Dáil Éireann díospóireacht -
Tuesday, 10 Nov 1981

Vol. 330 No. 9

Fóir Teoranta (Amendment). - Bill, 1981: Second Stage.

Minister of State at the Department of Finance (Mr. B. Desmond)

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

This Bill increases the statutory limit on the amount of capital available to Fóir Teoranta from £35 million to £70 million.

The company's function is to provide reconstruction finance for industrial concerns which may be in danger of having to close down or suspend activities because they are unable to raise necessary capital from the normal commercial sources. The governing legislation requires that industrial concerns, in order to be eligible for assistance from Fóir Teoranta, must fulfil a number of conditions. The employment content and the capital employed in them must be significant and the owners must have made a reasonable contribution to the initial capital. Perhaps of most importance is that the prospects of profitability on a permanent basis must be reasonable. Furthermore, there must be evidence that failure to receive financial assistance would have serious repercussions at national or local level. These are the general criteria.

Deputies on all sides of the House will appreciate that the board of Fóir have a very difficult task. I know that they consider applications thoroughly and with full understanding of all the implications of their decisions. In 1980 alone the board approved assistance for over 50 concerns employing nearly 9,000 workers and this clearly demonstrates a sympathetic approach. The jobs saved in this way are of the utmost importance to our economy.

It is inevitable, of course, that following a detailed examination by Fóir of a firm's circumstances and prospects for future viability, some applications for assistance will not be successful. This usually happens because a firm cannot show that it has a reasonable prospect of ultimate success.

In agreeing to providing finance, Fóir Teoranta may decide that further steps need to be taken in relation to a particular firm. They have insisted on measures such as association with a stronger firm, changes in management and at board level and the introduction of consultants to deal with particular functions within a firm. In addition, Fóir Teoranta may utilise the services of their own management services unit, the members of which are specialists in the main areas of management, to help firms where assistance at managerial level is necessary for survival.

Fóir Teoranta are reaching the limit of their borrowing powers which was fixed at £35 million by the amending Act of 1976. Amending legislation to increase their resources is therefore, necessary to enable the company to continue their work. Section 2 of the Bill before the House proposes that the new limit on borrowing by Fóir Teoranta be fixed at £70 million, an increase of £35 million on the present limit. On the basis of disbursements since the last Act, the extension proposed should suffice for another four or five years depending on demands for reconstruction finance.

The company have been almost entirely financed by borrowing from the Exchequer as the returns on the company's share and loan investments have been comparatively small so far. The company's income from their investments and the repayment of loans is growing but they will continue to be short of the amount which they are likely to have to advance in respect of new applications for assistance.

It is proposed, therefore, in section 3 of the Bill, to raise from £35 million to £70 million the limit on the power of the Minister for Finance to provide loan capital to the company.

When the original Act was introduced, the House was informed that an administrative limit would be introduced on Fóir Teoranta's discretion to advance funds. This was fixed at the time at £250,000 and it is now intended to raise it to £1 million. Any advances in excess of this will be subject to the consent of the Ministers of Finance and Industry and Energy.

The Joint Committee on State-Sponsored Bodies — of which I was a member at the time — recently produced a report — the 17th Report — on Fóir Teoranta. I note the committee's agreement that the company perform a most valuable function, on the basis of rational criteria, by helping industrial firms in temporary difficulties to survive and recover profitability. The committee have raised a number of issues relating to Fóir in their report and these are the subject of continuing examination both by Fóir and my Department. Discussions on these issues have taken place and will be continued.

Fóir Teoranta are, of course, but one link in the chain of the State's efforts to give assistance to industry. Most of this effort is, through the IDA, principally geared to encourage industries to establish and expand in Ireland. However, we will always have problems with our existing industrial base due to changed market conditions, costs and so on. While we would ideally like to see Fóir used as little as possible as that would mean a healthy industrial base, unfortunately there will always be a need for reconstruction finance in certain cases. Fóir Teoranta provide an orderly and efficient procedure for dealing with these firms.

Therefore, I confidently recommend the Bill for the approval of the House as it will enable this vital State agency to continue their important work.

Mr. Gene Fitzgerald

Our party have no difficulty in accepting the Bill before the House which provides for an extension of facilities to Fóir Teoranta by way of borrowing and loan facilities. We will support the Bill and I know some of my colleagues will have some comments to make on it.

In his closing comments the Minister of State said he would like to see Fóir Teoranta used as little as possible but I am afraid that is a dreamland the Minister will not see for some considerable time. Since the inception of Fóir Teoranta by a Fianna Fáil Government some ten years ago, there is no doubt this institution has been of tremendous assistance to industry. I admit there have been growing pains but, with the co-operation of the IDA and other important State agencies, there is no doubt that Fóir Teoranta assisted in solving many serious problems. The work of the agency progressed very considerably during our time in office.

