I asked the Minister on the Second Stage if he had any information with regard to the firms which had availed of the special grants in order to make certain changes in preparation for the Common Market or, as he said himself, for the purpose of their making general improvements and arrangements for bulk buying and so forth. The Minister thought that it was unusual that I should ask that. I said the assistance offered to those people to enable them to prepare themselves was pretty generous and the Minister had handed out money to something like 882 firms. I think that figure is correct. Is there not some follow-up on behalf of the taxpayer to ensure that progress is being made and the money is not just being wasted? Surely there is some follow-up to ensure that these firms are using this money to prepare themselves for free trade.
Committee on Finance. - Industrial Grants (Amendment) Bill, 1964: Committee Stage.
I may have said something which misrepresented something which the Deputy said and, if I did, then it was only because I misunderstood the Deputy. I took his remarks to mean that he wanted to know to what type of firm and what type of industry these grants were being made available and my reply was that the types represented were set out fully in the schedule to the report of An Foras Tionscal. I understand what the Deputy really wants to know is whether any check is being kept. I can say definitely there is.
In the first place, as the Deputy is aware, the CIO recommended the setting up of adaptation councils for groups of firms within certain industries. In many cases these councils have been set up. Their purpose is to do exactly what the Deputy suggests, namely, bulk buying of raw materials and joint marketing of the finished products where these exercises appear feasible within the particular industries. As well as that, I have set up a special branch within my Department, called the Industrial Reorganisation Branch, and the officers in that section not only keep in touch with the adaptation councils but also with individual firms and industries both by way of interviews with representatives in the Department and also visits on the spot to the industries themselves. All these industries visited are not industries which have applied for and been granted adaptation grants, but most of them are, and I get weekly reports from the Industrial Reorganisation Branch on the results of inquiries and consultations with these firms. I cannot say that I could put these reports in the form of a submission for publication——
Oh, no.
——because, in many cases, as the Deputy will appreciate, these reports are confidential and must remain so if my Department is to continue to be kept fully informed of the activities of the firms concerned. If and when it appears possible to supply the House with suitable material in order to give the House an indication of how these adaptation grants are being applied, I shall certainly consider doing so.
The Minister expressed disappointment at the small number who made application for these adaptation grants. Am I right in assuming that where these grants have been given progress is satisfactory as far as the Minister is concerned?
I am satisfied, yes.
But the Minister is still disappointed with the number that have applied.
Not now. I was originally. Even though the number, 300 in excess of 3,000 firms, might be disappointing proportionately, from the point of view of volume of production and the type of firms involved, it is quite satisfactory.
It is related to employment. It has a good bulk in employment as well?
Yes.
Could the Minister put any figure on it in terms of employment?
No. In the great majority of cases in which grants have been applied for the results in general have been to increase employment. There may be a few cases, but they are very few, in which reductions in employment may have been effected. The majority of the reports that come to me indicate that the volume will be increased.
Where the record of a particular trade is unsatisfactory in this matter as distinct from individual firms, if it affects a number of firms in that particular type of work, does the Minister take it up with the association or with representatives of the firms concerned?
In a case like that where a product rather than a firm may show defects, we usually take it up with the adaptation council.
I move amendment No. 1:
In page 2, before section 2, to insert the following section:
"A grant may be made under section 4 of the Undeveloped Areas (Amendment) Act, 1963, in respect of an enlargement or adaptation that is of the kind referred to in that section and is approved by An Foras Tionscal after the 31st day of March, 1965, and before the 31st day of March, 1966, and a grant may be made under section 4 of the Industrial Grants (Amendment) Act, 1963, in respect of an enlargement or adaptation that is of the kind referred to in that section and is approved by An Foras Tionscal after the 31st day of March, 1965, and before the 31st day of March, 1966, and, accordingly, `31st day of March, 1966' is hereby substituted for `31st day of March, 1965' in each place where it occurs in subsection (5) of those sections."
This Bill which was circulated during the Recess was, of course, drafted before the imposition of the British 15 per cent surcharge. The purpose of the amendment is to give legislative effect to one of the measures announced by the Government to overcome the effects of the surcharge. The law as it stands under the 1963 Industrial Grants Act provides that adaptation grants— these are special grants designed to ensure that Irish industry can be made more competitive to face free trade conditions—would cease to apply as from 31st March, 1965. As a result of the special difficulties now being created by the British surcharge for certain exporting firms, and in case some firms might feel doubtful about proceeding with adaptation measures, it is intended to extend the period of the operation of the special grants by another year, that is to 31st March, 1966.
Is it not also true to say that if there never had been this business of the 15 per cent surcharge, the Minister might have found it necessary to extend the time for the making of grants?
Is one good reason not enough?
