Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Wednesday, 1 May 1974

Vol. 272 No. 4

Finance (Taxation of Profits of Certain Mines) Bill, 1974: Second Stage.

I move: "That the Bill be now read a Second Time."

This Bill is designed to repeal, from 6th April, 1974, the 20-year tax exemption for profits arising from scheduled non-bedded minerals and to replace the exemption with effect from the same date by a special scheme of tax allowances.

Deputies are already aware that an interdepartmental committee was set up in 1971 to review the taxation and royalty arrangements in relation to the exploitation of our mineral resources. It was envisaged that this review would assist in the formulation of sound long-term fiscal policy for mineral exploitation which would give the State an equitable share of profits and which would at the same time be sufficiently attractive to the mining companies to ensure the continued development of our mineral resources in an orderly and efficient manner.

Following this study the Government concluded that the 20-year tax exemption was unduly generous by reference to comparable concessions elsewhere and that it was no longer appropriate in the light of the present state of development of the mining industry in this country. It was clear that the same economic benefits could be secured for the country, together with additional benefits from increased tax revenue, by less prodigal incentives.

World-wide changes have occurred in recent years in the climate of public opinion and in the framework of government policies within which the mining industry has to operate. Regardless of the terms of fiscal legislation when investments were first initiated, many countries have subsequently taken steps to increase their revenue from mining. For instance in Canada a new scheme of allowances applicable to mining is replacing the tax holiday; in the Philippines a percentage depletion allowance, which results in a reduced rate of tax, is being progressively withdrawn; and in Australia certain mining investment allowances have been repealed and the withdrawal of other allowances is being contemplated. There has also been a marked trend towards greater State participation, from part sharing to outright nationalisation in some places. Mining companies are conscious that they are operating in a highly sensitive area in exploiting the natural resources of host countries. It is clear from the mining press and journals that the industry recognises the universal and ineluctable character of these new attitudes and has, in fact, come to terms with them.

Apart from the international change in attitudes to exploitation of natural resources the difficulty in meeting sharply rising demand for base metals has led prices to rise to record levels with commensurate increases in mining companies' profits, which in Ireland have been completely free of tax up to now. World demand for base metals, the discovery of the Navan mine, which promises to be one of the largest of its kind in the world, and other mining developments and possibilities in Ireland have fundamentally altered the mining situation in this country and made realistic appraisal of the 20-year tax exemption imperative. It was inevitable in these circumstances that Irish public opinion should strongly react against the continued exemption from taxation of profits arising from the exploitation of irreplaceable mineral resources. The Government, for their part, were duty-bound to act by recasting the tax concessions available as respects non-bedded minerals in order to ensure that the fruits of exploiting our mineral resources would be applied to the greatest extent possible for the economic and social development of the country.

I wish to avail of this opportunity to emphasise that the special circumstances which necessitated a change in the Government's fiscal policy as respects non-bedded minerals do not apply to industry in general, particularly manufacturing industry. There is a vital distinction between the proper attitude to adopt to the exploitation of mineral resources, which are wasting assets, and manufacturing industry, which is intended to be permanent. When a profit making asset is wasting and irreplaceable, it must be taxed while it exists or it will pay no tax at all. Irish mining assets fall into this category. Unlike manufacturing industry, tax incentives are not required to locate mineral resources in Ireland; they are either here or they are not. On the other hand incentives have been recognised as necessary to attract foreign industrialists to Ireland to establish permanent industries which in the absence of tax incentives might not be set up here.

By virtue of the 20-year tax exemption which could be claimed once mining operations commenced before 6th April, 1986, most of the mining companies would never pay any tax. Manufacturing companies will pay tax when reliefs, such as those for exports, are exhausted and will confer a continuing benefit on the community. The changes in mining fiscal policy do not of course imply any intention whatsoever to change the tax reliefs in respect of export sales by manufacturing industry. Every Government since 1956 have continued the reliefs for manufacturing industry and there will be no change in policy in this respect.

Taxation is but one of many considerations to be taken into account by companies in deciding the allocation of resources between different areas and countries. In particular the growth of the Irish mining industry in recent years cannot be attributed solely to the tax exemption. This development was also due to relatively favourable and well documented geology, improvements in technology, good mineral legislation and the impetus given by the Tynagh discovery in 1961. It is indeed significant that all the mining companies which have made exploitable discoveries here were engaged in mineral exploration before the announcement of the 20-year tax exemption.

When the Government announced last autumn that it had been decided that the 20-year tax exemption for profits from the mining of non-bedded minerals should be withdrawn and be replaced by an alternative system of tax allowances, a statement of the proposed new allowances was issued and interested parties were invited to submit their views. Subsequently I discussed the proposed scheme of allowances during the course of a series of meetings with the mining companies.

I am grateful for the constructive manner in which these consultations were held. Following these representations the scheme proposed last October was modified in some respects. In particular it was decided that in addition to the reliefs already announced certain allowances should also be provided in respect of abortive exploration expenditure and the cost of acquiring scheduled mineral assets. The revised scheme of allowances is now set out in the present Bill.

The various definitions used in the Bill are described in section 1.

Under section 2 of the Bill immediate allowance is provided against any mining profits of a person from working a qualifying mine for the full amount of exploration and development expenditure as it is incurred, on or after 6th April, 1974, in any part of the State. Deputies will note that all exploration expenditure, whether successful or abortive, will qualify for immediate allowance against mining profits. Where however abortive expenditure is incurred on or after 6th April, 1974, by a person commencing mining operations, relief will be limited to abortive expenditure incurred within seven years prior to the commencement of mining. This seven-year restriction will in practice apply only to persons starting to work a qualifying mine after 6th April, 1981.

Section 3 will in certain circumstances enable abortive exploration expenditure incurred before 6th April, 1974, but not earlier than 6th April, 1967, also to be set against mining profits. The qualifying term of seven years for abortive exploration expenditure is considered reasonable in the interests of the Exchequer and the mining industry. In the absence of such a time limit there could be claims in respect of abortive exploration expenditure incurred in different parts of the country and regardless of when it was incurred— perhaps over periods of ten, 15 or 20 years. Since the 20-year tax exemption, which is now being terminated, commenced on 6th April, 1967, it is considered that this date would be an appropriate starting point and it gives a qualifying term of seven years. Provision is also made in section 3 to prevent persons arranging matters so that successful mining companies would take over unsuccessful exploration companies in order to set their abortive expenditure against the taxable mining profits of the successful companies.

In addition to the reliefs which I have referred to, special provision is made in section 2 of the Bill to enable companies already carrying on mining operations before the withdrawal of the tax exemption to claim an immediate allowance of any unallowed balance of exploration and development expenditure incurred before 6th April, 1974, which qualified for relief under existing law. Section 7 accords similar relief in respect of any unallowed balance of capital expenditure incurred on plant and machinery brought into use before 6th April last.

As an encouragement to higher investment in new plant and machinery by the mining industry, provision is also made in section 7 of the Bill which will, in effect, allow 120 per cent of that expenditure to be set-off as it is incurred against mining profits. The relief in question will apply to expenditure incurred on or after 6th April, 1974, to new plant and machinery used in connection with the mining of scheduled non-bedded minerals in any part of the country. No terminal date will apply in the case of this relief. As a further incentive to encourage exploration for non-bedded minerals, section 6 provides for a special investment allowance of 20 per cent of expenditure on exploration incurred on or after 6th April, 1974. This is in addition to the 100 per cent allowance for exploration expenditure allowed under section 2, to which I referred earlier.

I am satisfied that these provisions will afford adequate incentive to further prospecting and exploration so as to ensure the continuation of a satisfactory level of development of the country's mineral resources.

Section 4 is designed to cover the case where exploration expenditure is incurred by one company in a group of wholly-owned subsidiaries and mining profits are earned by the parent company or by another subsidiary in the group. In such cases the exploration company may elect to have its exploration expenditure, whether successful or abortive, attributed to any other subsidiary in the group or to the parent company so that the exploration expenditure may be set off against mining profits wherever they arise within the group.

Section 5 provides relief for exploration expenditure incurred by a person who finds a scheduled mineral deposit and then sells the assets to another person who develops and works the mine. In such a case the latter will be able to claim in respect of the exploration expenditure incurred in connection with the mine.

As regards the cost of acquiring deposits of scheduled minerals, section 8 will enable this expenditure, where incurred on or after 1st April, 1974—the date of circulation of this Bill—to be spread over the life of the mine or 20 years if shorter. The allowance will also be given to persons commencing to trade on or after 6th April, 1974, where the expenditure in question was incurred before that date, since such persons would have received no benefit whatever from the tax exemption provisions. It would, however, be invidious to allow gains from sales of scheduled mineral deposits to escape taxation because the owners elected not to work the deposit but to dispose of their interest. Consequently, section 11 imposes a charge to income tax, and section 12 imposes a charge to corporation profits tax in the case of a company, on the proceeds of sales of scheduled mineral deposits occurring after 31st March, 1974.

Sections 15 and 16 terminate, with effect from 6th April, 1974, the exemption from income tax and corporation profits tax, respectively, of profits from the mining of scheduled minerals. Section 10, however, ensures that relief will be provided for marginal mines which might otherwise cease to operate because of the potential tax burden.

Sections 13 and 14, which relate to the tax treatment of dividends paid on profits previously entitled to exemption, are consequential on the repeal of the exemption. In particular, provision is being made to ensure that dividends paid, after the repeal of the tax exemption, but out of profits which fell within the exemption period of 20 years will carry the benefit of the income tax exemption.

