: Is there adequate machinery at the Minister's disposal to ensure that the standard of the product will be comparable with that of other countries? Will he have means of ascertaining exactly what is the standard of quality of the product produced? I did not gather from the Minister's statement where it is proposed to establish the industry. Personally, I am not interested, provided it is established within the State.

I should like to be satisfied on one or two points. The criticism levelled at this measure by Deputy D. Morrissey and by Deputy Mulcahy raised questions which demand a reply from the Minister. Like Deputy Cogan I am concerned as to the effect these tariffs will have on consumers. I have no doubt the Minister has considered that, but I have in mind a statement made by him recently at a Dublin function, warning a number of manufacturers in relation to the whole question of tariffs. I do not want to misrepresent him, because I have not the report at hand, but he made it quite clear that manufacturers had got a good deal of support from the State by way of tariffs and other methods; that support by way of tariffs, etc., would not continue, and should not be expected to continue; that it was time these manufacturers took stock and prepared perhaps for the removal of some of the tariffs.

I think it will be conceded by anybody with any knowledge of industry that, having got 20 odd years of these selective and direct tariffs, industry has had a very fair chance of getting on its feet. I have compared tariffs on a previous occasion in this House to the procedure adopted in the case of a young child being taught to walk. The toddler is taken by the hand, but when his legs get strong enough, he is told to walk for himself. We have now reached that stage in relation to industry. None of these companies, so far as I know, is going bankrupt, and we have the statement by Deputy Morrissey that this country is fairly prosperous, that they are able to manufacture in competition with outside countries and able to give a better article at a cheaper price. If that is so, what is the necessity for a tariff?

I think the Minister should indicate now what his ideas are as to the future of these tariffs. Are we to have tariff after tariff until the ordinary consumer is not able to live at all? I am quite familiar with the arguments for and against, and I feel that a number of Irish manufacturers have done very well and have given good value for the protection they got. It is necessary to support infant industries against competition by countries in which the cost of production is lower than it is here, but I hope the Minister will indicate his attitude towards the tariff question generally, because I am aware that such an announcement is awaited by many people in industry, both operatives and employers.

I should like the Minister to avail of the opportunity to announce to the House what the future holds with regard to the import of raw materials for our industries.

That is going far outside this Bill.

The Estimate for the Department has been ordered for this week.

The Minister's Vote will be discussed this week and the Deputy will have a full opportunity of raising that matter on that Vote.

I have given the Minister warning, at any rate. I want to be assured that the imposition of duties is not to have the effect of keeping out necessary raw materials, for instance, the raw material of boys' clothing.

This has to do only with glue, size and gelatine.

The review of general policy and procedure in relation to industrial protection which Deputy Mulcahy suggests we might have could, I think, be initiated on the debate on the Departmental Estimate. I agree that it is desirable that we should have some discussion upon these general questions, because it is clear that the circumstances which will prevail in the years immediately ahead will be very different from those with which we had to deal before the war and that there is need for such a review. On the question of procedure, I appreciate that Deputy Mulcahy agrees that the method of the Tariff Commission was unduly unwieldy and in many respects unsuited to the circumstances of this country. The Government, before the war, proceeded on the basis of affording protection by administrative action, subject to the confirmation of the Dáil, and providing for review by the Prices Commission subsequently. The amendment of the Prices Commission Act, which was made in 1938, established a legal basis for these reviews, and during the short period in which the Prices Commission was working under that Act, some 17 or 18 reviews were carried out, leading in all cases to changes in the level of the duty or the scope of the duty and, in two cases, to the substitution of a duty for quantitative restrictions.

Deputy Mulcahy asked me if the British trade agreement of 1938 is still in force. It is technically still in force, but the main provisions of it are inoperative at present. There are no reviews of existing tariffs by the Prices Commission in progress, and in fact, as the House is aware, the great majority of tariffs which were in operation before the war are now suspended. They were suspended by Emergency Powers Orders and continue suspended up to the present. Many of the provisions of the British trade agreement of 1938 are not applicable at all to present day circumstances, and at some stage it is clear that trade relations between the two countries will have to be put on a basis which is more definitely related to present day trading conditions.

The only portion of the agreement to which the Deputy's query might apply would be the review of tariffs and quotas by the Prices Commission. The Prices Commission is not now functioning and no reviews have taken place in recent years. Most of the tariffs have in fact been suspended.

What does Section 15 of the Finance Act, 1938, deal with particularly?

I should require notice of that question. It was asked why this industry needs protection. At first sight, it would appear unnecessary to protect it, in view of the fact that most of its products are at present being sold at prices below the prices of corresponding imported products. That question, however, brings up one issue of policy which we will have to consider when deciding upon future protective procedure. This is an industry which deals with a commodity which sells at high prices per ton, but in which the total output, the total user, involved is a comparatively small quantity of goods.

In pre-war years, the total imports of glue, gelatine and size did not average much more than 700 tons per year, and that is the size of the market which the industry might hope to obtain in this country. Clearly, one consignment of goods of substantial size could upset the prospects of this company engaging in profitable production for a considerable period, and at a stage when the company was being pressed to carry out an understanding which had been made with it to purchase and install the most efficient type of plant available, the company indicated that it regarded it as a reasonable request, when placing the order for this expensive plant, that it should be protected against the possibility of supplies coming in in quantities which would undermine its market potentialities.

