Dáil Éireann díospóireacht -
Tuesday, 6 Dec 1966

Vol. 226 No. 1

Committee on Finance. - Private Members' Business: ESB Charges (Resumed).

Debate resumed on the following motion:

That Dáil Éireann is of opinion that the Electricity Supply Board should not increase its charges to domestic consumers by seven per cent in view of the undue hardship which this price increase would create together with the inflationary situation which such an increase would initiate; and also considers that the ESB special charges should be abolished.

—(Deputy Mullen.)

Mr. Booth

When speaking on this motion last week, I was referring to the speech of Deputy Seán Dunne, which appeared to me to have strayed very far from the details of the actual motion before the House. This whole motion appears to me to be rather typical of present Labour Party thinking, if such it can be called at all. The best they can put before the House is a suggestion that whatever extra charges have to be paid they have always got to be paid by somebody else—this mythical person who just does not exist. We have got to face the hard fact of life, that is, we must pay for what we get. There is no doubt that over the years the Electricity Supply Board has supplied electricity to a rapidly increasing number of homes at what, by European standards, is a very low rate of charge. Granted, there have been increases, but we have got to remember that the cost of generating electricity has been steadily increasing throughout the years and, with the increasing number of users of electricity, the capital expenditure by the Board has had to be almost astronomical in order to keep pace with increasing demand. Admittedly, some of the capital costs have been covered by borrowing rather than by revenue but nobody can borrow without servicing that loan; that loan must not only be serviced by way of payment and interest but there must also be a sinking fund for the eventual repayment of the loan.

I know homes where electricity is a very valuable commodity indeed, where the income is very low and where every conceivable economy has to be used to keep the bill within the scope of the income. This is the case with, for instance, single old age pensioners living in a room or a flat. I have come across cases where the electric light is scarcely used at all and where an old person may use it just for a period of having tea and then sit in the dark for the rest of the evening. But these cases are very rare and, in the greater number of homes—even in those homes which we describe as being in the lower income group—I have never seen any evidence of any effort to economise on the use of electricity. It is far more common to see electric lights burning in the house quite unnecessarily.

I do not believe that the ESB bill is anything like the ghastly burden which some of the speakers have made it out to be. I think we can get confused, too, by the reference to a seven per cent increase. Let us get that down to hard facts and figures—that is 7/- in each 100/-, 7/- in each unit of £5.

Now, I wonder how many homes have a monthly bill of £5? If they have a two-monthly bill of £10, that probably is unusually high. More often, of course, they may be working on a weekly basis, but seven per cent means only an increase of 7/- in each £5 or 14/- in each unit of £10. Put that way, I think to say that this, in itself, would create undue hardship on the average home is a gross exaggeration; similarly, to say it would create an inflationary situation is also exaggeration. These are not arguments. They are not reasoned statements of fact. They are mere explosions of emotion with no basis at all.

Reference is made also to the ESB special charges; they should be abolished and everybody should be connected without any additional charge. Here again is the mythical somebody else who will pay the cost of running electricity mains across the country, for the whole question of negotiation, the right to erect poles across somebody else's land and for the maintenance—sometimes in very exposed positions—of the ESB lines. It is, unfortunately, necessary that these things have got to be paid for by somebody but I cannot believe the Labour Party really mean that the ESB special charges should be abolished and that the ordinary rate to domestic consumers should be increased by something more than seven per cent in order to keep ESB operations on a normal economic basis. I know it does sound, possibly, popular for people to keep on saying prices should be kept down; nobody should be charged for this, that or the other. My experience is that the Irish people are not as easily fooled as the Labour Party would like to believe. Our people are becoming increasingly realistic——

Mr. James Tully

As tomorrow will prove.

Mr. Booth

They only want to know the facts and, when the facts are put clearly before them, they are prepared to accept them and to carry on. The ESB is engaged in a very difficult operation, not only with the maintenance of its existing supply but also in the constant planning for new generating capacity. The fact that it has to spend so much money on new generators is something in which we, on this side of the House, take considerable pride because it is made necessary only by the fact that the standard of living of our people is, mercifully, still rising and that people are now in the position that they regard electricity as an absolute necessity, not only for ordinary domestic use, but for agricultural and industrial use as well. We have come so much to take it for granted that we find it difficult to cast our minds back to the days when the average home had no electrical equipment, except, perhaps, at most a few electric light bulbs.

The average wage earner's house now contains a very considerable amount of very useful electrical equipment and for that I, for one, am absolutely delighted, because this equipment makes life much more worthy of living for the average housewife. No one can say it is an absolute necessity. We have come to regard it as a necessity by reason of the general trend of events. Even if it is an absolute necessity, I cannot visualise for myself any home where seven shillings in each unit of £5 charged will be an intolerable additional burden. If it is a burden, it can be avoided altogether by——

Mr. Dillon

Turning out the lights.

Mr. Booth

——the use of reasonable economy. If anyone turns out the lights all the time, he will not have a bill for £5.

Mr. Mullen

If the Deputy's workers were looking for a seven per cent increase, he would squeal.

Mr. Booth

I do not think that is strictly relevant but I am prepared to discuss it with the Deputy on another occasion. If anyone finds it an intolerable burden, I say categorically that it can easily be avoided by the use of reasonable economy.

Mr. Mullen

That is the Deputy's attitude.

Mr. Booth

As I have already said, if the Deputy was listening—but I expect he did not want to hear it— I am delighted that people have so much electrical equipment and that they are using it, but if they do use it, it is only right that they should pay for it.