In his opening remarks the Minister of State referred to the criteria for involvement by Fóir Teoranta in some companies. If the industry or company concerned happens to be in one's constituency one is inclined to be critical that not enough action or swift action is taken to save jobs but on the whole the approach of the staff and management of Fóir Teoranta has been reasonably flexible. The staff, management and board have always been as courteous and as helpful as possible in the circumstances.

My colleague, Deputy O'Malley, who will be following me in the debate may wish to develop the following point. There was very considerable co-operation between Fóir Teoranta and the IDA and other State agencies but I wonder what is the present position in that regard. There are cases when approval for a decision by the board has to be obtained from the Minister for Finance and the Minister for Trade, Commerce and Tourism. Which Minister is it? Will there be difficulties or does anybody know? Has that been ironed out yet? It is important that there are no hitches of that nature. Fóir Teoranta should be as flexible as possible in the present difficult economic circumstances.

We read today that there are almost 130,000 people unemployed. That is the highest figure on record, according to one newspaper. I remember the Tánaiste sitting on these benches a short time ago criticising the Government and saying that unless we changed our policies the figure could well be 120,000 by Christmas. Now he has had the greatest audacity to make a statement to the public defending the present figure, which is 10,000 higher than what he had predicted a few months ago when he was in Opposition. The once proud Labour Party, how sorry they must be now when their leader and Tánaiste makes that kind of admission.

These are the sad circumstances that are the background to this discussion. We are making extra funding available, should it be needed, for the operation of Fóir Teoranta. The Joint Committee on State-Sponsored Bodies examined this operation and expressed their satisfaction that the view of the Department of Finance was fully justified. It is encouraging to think that, having been examined by them, the committee were satisfied with Fóir Teoranta.

There is an area where more progress was made during our time in office than had been the case prior to that. A Bill was introduced in 1975 extending the amount of money available at that time. The importance of management expertise being made available to industry when in difficulty was recognised. This is referred in the Fóir Teoranta report. There is still some room for improvement. Fóir Teoranta should make available the expertise necessary to help firms minimise the difficulties they face whether in the area of production, sales or financial control. In some industries which have closed down one will find there was a lack of top quality production, marketing expertise, management of finance and so on. Fóir Teoranta are committed to increasing the number of personnel they have to handle management difficulties. Many companies have been assisted by Fóir Teoranta but it is not always just a capital injection that is needed. There is need for early warning of firms in difficulty. Substantial progress has been made in that area and I commend it. Not only must that progress continue but we must strive for improvement because of the danger of complacency setting in.

At present there is a firm in difficulty in Dublin. A meeting was held with a junior Government Minister on Friday. According to him on Friday evening, the problem was gone. This morning I heard something about a receiver being appointed. That does not mean the end of the road in any way. I understand there are a number of jobs involved. I would say to that junior Minister it is important that he should be factual in any comments he would make rather than creating an impression, perhaps unintentionally, which could be misleading afterwards. There is a situation where the operation could continue but with a reduced workforce.

Every act of the Government to date has been designed to create further costs. Our competitiveness is important. Wage increases and how they are arrived at are of consequence to every firm mentioned in the Fóir Teoranta report. Yet what do we see? We see a Government who are not interested, or do not know, how both sides of industry should be approached to see whether a national wage agreement can be achieved. This is not an easy task. It never was. Perhaps it will be more difficult this year than in others.

Every step taken by the Government seems to have been designed specifically to wreck the talks. I am not sure whether this was due to their lack of experience or to what happened in the heady days of May, June and later of this year, but whatever the reason the Government have been the cause of a major upset to progress in this sphere of a national wage agreement. The Minister of State has a good background in the trade union movement in addition to his years of experience here. He is a sensible and constructive Member of this House and I hope that in his reply he will be able to tell us in detail how the Committee on Costs and Competitiveness reached a figure of 6.5 per cent. These three eminent men, after three or four weeks' deliberations, decided on a norm. This norm, though its level was not then known, was the centrepiece of the entire Fine Gael election propaganda. It was propagated at every church gate and in every piece of Fine Gael literature prior to the election. It was modified somewhat in the Gaiety. The first figure arrived at by the three eminent men concerned was 9.5 per cent but within a very short time the press were reporting a figure of 6.5 per cent. I hope the Minister of State will be able to tell us what happened to bring about the change in the figure, having regard to the importance of a pay agreement. Each of the firms listed in the Fóir Teoranta report is very concerned about what the wage norm is to be. This figure of 6.5 per cent was put forward within months of the Government sanctioning increases that will result in raising the inflation level from 17 to at least 22 per cent by the end of the year. It has been said that the fluctuation of the púnt vis-à-vis the £ sterling was the reason for the change but it was difficult to understand how 3 per cent could have been achieved in that way. However, the Minister of State knows what happened, so I am sure he will inform the rest of us too.