Whatever misgivings, real or imaginary, may have been expressed at the time of the announcement of the intention to end the tax-free holiday on mining profits, all the indications since demonstrate that interest in mining in Ireland is not only continuing; it is on the increase.

I am satisfied that the new scheme of taxation for mining dealt with in this Bill, together with the other advantages of operating in Ireland, will ensure the ongoing development of mining here to the benefit of the mining interests and the people of the country as a whole. Because of the generous allowances now being provided, the gain in additional revenue to the Exchequer in the next few years from the new tax arrangements may not be significant but, over the next 20 years, it is estimated that the likely tax yield on the basis of present information, will be of the order of £125 million. I commend the Bill to the House.

Fianna Fáil's criticism of the Government in their approach to mining was not, as a number of Government speakers from time to time have tried to suggest, because we objected to the community getting more from the mines; on the contrary, as I propose to show, Fianna Fáil's approach was to encourage development of our mineral resources and to get the greatest possible return for the community consistent with that encouragement. Indeed, the Minister has stated that objective in his speech in perhaps better language than I have put it in, but our criticism of the Government's proposals were based on three main grounds.

First, this Bill before us is unnecessary and introduces enormous complications, whereas under what I might call the Fianna Fáil legislation there was virtually no limit to what could be recovered for the community on foot of royalties in a clean, simple way. We believe that this Bill is largely a window-dressing operation designed to fool some of the supporters of the Government.

The second ground for our criticism was that the imprecise Government announcement followed by a long delay in producing this Bill created great uncertainty in the mining industry and caused the postponement or cancellation of plans for the expenditure of very considerable sums of money on mineral exploration.

The third and the most important ground on which we criticised the Government's attitude on this matter was in relation to the cancellation of the statutory exemption of existing mines, as distinct from new mines, from income tax. We believe that, in relation to existing mines which were benefiting from this exemption, cancellation was both inequitable and damaging to our hard-won reputation in the field of industrial development as a place where a deal made was a deal kept. We, on this side of the House, intend on Committee Stage to try to amend this Bill to undo the damage caused by the Government in so far as it is possible to do so now.

As the Minister indicated in his speech, and as I propose to show in more detail, we, when we were in Government, were endeavouring to work out the maximum amount that we could recover for the community from new mines consistent with encouraging mining in Ireland. That is one matter. It is quite a different matter when one is taking away from existing mines a concession granted to them by both Houses of the Oireachtas, solemnly enshrined in legislation, and then trying to reassure people, as the Government tried to do in relation to industrial development, by offering written undertakings by the Taoiseach and other members of the Government that this kind of thing would not happen in relation to industrial development.

We suggest that this kind of approach is very damaging to this country's efforts to attract industry and create new employment, which should be our first priority, and that it was quite unnecessary. The term that might be applied to new mines starting up would not be, I believe, a matter of major controversy, but the taking away of what had been offered to existing mines and under which they had been operating is quite another matter, and it is not good enough for the Minister to gloss over that in his speech, as he has done.

In considering this legislation it is probably necessary and, I would hope, worthwhile to look back a little at what has been happening in this country in regard to mining. It must be remembered that up to relatively recent years all the experts told us that there were no mineral resources in this country. Despite that, a State company known as Mianraí Teoranta was set up to explore for mineral deposits. This operation, although it cost a great deal of money, was not successful. There were at the time complaints about the money being spent on Mianraí Teoranta. If we had continued with this policy—and on a bigger scale as would have been necessary—there would, no doubt, have been an outcry about voting money in this House every year for holes in the ground. That is what they would have been described as, and were described as in the past. It might be argued that the State could have bought the latest technical know-how to improve exploration methods. While this is all right in theory in practice it is difficult and may well be impossible to bring about.

As a consequence of this experience it was decided to change the general approach to mineral exploration and to offer inducements to private enterprise to explore for and develop mineral resources. That this policy was successful in locating very substantial finds of minerals and is likely to result in further similar finds in the future is now well known and accepted. It is of some significance that, so far as I know, no worthwhile exploration was carried out in Northern Ireland until recent years when it was triggered off by the findings of mineral deposits in the Twenty-six Counties. I believe that the significance of that is that inducements such as we offered were not available in the North. It is difficult to believe in a small country like this that the geological deposits conform with the Border. There must be some other explanation for the finds in the South as against the lack of finds in the North.

There is in this country a very voluble group—I do not know how large they are but they are certainly voluble—who demand the nationalisation of our mineral resources. I did not hear demands of that kind being made in any voluble way when we had a State company exploring for mineral resources. I do not remember these people or people like them advocating at that time the expenditure of a great deal more money on exploration or on the purchase of know-how from abroad or of more up-to-date technical equipment. What these people are now advocating is that private enterprise, having done the work and risked capital, should have the fruits of their labours and investments confiscated.

It is frequently forgotten that a number of companies have spent a great deal of money on exploration and drilling with no success whatever. Even if one were to accept the proposition that we should nationalise the mines at this stage one must face the fact that very large amounts of capital would be required and that the amount of capital available to the State for the building of houses, schools, factories, hospitals and so on, is limited, as the Minister for Finance knows only too well. Consequently, if we were to nationalise the mines we would have to cut back on the capital we are putting into such projects as schools and hospitals, or we would have to try to find abroad, and to attract here, specific mining capital in order to invest it in our nationalised mines. To succeed in this, we would have to offer very considerable inducements and financial returns so that the net effect of this, while it might be called nationalisation, would not be very different from the present position in that a great deal of the profit would be going to outside interests who had invested capital in our mining enterprise.

It must also be remembered that when we originally offered inducements it was in a situation where the prospects for mining in this country were very poor. As our mining finds developed, the State's bargaining position improved so that it is now possible to get much greater returns for the State from mining and, in other words, to give much smaller inducements than was possible in the past. It is quite unrealistic to compare the present situation with that which obtained when we first introduced our mining inducements. It is also important to remember that no new mining lease has been granted for over eight years and that the negotiations for that lease took place considerably earlier. In other words, we have not had an opportunity of improving the returns to the State from mining since the mining picture in Ireland improved to the extent where we could reflect that improvement in the returns we got for the State.

The former Government were very conscious of this situation. As indicated by the Minister in his speech, they set up an inter-departmental committee in 1971 to examine and advise the Government on the best approach, from the State's point of view and the point of view of the community, to the kind of terms that should be demanded in any new mining lease. The mining lease for Navan was held up for that reason. It should be realised that we were in a position, as I have indicated earlier, under the previous legislation to improve the returns for the State almost without limit on foot of the royalty clauses which we could impose in new leases. We could do so while still arriving at a figure that would ensure an adequate return for those investing in mining.

It is quite clear, therefore, that Fianna Fáil originally tried the approach of using a State company and found that this did not work. They then changed policy and offered inducements to private enterprise. They found this policy was very successful. When that success had put us in a much better bargaining position, Fianna Fáil were preparing to extract the maximum benefit from that bargaining position for the community, but they left office before it was possible to complete the implementation of this policy.

The question of a smelter arises whenever one considers the situation in regard to mining in this country. There is no doubt that the erection and operation of a smelter here would be very valuable to the economy and would result in our getting much more of a return from minerals than if they had to be exported to foreign smelters. The first requirement for a smelter is that there be an adequate supply of ore to keep it going. It is for this reason that owners of smelters around the world are major sources of investment in mining operations and in the development of mining. From their point of view investment in mines means that they can be sure of having a supply of ore to render their smelters economic but, consequently, one of the conditions of their investment is that a certain proportion of the production of the mines must be guaranteed to be supplied to their smelters. This brings us again to the problem of capital. It is clear that if a smelter is to be erected here a great deal of capital may be required from the Government because alternative sources of capital for a smelter will create the problem I have mentioned, that is, of endeavouring to tie down part of our ore supply for a foreign smelter.

When the Minister is replying I should like him to clarify whether the operation of a smelter would be subject to the provisions of this Bill. Such clarification would be helpful.

The next matter I wish to deal with is one to which I referred when speaking in this House on budget day after the Minister had made his statement. On that occasion I referred to the situation regarding an offer made for shares in Tara by a company called, I think, Cominco. At the time I was subjected to a considerable amount of abuse and interruption particularly from the Minister for Industry and Commerce but I note that, subsequently, in his speech on the budget, he made no reference to this matter. Perhaps I could recap the position: it appears that this company made a bid for Tara shares that was much greater than the market value. People do not understand how that company could do so if they were in the same position as ordinary Tara shareholders and as members of the general public who did not know what were the details of the Government's taxation proposals or, indeed, the terms of the lease to be granted and the royalties to be paid in respect of Tara.

On the face of it, Cominco had information that was not available to the ordinary public. Anyone in possession of such information could stand to make a fortune. I ask the Government, even at this late stage, to state categorically that no member of the Government, that no one on their behalf, gave such information either directly or indirectly to Cominco. In the absence of such a categorical assurance public interest requires a public sworn inquiry into the matter. I am not accusing the Government of anything. I am saying that the situation, on the face of it, requires an explanation. It is open to the Government to explain it and I am calling on them to do so.