Mr. Mullen

That is a progressive statement from one of the many bosses in this country.

Mr. Booth

It is typical of our general attitude that we should take pride in a rising standard of living, but we cannot have a rising standard of living with reduced costs. It is typical of the general attitude of the Labour Party that they want to have an increased standard of living but other people should pay for it.

Mr. James Tully

Our labour pays for it.

Mr. Booth

"Our"? It is an incredible illusion of the Labour Party that all the wage earners of the country are members of the Labour Party. Thank heavens, they have more sense than to fall in with that suggestion. In actual fact, the basis of the whole Fianna Fáil Party has always been the ordinary wage earners. We are closely in touch with them and, in fact, in many cases I believe that we have a very much clearer and less prejudiced idea of working class conditions than some of the trade union officials.

Mr. Carty

Hear, hear.

Mr. James Tully

Be careful; he is agreeing with you. There will be a correction tomorrow.

Mr. Booth

Not necessarily. Here we have the attitude of the Labour Party. They are trying to make out that this is a serious matter, and yet they are wasting the time of the House——

Mr. Mullen

The Deputy is.

Mr. Booth

——with cheerful and smiling interruptions which show that they are not unduly worried at all. If I felt there was this passionate sincerity or personal concern for people who are "pulling the devil by the tail", I might be more impressed, but when I see the broad smiles on the faces of members of the Labour Party——

Mr. Mullen

Nothing would impress the Deputy. He has a one-track mind.

Mr. Booth

I certainly am not impressed by the conduct of the Labour Party on this occasion.

Mr. James Tully

Fortunately the Deputy does not judge us.

Mr. Booth

I saw no evidence of any knowledge on their part of the subject on which they were supposed to be speaking, nor any deep personal concern about it. I am constantly in touch with wage earners. I am in and out of their houses——

Mr. Mullen

There are more disputes in the Deputy's place than anywhere else.

An Ceann Comhairle

Order. Deputy Booth, without interruption.

Mr. Booth

These remarks demonstrate absolutely clearly that the one thing which the Labour Party do not want debated is this motion. I am not surprised that every conceivable irrelevancy is being brought in, in a desperate endeavour to cover up the fact that they have not a leg to stand on. No case whatever has been made for this motion. I am all in favour of everyone getting the maximum facilities from the Electricity Supply Board, but not for nothing. If there are these hard cases to which I have referred, the only way we can relieve those cases is through social welfare payments: by paying them enough by way of old age pensions, and so on, to enable them to cover their bills. We cannot start framing a new system of ESB charges on the basis of isolated cases. I have not heard so far any evidence of any particular cases of hardship where this seven per cent will produce an intolerable burden. I have not heard any suggestion as to how the income from the special charges is to be met if these charges are abolished in their present form. This is just a propaganda move designed to fool people who, I am glad to say, have grown up far too much to be fooled by it. If even yet there is a member of the Labour Party —one of the signatories to the motion or anyone else—who can give some hard facts, I will be delighted to hear them. I defy them to do it, but at least if they try, I will consider them.

Mr. Dillon

Is there not a striking incongruity in the situation that a State-sponsored body are invited to increase their charges by seven per cent, at a time when the Government are warning every wage earner in the country to restrict his demands for increased wages for the national good, are warning every shopkeeper—I am sorry Deputy Booth is leaving the House; I want to say a few words about him——

Mr. Mullen

I thought he was interested in this debate.

Mr. Booth

I will be back.

Mr. Dillon

At a time when the Government are warning every shopkeeper, whatever burden he has to bear, that his prices must not rise, and warning every manufacturer that the greatest contribution he can make to the national welfare is to reduce his costs of production, the householder, the small shopkeeper and the manufacturer are all invited to accept cheerfully from a Government-sponsored body an increase of seven per cent in the charges to be levied for electric power. Deputy Booth's striking contribution to the debate is that if there is any householder who is suffering hardship from this impost, he can relieve himself of that hardship by turning out the lights. We all know that, but do we think it reasonable at this time that we should call on everybody in the country who finds the seven per cent increase too substantial a burden to counteract it by turning out his lights?

Deputy Booth spoke of our rising standard of living. A rising standard of living is a good thing but surely it is not indicative of a rising standard of living to say to those people to whom this new differential will make a material difference that the remedy is to turn out the lights? That seems to indicate a falling standard of living. Inflation presents itself too often in this House as an abstraction, an economic abstraction which is very hard to relate to the daily lives of our people. I have never heard it more eloquently described than it was by Deputy Booth: if you cannot pay for the light, turn it out.

Mr. James Tully

And those who can pay can keep it on.

Mr. Dillon

The Minister should explain to Deputy Booth how he reconciles his advice to the ESB to increase their charges by seven per cent with his advice to everybody else to maintain stability in prices. There is only one lesson I have learned in my business life and it is that the larger the volume of turnover, the lower your margin of profit needs to be. Does anybody know of any commercial enterprise in the world which had to record in their annual report that their turnover had reached record proportions but that the result was they had to raise their price? I suggest that any commercial enterprise which made that announcement would at once be reported to the Department of Industry and Commerce and a public inquiry would be held as to how this could conceivably come to pass.