An Ceann Comhairle

The Deputy is digressing to some extent from the Bill.

Mr. Gene Fitzgerald

I am merely emphasising the importance of a wage agreement to all of those firms listed in the Fóir Teoranta report, many of whom are substantial employers.

I am disappointed with the performance of the Government in the whole area of the national wage agreement but I shall not pursue the matter further. With 130,000 people unemployed it is vitally important that we make available to Fóir Teoranta the necessary moneys to enable them to rescue as many firms as possible and, above all else, to preserve as many jobs as possible. I say this because often, when efforts are being made to save a firm who are in economic difficulties, jobs are lost in the process. We must remember that people are our most important asset. In this context I would criticise the Government for their lack of understanding of this priority. Tomorrow during the debate on the Finance Bill I hope to tell the House why the budget was unnecessary and to make it clear that it was no more than a propaganda exercise, a question of tactics, decided on by Fine Gael before they came into office. The Labour Party must realise that for tactical reasons the Government have impinged increasingly on every Irish worker as well as on every unemployed person. Other speakers from this side will have more to say on this Bill and they too will be emphasising the importance of this State agency who, since their foundation by Fianna Fáil have made worthwhile contributions.

Mr. Mervyn Taylor

Listening to the remarks of Deputy Fitzgerald one might be forgiven for thinking that our economic problems and the trends in unemployment have manifested themselves only within the past few months whereas these problems have been building up during a considerable period. Fianna Fáil must accept a major share of the responsibility for that situation.

The Deputy referred to the paper mill at Clondalkin and I, too, should like to address a few remarks on that subject in the context of the Bill. In 1968 there were 1,800 people employed in the paper industry which at that time comprised six paper mills. Now, as a result of the Government we have had in this country in the past decades there is but one paper mill remaining and this employs only 500 people. This remaining fragment of the industry is now in serious jeopardy.

I am aware that various talks have been held between Fóir Teoranta, the IDA and other agencies in this regard and, consequently, I would not wish to say anything that might jeopardise a possible successful outcome of any such talks. However, I appeal strongly to the Minister and to the various agencies concerned to do everything in their power to ensure that the jobs at this mill will be preserved. The problems of the paper industry are twofold. Deputy Fitzgerald has referred to the wage cost element but in reports that I have studied on the subject the wage element has not been an issue. However, there are two factors which are of major importance to the industry. The first is the hydrocarbon tax and the second is the cost of the very large quantities of electricity that are used in this industry. It has been pointed out that the hydrocarbon tax which was imposed in the 1980 budget added £280,000 in one year alone to the costs of the Clondalkin paper mill.

Sometimes I wonder how we get by in this country when I consider how we organise our affairs, how we plan matters for ourselves and the things we do. We gear ourselves through the IDA to attract in foreign industry. That is fine and I am all for it, but we pay scant and insufficient regard to the needs of our ever-declining home-based industries. This is a primary factor in those climbing unemployment figures. We see here the real threat of this last industry in Clondalkin fading away and having to close. Why? There are reports aplenty as to the reason. What are we doing to assist them and to save those 500 jobs and keep those unfortunate people off the dole queues?

The paper industry requires grant assistance from the State to enable it to compete with comparable industries in the other paper manufacturing countries in Europe and North America. What is our record in that respect? I want to quote a couple of examples on the subject. The annual grant per person employed in the paper industry in Norway is £458; in the UK it is £419, in Sweden £671, in Canada £844 and in Ireland £144. Small wonder then at our inability and the inability of the Clondalkin Paper Mills as constituted and financed at present to compete against that massive State subsidy and support provided for their competitors in North America and Europe. The other very major cost item affecting the production of paper is the electricity cost. I want to give some comparable unit cost figures referable to that item. The cost of a kW in Irish pence in the US is 1.81, in Canada — a major paper producer — 1.03, in Sweden 1.62 and in Ireland 3.93. Of the list of some ten countries furnished, Ireland is far and away the highest of the lot.

These are the sort of things to which we have to apply our minds if we are seriously interested in preserving home-based industries that have been here for generations. If we do not look to our laurels the £35 million and Fóir Teoranta's increase of £70 million are quite meaningless. You can talk about £700 million and it is not going to solve these problems. We have to ensure that the opportunities are given to the home-based industries to work and operate and be able to sell their products. The word "protectionist" has become a dirty word in many respects. There is nothing at all wrong with a bit of protectionism. What efforts are being made through the EEC — with which we are stuck, unfortunately — and what efforts are being made and have been made by the present and last administrations to secure some protection for the remnants of the Irish paper industry? It can be done. For example, I see a note in the 18th report of the EEC that in the textile industry concessions were obtained and that we were permitted to apply a measure of protection. It is about time that some measures were taken to look to other industries, in particular the paper industry, to see what help can be provided for them. Our production compared with major producers like Canada, Sweden and Norway — countries which are not in the EEC — is miniscule. I suspect that to those who control the policies of the EEC in Brussels, Strasbourg and so on — in which we have a very small say and a very small input — the degree of our production as opposed to those giants is small. It could well be that, if we laid down the law and applied pressure there, some substantial help would be achieved.