Another matter to which I referred also on the occasion of the budget and to which the Minister for Industry and Commerce took grave exception was the effect on industrial development of the Government's announcement in relation to mining legislation. I do not know whether the record of this House shows precisely what happened on that occasion but what did happen was that the Minister for Industry and Commerce became very agitated when I referred to this matter. Three times I asked him if he were denying that problems had been arising in regard to industrial development because of the Government's announcement. It was only after being asked the question three times that the Minister replied and then he denied that what I was saying was true. However, in his speech on the budget he referred to the matter and said that I had produced no evidence to substantiate what I was saying. He said also, I think, that I was guilty of shyster tactics in this regard. We, on this side of the House, in common with many people, including in particular some of our own supporters, suffer by reason of the fact that, having been in Government, we are a great deal more conscious of the risks of damaging the national interest than were the Opposition with whom we were faced. The reason for this was that they had not had experience of Government.

There have been a number of matters on which we have remained silent because we deemed it to be in the national interest to do so but there comes a time when it is not in the national interest to allow a coverup of steps being taken by the Government which are damaging, as in this case, to our economic prospects. I do not propose to mention the names of any private firms in this context but I propose to draw the attention of the House to the fact that after the announcement was made by the Government regarding the withdrawal of the statutory tax exemption on existing mines, a number of members of the Government very quickly were speaking about this matter. So far as I can recall the first one to do so was the Minister for the Gaeltacht. He was followed by others, including the Minister for Industry and Commerce and, ultimately, by the Taoiseach. They spoke at considerable length in efforts to reassure the people. Indeed, the Minister for Finance said the same thing today in his speech. They went so far as to say that they would give written undertakings to the effect that the tax exemption applying to industrial firms engaged in the export market would not be withdrawn.

I ask the House and, in particular, the Minister for Industry and Commerce, whether it would have been necessary for members of the Government, including the Taoiseach, to make such speeches and to offer such undertakings in writing unless it had been discovered that the Government announcement in regard to their mining proposals was causing difficulty in the industrial field? Let us suppose for a moment that no difficulties were being caused in that sphere by this announcement, as the Minister for Industry and Commerce tried to convey to the House. In that case would even this Government, despite all the mistakes they have made, begin drawing the attention of potential industrialists to the possibility that the export tax relief might be withdrawn? It would be insulting to the intelligence of the Minister for Industry and Commerce to suggest that he and his colleagues would have made speeches to that effect and would have offered written personal undertakings if there were no problems arising. It is beyond belief that any Government could do something so silly.

It passes beyond belief that any Government could do something so silly. Therefore, I suggest that the evidence is clear from the actions of the Government itself, and in particular of the Minister for Industry and Commerce, that the announcement of the Government's intention in regard to mining did cause considerable difficulties in regard to industrial development. It is useless for the Minister for Industry and Commerce or anybody else to come here and try to deny that that is so. They may argue that it was an inevitable consequence of what they announced, that it was unavoidable and worthwhile. If that is the argument they want to make let them make it. But that is not what they said. They said that no difficulty was caused by the Government's announcement. What I have just outlined is clear evidence that there was a backlash and a problem arising and that potential investors in industry here were being frightened off not because the Government were proposing to impose taxation on mining and profits from mining, but that the Government were proposing to repeal in relation to existing mines a statutory exemption which had been passed by both Houses of the Oireachtas, and, as far as I know, without opposition. That is the reason the trouble was caused and that is why we objected to the Government's announcement. We pointed that out at that time and it is no use now trying to pretend that damage was not caused. It was.

We believe that even at this late stage equity and the interests of this country in securing investment from abroad in industrial projects require us to undo, as far as possible, the damage this Government has caused. On Committee Stage we intend to try to do this. However, at this stage I cannot anticipate what attitude the Minister and the Government will adopt in this regard. Therefore, I must deal with the Bill on certain assumptions, including the assumption that the Minister will not accept the proposition we will put forward. On the assumption that the Minister will not try to remedy the breaching of the statutory promise to existing mines, would he indicate whether the conventional preceding year basis of assessment will be applied? If it is, it would appear to contradict what I understand was an assurance given by the Minister to mining interests when he met them on 11th January last. Furthermore, if the preceding year basis is to apply, there would appear to be a certain lack of logic in the Minister's report.

Sections 13 and 14 dealing with dividends provide that the benefit of the tax exemption cannot be given to shareholders on the payment of dividends out of profits earned after 5th April, 1974, but that it must be given in relation to profits earned before that date. It seems clearly illogical to charge the profits earned before 6th April, 1974, to tax while at the same time requiring that dividends paid out of those profits should be tax-free dividends. I suggest that unless the Minister can confirm to the House that the conventional preceding year basis will not be applied, it would behove him to take some action in this regard, possibly on the lines of what he proposes to do with regard to the income taxation on farmers announced in the budget. That might meet this problem.

In regard to section 2, it would appear that interest on money borrowed to meet development expenditure as defined in the Bill will be allowed as part of development expenditure, if it is incurred on or after 6th April, 1974, but not if it is incurred before that date. If this is so this would appear to be discrimination against existing mines. I ask the Minister to confirm the position as to whether I have stated it correctly, and, if I have, to explain the thinking behind this provision. Furthermore, if interest on money borrowed for development expenditure is to be allowed as a charge, why not apply the same treatment on money borrowed for exploration expenditure before the mine starts production? Perhaps the Minister would explain the thinking behind that also.

In regard to section 3 which relates to expenditure on abortive exploration, the Minister proposes to allow this with a seven year time limit. I understand that exploration may take five to seven years, appraisal another two years and development thereafter approximately another five years. If this is so, it would seem clear that the seven year period proposed by the Minister is quite unrealistic. Perhaps when replying he would deal with this point, explain the principles he has in mind and whether he accepts the estimates of time involved which I have given. If he does not, why not?

There are provisions in section 8 and 11, if one takes them together, under which existing mines, which dispose of scheduled mineral assets, become liable to tax but without the benefit of the relief provided for in section 8 which is given to new mines. This appears to be further discrimination against existing mines. I would appreciate if the Minister would explain the thinking behind this or, alternatively, make provision to change this approach in the Bill.

There is another matter which arises under these sections. If a farmer sells land to a mining company, this Bill will make him liable to tax at the normal tax rates on whatever price he receives. If, however, he sells the same land for another purpose, say, to a builder, he will only be liable under the White Paper proposals to capital gains tax on the increasing value of the land since the 5th April of this year. This, on the face of it, appears to be an anomaly requiring rectification. I would ask the Minister to have a look at that problem. I would ask him also to state the reason he proposes to allow as a deduction in such cases only the cost of acquisition and not the cost of exploration or development. I would ask the Minister also to note the phrase in section 2 (1) (b) "in the opinion of the inspector". Would the Minister confirm that such an opinion would be subject to the right of appeal?

In regard to section 6, I should like to ask why is the investment allowance in relation to expenditure on exploration to be allowed only on expenditure incurred after 6th April, 1974? Again, on the face of it, this appears to be discriminating against existing mines. If the statutory exemption from tax is to be taken away from existing mines, surely the least they can expect is that all mines, existing and new, will be treated the same way for tax purposes? Perhaps the Minister will explain the thinking behind that provision.

In regard to section 7 (2) I would ask the Minister to consider amending that to provide that the right as to the amount of unallowed expenditure on plant and machinery claimed as a deduction for the year of assessment, 1974-75, would be at the election of the company on the same basis as he provides in section 2 (2).

With regard to section 10, which deals with marginal mines, I am somewhat unhappy at the vesting of the power provided in that section in the Minister for Finance as such. On the face of it this would seem to be quite inappropriate. I note also that there is no provision for an appeal against whatever decision the Minister would make. Indeed it is difficult to see how you could provide an appeal if one adheres to the Minister's proposals to vest this power in the Minister for Finance. It would seem to me that a better arrangement would be to give the power to the Revenue Commissioners with the right of appeal to the Appeal Commissioners. It may be that the Minister will be able to show us that there is something wrong with this approach and that it is necessary to have the power vested in the Minister himself, but the reasons would want to be very compelling to justify a provision of this nature.

Furthermore, I believe this section would be much improved if it laid down some guidelines as to how the Minister for Industry and Commerce, the Revenue Commissioners, the Appeal Commissioners and, above all, the taxpayers were to approach the problem of marginal mines. I do not think the section really gives any guidance as to how this problem is to be approached and what criteria are to be operated by the Minister for Industry and Commerce or the Minister for Finance in exercise of the powers under this section.

I have tried to outline some of what might be called the technical problems that I see arising in regard to various sections in this Bill and on which I would appreciate the Minister's comments. I repeat that I have put these forward only on the assumption that the Minister would not accept the proposition that the existing exemption should not be removed from existing mines. If that were accepted most of the points I have raised would not arise at all. We believe, in the interests of equity and in the interests of the economy, that this exemption should not be removed from existing mines. I repeat from existing mines, quite distinct from new mines, which can be treated on a completely different basis. There is no obligation on anybody to treat them in the same way as existing mines. This is a very important point. I would ask the Minister, even at this stage, to give very serious consideration to the implications of what he is proposing to do in this Bill in relation to existing mines, the implications not merely in the mining field but overall in relation to industrial development, which is vitally important to the people of this country. If the Minister does a rethink on this, most of the points I have raised will not arise; but if he does not most of these points do arise and I would ask the Minister to comment on them when replying.