What the market is is difficult to say. In 1937 and 1938, the quantities of glue and size imported were 300 tons in each year. In 1939, 1940 and 1941, they averaged 500 tons; and, in addition, there was an import of about 200 tons of gelatine. The total productive capacity of the company's existing plant is about 200 tons, but that capacity will be considerably increased when the new plant is in operation. The company worked during the war years on the basis of a plant which was not as efficient as the company intended ultimately to install. For the information of Deputy Cogan, this enterprise was established and worked during the war years at Dungarvan. It is not a new industry in the ordinary sense. At the same time, there is no evidence that the company is not able to supply present requirements in full. It is to be assumed that the normal peace-time demand for its goods is not operative and that the total effective demand at present would be substantially less than in pre-war years.

About one-quarter of the normal.

If the Deputy takes the 1937 and 1938 figures as normal, it would be more than that. It is possible that, in 1939, 1940 and 1941, the inflation of imports was due to a desire on the part of traders and manufacturers to stock up against the possibility of emergency shortage. It is not possible to give a precise answer to the question as to how the prices of this company's products compare with the prices of imported products. There are, I understand, six grades of gelatine varying in price from £175 per ton to £250 per ton. The average price of imported gelatine during 1945 was £420 per ton. I am told that the imported gelatine is equivalent in quality to the gelatine produced at Dungarvan which sells at £220 per ton, but I cannot give precise information on that point.

There are ten grades of glue produced, the prices of which average from £77 per ton to £154 per ton, as against the average price for imported glue of £90 per ton. I am told that the imported glue is similar in quality to the glue produced at Dungarvan which sells at £77 per ton. The price of imported size is cheaper than that of the Dungarvan size because of the inadequacy of the present manufacturing equipment at Dungarvan.

The company is at present paying in wages approximately £225 per week on the average.

Seventy-five?

£225 per week.

But 75 employees.

A total of 75 employees. I advise the Deputy not to start working out an average figure.

Because an average figure could be misleading in that case.

I do not think that it would be very flattering.

Quite. A licensing provision was instituted so as to permit of an import licence being granted to any firm requiring these goods which could not be supplied from Dungarvan. A licence would not be given and has not been given to the Dungarvan company itself to import any of these goods. These goods, as the Deputy understands, are industrial materials. Any firm that Dungarvan could not supply would get a licence to import these goods free of duty until production at Dungarvan is sufficient to meet all requirements. I agree entirely with Deputy Cogan that important considerations to be kept in mind are the prices at which these commodities are made available and the efficiency with which they are produced. I give the House an assurance that if this concern should find itself unable to produce goods of a quality similar to that prevailing in Great Britain and at a price which would compare favourably with British prices, or are unable to produce the goods with sufficient regularity and efficiency to meet the requirements of the users of them, then the position will be reconsidered. There is no reason that I know of why these goods could not be produced here at prices below the British prices and the company fully understands that they are expected to frame their plans upon that basis. If Deputy Cogan's point as to the testing of the quality of the goods produced by this company relates to the actual physical machinery for testing qualities available to me the answer is that no such machinery exists at present. I am hoping, however, to have in the course of the next few weeks for the Dáil proposals for legislation in relation to an industrial research institute and one of the functions of that institute will be the periodic testing of the qualities of the goods offered for sale in commerce. We can consider that matter when the Bill comes before the Dáil.

When did this concern start operating?

It started in 1941 and it has continued to produce to capacity during the war years when supplies were not available from outside and we were very largely dependent upon Dungarvan for supplies of these goods. Gelatine, of course, is used in the manufacture of confectionery mainly and I think principally in the manufacture of jellies. The glue is, of course, used in a large number of industrial concerns.

I should be quite hopeful of this industry prospering because it is a natural growth from the development of the tanning industry in that part of the country. Its existence helps the tanning industry because that industry would not otherwise have avialable a market for its waste products, which constitute the raw materials of the glue and gelatine industry. Both by its location and other facilities it has every chance of developing successfully; and the manner in which it met the problems created by the war and kept up its production is an indication that it will in fact do so.

Would the Minister say what machinery exists in his Department of determining the level of protection for industries and how this particular level is determined for this company?

It is ultimately the Minister's responsibility and it is based upon his judgment in relation to all the facts of the case. I should say that normally I should expect that the protection afforded during the initial stages of an industry's existence would tend to decline as it got over its foundation difficulties, trained its workers and generally succeeded in establishing itself. Normally, therefore, it can be taken that the duty initially imposed on any goods for the protection of a new industry would be the maximum and that in the course of time that duty would tend to decline.

When does the Minister intend to review the position?

As I said, in the year immediately before the war there were 17 or 18 such reviews carried out by the Prices Commission and alterations were made in the duties where such alterations appeared to be desirable.

Agreed to take the Committee and remaining stages to-day.

Bill put through Committee without amendment and reported.

Bill received for final consideration and passed.

This is a Money Bill within the meaning of Article 22 of the Constitution.

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