A further matter which has not helped the industry is the EMS system. The cost of external commodities being purchased here has not helped the industry at all. Of course, it was known before we entered that that would apply and for this reason the EMS interest subsidies arrangements were entered into. In 1980 we obtained approximately £45 million in subsidies from the EMS fund. Instead of taking that money and placing it into the Central Fund to disappear into limbo, it ought to be applied specifically to whatever industries are hit so badly as a result of that system, industries such as the paper industry at Clondalkin.

Once again I want to make a very earnest and sincere appeal to Fóir Teoranta and to the Minister to take every possible step to ensure that that factory will not close and that those jobs will be preserved. Whether Fóir Teoranta have the resources, methods or system that would enable them to do that I do not know, but it highlights again the urgent need for the National Development Corporation that is a part of the Gaiety Theatre document and which will have such a vital and important role to play in this kind of situation. It is a situ- ation where it would be appropriate for the National Development Corporation to take a substantial equity interest in industries like the Clondalkin Paper Mills——

Mr. Lenihan

When is that starting?

Mr. Mervyn Taylor

——to ensure that it will become a viable interest and can continue.

Mr. O'Malley

I welcome this Bill and it has my support. Over the years I have had quite a lot of dealings with Fóir Teoranta, a body of whom I can speak highly. In my experience in the Department of Industry and Commerce certainly they were a very worthwhile, useful and progressive body and I have no reason to believe that they will be any different in the future.

This Bill allows an extension in their powers to borrow through advances from the Exchequer. It does not confer on them the right to get that money and one wonders whether in fact the sort of money they are going to need in 1982 on present indications will be available to them. I hope it will be, because the taxpayer will get better value from the money disbursed through Fóir Teoranta than they will through some of the other methods whereby certain public moneys are being spent at present. Too often the public at large and many companies themselves think that money is the source of restoring a company to health. Frequently it is not, and I think Fóir Teoranta themselves have made this very point.

A high proportion of the failures in Irish industry over the years has been attributable to poor quality management, poor industrial relations on both sides of the fence and, very frequently, to poor or non-existent marketing. When companies who are patently incompetent in terms of doing their job find themselves in a loss situation and seek assistance from Fóir Teoranta, I am sure that Fóir Teoranta have frequently found the difficulty that they know perfectly well that an injection of further funds will only put off the evil day. I often feel — and I think the Joint Oireachtas Committee felt it too — that the deficiencies of many of these companies should be highlighted to a greater extent and that we should not think a simple injection of money will make any long-term contribution to such a company.

This body have proved themselves to be important and useful during the nine years of their existence in their present form. All current indications are that 1982 will be their busiest and most important year ever. I reiterate what Deputy Gene Fitzgerald has said in regard to the present unemployment figures, the highest ever known in the history of the State. These figures have increased very substantially in recent months. I contrast what the present Tánaiste had to say on this subject six or 12 months ago with the situation existing today, what he said then with what he is saying now. I take it that there is on his part and on the part of the Government a fatalistic acceptance that 130,000 is only the start of the climb up the ladder and that it is simply a question of time until our unemployment figures reach 140,000 and subsequently 150,000. The only real question exercising the mind of anybody on the Government side is whether a halt may come to the climb in the figure before or after the figure of 160,000 unemployed is achieved, if that is the word to use.

While I know my two colleagues want to talk in some detail about the position in regard to Clondalkin, I reiterate what Deputy Fitzgerald has said. The fact that the industry is gone is not a total surprise to everybody but we had the spectacle last Friday of the Minister of State at the Department of Industry and Energy appearing on television and saying that the situation looked hopeful and bright, that prospects were reasonable and that he had every confidence about the future of the plant; on the following Monday afternoon a liquidator was put in. It is significant, unhappily, that it is a liquidator and not a receiver because quite clearly the intention of the group is to liquidate the business. The plant could only be re-started by someone else buying it and that would be after an interval. In all the circumstances I would not be very optimistic and it was very irresponsible of the Minister of State to take the line he did within the past few days.