I should like to welcome this Bill. Any sane-minded person or country would not have given away the wealth of the nation like this. There was a 20 year concession on the wealth of Ireland. No doubt international mining companies could not believe they were in for such a bonanza, and bonanza it was. All the Irish people would have got out of this was holes in the ground and mounds of dirt because those international companies would have ensured that they cleaned out the wealth of Ireland within this time. Because a Bill went through ensuring this 20 years it behoved any Government with a social conscience to ensure that action was taken, that if not all the wealth of this nation, at least a good deal of it, would accrue to the Irish people and not go somewhere else.

There is talk about this having reprecussions on other industrial development. This is not true. The Taoiseach and Ministers had to make clear statements of intent that industrial development would not be touched because we had an Opposition going around the country preaching doom, saying that this Government were going to welch on all international companies. That is the reason. There were no other reasons. The mining concerns are quite happy with the deal they have got. They are not complaining. There was conjured-up hysteria, workers being led astray and marching when we all knew the wealth was still in the ground and that no mining company would pull out or no mines would close. This is the type of thing that was being conjured up at the time. One cannot imagine why. The wealth that would have accrued to the nation from mining would help our industrial development and the development of our nation in general. Any developing nation that gives its wealth away, as we were, remains under-developed and poor. We have seen some of the South American countries that were exploited. This Government are not prepared to allow this nation to be exploited. We encourage industrialists and mining companies to come in here. We have the facilities for them and in this Bill we have concessions for them. No international company today expect the kind of deal the previous Government gave. They sold out the nation. Thank God we had a change of Government and a change of attitude.

As the Minister for Defence admitted.

The Deputy must be allowed to speak without interruption.

I do not mind being interrupted by Deputy Crowley. Every time he interrupts he highlights the attitude of the Opposition.

Let the Deputy get on with the debate.

Acting Chairman

Deputy O'Brien please, without interruption. Everybody will have an opportunity to speak.

When the Opposition were in Government they gave away this country's assets. Now they cannot face up to the fact that what this Government are doing is correct. We will obtain, over the next 20 years, a sum of £120 million which could do a lot in relation to industrial development and help for our social welfare recipients. Even now they will not admit they were wrong. They still persist in the innuendo that this will affect our industrial development but they have never said where it will. If they had the interests of the country at heart they would tell us the areas where they think it will suffer. International companies still want to come into this country despite the talk on the Opposition side. We will do the right thing. That is why the people put us here and why the Fianna Fáil Party are over there. They made a very bad job of it when they were in Government.

The people will have an opportunity very soon.

They will have an opportunity in three and a half years' time when we go to the people and ask them for a further term of office. No doubt we will get it. The people can see that the performance of Fianna Fáil as an Opposition party is pathetic. They are now opposing something that will benefit the nation.

Last year our employment figures rose and our economic growth improved despite international problems and despite the mischieveous talk of an Opposition conjuring up evil thoughts. They will not divert this Government from the course of action they are on.

(Dublin Central): Could the Deputy tell us how he values mines as regards wealth tax?

The Minister for Defence will divert the Government as far as he can.

Whether you speak of the Minister for Defence or the Minister for Finance we have a Government of collective responsibility. The Opposition are clinging to straws, hoping something will happen, because they have not got any policy. They are looking across here hoping something might happen, in the vain hope that they will cross to this side of the House. They will not cross to this side unless they improve and show the people they are capable of governing this nation.

(Dublin Central): Let the Deputy drive around Dublin and see the industries we are getting.

Deputy O'Brien without interruption.

It is a shame that the Opposition at this late hour still oppose giving to this nation the wealth which is under the ground. They are sitting over there with shameful faces because they made a mistake and they have not the guts to stand up and admit it. I commend this Bill to the House and I hope as the years go on it can be improved, so that we will ensure we will get the maximum amount of wealth channelled to our people.

One has to excuse Deputy O'Brien in his political innocence seeing all the brightness on one side and all the darkness on the other side. Of course, when he becomes a little bit more experienced in this House he will discover there is nothing totally black and nothing totally white. He resents the fact that we are opposing this legislation. Very few people will disagree with the sentiments expressed in the Minister's statement.

Except Fianna Fáil.

We definitely want the most profitable exploitation of our mineral resources. As far as the people are concerned we want them to benefit to the maximum degree. We also want industrial development to carry on at the same rate of progress as it did under Fianna Fáil. I regret to have to say that due to the irresponsible statements and the irresponsible attitude of the Government my constituency, which is only a small one in relation to the whole country, lost two very valuable industries because the industrialists who were about to come into west Cork recognised this Government as being a Government of welchers.

That is rubbish.

They welched on legislation that had the sanctity of this House and the Seanad around it. The Minister for Industry and Commerce, Deputy Keating, in reply to a question on 12th July, 1973, as reported in the Official Report, Volume 267, column 903, said:

The same sort of considerations apply as applied in the question answered just now by the Minister for Posts and Telegraphs. Where commitments have been entered into they will be honoured. The country cannot continue its industrial development if it makes agreements and breaks them.

I submit that that is exactly what this Government have done. The Government have broken agreements; they have flagrantly cast aside legislation that was guaranteed in this House to give in to a few vociferous protests in the Dublin area. Nobody objects to the welfare of the Irish nation being protected by any legislation and this Bill would have the full support of Members on this side of the House if it applied only to new mining companies and if there was no retrospection.

I concur with the statement made by the Minister for Industry and Commerce which I quoted. The country cannot continue its industrial development if the Government flagrantly breaks agreements as they have done. That is why the Taoiseach, and other Ministers, were so anxious to give their personal guarantees because they knew from the IDA that there was wholesale backing-out by prospective investors.

The IDA did not say this and the Deputy should not be using words never uttered by the IDA.

The Minister does not know the Deputy.

If Deputy Creed was around more often he would realise that out of his own constituency a most valuable industry was lost.

Such as?

Burroughs Corporation.

That is rubbish and the Deputy knows that.

Does the Deputy know anything about Burroughs Corporation?

Probably a lot more than Deputy Crowley.

The Deputy may get away with that kind of bluff elsewhere but he will not get away with it here. Does Deputy Creed know anything about that corporation? Does the Deputy know what they manufacture?

Acting Chairman

Order, please.

I do know what they make.

The Deputy should put up or shut up. The Deputy has stated that he knows everything about that corporation and that he was involved in the negotiations so that he should be in a position to tell us what they manufacture.

I did not say I was involved in the negotiations.

The Deputy, or the Minister for Finance, do not know what Burroughs Corporation manufactures.

Acting Chairman

I should like to draw the attention of the Deputies to the fact that this is a Mining Bill dealing specifically with mines. I should like that Deputy Crowley be allowed to make his contribution without interruption and that he address his remarks to the Chair.

Deputy Creed is trying to bluff. He does not know what is going on in his own area or in his constituency. I submit that because of the statements that were made on mining two valuable industries I have referred to did not come to Ireland.

I regret, in particular, that they did not come to my constituency.

We all accept the fact that our mineral resources are a wasting asset and, in that light, cannot be compared to industrial development. But we must remember also that not long ago all the experts here were telling us that we did not have any worthwhile mineral deposits. Our own experience, by setting up a semi-State body to investigate the possibility, did not come to fruition and probably cost the Exchequer what was then a considerable amount of money. Those people who cry out for the nationalisation of our mines would do well to ponder on the experiences that were met then. As Deputy Colley has pointed out, all that was produced was holes in the ground.

As a consequence of that the Government at that time decided, rightly, on a change of policy. They decided to encourage private enterprise into the field by various forms of inducement to explore and develop. It cannot be contradicted that this policy was very successful in locating where mineral deposits were. The enormous sums involved in exploring and endeavouring to exploit our mineral resources are so vast that the Government could not contemplate undertaking this work. A semi-State body could not do so either.

The amount of expertise that is so necessary is not available here. Some of the people who have come in here to explore for mineral deposits have been described as foreigners and speculators, but the people involved in the work at Tara Mines are Irishmen who emigrated and did well. They returned to this country and invested their money here. They had the good fortune to discover substantial deposits of mineral ore in that area.

I do not deny that, as our recognition of our mining potential and as a promise of greater deposits evolve, the State should demand its pound of flesh. I have no objection to the lessening of those incentives or inducements to new companies coming in. It is difficult to imagine how so much ill-informed criticism came about in relation to the mining industry because we know that a big number of prospectors have spent a considerable amount of money and have had absolutely no return from that expenditure as yet.

There are groups saying we should nationalise and take over everything, that we should take it off all the free enterprise operators in the country and make it as difficult as possible for them. The amount envisaged by the Minister, £125 million over the next 20 years, is considerable even by modern standards, where inflation is running at such a rapid rate that those large sums seem to contract quickly in the space of a couple of years. We could have had all that sort of protection without any of the consequent damage if we just ensured that only new companies coming into the field would be subject to the new restrictions. It is always difficult in a situation like this to try to draw the line, especially in relation to mining where, as the Minister said in his brief, we are talking about something that is a wasting asset and on which we have to capitalise to the maximum maybe in a short space of time.

I do not think any of our development, mining or anything else, can be taken in isolation. We must recognise the fact that legislation enacted specifically in relation to mining can have repercussions elsewhere. The most important exercise that we and the Government should involve ourselves in is to ensure that we never again have a recurrence of what happened in relation to this legislation and that we will never again be in the position of scaring off potential investors.

It is quite easy to make statements, and it is probably hard for Ministers on that side of the House who have been in opposition for so long to adjust to the fact that they are Ministers and that every statement and every commitment by them carries far more weight than when they were mere Opposition spokesmen. They have been used to pleasing the protestors, the complainers and other people for so long that as soon as any sort of mini-lobby comes along, especially one that was as articulate as the antimining lobby, they run scared in front of it and do irreparable damage to the country.

