I move that the Bill be now read a Second Time. It is perhaps appropriate enough that I should move the Second Reading of this Bill after the debate which has just concluded. I do not think it is necessary, in doing so, to argue the need for industrial development in the areas to which the Bill primarily relates, that is to say, the counties west of the Shannon and Donegal, Kerry and West Cork. If it was thought necessary to put upon record the case for special measures for industrial development in those areas, it would, I think, not be difficult to find statistical material to support that case. But Deputies do not need statistics to convince them that the position in these counties in relation to the expansion of industrial activities requires immediate attention. The proportion of the total population of these counties which is engaged in industrial work, that is to say, in the production of saleable and transportable goods, is very much less than it is in the rest of the country. Since the industrial drive began here in 1932, the proportion of our population engaged in industry has more than doubled but in these counties named in the Bill it is still less than it was in the whole country in 1932.
The House is, I think, aware of the fact that it is from that area that the heaviest emigration is taking place. It is my view—and I think the considered view of everybody familiar with conditions there—that emigration will not be checked unless and until a wider variety of employments is introduced in these counties, particularly industrial employment. In fact, I think it could be argued that there is a greater need for industrial development in these counties on the western seaboard than in midland and eastern counties.
A case could be made for the contention that, in the eastern counties, industrial development could possibly involve attracting labour from agriculture and that in terms of long-term policy that is undesirable because it is very probable that during the next ten or 20 years the terms of trade are going to go heavily in favour of agricultural and other primary producers and against manufacturing industries, particularly the secondary industries which we have, up to the present, been able to establish here. If that is so, then on a long-term basis there is a case against encouraging manufacturing industry in circumstances in which necessary labour might be taken from agriculture.
But that position certainly does not arise in the West of Ireland, because there is a real surplus of labour in relation to productive possibilities. Any increase in productivity which might be secured there through industrial development would be a real gain. It need not detract from the agricultural potentialities of the area and will represent—we hope completely—a retention at home of workers who might otherwise emigrate. If there is no need to argue the case for industrial development in the congested areas, there is no need to argue either that it will not take place there through private enterprise unless very special inducements are offered.
For historical reasons, which it is not necessary to review, this country has suffered from underdevelopment of industries. For these same historical reasons such industries as did develop tended to gravitate towards the East and the South. There we have the greater concentration of purchasing power and the main markets of the country. There are the ports through which the bulk of our exports pass and our imports arrive. They are the centres of financial and commercial activity. It is obvious, therefore, that factories which are located away from these centres of activity, from these markets, will suffer a competitive disadvantage as against factories close to them. Furthermore, it can, I think, be demonstrated that, unless something effective is done to remedy that maladministration of industries, not merely will it continue but it is liable to become more pronounced because the whole trend is for industrial activity to concentrate where it already exists. Unless that trend is arrested, the remedying of the position will be made more difficult and much more costly.
That position is, I think, aggravated by the fact that with the lack of industrial activity and the absence of commercial activity in these congested areas on the scale that exists in the East costs tend to be higher, and particularly the cost of providing and operating the public services such as railways, roads, harbours and electricity.
This special problem of ours, resulting from the historical causes to which I have referred has, of course, always been recognised to exist. For my own part, I am prepared to confess that I originally underestimated what was needed to rectify it. When we commenced the industrial policy in 1932, I thought that the power which the Government would have to attach conditions to the provision of protection by tariff or otherwise would be ample to secure that a reasonable share of the new industrial activity we aimed to promote would be sent west of the Shannon or to Donegal, Kerry or Cork. That did not prove to be the case. It is now obvious, in retrospect, why our hopes were disappointed.