There are thousands of small shopkeepers throughout the country to whom Deputy Booth's proposed economy is not available because, though theoretically we could still do our business in rural Ireland and elsewhere by candlelight, the competition of the supermarkets would soon elimipate them. I do not suppose that any of the great British combines who are buying up businesses in this country to destroy the small shopkeepers would be in the least disturbed if the local shopkeeper were constrained to accept Deputy Booth's advice and turn out the lights or turn out half the lights. The supermarket would put on twice as many lights, on the ground that the process of eliminating competition in its area could be expedited if the lights went out in the small shopkeepers' premises and the lights were multiplied in the supermarket.

The supermarkets are not a bit worried about five years or ten years but the small individual enterprises in the country, struggling against competition of that kind, are offered no better consolation by Deputy Booth than the advice that if they find this additional burden unbearable, they should turn out their lights.

Mr. Booth

"Economise" was the word I used.

Mr. Dillon

Quite. Deputy Booth is a most rational and prudent man. His advice to small shopkeepers was: "If you have 12 lights, turn out six." But the supermarket has 36 lights and this merely expedites the elimination of the small shopkeeper. Seeing that this happens to be part of the policy of Fianna Fáil at the present time, I do not suppose it will unduly disturb them, but there are thousands of families being reared in Ireland in relatively small shops the proprietors of which, though unknown to Deputy Booth, are quite respectable people. Their only aim has been to raise a decent family by their own labour, to educate their children and to live on a very modest standard of living. They are finding this progressively more and more difficult.

I agree with Deputy Booth that seven per cent extra on the electricity bill will not radically alter the economics of large international groups who set up supermarkets in this country. They will take it in their stride just as they took the turnover tax. We are to understand that 2½ per cent of this increase is related to the turnover tax. That does not bother the supermarkets. In fact it is an additional instrument in their hands for the destruction of the relatively small business units who have not got the margin or the reserves or the development finance, which is the polite phrase, with which to carry losses while the competition is being destroyed.

We have become so high-falutin under Fianna Fáil direction that we are beginning to forget where we all came from. Most of us in this House have come from the country towns and provincial cities. A great many of us have come from the suburbs of Dublin, but whether we have come from the suburbs or the provincial cities or country towns, who among us has not seen the gradual preliminary crucifixion and ultimate elimination of the small businessman?

Do we approve of it? Do we desire it? Do we welcome it? I consider it to be a disaster. As you raise the costs of the small businessman and make him more vulnerable to competition— he is already fighting for his existence— you are expediting the process of his elimination and advancing a process which is resulting more and more in the gradual acquisition by foreign interests of the entire distribution system of the country, making no new contribution to the real welfare of our people and creating an enduring drain on our balance of payments. It is important that Deputies should see the direction and the significance of this slow process of erosion. I deplore it, and I warn the Minister and the Government to which he belongs that they are travelling along a path which will disrupt the society to which we all belong. I am afraid some of them want to do that, but some of them do not. I do not think Deputy Booth understands the problem.

Mr. Booth

Has the Deputy any alternative suggestions for financing the ESB?

Mr. Dillon

I would suggest investing less in Potez.

Mr. Booth

I did not understand that the ESB had done that.

Mr. Dillon

No; the Government did.

Mr. Booth

The ESB did not do it.

Mr. Dillon

The Government did. If some of our resources were more prudently husbanded, they might be available to the ESB to enable them to carry on their increased, and increasing, output at a stable price. Deputy Booth knows something about the automobile trade. Would Deputy Booth call it reasonable if the Ford Motor Company set a price for a car on the basis of producing 1,000 units and then asked for a seven per cent increase when they were producing 1,000,000 units? Would he not say to the Ford Motor Company: "Come, this is absurd. It was one thing to ask for seven per cent on the price for this motor vehicle when you were producing 1,000 units. Now you have reached 1,000,000 units and you want to charge the same." When they got to 9,000,000 units would the Deputy still think it reasonable for the Ford Motor Company to say: "We want a seven per cent increase in prices." Would he not ask: "What was all the capital investment for?"

Mr. Booth

There is no comparison good, bad or indifferent, as the Deputy knows.

Mr. Childers

None whatever.

Mr. Dillon

I do not know. When I read this report and see that the output of the ESB is rising steadily all the time, consumption is rising, with special reference to domestic consumption, is it not reasonable to expect that the price per unit would decline instead of rise?

Mr. Childers

The Deputy has not read even the first page of the report.

Mr. Dillon

I have. One must not blame them for being a little ashamed and I do not blame them for being ashamed. I do not blame them for telling one story out of the right hand corner of their mouths and another story out of the left. I have watched them for 30 years and they have not got facial paralysis yet. I should like to ask the Minister for Transport and Power and Minister for Posts and Telegraphs, as he now is, to explain in very simple language to the people of this country why it is not only permissible, but essential, for a Government-sponsored body to increase their charges at this time by seven per cent when every other body which has to bear exactly the same charges, exactly the same increases in the cost of labour, exactly the same increases in raw materials and exactly the same increases in every charge which the ESB have to meet, is expected, as a national duty, not only to refrain from increasing its prices, but, if possible, to reduce them?

The whole theme of Fianna Fáil propaganda at present is that every exporter and every manufacturer in this country has a national duty to reduce his costs and bring down his charges. We are warned, if we are to meet the competition of the Common Market, into which we hope to sail some day, when de Gaulle permits Britain to carry us in on their coat tails, we must bring down our production costs? Does the Minister for Transport and Power seriously maintain that the proposal to increase the cost of power by seven per cent, to increase the cost of light by seven per cent or to increase the cost of heating by five per cent will contribute to the task of cutting down the cost of production for industry in this country?

