That the Bill be now read a Second Time.
The Irish National Stud Company was established under the National Stud Act, 1945, as a measure to assist and encourage the breeding of thoroughbred horses in Ireland. Since 1946, when it leased from the Minister for Agriculture and Fisheries the property known as the National Stud Farm at Tully, County Kildare, the company has carried on the business of a stud farm. Deputies will recall that this property had been used by the British Government as a stud farm until 1st January, 1944, when it was transferred to the Irish Government. The transfer did not, however, include any bloodstock.
Since the war the importance and value of the Irish bloodstock industry have been increasing progressively. Yearlings and foals from studs in Ireland command attention at Irish and English sales where buyers from the major racing countries compete for them at excellent prices. Irish bred sires have been exported to most countries in the racing world, where their blood lines have boosted the quality of the thoroughbred and enhanced the prestige of the Irish horse.
The net export value of the thoroughbred industry is in the region of £4m. a year including worthwhile indirect export benefits which accrue from the substantial expenditures of foreign owners sending their horses to Irish training stables and their sires and mares to Irish stud farms. The industry provides a significant quota of good employment in rural areas. The State through the National Stud has contributed a good deal to the prosperity of the thoroughbred industry. Conditions are changing radically, however, in this industry as in so many others. Ireland's prestige as one of the greatest nurseries of thoroughbred horses by itself is not sufficient to compete with developments in other countries — notably the United States, Great Britain and France.
The directors of the Irish National Stud Company have been taking stock of the company's position in the light of changing times and of the findings of the Survey Team on the House Breeding Industry which reported in 1965. I must accept the considered view of the directors which is that, unfortunately, the National Stud has not been able to keep up of late with what a national stud might ideally be or even, perhaps, with the standards set by the best privately-owned stud farms at home and abroad.
For instance, a large part of the accommodation for visiting mares and their foals, besides being very old, is uneconomic in its lay-out and in its location vis-á-vis the stud's operations generally. Then, the number of stallions at the stud which used to be six or even seven is now reduced to four. This quota is quite insufficient to meet the demands of breeders.
It is five years since a stallion was purchased by the stud. "Fashion" is very important in this business. Many high-class young horses have been acquired by private studs over the last two or three years. The National Stud should clearly be in a position to provide the services of comparable sires. The special feature about the National Stud is that the smallest breeder — provided his mare is of acceptable quality — can compete with all comers in the ballots for nominations. The stud's fees are modest and the "no foal no fee" basis of charge is a valuable concession which is not common in the industry generally as far as high-class sires are concerned.
The need for new and additional stallions is represented by the company as necessary also to provide the extra revenue needed to meet steeply rising costs of maintenance and overhead charges. Since 1960 the company have spent some £300,000 on capital account on bloodstock and on additions and improvements to the stud's facilities.
The recent outlay has virtually exhausted the company's capital resources. I am satisfied that the case made to me by the board of the company for a substantial injection of new capital is a good one. All told, the purchase of additional stallions; the construction of new yards for their visiting mares and the replacement of out-of-date and uneconomic buildings and installations in conformity with modern standards and specifications would be likely to cost the company some £500,000 to £600,000 in a programme phased over three or four years.
Since the authorised share capital of the company is limited under the National Stud Act, 1953, to £500,000— it was only £250,000 under the original Act of 1945 — an increase to at least £1,000,000 would be necessary for the purposes I have already described. It is contemplated that if this Bill is enacted the additional finance found to be required by the company should be provided in the form of share capital taken up by the Minister for Finance under section 19 of the original Act of 1945 after statutory consultation with the Minister for Agriculture and Fisheries.
Up to now I have been speaking of objectives which would call for an increase of half-a-million pounds in the company's share capital, that is, from £.5m. to £1m. Deputies will have noticed, however, that clause 2 of the Bill before them provides for the increase of this capital to £2m. This brings me to the question of the acquisition by the National Stud of what has been described as a "prestige stallion."
The Survey Team on the Horse Breeding Industry agreed that, as at the time the team reported (1965), the National Stud was providing a reasonable service to small breeders. However, after reviewing all the evidence available about the quality of the bloodstock produced in this country and on the reputation of Irish horses generally, the team went on to recommend that "there should be at all times at least one prestige stallion standing at the National Stud." The directors of the Irish National Stud Company agree with this view while, naturally, stressing the risk involved in the investment of a great deal of money in a horse which might well prove disappointing.
This, then, is merely an enabling provision against the contingency that an opportunity might arise of obtaining what the directors of the company considered to be the right kind of horse at the right price. A factor of special concern to the Minister for Finance would, of course, be the capacity of the Exchequer at any given moment to provide the company with the amount of share capital needed to effect a proposed purchase.
Clause 3 of the Bill deals with the company's bank borrowings. These are restricted to £100,000 or to the amount of share capital unissued whichever is the less. That restriction relates back to the 1945 Act when the share capital of the company was £250,000. If the fixed capital of the company is increased as provided for in this Bill some corresponding increase in working capital facilities will obviously be needed. Clause 3, accordingly, purports to raise the company's borrowing capacity to £200,000 without limitation by reference to unissued share capital.