Any person engaging in new industrial activity and risking his private money on its success, will naturally think ahead and, thinking ahead, will realise that the granting of protection and the restricting of imports will not merely enable him to get started on the particular line he has chosen, but will also induce others into the same line. A person proposing to engage in any particular industrial development, responding to Government exhortation to locate his factory in a rural area or western county, would have to recognise that the Government would have no power—once the protection had come into force—to prevent another Irish company getting into the same business in a more advantageous location and that, with the curtailment or disappearance of external competition, a far more dangerous internal competition might develop.
It would be wrong to say that the utilisation of that power of the Government to induce newcomers in industry or persons promoting new industrial activities to go to the smaller towns or even to the west of the country was completely ineffective. A number did, but as I have pointed out, not nearly to the same extent as was desired and certainly not in the same degree as new industries were started in the eastern counties and in the larger towns.
We recognised quite early in the industrial drive that that power on which we were relying, the power to make the granting of protection conditional upon people accepting the Government's view on where their factories were to be located, was inadequate and in 1936 we thought we found a means of doing something more. I have mentioned that the main problem which arose for those who were prepared to embark on new industrial undertakings and to finance them on the promise of protection from the Government was their fear that subsequently they would be subjected to competition from other newcomers into the same industry located in Dublin or in some other more advantageous position. We thought then of the device of the reserved commodity licence which was provided for in the Control of Manufactures Act, 1934. That was a system under which we were in a position to guarantee to anybody who started a new industry in the western area that nobody else would be allowed to start the same industry anywhere else, but that device also proved in the main ineffective, firstly because it aroused, as some Deputies will remember, considerable opposition in the House and that political controversy naturally created doubts in the minds of intending industrialists whether the protection granted by the reserved commodity licence would prove to be permanent. Secondly, it was a device that could only be adopted in the case of a proposition for a new industry, that is an industry of a type that did not already exist in the country and that was unlikely to be established here except on the basis of one unit. Thirdly—and this was the aspect of it that was developed in the course of the political controversy—it necessarily involved or seemed to involve the granting of a monopoly to an individual concern which, it was argued, might be exploited. The device of the reserved commodity licence therefore also proved to be largely ineffective.
Coming to consider this matter anew it seems to me that we have to try to devise a different approach. We cannot really guarantee people engaged in new industries in any of these counties named in the Bill against the development of competition from some other part of the country. We can guarantee them against competition from outside, but the possibility of internal competition developing will always be in their minds and may deter people from taking the financial risks involved in establishing new industries in those counties. Our aim should, therefore, be, if possible, to give to the industrial firms which undertake the establishment of factories in these undeveloped areas such advantages that they will be able to meet competition from other firms in the same business located in the East on more or less equal terms, advantages which will secure for them a reasonable prospect of success.
That is what we tried to do in framing this Bill, and I do not mind confessing to the Dáil that, in determining its provisions, the Government encountered quite a number of difficulties, difficulties which I will place frankly before the Dáil, because it is, I think, desirable that we should all address our minds to the nature of these difficulties and see if it is possible to find some more effective way around them than is now proposed.
May I say that this Bill has a title similar to that of an Act passed some years ago in Great Britain and is not dissimilar in its general provisions to that Act and to certain legislation passed in other countries? We found, in framing the Bill, that the legislation enacted elsewhere was not of much help. The aim of the British Government and of some other Governments that promoted similar legislation was either to secure the diversification of employment in areas in which unemployment had developed, or was threatened because of over-dependence upon a particular industry, or else because there was a desire to provide supplementary employments for persons who were normally engaged in fishing or in farming, or in some other part-time occupation. Our problem, as I have explained, is one of chronic under-development over a fairly wide area of this country. In devising means by which the State might help private firms engaging in industrial activities in these underdeveloped areas it was necessary to keep certain essentials in mind. First of all the help had to be of such a character that it could be varied in accordance with the circumstances and merits of individual cases. Secondly, it had to be permanent in its effect.