I attended session after session after session at Strasbourg with my colleague, Deputy Michael Carty. He will tell you that the Council of Europe and its economic committee were continually talking about the insidious and disastrous consequence of taxing sources of power and pointing out that such taxation on the cost of power filtered through the whole economy and bore most heavily on the consumer and reduced the competitive capacity of the manufacturer in any country where such increases were allowed.

How does the Minister for Transport and Power reconcile the propaganda of his colleague, the Minister for Industry and Commerce, with the course he recommends to the Electricity Supply Board? How does the Minister for Transport and Power say to every shopkeeper in Ireland who he knows, as he must know, is struggling for his life against the growing impact of the foreign-owned supermarket, which is deliberately seeking to wipe him out as a preliminary to establishing monopoly in his particular area, that he is to reduce his illuminations while the foreign combines increase theirs? The small man, as described by Deputy Booth, is called on to economise, not as Deputy Booth says to go over to the candle, but to economise by reducing his light. How does the Minister for Transport and Power say to the ordinary householder in this country: "I am asking you not to make fresh demands for adjustment in wages and salaries which you may need. I expect you to exercise the moderation and restraint required by the economic situation in which we find ourselves at the present time. I must do my part and see you are not asked to carry any additional burden "? At the same time, he announces that the ESB are to increase their charges by seven per cent.

This is something which Deputies, with such a simple mind as Deputy Booth, fail to comprehend. The ordinary consumer of electric light and power in this country is not finished with the seven per cent when he switches on the light or switches off the light in the kitchen. The affluent person to whom Deputy Booth refers when he speaks of the person who has embarked on the extravagance of a washing machine instead of sending her clothes to the laundry, as Deputy Booth does, is not finished when she lifts her clothes out of one tub and puts them into the spindrying machine. If she were a shrewd person, she would put them through a hand-operated mangle and save the money spent on the spindryer. She would save the seven per cent extravagance on the purchase of the spindryer on her bill if she used a hand-operated mangle.

But the detergent she puts into her washing machine is going to carry its share of the seven per cent. Everything she buys is going to carry not only the turnover tax appropriate to it but the seven per cent on the power used to make it. Does anyone here seriously believe that a manufacturer who is going to pay a substantial sum, represented by seven per cent of his entire costs for heating, lighting and power, is not going to pass it on? He is going to ask the question I am asking: why should I be asked to absorb it when the Government-sponsored body itself says that it will not absorb it? If the ESB passes it on to me, I will pass it on to the wholesaler and the wholesaler will pass it on to the retailer and ultimately the retailer will pass it on to the consumer. Of course, at every stage, trade being what trade is, there must be a suitable mark-up. It does not matter if I as a merchant buy a parcel of goods; I do not count the cost of the raw material that went into the goods, what the wood cost, what the rubber cost, or what the brass or steel cost, or what the power to make it cost. I take the global price and mark it up at wholesale level and pass it on to the retailer and eventually the consumer will pay for it. I do not suggest that for what the consumer paid £1 heretofore he is now going to pay 22/6.

Mr. Childers

He hardly could.

Mr. Dillon

I am not saying he will, but your folly is that you do not realise that it is passing through the economy and steadily, if stealthily, expediting the spiral of inflation. What is being said is: " My little twist to the screw cannot make any difference. I am only going to twist it one-quarter." But then another little gnome comes along and says: "I will twist it another quarter," and then somebody else comes along and says: "I will only twist it one-eighth," and by the time they have all twisted it the net result is that the tenth round of wages has gone. Is that not so? When everybody has given his little twist, the tenth round has gone and we all start talking about the eleventh round. The same cycle——

An Ceann Comhairle

The Deputy has about three minutes.

Mr. Dillon

Well, I did not do too badly. I have said a good deal, more than the Minister will be able to answer. I wish he were able to answer it.

Minister for Transport and Power (Mr. Childers)

After Deputy Dillon's fluorescent contribution, we have to get down to facts regarding this matter. Deputy Dillon and others talked about inflation. The Government have never said that firms should reduce profits and fail to put aside sufficient sums for depreciation and maintenance of plant, if they were facing higher costs. The Minister for Industry and Commerce never proclaimed that. They never proclaimed that any industry for a period of years should make losses. That would not have been to the advantage of the workers or of the country.

Deputies know perfectly well the history of inflation in this country. They know from 1958 to 1961 the record of increases, increases of earnings and of wages, incomes and of profits, and that from then onwards, despite all the advice given to the people, and through their own capacity and democratic rights for collective bargaining, incomes increased faster than productivity. This has been made clear frequently by Minister on every possible occasion, beginning with the Minister for Finance in 1962. They have been asking for restraint in this matter but where a free democracy operates, this could only be done voluntarily. The Government were faced equally with increased costs of Government as a result of the inflation that took place. We are not the only country in the world facing inflation. Other very respectable communities have broken loose from the observance of the rules, such as the Netherlands, which is facing a crisis which is more serious than others. I will not even talk about the position in Britain where Conservative and Labour Ministers have lectured on the same basis, accompanied by most of their independent economists, about what would happen if incomes continued at too rapid a growth over production. We have reached the point where we have to make the same recommendation, that industry cannot be without the right amount of resources for paying dividends and repaying principal and interest on loans. We never said it should be.

In the case of the ESB, this is a cumulative result of a long period of increasing costs, when in fact, as the House knows, charges have not been increased since 1960. During the whole of that time, at least from 1962 onwards, costs have been increasing. It is not only costs within the country. The goods that the ESB purchase have gone up in price in very considerable measure and we are not responsible for the cost of imported goods. Therefore, the inflation has not only come from within but has come from without. Everybody knows that.