Our policy in Government has always been to attract as much investment as possible to this country, because we recognise that by attracting investment we are not alone attracting the capital that is so important for the creation of extra jobs but we are also importing what we so badly need, namely, technical know-how and expertise in the various fields of the companies that invest here.

No short-term gain should jeopardise our whole industrial future. It is quite popular to talk about taxing wealthy people like mining companies, large farmers, large industrialists, and other people like that, but in this country we either have a free enterprise system or we have not. It is an easy thing to debate. If you want a completely socialist State, there are lots of good arguments for it, but at the moment we have a free enterprise system operating and, therefore, the inflow of capital is a vital ingredient for the success of the economy. Any steps we take that restrict or stem that inflow will have very serious long-term repercussions.

As I say, the inflow of capital is important. However, statements that have not been thought out properly and socialistic clichés about taxing the wealthy, such as have been thrown out ad lib., cause an outflow of capital, which is very serious. This Government must be tremendously strict with themselves and remember that they are the Government of the country now, that they are no longer the irresponsible Opposition that they were, and that every decision and every statement made by them has vast repercussions for all of us. Therefore I would ask the Minister for Finance to take very special note of the quotation that I gave from the Minister for Industry and Commerce when he said: “The country cannot continue its industrial development if it makes agreements and breaks them”. I submit that as a result of the breaking of an agreement entered into by the former Government this country has lost considerably.

The Minister said that he has had discussions with the mining companies, that they are now very ameniable to his proposals and are not prejudiced against this Bill introduced by him. Nevertheless, I do not think they are the ones that have got to be the primary concern of us all. The Minister, when he is replying, could very well answer the charges levelled by Deputy Colley: how did a company with absolutely no connection with Ireland have the knowledge—because prior knowledge must have been necessary—to pay such a substantially greater amount than the apparently true value of the Tara shares at the time? The Minister owes it to the country to make a categoric statement. If he does, it would help to clear up quite a lot of disquiet in regard to that question. The Minister can give an explanation of why it was necessary for the Taoiseach and some of his Ministers to make statements to the effect that they would personally guarantee that there would be no breaking of agreements in relation to any industrialists coming into this country.

It is extraordinary to have the Taoiseach and his Ministers putting themselves in the position of having to make such statements. The only conclusion I can draw is the obvious one —that some industrialists were pulling out while other industrialists were reluctant to consider coming here and that this type of reassurance was necessary. If the Government have learned nothing else from this episode that itself would seem important.

The Minister spoke about the development of the mining industry and said that it was due to relatively favourable and well-documented geology. If our geological surveys were so well-documented, how is it that the State body which was set up to investigate the position in regard to mineral ore deposits in this country was not able to locate such deposits? The Minister said it was so when he was making the point that the growth in the Irish mining industry cannot be solely attributed to tax exemptions but was also due to relatively favourable and well-documented geology, and also the improvements in technology, good mineral legislation and the impetus given to the Tynagh discovery in 1961. I submit that this is a lot of poppycock and that the reason the mining industry was successful was the enlightened legislation enacted by Fianna Fáil. It brought the proper type of people here with the expertise to exploit and explore the mineral resources which we had available. I submit that saying that one of the reasons for it was the well-documented geology is an attempt to cloud the issue completely.

Even at this late stage the Minister must, in fairness, reconsider the whole position in relation to the way the Government have welched on the deals entered into by the former Government. As the Minister for Industry and Commerce so rightly said, the country cannot continue industrial development if it makes agreements and then breaks them. I submit that our industrial development is in jeopardy because of the irresponsible acts of the members of the Government. Let us hope that they will learn the lesson of the past and ensure that industrial development is not inhibited in any way because of some socialistic cliches coming from members of the Labour Party or, indeed, the Fine Gael Party also. Let us make sure that we present a proper image of this country as a Government that always honour their commitments.

Deputy Crowley mentioned the claim made for our adequate geological surveys and the knowledge we had on this subject. Many years ago I read an article by someone whose name I have forgotten. He stated that people interested in mining could forget about this country because they had tried all the resources and the results were nil. Luckily for us, in later years there were people in Government who did not accept this. They set out to prepare the way for full exploration and development of our resources. Having enacted legislation and attracted to this country outside concerns who had the expertise and the organisation to probe for our mineral resources, they set a path for further development. If names like Tynagh and others come to mind we can take great pride in them.

The Minister stated that, unlike manufacturing industries, tax incentives are not required to locate mineral resources in Ireland. He stated that the minerals are either here or are not. That is a very simple statement. How does one discover whether there are minerals? Having done so, does one leave them lying in the ground or does one take all possible steps to ensure that they are taken from the ground and converted into their finer forms?

As a result of Fianna Fáil action over the years not alone in Ireland but abroad, we had built up an image of a go-ahead country wishing to develop all its resources and which had not insular ideas of trying to keep the resources but rather the idea of giving the opportunity to outsiders to come here and help us develop our resources. A change of Government brought about a change of outlook on this matter. This is where one feels afraid because the Government have decided to change this. I know that not all members of the Government agree with this policy, but the Government have decided to change the plan of developing these resources. We must think of the damage that may have been done to our image abroad. Steps may be taken which will hinder the full development of our resources. Such action does not enhance our standing in the world today. It does not help us when it is noted that because of the change of Government there is a radical change in the approach in financing and general encouragement in regard to the development of the country's resources.

Perhaps, as Deputy Crowley suggested, it is not too late for the Minister to review the present attitude and to amend the legislation as it goes through the House.

The Government did not have the task of convincing outsiders of the presence of mineral resources in this country. Fianna Fáil had that task and had to take the initial steps towards attracting mining prospectors. Of course, we were prepared, too, to introduce the legislation that was necessary to make it easier for outside firms to explore here. Therefore, what is happening now is, in effect, the second stage of the development, but instead of letting matters run smoothly as they have been, the Coalition are now making changes with which I am sure many members of Fine Gael do not agree. These changes may result in grave injustice being done to the people of this nation by reason of the fact that they may not allow our mineral resources to be developed to the full. The Government's attitude may be based solely on some political prejudice against Fianna Fáil. I would not expect everybody on the benches opposite to agree with what Fianna Fáil have done in this sphere but I would suggest that the Coalition should not run the risk of jeopardising the welfare of our people. They must realise that in order to provide a good standard of living for our people in the future it is necessary that every ton of our mineral resources be exploited.

The Government may very well be turning back the clock so far as the mining industry is concerned. We are aware of a certain uneasiness among some members of the Cabinet, especially the Fine Gael members, in regard to the Government's attitude. These people are hoping that their colleagues will realise the wisdom of the thinking of Fianna Fáil Governments. Despite any promises that may have been made during the election campaign, or at some other time, the Government should reconsider what they are doing. Not only will the development of our mineral resources provide gainful employment for our people but they are necessary if we are to provide a higher standard of living for all our people. This is an area in which the Government should not play party politics.

The Minister stated that he wished to emphasise the special circumstances which have necessitated a change in the Government's fiscal policy in respect of non-bedded minerals and said that these would not apply to industry in general, particularly the manufacturing industry. On that basis, having removed the mineral from the earth, will the Government go ahead then to make attractive the task of refining the metals or will the metals be exported in bulk form? The Minister might well admit that the Government have made a miscalculation as to what are the best incentives to attract people from outside to explore here. If this is the case they should seek the confidence of the House and tell us that the decision they have made may well have far-reaching implications abroad, that it may damage our image of being a country which, having made a decision, is not prepared to stand by it. In any case, let the Government not endeavour to show that Fianna Fáil were not au fait with all aspects of the mining industry or that we were over generous. I would not accept that Fianna Fáil were over generous because, in the first place, we had to prove that there was a possibility of gainful mineral finds here so as to attract mining exploration companies to come here with all their expertise. That was a very big step and, of course, we had also to convince our own people of the existence of these minerals in quantities great enough to provide a viable industry. Any Government must take a chance in relation to decisions made from time to time but in this case they had sound guidelines available to them. I do not know why they deviated from these guidelines. One can only guess that their motive was political but that can hardly be sufficient reason for rescinding the legislation in respect of this industry. Therefore, we must assume that there is another reason but whatever that reason the Government should examine their whole attitude in this regard and, before untold damage is done, they should examine this legislation line by line so that they might amend it in a way that would ensure that no harm would result to the mining industry. Apart from the value of any minerals that might be exploited one can envisage a situation in which we could take our place in technology with other peoples of the world so that they might benefit from us as we have benefited from them in regard to their resources of oil or natural gases.

We must ensure that from this Legislature emanates the basis for the establishment of a viable mining industry. We must ensure, too, that the legislation we enact in this respect will be such as to ensure that nothing will be left undone that will enable every available ton of mineral to be taken from the earth and to be used for the good of our people. I believe that the Minister for Finance could be avant garde in relation to the development of our resources.

He was influenced by other people who feel we should be more socialistic and hammer the mining moguls. That may sound well in speeches at political party meetings but it has no place in this world today where a country with a wealth of minerals is the envy of others. Major wars have been caused in the past by greed for these minerals. Their excuse was that the natives were not capable of developing their own resources. Then the bigger nations stepped in to do the job for them. It would be a terrible thing if because of this Government's attitude and decisions other powers might take action—not physical action—against us to show us that we are not capable of developing our natural resources. They could use international financial considerations to make sure that we did not progress very far.