We ruled out quite early an idea of a continuing subsidy. I think that there would be very strong objection to reliance upon the idea of annual subsidy to private industrial firms establishing factories in these western counties. It would probably be ineffective anyway because the private individual or group of individuals proposing to finance the particular development would have a lack of confidence in the continuity of the subsidy arrangement, and that, in itself, would be sufficient to deter them from beginning at all; and, secondly, I think that there is no doubt that any subsidy arrangement of that kind would encourage inefficiency. A subsidy is always demoralising in its effect.
It may be that, in individual cases, there is sufficient strength of character or other circumstances which will ward off the demoralisation, but in regard to the particular matter that we are dealing with now, which may involve a large number of separate concerns of varying size, any general subsidy arrangement covering them all would be bound to produce undesirable results in a few cases and, of course, the development of inefficiency would not be checked by any limitation placed upon the subsidy because there would always be the belief that political pressure or other influence would be capable of securing its revision if the need for it arose.
The general view, anyway, that we worked on was this, that whatever assistance was to be given was to be given right at the start and given irrevocably. The private individual or the group of individuals concerned, before risking their own money, should know precisely what help they were going to get from the Government. They should know that that was all the help they were going to get and that, once they had accepted the obligation of proceeding upon the basis of that help, thereafter they were on their own and would get no more help.
The scheme in the Bill, therefore, is based upon the prior assessment of the disadvantages attached to any particular location. The board, An Foras Tionscal, which is to be established under the Bill, will have imposed upon it the obligation of making that assessment, of deciding within the provisions of the Bill what help is to be given in individual cases and then, having so decided and communicated their decisions to the parties concerned, it will be for each party to decide whether, in view of it, they are prepared to proceed or to drop their plans.
There will be cases, of course, where an industry located in any of these congested counties or any of the undeveloped areas to which the Bill may apply will be at no competitive disadvantage at all. The best illustration I could give of that would be: If somebody were to discover in one of these counties a valuable mineral deposit and was to propose to develop that deposit and process the ore, obviously, except perhaps in some unusual circumstances, that is an industrial activity which would have to be undertaken on the site of the deposit and there would be no commercial reason why it should be undertaken elsewhere. I will admit that even in that category there may be some exceptional cases.
Also, there are established in many towns in the West small bakeries and mineral water factories and undertakings of that kind, small furniture factories, which are quite capable of economic operation and which maintain themselves by reason of the protection afforded to them by the transport cost which their competitors elsewhere have to incur, industries which are designed merely to meet the needs of a limited area.
It is only where there is clearly shown that there exists a competitive disadvantage attached to a location in one of these undeveloped counties, that the question of help would arise and where an application for help would be considered.
There will be cases, no doubt, where the competitive disadvantages will be so great that not even the maximum help that could be given under the Bill would be sufficient to offset them, and in such cases it is possible only to decide that the industries are completely unsuitable for location in these districts.
The major disadvantage which any firm undertaking industrial activities in these undeveloped areas has to encounter is higher transport costs on their products when distributing them, and on raw materials if they have to be imported. I spent a lot of time considering whether there was any form of help that could be given initially, permanently and adequately, at the commencement of such an undertaking which could be directly related to that disadvantage. I do not think there is. I think we must aim at overcoming that permanent disadvantage of higher transport costs by the help given in other directions initially. Against that disadvantage we have to give some compensating advantages.
Under the Bill, An Foras Tionscal can give that help in all the forms set out there. They can build factory premises and lease them at low rents to those who are prepared to carry on industrial activities in them. That, as many Deputies know, was a device adopted by the British Government for their depressed areas. They developed industrial estates, built factory premises on those estates, and then induced private firms to begin activities in them or to remove their activities to them. Alternatively, it can give a grant covering the whole or part of the cost of constructing factory premises, the difference between the two cases being that, in the first instance, the factory premises would remain the property of An Foras Tionscal, leased to the industrial firm operating in it and, in the other case, the factory premises would become the property and remain the property of the industrial firm. It can provide all the incidental services required for industrial operation, the bringing in of water, the laying on of sewerage, and similar services of that kind. It can give grants up to 50 per cent. of the cost of machinery and other capital equipment, and it can give grants for the training of workers. The grants for the training of workers can be utilised either to secure their training in this country or abroad. It can provide, after consultation with the local authority concerned, funds for the construction of any necessary roads or bridges, harbour works or railway sidings, and it can also give grants for the provision of houses for the accommodation of workers, or hostels or canteens.