Mr. Dillon

By how much has the cost of oil gone up?

Mr. Childers

I did not want to speak on this matter because it is before the Prices Advisory Body and I felt it was sub judice. I know that according to the rules of this House, the Prices Advisory Body, when examining a situation like this, is not regarded as a judicial body and therefore motions like this can be discussed. Since everybody on the other side has been charging the ESB with making a wrong decision, I would have at least to give some reasons why the ESB has been committed to increased charges and to give the background to the situation. I suppose if my remarks and those of other Deputies are balanced together, the Prices Advisory Body will still be able to make a reasonable judgment when it comes to examine the whole question.

There are a number of things which contribute to the increases in the ESB charges. One of them is represented by the increase in the cost of turf supplied to the ESB. That again is due to increases in costs, the same as in the ESB. As Deputies remarked, the turnover tax which was paid for by the ESB for a very long period—and the ESB was almost unique among large institutions in not passing on the turnover tax—has also, because of increased costs, to be paid for now by the consumer. I should make it clear that the ESB is a non-profit making body and it is expected to pay, taking one year with another, or one could put it in a slightly looser way and say that the ESB can judge the situation over a number of years and restrain any increase in charges until they become absolutely imperative. I have no power, actually, under the laws of this House, to prevent the ESB from increasing their charges. In fact, however, as I meet the Board regularly to discuss every pertinent question in connection with the national economy as a whole, the Second Programme for Economic Expansion, and matters such as rural electrification, naturally they do come to me when they consider it necessary to increase charges and now, the Minister for Industry and Commerce, by direction of the Government, has power to have an inquiry made into their increases. I want to make clear the statutory position which has been approved by the House. But we have other methods of control.

To come to the reasons for the need to increase charges, as stated by the ESB, the ESB estimated that the deficit, as at 31st March, 1967, would have been £1.5 million, assuming a generating increase of nine per cent. The deficits which the Board expects to incur for the following years were, in 1967-68, £1.9 million; 1968-69, £1.75 million, and in 1969-70, £1.75 million. One of the main causes of the deficit in 1966-67 was the anticipated steep rise in fuel costs. The reason for the abnormally high increase in the current year arises from the fact that fuel costs in the previous year were abnormally low. Heavy rainfall in that year resulted in greatly increased output from hydro-electric stations in conjunction with increased production from oil stations, because Bord na Móna had a very bad year and the Board were able to reduce fuel costs and, as a result, they finished the year with a small surplus of £240,000. I am talking about 1965-66. If it had been a normal year, with the usual amount of rainfall, the loss would have been £800,000.

It is not the intention of the Government, and I do not believe it would be the intention of any Party in office, to allow the ESB to engage in losses of those dimensions in future years, losses of around £1.75 million for each of the next three years. The ESB is bound by this House to pay its way. Nothing could be more serious than for an institution like that to make losses. Indeed, it would shake the confidence that investors have in the ESB. It is a very fine thing that the ESB can secure capital from the market itself, independent of the Government, for part of its requirements for generation and transmission. I certainly intend that they will continue to operate as an efficient company, not making profits, and ploughing back whatever small surpluses they have into development and for that reason they must take action, just the same as any other companies, as a result of the inflation which has come partly as a result of choices made by the people and partly as a result of conditions abroad. A massive inflation is taking place in countries from which equipment comes to the ESB.

I have given two causes for the increase in the cost of electricity. Then, of course, there is the inevitable result of the ninth and tenth rounds of wage increases and of the £1 per week increase recently.

Mr. Dillon

The Minister has not told us what fuel costs increased.

Mr. Childers

They added £720,000, £361,000 and £416,000 respectively to the total labour bill. The average revenue from sales of electricity is approximately £22 million and the increase required to offset those wage increases would be, for the three different rounds, 3.2 per cent, 1.6 per cent and 1.85 per cent. The ESB does everything possible to maintain its efficiency. It has engaged in work study and other studies to ensure that work is done as efficiently as possible, but naturally, in common with other manufacturers and other firms, when wages go up, if the costs cannot be met by a sufficient increase in productivity to offset them, there must inevitably be some increase in prices. Deputies know that is just a commonplace.

One of the interesting things about the whole position of the ESB is that the cost of living since 1947 has gone up 85 per cent but the increase in overall charges by the ESB, which took place in only three years, 1951, 1956 and 1960, were 14 per cent, nine per cent and five per cent. The overall increase in charges is far less than the increase in the cost of living, partly for the reason stated by Deputy Dillon, that consumption has increased enormously and that has enabled the ESB to forgo making increases of the kind that could be seen and have taken place in other industries and services.

There is another element also involved. People are using so much more current, so much more power now than formerly, that if you allow for the actual usage of current by domestic consumers and the fact that you pay less as you use more current, once you have paid for the first group of units, the average price per unit increased from 1.83 pence in 1949-50 to 1.96 pence in 1965-66, an increase of only nine per cent, whereas, as I have indicated, the cost of living went up by 85 per cent. So that although the total bill to the ESB consumers has gone up in that period by a certain amount, the actual cost per unit, if they are using more electricity, has hardly increased at all.