If the Government examine this legislation, they will realise that they may do untold harm to the image of the Irish nation if they are accused of breaking their promises. That would be very serious. That could damage our mining prospects which would be a major disaster.

It is clear to the people and accepted by virtually everyone outside the ranks of the Fianna Fáil Party that the tax concession involved here for the last 20 years was a mistake. It was a mistake for which the blame was shared. Primarily, the blame for such a blunder rests with the Government of the day who took that action. The Oireachtas generally failed to appreciate its significance at that time. As a result, we were left with the situation in which, if this Government had taken no action, the legitimate benefits which should accrue to this country from these natural resources would, to a disproportionate extent, have gone to the private interests largely outside this country to whom these benefits would have flowed through the outflow of untaxed profits. Something had to be done about that.

Public opinion on the subject was acute. Then it became clear from the scale of mistakes that had been made and from the scale of the discoveries of ores here, how much this blunder might cost this country. The weight of public opinion directed to the subject made it necessary for action to be taken by whatever Government was in power. It is hard to believe that if the Opposition were in Government they would not have taken the necessary responsible action to retrieve the blunder which was made.

The work of the resources study group played an important part in the development of public opinion. Their work in my view contains errors, exaggerations and, in its interpretation by others, it has given rise to misconceptions as to the scales of the sums involved. Nonetheless, they helped to alert public opinion to this subject. They created a climate of opinion in which it became clear that certain action had to be taken. There have been misconceptions as to the scale of what is possible in this matter. It is a mistake to talk about sums of money involved and the value of the ore. A very large part of that value relates either to the actual cost of extracting the ore or to its subsequent processing, some at least of which would have to take place beyond the shores of this island.

What we are concerned about is the value added in Ireland which would accrue in the absence of taxation or royalties to the enterpreneurs concerned. The question is how much of that should be diverted for the benefit of the Irish people and by what method that should be done. There have been suggestions from the Opposition that this should have been done solely by a process of charging royalties. I do not think the Opposition have thought out the implications of this suggestion. Either such a process would have been so geared as to bring in small sums of money or a certain sum of money which would have been a good deal smaller than the amount which will accrue by the methods proposed by this Government or, alternatively, if they mean that the sums of money which will accrue by taxation and royalties, could have been secured through royalties only, then an attempt to act in that way would have been very damaging. That would have involved a level of royalties which would have been out of proportion to royalties in similar cases elsewhere. That would have been seen as a dishonest attempt to retrieve a blunder. That would have brought to this country considerable discredit. Given the mistake which was made, the only thing to do was to attack it frontally and honestly and not try to pretend that we were leaving the concession there while, in fact, imposing totally unreal royalties unrelated to the normal level of royalties elsewhere. The course of action we have taken is absolutely right.

We made it clear that we regard as unacceptable that the tax concession mistakenly given by the previous Government should be maintained. We have discussed with the companies concerned the implications of this action and have sought to arrive at a reasonable solution. This solution will be designed to ensure that existing mines will continue to be worked and deposits of minerals will be explored and worked in the future. It is very important that the action we take should not have an adverse effect. If we had acted otherwise and been unreasonable in the implementation of our new legislation this could have led to a situation in which existing mining might have stopped in certain places where it is marginal or is not yielding profits or maybe incurring losses. We must maintain a balance.

The balance requires that the tax remission granted by the previous Government should be changed. That should be done openly and honestly and not through a process of trickery as the Opposition seem to propose by fiddling royalties to achieve this result. At the same time, in the implementation of this policy there should be a realistic and reasonable attitude to the Government which would meet the legitimate needs of those mines which are not completely economic or yielding significant profits, and ensure that they are kept open. We must also ensure that the benefits from these mines which are, or would, be highly profitable, accure in a reasonable share to the Exchequer and through the Exchequer to the Irish people. The balance of the package proposed is right. The action was necessary in the interests of the Irish people and the type of action taken was adjusted to the needs of the situation.

There was talk about this having an adverse effect on confidence. It obviously has not. There is no sign of a slackening of interest in our mining deposits, no indication that they are less willing than they were earlier last year to explore or to undertake expenditure of that kind here. Indeed if anything there is an indication of greater confidence at this time in the form of an evident interest in the establishment of a smelter here. The establishment of such a smelter must be a primary aim of Government policy. In our dealings with the mining companies that must be uppermost in our minds. It is encouraging that there does appear to be an interest in this possibility at this time. It certainly gives the lie to any suggestion that the action taken by the Government has affected confidence in the mining industry, in this Government and their method of handling these matters.

Of course the mining situation is, of its nature, completely different from that in manufacturing industry. No one in this country that I am aware of has ever challenged the wisdom of tax reliefs for manufacturing industry. They are necessary to attract industry, entrepreneuriship, know-how, and capital to this country which, because of its peripheral location, is less than ideal for many manufacturing purposes. They have been accepted as such by our people. They have never been challenged and indeed the question of the extent to which they could be safeguarded under EEC conditions was one of the main issues at the time of the negotiations. It is quite clear that most people regarded the maintenance of these tax concessions as of vital importance. They could not be less controversial. There is no question of their being in any way in dispute because it is clear that they are totally in our interest.

In the case of mining the position was different. Given the existence of mining deposits here it is unnecessary to create artificial attractions to encourage people to come and exploit these minerals. It seems clear that the scale of minerals here is sufficient now to have this power of attraction of its own account. The tax relief for 20 years introduced by the previous Government was something which at the time it was given was regarded by the companies concerned as a bonanza which they did not expect to get and did not indeed think they deserved. I recall myself being asked to meet, as an economist, and talk to one particular group. They were concerned with the possibility of investing in mining here and they wanted to know something about the climate of opinion here. The advice I gave them on the particular matter was that they should enter into an agreement of some kind with the Irish State or a State enterprise for joint operations as that would clearly identify them with the interests of this country and would ensure that their operation would be one that would be highly acceptable. Nothing came of that but in the course of these discussions—this was at the end of the 1960s—they remarked that the 20 year relief was of course absurd, that the kind of relief which would have been appropriate would be five years, but that naturally companies like themselves would look for ten with a view to getting five. They failed to understand how a Government could, off its own bat, accord a 20 year relief, given the situation of mining in this country. The people concerned were the representatives of one of the major mining groups in the world.

It is clear that this was an error, an error that had to be retrieved in the interests of the Irish people. It had to be retrieved honestly in a straightforward way and not by attempting to get around the problem. The legitimate concern of people involved in marginal mining had to be met. This is done by this Bill, while ensuring that an adequate return to the Irish people from these resources will not have the effect of closing down any existing activity. I think the balance that has been achieved is correct and the evidence is there in the continuing interest in mining exploration in Ireland since the publication of this legislation—indeed the evidence of confidence in the future exists in the form of the growing interest in the possibility of a smelter being established here.

I would regard the establishment of such a smelter as a primary aim of Government policy because of the significant addition to domestic added value it would yield directly and perhaps also in terms of a later use of some of the products. Those who are concerned, and there are many in this country, that we should maximise the use of these minerals at home and ensure that they are processed as far as can possibly be done at home, are, I am sure, right. It should be our aim to achieve that and, if possible, to move beyond the smelter to the establishment of industries based on these minerals. How feasible that would be remains to be seen but it is something with which the Government must be concerned.

These are points that seem to me to be crucial. I am not in a position to enter into technicalities or details. It is not a particular area of speciality of mine. I thought I should like to make these points at this stage in reinforcement of what has been said by the Minister and in order to clarify the issues which can at times be muddied in Parliament when it suits an opposition to confuse some of the issues.

The Bill is one which can be heartily commended to the House. The benefits accruing from it will stand to this country in the years ahead. I am doubtful whether the Opposition in criticising the Bill are doing either the country or themselves any good.

I rise to support this Bill. It seems to me we are reaching the stage where we can begin to be a little more sophisticated in our approach to development and in particular to the price which we must pay for development. As a developing nation some years ago, when there were critical problems of severe unemployment and an undesirable structure of employment in the country with so many people engaged in primary employment, we had to pay an extremely high price for development especially development by interests outside this State. This was the background to the extremely liberal approach which successive Governments adopted to foreign investment. We are today reaching the stage when we should pose certain questions. It would seem to me that it is not enough simply to have development occur. It is somewhat more relevant at this stage of our development to ask what price we should pay for what development is occurring. It is desirable in the national interest to review these matters quite frequently.

If we put this legislation into context and if we try to compare the fiscal policies, the incentives, and the attitude to investment that exist in this country with that of other countries in the developed world, we find that in general the attitude here is extraordinarily liberal. On the other extreme we have Japan, where there are great brakes on investment within that country by foreign interests, even to the extent that companies may not be set up unless they are joint ventures with specific Japanese participation in such industries. Again we go to countries on the European mainland which are much less generous in welcoming development for the obvious reason of their greater level of development than here.

It is relevant to point out, as the Minister and Deputy Fitzgerald have done, that mining is in an entirely different category to manufacturing industry if you are seeking development. Mining, as has been pointed out by the Minister, is a wasting resource. We have only so much mineral wealth in this country and when that is exploited or developed that is the end of the story. There is no continuity beyond that particular point. In the case of manufacturing industry it is an on-going thing. To a degree it is an artificial type of development in that in many cases we are not developing a native, indigenous resource. We have for that reason been extremely generous in regard to complete relief from taxation on export sales of manufacturing companies.