It will be noted that these forms of help are in a sense related to the competitive disadvantages associated with industrial activities in the undeveloped areas. A private firm proposing to risk its own money in some industrial project and considering how much it could recover if the project failed to develop would ask itself a number of questions. First of all, if it built premises to house the activities, they would ask themselves what were the prospects of selling these premises if they decided to vacate them, and they would realise that in some towns in any of these seven named counties or any other undeveloped district the saleability of a factory premises would be a great deal less than that of a similar premises in Dublin, Cork or on the east coast. Secondly, they would realise that a lot of the development expenditure associated with the establishment of the new factory, the bringing in of water, the construction of roads and, in so far as they would require it, the building of railway sidings, and other work of that kind, would represent completely lost money in the event of their being unable to continue with their project. That would apply also to houses built by them for the accommodation of their workers although perhaps in a less degree in that case. It would certainly apply to hostels and canteens.
Secondly, in so far as there is not in the undeveloped areas any industrial tradition, a private industrialist would realise that in order to carry on there he would need to make special provision for the training of workers in the skilled processes of the industry in which he was proposing to engage. That fact has been a difficulty in a number of cases and it is not unusual for new industrial firms here to find it necessary to send workers to factories in Great Britain or on the Continent for a period of weeks or months so that they can become familiar with the process involved and undertake the training of other workers.
In the Six-County area the legislation in force for the encouragement of industrial development provides for similar training grants for workers. The Six-County legislation goes quite far in determining the help that can be given to private industrial firms. But, of course, the circumstances there are different from ours in so far as they have no power to protect the local market and they will have to rely entirely on these inducements, while over and above all the help we can give directly under the Bill, the big advantage of being able to restrict external competition, still remains. It is proposed that local authorities may grant remission of rates, and it is contemplated that an arrangement will be made with the Electricity Supply Board to ensure that power for industrial purposes in these areas will be provided to those concerns at rates as low as are provided for similar concerns anywhere else.
Now, as to the form of the Bill, there is also something which must be said. First of all, I should perhaps emphasise that I am conscious of the fact that the introduction of the Bill will, for the time being, keep at a standstill any projects which may now be in train for the development of industrial activities in the West, because the Bill provides for the establishment of a board, An Foras Tionscal, and the help to be given under the Bill will be determined by that board, which is not yet in existence. Naturally, anybody who is interested in industrial development in the West or has in mind industrial development anywhere will wait until he can get a decision from that board as to the help which might be given to him.
In the case of other legislation of a different kind, it is sometimes possible for a Government Department to give directions to its staff before a Bill has been passed as to bringing to completion the consideration of proposals that might be submitted under the legislation, and thus permit of prompt action when the legislation is passed. In this case that is not possible because, even though the Department of Industry and Commerce can receive and examine proposals by private groups for industrial projects in those areas, it cannot assume what the decision of An Foras Tionscal on them will be, and it can only get them into the form which will facilitate An Foras Tionscal in arriving at prompt decisions. That is why I think I should say now that I have instructed the officers of the Trade and Industry Branch of the Department to assume for the time being that this Bill will pass into law in a form much like that in which it was introduced, and to encourage people not to hold back any projects or any proposals which they may have in mind, and particularly to encourage local development committees and organisations to work up any projects they have in contemplation and bring them for consideration to the Department. Even though it is clear that the Department will not be able to tell them what help they can get under the Bill, they can at least get these propositions to a stage which will facilitate, as I said, a prompt decision by An Foras Tionscal when established.