One can give another example of that. The highest average cost of electricity per unit occurred in 1958 when it was 2.17d. This was only 15.6 per cent above the average cost of electricity per unit in 1950 whereas the cost of living had increased by 46 per cent. Those figures are not just statistics that can be cut up and distorted; they are basic figures. They show that the ESB costs have been kept down while there has been a massive increase in the general cost of living not only here but in other countries and that the ESB cost to the consumer has not risen in the same measure.

So far as the effect on industry is concerned of the increase, to industry as a whole, under these electricity charges that are being levied, I can give the figures. I do not think Deputy

Dillon need worry unduly, although I agree that there is a multiplier effect in connection with all costs. According to the Census of Production, the gross output for all industries in 1963 was £679 million. The cost of electricity used by industry in that year was £5 million and it represented .7 per cent of gross output. On that basis the proposed increase will represent an addition of an average of about .05 per cent to total costs. I wish all other costs affecting industry were as small as that. That is not a serious increase in costs.

There are some industries where very large amounts of electricity are used and where there is slightly greater effect. These include, for example, cement. About five per cent of cement costs are electricity costs. An increase of seven per cent by the ESB then represents an increase in overall costs of about .35 per cent. Again it is not an excessive increase, although it is one we would like to avoid.

Some Deputies suggested that the ESB has some kind of hidden reserve. The only real reserve the ESB has is the balance in the profit and loss account at 31st March this year which stood at £243,000. The Board has certain other reserves earmarked for specific purposes. They include a contingency reserve of £1,500,000; plant self-insurance, £500,000, and other reserves of £75,000. It is essential for the ESB to have a very small sum of money, in comparison with their total turnover, so that if there was some special condition operating which would very materially raise their costs or reduce their revenue in any year they would be able to balance their accounts. It would be wrong to deprive them of that contingency reserve, most of which is fully committed in one way or another to be invested in new and replacement capital.

Compared with the cost of other fuels, the prices for electricity are not unsatisfactory. The price of electricity per unit in 1966 was 30 per cent above the 1939 price, while the price of gas has increased by 16 per cent since 1960 and by 184 per cent since 1939. That does not mean that the gas producers are profiteering. It means that they operate in different conditions; their expansion has not been nearly as great. I am merely giving the figure in order to show that the cost of electricity has risen very slowly compared with the cost of other services and products.

We made investigations into comparative costs of electricity in various countries. It was very difficult to get an exact comparison because we had to work out the cost of electricity in a given situation, for a given kind of house, in relation to a specific turnover. The OECD worked out some figures for this country and they showed that the cost of electricity is not high in comparison with other countries. It stands well in comparison with that of other countries and certainly is not high in comparison with British costs. I may add in regard to some of the ESB operations that experts come over from other countries to see how they do their installation work because some of it is done with marked efficiency.

It is true that we could operate the ESB by allowing it to increase charges in very small jumps of one, two or three per cent over short periods. However, anybody with any common sense will know that for an organisation like the ESB that would be impracticable. It should be noted that increases have taken place on only three previous occasions since 1947 and in each case the ESB made a fairly good prediction of how long that increase would last. Of course, in this case there has been very marked inflation in the past two years and as a result this increase is necessary. This will cover the ESB over a number of years provided inflation is reasonably controlled, not only in Europe but in this country. It is essential to make some kind of increase that will operate over a period.

Deputy Lindsay asked whether charges could be reduced by savings which the Board could make by eliminating advertising. Deputy Lindsay said the Board was a monopoly and did not need to advertise. That is an outdated concept, as most Deputies know. Everything is advertised these days, even milk and butter.

Mr. Dillon

And Fianna Fáil promises.

Mr. Childers

The vast majority of Fianna Fáil promises have been fulfilled.

Mr. Dillon

This is one that has not been fulfilled.

Mr. Childers

There was never any promise that the cost of electricity would not go up.

Donnchadh Ó Briain

Who took away the subsidy on rural electrification? Who was Minister for Industry and Commerce then?

Mr. Childers

The ESB is bound by section 19 of the Electricity Supply Act to encourage the purchase and the use of electricity. The Board has permission under the statute to do that. Its total sales are increasing by an average of nine per cent. Its advertising is slanted towards selling electricity in valley periods, and I do not think it would be wise for it to discontinue advertising, which is the lifeblood of a service of that kind, for all sales which could markedly increase consumption to the advantage of the ESB.

Deputy Mullen asked why the Minister did not give notice of the proposed increase. The answer to that is that the annual report of the ESB, which was laid on the Table of the House on 27th July, 1966, stated that an application for an increase of seven per cent had been submitted in accordance with the Prices Acts, 1958, 1965, and the matter was extensively covered by the press. Therefore, there was a warning of this.

Deputy Lindsay also suggested that telephones are supplied in this country without any special service charge and therefore the ESB should not have special service charges. The rental rates for telephones correspond with the service charges of the ESB. In the telephone service the rental rate is supposed to pay the cost of providing the poles, wires, circuits, junctions and the automatic exchanges, and of maintaining them. The cost of the call is supposed to correspond with the cost of supplying a call. That corresponds to some extent with the position in the ESB. The telephone service has a rental charge which is somewhat equivalent to the ESB service charge.

Part of this motion deals with the abolition of the special service charge. I have dealt with this at very considerable length on previous occasions. I made it clear, first of all, that there was not a respectable electricity authority of which I know that does not have these two types of charges, one in connection with the consumption of electricity and the other in connection with the provision of the sum necessary to discharge the servicing of the capital invested in a particular ESB connection, the annual depreciation required to replace the equipment in due course, the maintenance and service charges involved, and a contribution to the overheads of the company such as head office accountancy, and so on.