I should like to see a further extension of the rescue committee in the Department which was extended about a year or 18 months ago to include a number of other agencies. That committee used to meet fortnightly but as this recession became more serious they had to meet weekly. They had their finger on the pulse of the more ailing patients in Irish industry because they had a list of between 40 and 90 such enterprises, depending on how sick the various patients were. They reviewed each of those cases at regular intervals. Before I left office it was a very representative committee involving people from the Department of Industry, Commerce and Tourism, the Department of Finance, the Department of Labour, the IDA, Fóir Teoranta, the ICC and CTT. They have a very clear picture of the causes of so many failures in industry and I had it in mind to ask the committee to publish, without going into details about individual firms where that might prove embarrassing, a six-monthly account of the state of ailing firms in Irish industry, why they were ailing, how the problems might be overcome and how they might have been prevented from getting into such a difficult situation. Pure finance is only one of several reasons why they are in difficulties. The publication by the committee of a synopsis of their findings in relation to a broad number of these businesses would make very interesting reading because frequently the reasons are quite different from the public perception of them. It would enable other firms in various industries to avoid the same pitfalls.

I welcome this Bill. Unfortunately it is very timely and I hope that Fóir Teoranta will not be short of funds in the coming 12 months because all the indications are that they will need more money than ever before. By and large the State has got good value from what Fóir Teoranta have done. The average cost of saving a job is substantially below the average cost of creating one. With the highest ever unemployment figures and resigned acceptance on the part of the Government that the figures will climb higher and that they cannot or will not do much about it, one thing they can do is give every possible assistance to the body whose affairs we are now discussing.

Mr. Raphael Burke

I welcome this Bill and congratulate Fóir Teoranta on their excellent work on behalf of the nation during the nine years of their existence. It is unfortunate that their services and expertise will be more necessary in the period ahead than at any other time in our history. This morning we heard that the figure of unemployed is now 129,211, the highest ever.

I wish to refer to the point made by Deputy O'Malley regarding the commitment to provide this money. We have heard much talk since the change of Government about the unacceptable level of borrowing of the previous administration. The Minister of State has been the most vocal in this cry. I should like a commitment from him to the House, to the workers and to industry that the necessary moneys will be provided, not only by way of borrowing, in the grave period ahead so that industries in trouble will be assisted and jobs saved.

Fóir Teoranta have been doing an excellent job but I foresee a difficulty in the path of their progress. It is that in too many cases their assistance is called for when the fate of the company has been sealed, when the receiver is at the door. It is like closing the door when the horse has bolted. I appeal to the Minister of State to consult with industry with a view to giving companies the message that the earlier the call goes to Fóir Teoranta the greater will be the possibility of saving the company.

Fóir Teoranta are only one of the agencies which are designed to assist industries. There are the ICC, the IDA and CTT, all with marketing expertise in both the export and the domestic markets. There is also the Irish Goods Council. As I have said, I do not want to see Fóir Teoranta in the future being called in when companies are beyond rescue. They should be called in to protect employment in industry much earlier. It is not all about money. It is also about management and industrial relations from the factory floor to top management. It is about marketing design. If they are not called in at an early stage Fóir Teoranta do not get a fair opportunity to assist industries in the way they would like to. From this point of view I think the organisation should be renamed because at the moment when word goes around that Fóir Teoranta have been called in to assist in industry the competitors of such an industry, the colleagues in the CII and the FUE too readily assume that the company concerned are suffering from some terminal disease. Therefore, I suggest that the image of Fóir Teoranta should be changed so that they can be seen more as an assistance rather than a rescue agency.

Fóir Teoranta have another important role in co-operation with other State agencies. Earlier in the year we as a Government entered into negotiations with the ICTU to discuss the setting up of sectoral committees to examine problems that exist and others that will arise in the future possibly. Fóir Teoranta have an important role to play in that examination and I should be obliged if the Minister would let us know if such examinations are being proceeded with. Now with unemployment at a record level and the Government's acceptance that it will rise even further, it is time for an over-view of industrial problems in the different sectors rather than to look at each company individually. It is time for a comprehensive sectoral over-view.

The need for this can be seen particularly when we look at the position at Clondalkin. Deputy Lenihan will be going into this in greater detail later. Today I was disturbed and disappointed to hear a Labour Member, Deputy Mervyn Taylor, talking with such a level of acceptance of the situation at Clondalkin, acceptance of this loss of jobs. As well, we had a show of irresponsibility by the Minister of State, Deputy E. Collins, last Friday when he gave us and the Clondalkin workers the clear impression that the difficulties in the company had been overcome and that the future was relatively bright. That kind of thinking typifies the whole attitude of this Government who have been talking in figures but do not consider people. Nearly 500 people are involved in Clondalkin and they deserve better than the attitude displayed last week by the Minister, Deputy Collins.