I move amendment No. 2:
In page 2, before section 2, to insert the following section:
"Where, as a result of the imposition of the special charge on certain goods imported into Great Britain, Northern Ireland, the Channel Islands or the Isle of Man on or after the 27th day of October, 1964, any exceptional difficulty occurs in relation to the sale by an industrial undertaking of its products outside the State, a grant towards the cost of meeting that difficulty may be made under section 4 of the Undeveloped Areas Act, 1963, or section 4 of the Industrial Grants (Amendment) Act, 1963, as may be appropriate having regard to the location of the undertaking, as if such cost were the cost of an enlargement or adaptation of the kind in respect of which grants may be made under those sections."
I envisaged this amendment in my Second Reading speech introducing the Bill. Again, the same remarks apply. The Bill was introduced and circulated before the necessity for what is contained in this amendment appeared. In my opening statement on Second Reading, I referred to the necessity of introducing amendments to the Bill to give effect to the Government decision in relation to the assistance to be given to exporting industries in view of the British surcharge.
There may be cases in which the assistance which exporters may obtain by way of Market Development Grants in accordance with the Supplementary Estimate recently voted by the Dáil will not be sufficient to supplement the best efforts of the firms concerned to minimise their particular problem. To deal with those cases of exceptional difficulty in which even the maximum assistance available under the Market Development Grants scheme will still not enable an industry to maintain its export activities and its workers in employment, it is proposed to extend the scheme of adaptation grants. Those are the type of grants to which I referred in relation to the previous amendment.
The provision will be applied only in the exceptional circumstances and any applications for this form of assistance will be subject to a most searching examination before any decision is taken by An Foras Tionscal. I cannot now give the House any precise definition of the difficulties which would warrant the grant of the maximum assistance available under the different measures announced on 11th November. If I may take an example, I should like to refer Deputies to the statement made by the Taoiseach on that occasion that the scheme of adaptation grants would be extended to provide help to industries, and new industries were mentioned in particular, to meet the cost of any re-designing of their products to fit them for alternative markets, or to cover any exceptional marketing problems arising for these industries, or to help them to effect changes in their production which would enable them not only to maintain their export trade but also to continue their efforts to raise the level of their activities and improve the employment possibilities in their industries.
We must proceed on the basis that this temporary burden which, through no fault of their own, has fallen on our industries at a time when they were in the mid-stream of adapting themselves to conditions of freer trade, will not be allowed to slow up this process. On the contrary, we must do what lies in our power to encourage our industrialists and their workers to redouble their efforts now, so that they may emerge from this temporary difficulty with even brighter prospects than before of achieving the export target set for them in the Second Programme for Economic Expansion.
This amendment, as the Minister said, is introduced to offset in so far as possible the effect of the recent levy, and it is to be hoped that it will enable adequate assistance to be rendered to those firms and exporters who may be adversely affected by the levy in the future. There is, however, another aspect of this matter which I wish to mention at this stage, and which has been referred to briefly in the House by means of a reply to a Parliamentary question. It is another effect of the measures taken by the British Government in October last and is involved as part of the changes made when the levy was introduced.
Under the double taxation agreement which this country has with Britain, and which I think was negotiated as far back as 1926, Irish people who have shares in British companies are not liable for double income tax. In other words, they are entitled to repayment of income tax from the British Revenue authorities and are, of course, liable for income tax here. This levy is a serious interference with their trading rights. It is a serious breach of a bilateral trading agreement. If international agreements are to be respected for what they are they should be honoured. The levy which is in operation interferes with and derogates from the double income tax agreement as well as the 1938 and the 1948 trade agreements.
As I understand the effect of the changes that were made, the double income tax relief will not operate in respect of the increase in corporation profits tax which results from the measures taken by the British Government in October. This will affect Irish shareholders in British companies. I wonder can the Minister say at this stage whether any information has been received from the British Government as to their attitude on this matter. It is generally recognised that British exporters have a valuable market in this country and that the British Government should not take action which would prejudice their position or cast doubts upon the bona fides of the British in trade matters generally.
This country has, over a long period of time, even prior to any of the agreements that I have referred to, been a good customer. The advantage which British exporters have had of having a valuable ready market for a wide variety of goods here has certainly been understood and appreciated by exporters in Britain. It is true to say that so far as this country is concerned our exporters and manufacturers have also benefited but I think, on balance, the weight of advantages certainly has not been excessive so far as British manufacturers and exporters are concerned. The continuance of that position is to the mutual advantage of both countries. I should like to know whether the British Government have yet indicated what the position of Irish holders of shares in British companies will be. If they have not so indicated I should like to urge the Minister and the Government to make the strongest representations on this aspect of the British levy, which is, as I have said, a breach of a long standing and mutually advantageous agreement as distinct from the breach which it is of the trade agreements to which reference has been made.