That is virtually the universal method of charging for electricity, and it would be greatly to the disadvantage of the community if the ESB attempted to make one overall charge and not to have service charges. I think everybody knows that the normal fixed charge is related to the size of the premises. The smaller the size the lower the fixed charge. When the premises are remote from the main centre of distribution the cost of connection has to be increased. The position at the moment is not unsatisfactory. Of the 377,000 houses which are to be supplied under the rural electrification scheme, 54,500 were still to be supplied on 31st March, 1966. Of these about 27,000 can be supplied without any special service charge or with a charge, in the case of a small house, of a very few pence per day; 11,000 can be supplied at a special service charge of not more than 50 per cent of the normal fixed charge and the remainder require extra service charges of between 50 per cent and 200 per cent of normal service charges. Therefore, it is a fact that the great majority of houses can be connected to the system without having to pay excessive special service charges. The Government have done the best they can by increasing the rate of subsidy from 50 per cent to 75 per cent in the 1962 Electricity (Amendment) Act, subject to a maximum of £75 per house. They also provided this subsidy for the backbone lines to enable the ESB to provide electricity service in the more remote rural areas.

The losses on rural electrification in the passing year were £1.3 million. That has to be met by the urban domestic consumers. In our circumstances it is a reasonable contribution. I should not like to see the urban consumer faced with a very much larger burden of what could be called cross-subsidisation. Of the 320,000 houses that have been connected 22,000 pay special service charges. If these were abolished, as is suggested, the extra cost would be immediately £350,000, bringing the cost of the rural electrification system to well over £2 million a year.

There must be some limit to what the taxpayer can be expected to pay in rural electrification subsidy. We have done the utmost we can under the circumstances. No doubt, when the present rural electrification campaign is completed some time between 1970 and 1972, the matter can then be reviewed again to see whether any steps can be taken. But for a country with our income per head to have 83 per cent of the rural dwellings joined to the system can be regarded as a fairly good achievement. As I said, there are about 12,000 houses very remote from the system. The capital cost of connecting them would be £5 million, and out of all proportion to the cost of dealing with that group of houses where supply can be given at a reasonable amount, either at normal service charge or with a small increase which can be afforded by most people.

Lastly, I want to point out to the House that nobody has suggested who should pay if the charges are not increased or if the increase is found to be unreasonable by the Prices Advisory Body. Who should pay? Should it be done by taxation? Would the House like to vote extra taxes to subsidise the ESB? Do they believe that the ESB, of all State companies, is one that would benefit by being subsidised by the taxpayer. Since most taxpayers are consumers also, is the whole thing not rather ridiculous? It would seem to me that to substitute for an increase in charges an increase in taxation would be most undesirable. Would anybody who knows the past history of the ESB, which is an efficient and splendid organisation, like to see it saddled with this subsidisation, if it can be avoided? We subsidise the ESB by providing the interest and principal for rural electrification. It is far better for it to work as a commercial organisation in the interests of the public. I have explained to the Dáil in considerable detail the reasons for the increase.

Mr. James Tully

On a point of order, Sir, is half an hour allowed to each speaker?

An Leas-Cheann Comhairle

The Minister concludes at 7.15 p.m.

Mr. James Tully

The Minister should have concluded at 7.13 p.m. However, we will not quarrel over two minutes.

Mr. Childers

I shall conclude. I have explained the position to the House.

Mr. James Tully

As some people know, I live near the town of Drogheda. Quite some time ago a gentleman named Oliver Cromwell came there, and he and his people murdered thousands. The biggest crime their victims committed was that they laughed. Yet here in the House on last Wednesday night, and again tonight, we had a Deputy who had the audacity to come into the House and condemn Deputies because they smiled, making it a crime. Possibly that Deputy believes, as Cromwell did, that it is a sin to smile. I would suggest to him that he should grow up.

Mr. Childers

There is no need to drag Cromwell into the ESB.

Mr. James Tully

I know where I would like to drag some of these people, but, unfortunately I have not the power to do it. One of the best Deputies in this House was thrown out because he smiled. I do not propose to be put out. I will say for the Minister that, whether we agree with him or not, at least he can behave like a gentleman and can take a joke and make a joke. It is just too bad to have people coming in who have the audacity to try to insult decent Members of this House because they smiled.

Mr. Briscoe

To whom is the Deputy referring?

Mr. James Tully

I should like to bring down the matter of ESB charges to the proper level. We have been talking here as if the ESB was losing money hand over fist. We had the Minister telling us how much the ESB was likely to lose next year, the year after and the year after. But, having seen what was suggested in the Second Programme and what actually happened, we are not inclined to give much credence to his figures. The Board's income at 31st March, 1966, was £24,160,830. The Minister told us it was about £22 million. It was something over £22 million in the preceding year. In 1964-65, the ESB deficit was £90,537. The surplus for the year ended 31st March last was £243,153. Therefore, we are talking about an organisation that made £250,000 profit up to 31st March last. These are the people looking for a seven per cent increase in their charges.

When the Prices Bill was going through this House, the then Minister for Industry and Commerce promised that before a price rise was approved, he would investigate it. In this case something different happened. The Minister authorised an increase of seven per cent and then agreed to have it investigated. This is a scandalous misure of ministerial power. The ESB should have been asked to make a case. I know the Minister would say a case was made for the increase. However, on the figures I have given, I cannot see that case. Since it has not yet been published, it would appear as if the case is not a very good one.