In the industrial sense, 1982 will be a very difficult year and therefore the efforts of the experts in all State agencies will have to be concentrated as never before on the protection of existing jobs and the creation of new jobs. Our young people leaving school must have something better to face than the prospects of spending years in the dole queues. I appeal to the Minister of State, even at this late stage, to get his party leader, the Minister for Industry and Energy to show some concern and interest in the Department for which he has responsibility. He should ask the Minister to show the same level of commitment to job creation, job protection and job maintenance as was the hallmark of his predecessor in the Department responsible for industry.

What we have seen so far of the performance of the Minister for Industry and Energy is a matter of grave concern to industrialists and workers. It is a matter of considerable concern to the various agencies for which he is responsible. Our young unemployed people deserve better than what they are getting from the Government. The Government have accepted an unemployment figure of 129,000 and that the situation will get worse. A discussion I heard on radio last night about the unemployment figures terrified me. I was frightened to hear a comment that we can never again aim to achieve full employment. That sort of fatalistic approach about our future is something Fianna Fáil have always refused to accept. We have the agencies and the expertise and what we need is the drive and motivation. The Government are not giving the motivation and I appeal to the Minister of State to make some effort to do this. In his reply the Minister should let us hear a commitment that the money will be made available, not just an increase in the level of the borrowing power of Fóir Teoranta from £35 million to £70 million.

Mr. Lenihan

I should like to welcome the Bill which extends the borrowing limits of Fóir Teoranta from £35 million to £70 million. To that extent the Bill is acceptable. The reality is, of course, that one does not get the £70 million by writing that figure into legislation. I hope the Minister of State will tell the House about the reality of the financial backing, and its availability, to Fóir Teoranta bearing in mind the draw that will be on their funds to cope with the serious unemployment problem we have. We have seen the unemployment figures rising to 130,000 today. Fóir Teoranta, with the IDA and the Industrial Credit Company, formed the three spurs which seek to stimulate in a financial and advisory sense industries that get into difficulty. It is important that an early warning attitude be adopted by State agencies and industries because there has been a tendency to approach Fóir Teoranta at a late stage, thinking only of the agency as a rescue body. It is much more than that. There is a lot more expertise available to Fóir Teoranta and it should not be considered merely as a rescue agency.

The more effective the early warning system in relation to an industry's difficulties is, the better it will be all round. The closer the monitoring arrangements of Fóir Teoranta, the IDA and the Industrial Credit Company with industries on a sectoral basis, the better for everybody. There is no question but that it can be a frustrating business seeking to put a company that has gone off the rails back into operation. The important thing is to try to get it right while it is still on the rails, to be present when the slowing down process starts and, while the company is on the rails, to get in early and endeavour to rectify matters. I should like to hear from the Minister of State about the effectiveness of the early warning system that exists between the Department, the three agencies concerned and industries on a sectoral basis. That in an important aspect.

Another important aspect is referred to in the annual report of An Fóir Teoranta, the importance that body places on the management services unit. I agree with that. It is not just a question of Fóir Teoranta supplying finance, important as that is. It is important to ensure that expert advice and consultancy advice in the various areas, financial and marketing, is made available at an early stage to a company which may be slowing down but may be in a position to get on to another track and pick up speed again. This is essentially a management problem but I should like to hear from the Minister of State on the progress that has been made in this regard. The report states that Fóir Teoranta have strengthened their management services unit. I welcome that move and I hope the unit continues to expand because there is a real necessity for such advice to be given to any firm that is slowing down.

In my constituency there is serious dismay at present about Clondalkin Paper Mills, an industry which in many ways represents in microcosm the problems facing Irish industry. This is a long and well established firm which is part of a group of public quoted companies employing 1,250 people. In fact, almost 500 are employed in the paper mill operation. Those employees have been given notice, a liquidator has been appointed and the whole operation is now threatened. In that industry there is a large reservoir of skills and it has existed in Clondalkin for many years. The threat to this industry means a real social problem because if one looks in a fatalistic way at the liquidation one cannot help but see it as representing the disposal of skills that have been accumulated over the years. Some of the employees have 37 years experience with the company. The average is 14 years and that is quite high. There is a pool of expertise and skills at every level, from worker to management, and they are in danger.

I intervene in this debate in order to get a constructive attitude going. My information is that the appointment of a liquidator may not mean the end provided the Government, through the State agencies, adopt a positive approach. I appeal to the Minister of State to tell his colleàgues who are charged with responsibility in this area, particularly the leader of his party, the Tánaiste, that this is a serious matter which cannot be approached in an off-hand manner as it has been dealt with so far. I can recall that as Minister responsible for Forestry I made timber supplies available to another Clondalkin operation at giveaway prices in order to maintain employment. The present managing director approached me and we facilitated him in every respect. That sort of approach should be adopted by the Government to the Clondalkin group.

