I move:—
That a supplementary sum not exceeding £3,079,995 be granted to defray the charge which will come in course of payment during the year ending 31st March, 1952, for the Salaries and Expenses of the Office of the Minister for Industry and Commerce, including certain Services administered by that Office, and for payment of certain Subsidies and sundry Grants-in-Aid.
This Supplementary Estimate is necessary to authorise payments due to Fuel Importers, Limited. As the House is aware, Fuel Importers, Limited, was formed shortly after the beginning of the war for the purpose of procuring supplies of coal, it being intended that it should, if possible, import coal in larger quantities than the ordinary merchant might handle and maintain a reserve of coal. As coal became scarcer during the progress of the war, the company was also entrusted with the work of building up reserves of turf and firewood. The money required by the company for the operation of these activities was obtained by borrowing from the banks, the repayment of the borrowings being guaranteed by the Minister for Finance. originally, the amount of the guarantee given by the Minister for Finance was for £500,000, but by 1948 the amount of the guarantee had risen to £6,000,000.
From the year 1943 onwards it was decided to operate a fuel subsidy. The turf which was acquired by this company was sold at a price which had no relation to its cost but which was deemed to be a reasonable price for the supply of that fuel to the consumers. In the course of other years the subsidy was extended to firewood and to coal. The method of operating the subsidy was to vote to the company each year an amount representing the difference between what it paid out for fuel and what it realised on its sale. The total amount paid out to the company in that way in those years up to 1948 was £6,776,000. Prior to that year, the loss shown in the company's accounts represented the element of subsidy and fuel prices. After 1948 the loss shown in the company's accounts was due to the disposal of the reserve stocks which were still held at the beginning of 1948—stocks which had been purchased at high cost and which were sold, in the better conditions of 1948, 1949 and 1950 at the price which they could realise. For each of these three years, 1949-50, 1950-51 and the present financial year, 1951-52, only a token provision was made under the fuel subsidy sub-head of the Vote of the Department of Industry and Commerce and no payment was, in fact, made to the company in respect of the losses which it had continued to incur.
At the end of this financial year the accumulated losses of the company are estimated at £3,080,000. That figure is arrived at as follows: The ascertained loss to the 31st December last, including interest upon bank overdraft and all overhead expenses, was £2,557,323. The company's audited accounts are prepared on the basis of the calendar year. At the end of the year 1948, after crediting the sum of £1,175,000 which was made available in the Estimate for that year, the profit and loss account showed a credit balance of £11,075. In 1949 there was paid out to the company a further £500,000, which was the balance of the provision in the Vote for the previous year. In that year only the token Vote of £5 was taken. Consequently, the company's loss at the end of the year amounted to £1,861,275. In the year 1950 the profit and loss account of the company showed a loss of £696,050. That, added to the loss carried forward from the previous year, brought the total undischarged losses of the company at 31st December, as I have said, to £2,557,325.
There is an estimated loss likely to be realised on the remaining 1947 coal and turf still in stock. At the beginning of this year the company held, of that 1947 coal, 224,738 tons and also 30,480 tons of turf. The coal was distributed between the dumps at Dublin and Cork. The turf was all at Cork. There were no sales of coal effected from the Cork dump during the present year to date, because the task of building up a new reserve in the present circumstances has been impeded there. The accumulation of a new dump at Cork has been retarded somewhat, but it is anticipated that the whole of the 1947 coal remaining at Cork will be disposed of before the end of the year.
From the 1st of January last to the 20th October, 177,000 tons of coal were disposed of from the Dublin dump involving a loss of £175,000. Stocks on hands on the 20th October amounted to 45,000 tons. The company also estimate that that will be cleared before the end of this month, at a further loss of £28,000, making a total loss for the year of £203,000. After deducting a small profit of £250 on the sale of anthracite, the net estimated loss in 1951 on the realisation of the coal stock will be £202,750.
The company estimate that a loss of £83,250 will be incurred on the ultimate realisation of the turf stock at Cork. That stock at the beginning of the year, as valued in the company's books, was £95,020. Sales during the year up to the 20th October amounted to 9,500 tons, including provision for shrinkage. These sales were effected at a loss of £18,600. The remaining 21,000 tons, valued in the company's books at £65,000, are of very poor quality and are expected to yield only about £1,000 in sales. In addition, it is estimated that it will cost about £20,000 to clear the Cork dump and remove the mould and unsaleable turf from it.
Wages and overheads are estimated at £90,000; while bank interest and depreciation come to £112,000. Certain retrospective amounts due to county councils against the emergency turf production are calculated at £10,000. There is approximately £4,000 due in compensation to the owners of dump sites. That produces a total of £3,079,323, which has been rounded off, for the purposes of the Estimate, to £3,080,000.
I should make it clear that no part of the cost of importing coal from America this year is included in this Estimate. All these costs will be borne on the selling price of the coal.
The House will appreciate that the building up of reserve stocks of coal or similar commodities may at some time involve a loss. A reserve stock is held against the risk of shortage due to an international emergency. If there is an international emergency, the stocks will be utilised, and it may be assumed that no loss will be experienced. If there is no emergency then at some stage a decision to that effect will be taken, and that decision will be accompanied, no doubt, by a consequential decision to dispose of the reserve stocks. I do not know how anybody can hope to fix a formula for deciding when the danger of an emergency is past. I think the most likely indication which anybody will have is the commencement of a fall in prices. It is to be assumed, therefore, that if the reserve stock is held for a period in which no emergency develops, it will be dispersed only when some fall in prices indicates that the danger of scarcity is past. It must be assumed that there is a risk that in respect of the present reserve stock which is now being accumulated, and which we hope to build up to about 200,000 tons, there will be at some future date a loss to be written off if the emergency against which the stock is being accumulated does not develop.
The Estimate does not include any provision for costs or expenses which the company may be called upon to pay as a result of the occupation of the Phoenix Park.
The ultimate payments of subsidy from the sum made available by the Supplementary Estimate will be made to the company on foot of audited statements showing the actual loss incurred.
In case any Deputy is under any misunderstanding, I should say that this sum is not being charged against tax revenue. There is no surplus tax revenue against which to charge it.