We heard a lot about the ESB needing money and about how hard the ESB found it to carry on the work it was required to do. On page 24 of its 39th annual report, there is set out: temporary cash investment, £6,500,000 —and a short term loan of £2,858,981 was taken up. Would the Minister be able to explain at some time in the future why an organisation that had a temporary cash investment—I assume this is the money lent to the Government—of £6,500,000 needed to get a short term loan somewhere else of almost £3 million? Perhaps the Minister might care to answer that point at some future date.

I should like to know if it is not correct to say that this seven per cent they are looking for has been brought about, among other things, because of the turnover tax. The two and a half per cent turnover tax, of course, is wrapped neatly into this seven per cent. The Government, I assume, imagine that by putting it into a general demand for a seven per cent increase they are avoiding the possibility of people pointing out that the two and a half per cent was the result of deliberate Government action. The amount shown here as having been collected and paid in turnover tax does not, in my opinion, represent at all the entire amount on which turnover tax should be paid.

The Minister referred to the price per unit sold here and pointed out what it was costing. Deputy Dillon referred to the extraordinary fact that in this organisation the costs went up according as output increased. The position is that in 1930 the average price per unit sold was 2.66 pence. In 1962 it was 2.12 pence. In 1963 it was 2.08 pence. In 1964 it was 2.06 pence. In 1965 it was 2.01 pence and in 1966 it was 1.96 pence. Yet we are told that the poor ESB are not able to make ends meet and must, therefore, increase their charges by seven per cent all over. I have not the time to deal with the question of the special service charge. The Minister and myself have had many a battle on this matter. I still think it is as unnecessary as when it was first introduced. People living, not on the mountains or on the islands, but within a few miles of towns and cities cannot get electric current because the service charge they are asked to pay is so high that they are unable to meet it.

With reference to the different costings for the different types of fuel used, there is one rather unusual thing here: it is in the Economic Research Institute publication, August, 1966. There is a reference on page 12 to the costs of the different fuels, the plant factor and the order of use. The order of use, I assume, is that the ESB have decided that order which will give preference as far as possible to native fuel though this is not so in numbers 2 and 3, the Ringsend and Marina stations, where, in fact, the oil stations are being used. I do not know why this is so—there may be a reason for it. However, because a preference has been given to native fuel, the cost to the Irish taxpayer is £240,000 in the year 1964-65. I agree that preference should be given to native fuel but I want to answer a point made by the Minister. He posed the question that if the consumer does not pay for it then who pays. CIE have got a fairly substantial subsidy to meet something like that: we know who pays for it. Similarly with Irish Shipping and with the air services—but, of course, they are used by different people. These are the ordinary people in the country and it would not do to pay an extra subsidy to them: it would be too bad as they would not appreciate it.

An Leas-Cheann Comhairle

The Deputy's time is now up.

Mr. Mullen

When Deputy Booth was defending the seven per cent increase, he made suggestions about the way in which it could be offset by domestic consumers. He said they should economise. This is in complete contradiction to the ESB policy. I understand that the ESB have been doing everything possible to get the consumers to use more electricity. If Deputy Booth is giving the Party line and expressing the views of the Minister, then I gather we shall see a cessation of the radio and television advertisements for electricity, the closing of their showrooms and the removal of all the gadgets which the ESB urge people to buy so as to use electricity. This is something which I find it difficult to understand.

I notice that when the Minister was defending the situation he made mention of the cost per unit as compared with an increase in the cost of living. As I see it, he failed to relate the cost of the unit to the increase in consumption by domestic consumers. Admittedly, he talked about consumption by people who operate industry but I am sure it is fair to say that domestic consumption has increased down the years. Naturally it goes on to increase particularly as we extend electricity to various parts of the country and also having regard to the opportunity afforded to people who have electricity in their homes to use the various gadgets which the ESB advertise.

The Minister referred to the fact that the annual report of the ESB was placed before this House quite some time ago which gave one the opportunity to make comments and suggestions. Something could have been done in that connection, possibly, but my complaint, having regard to the ESB report, is why the Minister should neglect to seek an increase then rather than impose it first and seek permission for it afterwards. Surely the Minister had ample opportunity to set about getting permission for that increase? We have said from these benches that the Minister has a penchant for telling people, particularly working class people, how to behave in regard to wage movements and other matters. Surely, when the Minister had the opportunity of displaying order, he should have set about displaying order? He should have made application to the Prices Commission for permission to increase prices. The increased price has now been applied and it is a certainty that it will remain which turns the investigation into a farce.

There are lots of points that can be raised in connection with this whole matter but what is being said in defence of it is very difficult to follow, particularly when we bear in mind the one-sided view expressed by Deputy Booth. I submit that there are many ways in which the ESB could make savings rather than imposing an increase of seven per cent in their charges. They may have to impose an increase to meet the cost of getting out flashy documents such as this report on the operations of the ESB over the past year. I think that that type of usage of public money is absolutely unnecessary having regard to what we are now told about the stage at which we are operating.

Mr. Childers

I suppose one might make a saving out of £22 million.

Mr. Mullen

The opportunity is not there for that type of thing. The plea is made that we have not enough money to continue and that we need more money. This is something which the domestic consumer finds it difficult to understand. Furthermore, there is the demolition of ESB premises in Fitzwilliam Street and the building of new ones. These projects could, perhaps, be carried out at a more opportune time. In the light of the picture being painted at the moment, this is not an opportune time for this sort of spending.

Debate adjourned.