Would the Minister of State comment on the report in the business and finance section of The Irish Times of today, 10 November? It reveals a disturbing state of affairs as far as the Government attitude and help are concerned. I quote from the third paragraph:

At the same time the owners of the paper mill, the publicly-quoted Clondalkin Group, issued a statement saying that the net cash effect on the group of the assistance offered by the IDA as an incentive to keep the mill open amounted "to zero over the next six months and a negative cash flow of £550,000 arises at the end of fifteen months on installation of new equipment".

Mr. B. Desmond

I will deal with that.

Mr. Lenihan

I read that because it seems to indicate, to put it mildly, a very negative attitude if we are talking in terms of a pittance of money concerned solely with the subsidisation of the interest rate. I see that that figure is put at different levels in different papers, so perhaps the Minister would clarify that. The figure mentioned in the Irish Independent this morning is £300,000 in 1983, and the figure in The Irish Times is slightly higher. I would like some precise information on that. It appears to be a niggardly contribution on foot of very serious difficulties. If it is merely a matter of subsidising the interest rate over a period and is contingent on the company itself investing £2 million in new equipment, that on that basis there will be an interest subsidy of £300,000 in 1983, it is little or no help. That has been rejected by the company. The company apparently regard the Government as not being serious in making that type of offer in face of a very serious problem compounded by the imports of basic materials that have to be paid for in dollars, compounded by high energy costs and other problems. There are problems but they cannot be faced up to in that sort of niggardly manner particularly when the company offer a certain positive contribution towards a solution of the problem. I would like to deal with that and I would like to hear the Minister of State comment on it. I quote from the statement of the company in this morning's Irish Independent:

With 470 jobs threatened, Mr. Henry Lund, Managing Director of the Clondalkin Group, said the appointment of a liquidator did not prevent a rescue move, but that his firm would like to see an element of "risk sharing" in any new structure.

This comes down to the nub of what I intended to say. I agree with the managing director, Mr. Lund, in that respect. There is no point in talking about an interest subsidy next year contingent on very substantial investment by the company. Unless the State itself participates in an equity manner in this firm I do not see any positive way out. Unless there is a risk-bearing on the part of one of the agencies that I referred to, the Industrial Credit Company, Fóir Teoranta or the IDA, or a combination of all three, there is no real way out.

The expertise is there. I respectfully suggest that one does not have to wait for the formation of the Industrial Development Corporation about which much noise has been made. It was part of the Gaiety Theatre presentation and has been talked about by the Minister of State and his party leader as being the panacea for all the problems. Here is a classical example of the sort of problems that the State should be dealing with by way of direct investment, not by way of subsidising loans. The State should, through one of these agencies, take on some of the risk-bearing aspect. That is the way forward. To judge by the statement made by the managing director, as quoted in the Irish Independent this morning, he is willing to talk business along those lines with representatives of the State agencies. That is what State involvement is all about. This problem presents a real challenge, particularly to the Labour Party who talk so much about State involvement. Here is a chance for the State to get involved in an industry that is basically sound. It would be a tragedy if this country got out of the whole pulp processing and paper industry. If this company closes down that would be the net effect because this company represents the highest degree of expertise and technological ability available in this State at the moment in this area. There is a positive recommendation already on record from a group composed of representatives of the Forestry Division of the Department of Fisheries and Forestry and the IDA advocating substantial State investment in this very area. Far from allowing this type of industry to deteriorate and become extinct, that report of the IDA and the Department of Fisheries and Forestry stated that the Clondalkin Group was, by reason of our timber resources the nearest approach to a vertically organised pulp processing industry here. But the main lynchpin of that group, which is the paper mill itself, is being allowed to become extinct by way of liquidation.

We should look ahead and regard Ireland as having a real future and being able to absorb those coming onto the labour market in the years ahead. Looked at in that way it would be unthinkable to see a major sector industry such as this being doomed to extinction. I know there are problems and difficulties. I know the sort of money that is involved. I know the sort of costs involved. But I am optimistic enough to believe that they are temporary although they put this industry at a certain disadvantage vis-á-vis similar industries in other countries. I know there are international difficulties with regard to this industry but if the Minister of State would have a look at this report published about 18 months ago he will see that there are very real long-term expectations which show that there is real hope and optimism for this type of industry because of the availability of timber resources which we have here and which represent such an advantage in any vertically organised pulp processing industry and would cater for newsprint, which has not been touched here yet, and the whole range of paper products.