It is relevant to point out, as Deputy Fitzgerald has done, that where the nation is concerned there is a capital investment in manufacturing industry; and beyond the point when the tax relief years will have ended there will, hopefully, be an ongoing situation with continuing investment, employment and profits. In view of the immense public pressures there have been and in view of the interesting statistics produced by the study group, it seems to me that the National Coalition Government were obliged, on taking office, to take a hard fresh look at policy. The previous Government were in office for a great many years and probably found it difficult to take a fresh look at the situation which they had developed so far as legislation was concerned.

My view is that the Government acted rightly. They made a decision last autumn. That particular decision was obviously socially desirable. The only debate at that time was one where many interests, especially vested ones, tended to get hot about the collar, not so much about the social desirability of the legislation in so far as our people were concerned but rather about the economic desirability of the issue in so far as the development of the nation was concerned.

It seems to me that the Government's decision was also economically sound in addition to being socially desirable. It is interesting that at the time of the original announcement there was a reaction which in general came from mining interests and certain financial interests. If the reality was as they stated it to be—that this was to be the end of the development of mining resources in this country, that it was to be the end of profit and employment in the mining industry— then certain things logically should have followed. There should have been a crash on the stockmarket. Not only should shares have temporarily dropped, but permanently dropped; and there should have been a recession in the mining industry. It seems to me, looking at what has happened in the eight months since the original announcement, that the Minister's idea has been vindicated totally from an economic point of view. Whilst there was a temporary drop in mining shares the reality is such that in broad terms there has not been any crisis. The mining industry continues to be healthy; negotiations have been entered into with the mining companies by the Government and the results seem to have been satisfactory.

When we look at the mining situation in other countries we see that in Canada, which is the parent base for many interests in this country in the mining field, there has been a move away from tax incentives to the mining industry. The reality is that the mining interests outside this country are aware of the fact that the Government, pragmatically, had to introduce the type of legislation which has now been introduced and that this is a good thing.

The reality of business, the reality of industry, is very simple. Investment will continue to flow into this country into these areas where it seems there will be an adequate return on investment. It seems that with the price of these metals and the activity around the world in mining, the scarcity of certain mining resources, the availability of these resources in this State simply means there is a good deal to be had and that there is an adequate return on investment. For this reason the pragmatic investors and entrepreneurs in the mining industry will continue to invest their funds and there is every reason to believe that this is increasing rather than declining in this country.

I suggest we should take the Minister's speech at face value because a certain amount of research went into it. He suggests in the latter part of his speech that over the next 20 years it is estimated that the likely tax yield to the nation, because of the introduction of this particular policy, will be of the order of £125 million. If development continues and the mining interests are pleased because they are getting an adequate return on investment, there will be primary employment in the industry within the country. In addition it is proposed that there will be a yield of £125 million for the benefit of this nation and a resulting investment in the national interest. It seems to me therefore that the case is unanswerable and that the Government are completely vindicated in doing what they have done.

I should like to refer to the question of tax incentives, on manufacturing industry, to which Deputy Fitzgerald referred. I believe this policy is excellent, that it was necessary for a great many years and that it is still necessary. There is one distinction which should be looked at in that regard. Whereas at the present time this incentive of complete relief on tax from exports is available to industry in this country, I believe we are reaching the stage where we should begin to take a look at this incentive so far as Dublin is concerned. The greater part of the manufacturing industry in this country is located in this city and we like to suggest that there are no special incentives in this area. There should not be any change in the position so far as any manufacturing industry already under the umbrella is concerned; but after a certain date new industries developing in the Dublin area should not get this incentive, because it is leading to lobsided development in this country. I want to endorse completely the Bill the Minister introduced and also what he said in regard to it. I want to compliment him and his colleagues in the Cabinet.

Having listened to the dyed in the wool true blue Toryism from the opposite side of the House in today's debate I feel that the blood of Enoch Powell would appear as a very wishy-washy duckegg blue in terms of the royal blue of Fianna Fáil 1974 vintage. How can any democratic party justify to the electorate that the workers' pay packet of £10 a week should be raided for income tax while other people can make probably tens of millions of pounds out of mining and pay no tax? It seems to me unintelligible and certainly without any reasonable explanation, unless their motivation is an unworthy one.

Deputy Colley called this short and simple Bill an involved and intricate piece of legislation. There are merely 17 sections in it. That reminds me that when Deputy Haughey introduced the 20 year tax exemption bonanza for the mining industry in 1967, he said he did it because he had received representations from the mining industry asking for certain allowances and set-offs in respect of exploration and development expenditure but that he considered that to give them would have meant producing an involved piece of legislation and that the simple thing to do was to totally exempt them. That was the action of a lazy Minister; that was the action of a thoughtless Minister. The fact that he and his Fianna Fáil successor were not prepared to do the work necessary to draw up a simple piece of legislation to deal with the peculiar problems of mining is a fair indication of the lethargy which existed in the Department of Finance when Fianna Fáil held the roost.

During the budget debate I received an exhortation from Deputy Haughey to follow the good example of the late Gerard Sweetman whom he commended, very properly, as one of the greatest Ministers for Finance we ever had. One of the great virtues of Gerard Sweetman was that he was a thoughtful man. If he thought hard he also worked hard and he never shirked work. I remember him telling me of the surprise with which he heard Deputy Haughey say in 1967 that he was going to abolish taxation of mining profits. He said he was so surprised that he nearly fell off the chair. He was a man who was interested in mining. No person relieved of taxes is likely to complain about it and he did not complain, and nobody in the mining industry complained. There would be no justification for failure to take action when we resumed power and replaced lethargic and thoughtless Ministers with a Cabinet which was both thoughtful and ready to do whatever hard work was required.

As we go about this campaign of tax reform we are certain to meet with complaints and obstacles from people who have not previously been taxed and will be asked to pay a share of tax in the future. The fact that we have heard so little complaint from the mining industry is a good indication that we have treated them fairly. We have treated them on lines which are operable in all comparable countries in the world. If we had done as Deputy Colley and Fianna Fáil are suggesting, either that we do nothing affecting existing mines or even future mines——

We never suggested that.

I am prepared to accept that. Or if we had done as recommended by Deputy Colley, not touched the taxation holiday but made a fraud of the taxation holiday by providing instead penal royalties, then I believe untold damage would have been done to our reputation. We would have shown the world that statutory provisions could be nullified by ministerial order; that tax exemptions could be destroyed by imposing royalties at rates far beyond what exist in any part of the world. That would certainly have called into question our integrity; that would certainly have meant that nothing provided for in legislation of this country would be trusted.

Therefore we never for a moment considered such a solution to the problem. It was a problem and, in fairness to Fianna Fáil, within four years of giving the tax exemption in 1967 they realised their mistake, because in 1971 they set up an elaborate commission to study the matter to find out where they had gone wrong and how they could put the matter right. Whatever else that commission examined or recomialit mended, they never recommended that we should make fools of ourselves and fools of others by imposing a royalty or a rent on the mining industry to take away whatever benefit might have been conferred by statute.

Of critical importance to this debate is to recall that there is no mine operating in this country as a consequence of the 1967 legislation. All the mines which are operating here operated prior to the concession given in 1967, and most of them are operating as a consequence of the thoughtful and imaginative legislation introduced by the late Gerard Sweetman when he was Minister for Finance in 1956. It is interesting that the concessions then given, which were less sophisticated than those we are introducing today, were the bait which attracted the mining interests from across the world into Ireland at a time before some of the very significant technological advances of recent years made Ireland more attractive than it ever had been.

There have been allegations here and elsewhere that we have gone back on deals which we had made; but to have a deal there must be two parties and if there is an offer there must be acceptance. The concessions offered in 1967 were not accepted by anybody so that there was no contractual obligation, no contractual relationship and nobody had acted on foot of the 1967 legislation in any way which would entitle them to say that having so acted they were entitled to have the concession which was offered in 1967 extended to them. That is the short answer to Deputy Colley's criticism that benefits which we are offering to future exploration and development are not being as generously given to those who have operated under previous legislation. The truth is they have not operated as a consequence of what was promised. The fact that the success which the Irish mining industry now enjoys arises out of the 1956 legislation is proof that the 1967 concession was unnecessary, and that it was a prodigal incentive given by somebody who would not take the trouble of thinking or of drafting legislation which is available in many other countries as a precedent even if he was unable or unwilling to do the work himself. There were ample precedents available which could have been used to guide the form of legislation required in this country.

I do not think there is any obligation on a Government at any time to respond to malicious and irresponsible charges made by Opposition spokesmen or any others. Deputy Colley, a lawyer, I am sure in the course of his legal practice has given advice to people who have been libelled that it is better to ignore the libel rather than to endeavour to refute it because to endeavour to refute it is only to give double publicity to the original libel. That is why we have not taken up the malicious campaign of Fianna Fáil suggesting there was some leakage of information by members of the Government to a Canadian mining interest which led them to make bids for Tara mining shares. There is of course absolutely no foundation for that allegation nor is there any foundation for any suspicions which even innocent people may now have in their minds because of the unfounded allegation which was made.