I am afraid I have no knowledge in my Department of the intention of the British Government in relation to the double taxation agreement as far as corporation profits are concerned. As Deputy Cosgrave is aware, this is a matter primarily for the Minister for Finance. I have taken note of what has been said and I certainly shall convey it to the Minister, who, I believe, is already in touch with the British Government.
Could the Minister tell us what progress has been made in the scrutiny of the industries which find themselves in difficulty on account of the imposition of the 15 per cent surcharge? Has much progress been made?
We have had discussions with a great number of industries but I understand no details have been worked out as to the assistance to be given to any particular industry.
It will be a cash subsidy.
We call it a marketing grant. No grant has yet been paid.
I appreciate that.
As I said at the outset, before these grants are made available we will expect firms to do everything within their power to overcome the impact of the surcharge.
The Minister will have to be satisfied they are doing all they can before he moves to assist them.
Yes. They will have to indicate what they have tried to do. They will have to indicate, if their efforts have failed in any direction, why they have failed. They will have to produce sufficient documentary evidence. I may say that I should expect to see invoices and customs documents.
It will be a big job.
Can the Minister say if any action has been taken by EFTA countries to offset the British surcharge?
I do not know. I did not get a full report of a recent EFTA meeting. I do not know if it has been discussed fully in Geneva.
Is there any sort of limit to which the Minister is prepared to go? I do not think any limit is proposed in the amendment. It has been said that it would take a figure of £7 million to offset the 15 per cent surcharge in terms of actual cash. In respect of industry and the value of its export trade is it possible that the Minister will go to 16 per cent, 17 per cent or above that, or has he laid down the yardstick, so to speak, that he will go to 15 per cent in relation to the value of the exports of any particular industry?
The total surcharge is 15 per cent. The scheme, as announced, provides for a payment, where necessary, of 50 per cent of the surcharge. That would automatically be 7½ per cent. In effect, we have indicated to firms: "You need not expect 50 per cent willy-nilly. We can give you a certain sum and between that and the 50 per cent, if you prove you are still suffering in any way we will be able to meet you up to the 50 per cent." The maximum is 50 per cent and, as in the case of industrial grants, it will be difficult to get that maximum amount without very good evidence that it is needed.
I move amendment No. 3:
In page 2, before section 2, to insert the following section:
"(1) A person who, for the purpose of obtaining in respect of an industrial undertaking a grant payable by virtue of section of this Act, knowingly makes a false statement or false representation either verbally or in writing or knowingly conceals any material fact shall be guilty of an offence and shall be liable, on summary conviction, to a fine not exceeding £100 or to imprisonment for a term not exceeding six months or to both the fine and the imprisonment or, on conviction on indictment, to a fine not exceeding £5,000 or to imprisonment for a term not exceeding two years or to both the fine and the imprisonment.
(2) Where an offence under this section which has been committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity, he as well as the body corporate shall be deemed to be guilty of the offence."
This is a penalty clause. It is the first time such a clause has been introduced into industrial grants legislation. It was with some reluctance that I decided to introduce this amendment. However, I have been forced to include it, because of the greater flexibility which the amendment which has just been passed by the House provides. There is also a duty on me, for the protection of Foras Tionscal, to ensure that no fraudulent attempt will be made by a manufacturer to take advantage of the special grants now being made available under the previous amendment.
This is quite a reasonable proposal. It should be obvious to everyone, but particularly to those concerned with it, that the decision which the Dáil and the Government have taken to offset, so far as it is possible by measures which we can take, the effect of the levy, is a contribution by the community to assist manufacturers and traders to keep their business going and also to maintain employment. It is, to that extent, a community effort to assist a section of the community. I feel there is every justification for the inclusion of the penalty clause, which is proposed here.
I agree with what Deputy Cosgrave has said in regard to this matter. When the 15 per cent surcharge was imposed by the British Government the Government decided to offset it by making certain moneys available. Nobody, at this stage, expects the Government to say how this money is to be got, whether it is by direct or indirect taxation. I believe a penalty should be imposed on anybody who attempts to get money, in relation to these grants, by fraudulent means. The taxpayer is making sacrifices to produce this £7 million and if some smart industrialist produces false evidence to obtain a grant, he should be jailed or heavily fined
I appreciate the observations of both Deputies.
There is another amendment in connection with the section with which I have just dealt. I propose to introduce the amendment on the Report Stage. I thought I had conveyed it to Deputy Corish.
I got it only ten minutes before I came in. Is this the Free Airport one?
Yes. The Deputy will have time between now and the resumption to look at it.