The biggest single asset we have is our timber products. We could even incorporate timber supplies as a zero contribution to such an industrial undertaking and wipe out any cost except the cost of harvesting as far as such an industry was concerned. It would be a question of mobilising the expertise of the Department of Fisheries and Forestry to accept such a situation of a no-profit aspect as far as timber supplies are concerned, to make the timber available to such a pulp processing complex free except for the cost of harvesting. I realise that the timber supply aspect is not involved in this paper mill operation which is dependent at the moment on imported raw materials. But that is part of the overall conceptual approach that the IDA and the Department of Fisheries and Forestry had in the report published 18 months ago. It is optimistic on the long-term prospects by reason of our timber materials now coming on stream and which will continue to come on stream into the eighties and the nineties. Here is a classical example where we have the nucleus of a pulp processing industry. We have the skills and the expertise on the ground. There are financial difficulties that undoubtedly will exist in the short term; but on all the assessments of the two relevant Government agencies — the Department of Fisheries and Forestry and the IDA — there are very real and positive medium and long-term prospects. Surely this is a classic case for the practical implementation of the sort of thinking which the Labour Party said they had in regard to the Industrial Development Corporation.

There is no point in putting labels on ideas. In the Gaiety Theatre it may have sounded grand to talk about a new Industrial Development Corporation but within the State agencies to which I have referred, the skill and expertise already exist and finance can be obtained, provided the Government have the will to provide it, to do this job in a positive way. They should do it by way of equity risk-bearing investment, plan and calculate how it should be done and go ahead and do it. I regard Clondalkin Paper Mills as a test case of the bona fides of this Government, in particular of the Labour Party.

In the statement which was issued by the company there is almost a positive invitation by the managing director stating he would like to see an element of risk sharing in any new structure. If there is an involvement by the State in the company it should not be represented in a niggardly fashion by reducing interest charges or wiping them out for next year for the paltry amount of £300,000. In fact, they propose to do this in 1983, not even next year. That is the only offer on record so far, to give an interest subsidy in 1983, contingent on the firm going ahead with an investment of £2 million. The State should recognise that this represents the nucleus of what could be a major technological industry which we do not have at present in the pulp processing area. This firm have already accumulated skills and expertise which can be expanded by way of a joint venture between the company and the State.

The will and the mood is there on offer in the statement by the managing director. This surely represents an instance in which the State should be directly involved in a positive and constructive manner. I should like to hear the views of the Minister of State on some of the suggestions I have made in regard to this industry which is at risk at the moment and which represents a test case of the bona fides of the Government in regard to employment and economic planning. It is also a test case for the Minister of State personally who has this responsibility in regard to economic planning and who will find in his own Department planning documents concerning what I am talking about in regard to the timber processing industry and especially to the pulp processing aspect of it. To put it colloquially, he should get dug into this matter. What constructive contribution has he to make in this matter?

Minister of State at the Department of Finance (Mr. B. Desmond)

I have some difficulty in replying to the various points raised by Deputy Lenihan, Deputy Mervyn Taylor, Deputy Gene Fitzgerald and Deputy O'Malley because we resume Private Members' Business at 6.20 p.m.

I have two constraints with regard to the Clondalkin Paper Mills, apart from the time element. Discussions are currently proceeding between Clondalkin Paper Mills and Fóir Teoranta. As Deputy Lenihan and his colleagues are well aware, continuous discussions have been going on between the company and the IDA, quite apart from any meetings which have taken place between the management, unions and the Minister of State, Deputy E. Collins. However, it is misleading to suggest that the Government are in any way holding back, negligent or tardy in their anxiety to assist this company. As Deputy Lenihan knows well, there is considerable restraint about revealing financial details in relation to any company. I notice that in all the newspapers considerable data has been given and figures vary from £5 million to £10 million in terms of moneys which might be sought by way of package or otherwise, to rescue the company.

There was no prior notification about the appointment of a liquidator yesterday to the IDA, who might have expected to have been informed since they are deeply involved, to Fóir Teoranta who could be regarded as having a direct interest in the matter or to the Department of Industry and Energy. The appointment of a liquidator by this company came as a complete surprise, especially since negotiations and discussions were in train. It is reprehensible that the management of any company, without prior consultation with the trade unions concerned, in this case unions which represented 470 workers, and without bringing in on a confidential basis senior staff of the IDA, Fóir Teoranta and of the Department, or without alerting the Ministers directly concerned, simply sprang it for reasons which perhaps will enfold.

I deplore that kind of management of a major company, I resent it, particularly when the IDA have been putting forward a package which could help the company. Since various figures have been bandied about, I want to give one parameter in terms of one aspect. The management and unions met my colleague, Deputy Collins, on 6 November, because the company announced that they proposed to close the plant in December. Deputy Collins outlined in details to the company and the unions the offer made by the IDA. Deputy Collins urged the management to resume negotiations and discussions with the IDA and, if necessary with Fóir Teoranta. He pointed out, and I agree with him, that any question of closure at that stage was premature. I will elaborate on other aspects of this tomorrow but I want to put on record tonight what happened. I deplore the bandying about of £5 million and £10 million in the newspapers.

Debate adjourned.