If people make what they consider to be good commercial decisions, or if they make commercial decisions good or bad, they are entitled to make them without having slanders of this kind uttered by politicians endeavouring to seek advantage for themselves and cause embarrassment to others. Following the Government's announcement last September of their proposal to introduce a reasonable package of tax allowances and incentives to replace the tax exemption, the 20-year holiday, there were movements on the stock market in the shares of Irish mining companies. That was to be expected but, not for the first time, the market over-reacted. When people thought a little more deeply and studied the Government's package they saw how reasonable it was and how well it compared with other countries and the market improved substantially. Some people made courageous decisions while others were prepared to panic. That is a normal experience in the market and the fact that it has happened should not be interpreted by people as anything particularly sinister.

I would have thought that any prudent person, if he had the money, would have been only too happy to avail of some of the panic selling which occurred last autumn. But these are matters upon which individual investors and other people have to make up their own minds and make their own calculations. However, as the Minister for Foreign Affairs and Deputy Staunton and Deputy O'Brien said today, the fact that there is such tremendous interest in the Irish mining industry is proof of the reasonableness of the Government's measures and of the fact that any allegations of undue interference with mining interests were totally without foundation.

Deputy Colley once again tried to underline what apparently is Fianna Fáil propaganda, even though it is without foundation, as any inquiry from the IDA would establish, that the announcement about taxation on mining profits caused certain potential foreign investors in manufacturing industries at least to postpone their investment in Ireland. Of course, there is no foundation whatever to that. Deputy Crowley went a little further, as is his wont, and actually named the company which he said had pulled out of Ireland as a consequence of the Government's announcement regarding mining profits.

The truth is this. The company to which Deputy Crowley referred and which he said was interested in establishing itself in his constituency in Cork made its announcement to pull out at least a month before the Government's announcement regarding mining profits. This decision was based upon two factors which had nothing whatever to do with mining profits: the first was that they found unacceptable conditions which the Cork County Council attached to approval for planning permission— perhaps Deputy Crowley would know more about that—the other was that redundancy at their plant in Mexico led them to transfer the Cork project to that location.

Far from there being any evidence whatsoever to support the malicious Fianna Fáil campaign, which is typical of their destructive campaign whenever they are out of office, that there is any dimunition in industrial interest in Ireland, there was a record level of job approvals by the IDA in the year 1973-74, and the projects for the coming year are even greater. It is very important that these facts should be recited and recorded, because they will make apparent to people just how malicious Fianna Fáil are if the party are prepared to act in such an irresponsible way when they are in opposition. When they have to act in the open, one can just imagine what they might do if the people were ever again, by any mistake, to let them back to power.

When were the undertakings given?

I am interested in Deputy Colley pressing the point, because Deputy Colley will recall that the first written promise by a Government, apart from what is contained in the statutes, to maintain export relief was given by the Fianna Fáil Government, and the previous Minister for Foreign Affairs, Dr. Hillery, gave an oral assurance in this House that the Government regarded export reliefs as a contractual obligation. That is the fact.

In the EEC context, I believe.

It was interesting that Fianna Fáil should have found it necessary to do that.

In the EEC context, I think. Is that correct?

I do not know what the context was.

If the Minister does not know, would one not think he would find out?

I do not know what the total aspect of it was. I know that the Government were asked for and gave specific undertakings.

That joining the EEC would not cancel out our industrial incentives.

Could we have the Minister without interruptions? Deputy Colley has already spoken. The Deputy will be afforded every opportunity——

And he will take them if the Minister is not prepared to deal with the case now.

In the meantime, the Minister must be allowed to make his concluding remarks on the Second Reading without interruption. We have had the most orderly debate and the Chair is anxious to keep it so.

It may be that the companies to whom the undertakings were given were concerned that there might be a modification of the provisions having regard to EEC obligations. It may have been attributable to other reasons; I do not know.

Find out.

I am saying that written promises were given by the previous Administration, and oral assurances were given in the House by Dr. Hillery; and I am saying that this was not the first time Ministers have given assurances to people with various queries regarding the maintenance of particular lines of policy.

Fianna Fáil have not been helpful to the national interest by allegations that doing the right thing by Ireland in relation to mines was an indication of the Government's intention to commit breaches in relation to the relief of export profits from income tax. It is proper to recall, as the late Gerry Sweetman has been mentioned in this House as a wise man, that it was he who introduced export profits relief, and he did it in the face of abuse from Fianna Fáil. If Fianna Fáil would just think a little more carefully——

Keep running away from it.

——of what was done by Ministers for Finance on this side of the House, they would find a great wealth of thoughtfulness, wisdom and hard work which compares more than favourably with their long history of running away from problems because they feared the backlash. Deputy Colley's backlash was produced once again here today. Now we know why he was such a failure as a Minister: he feared the backlash, real or imaginary; somehow it was very real to Fianna Fáil, because again and again they failed to do what they acknowledged was the right thing to do. They never had the courage to do it of their own accord. Even though they did it they always had to have years and years of advance study of the matter by committees and by commissions.

Why were the undertakings given? Would the Minister tell us now?

Deputy Colley had a number of specific comments to make on the Bill itself, and I should like to deal with those. Deputy Colley asked, in relation to section 2, if there would be provision for an appeal against the inspector's opinion. The section, as the Deputy is aware, deals with the application of the Income Tax Act, 1967, and section 245 of that Act provides for appeal. Accordingly, the normal provisions will apply and this would include the right of appeal from the opinion of the inspector.

Deputy Colley said he thought that section 6 discriminated in favour of future mines as against existing mines. It certainly is a section which contains an incentive to exploration in the future. That is what we intend, and it is with the future we are dealing. It would be wrong to overlook the fact that because of taxation exemption granted to existing mines in the past they already enjoyed a benefit which will not be available to mines in the future. In fact, there is discrimination, if it can be called such, both ways. We are making the situation equal as far as we can by this particular section.

I am not making a fractious point but I would ask the Minister to consider whether the section does not appear to be retrospectively operating against the existing mines. I am sure that is not the Minister's intention.

The existing mines have enjoyed a great bonanza which future mines will not enjoy. It could fairly be said that the exemption that they enjoyed included this one and many others. I do not think this contains any element of retrospective disadvantage. I will certainly have a look at the section in case it does.

Deputy Colley also referred to section 7 and wanted to know whether the right to claim unallowed plant and machinery as a deduction in charging the profits for the year 1974-75, would be at the election of the person or mining company. It would be at the election of the person concerned. We will table an amendment. In fact, I had already an amendment in mind to spell out that by putting in the words "at the election of the person" after the word "may" on the eighth line of that page.

What I said on section 6 would also apply in respect of section 8. Existing mines have got benefits that will not be available in the future.

Will the Minister have another look at that from the point of view of retrospection?

I will, certainly. On section 10, I am glad to hear the Deputy's high opinion of the Revenue Commissioners. It is an opinion which all Ministers for Finance, past or present, have but it is not necessarily an opinion which is widely held. There might be people who would prefer the power to be exercised by the Minister rather than by the Revenue Commissioners.

I appreciate that.

The Revenue Commissioners are in a difficulty in that they must act within the constraints imposed on them by the Legislature. Quite wrongly, people frequently visit their anger on the Revenue Commissioners when, in fact, the Legislature are responsible for what the Revenue Commissioners do.

The question of whether a mine is a marginal mine is one which would fall for determination in the first instance by the Minister for Industry and Commerce. That is the position in regard to the concession which is being given to the coal-mining industry. It is a mixture of accountancy, good commercial judgment and knowing the market, the price for the product, the likely movement of prices in the following year and so on. In fairness to the Revenue Commissioners it would be wrong to ask them to make a judgment of that kind. They have not got that particular knowledge or skill immediately available to them. If this was to be conferred on them by statute, they would have to consult with the Department of Industry and Commerce before coming to a decision. It is tidier to say that the Minister for Industry and Commerce should make a judgment and that the Minister for Finance should issue the exemption having already consulted with the Minister for Industry and Commerce.

I trust that this covers most of the points.

There is the question of an appeal. I can see that there is a difficulty in an appeal from the Minister's decision. I suggested that one of the advantages of vesting power in the Revenue Commissioners was that one could provide for an appeal. Will the Minister have a look at this point?

I will look at it, but I imagine there could be some difficulty. To what body would the appeal go? It would really involve making an appeal to some body about the commercial judgment of the Minister for Industry and Commerce. I would say that it would be difficult, but I will have a look at it. I would not wish that there should be any undue restriction. We have in mind to ensure that no mine closes down because of the burden of taxation. If an appeal seems to be desirable, we would certainly be prepared to entertain it.

Does the Minister think that the Minister for Industry and Commerce would report to him in relation to a particular mine that it was likely to make £X in profit, and would the Minister for Finance then decide the level of exemption from tax?

It would have to be done by the Minister for Finance. The facts of the situation would be researched by the Minister for Industry and Commerce, but the Minister for Finance would make the ultimate decision.

I would suggest to the Minister that he should have a close look at this section.

I will. I share with Deputy Colley the desire that this should be operated in a generous rather than a restrictive way.

Deputy Colley suggested that guidelines should be set out somewhere. In the course of our discussions with the mining interests this matter was raised but the consensus appeared to be that it was better to leave it open rather than set out guidelines. As has happened so often in the past, guidelines in legislation can frequently become constraints in the future. There might be factors in the future which we would not think of in legislation now. Even the use of a phrase such as "without prejudice to the generality of powers" would probably not be adequate. The matter is open for any mining interest to make their own case. The Minister for Industry and Commerce and the Minister for Finance can make an assessment accordingly.

Question put and agreed to.
Committee Stage ordered for Wednesday, 15th May, 1974.