I move:
That a supplementary sum not exceeding £10,018,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1981, for the salaries and expenses of the Office of the Minister for Trade, Commerce and Tourism, including certain services administered by that Office, and for payment of certain subsidies, grants and grants-in-aid.
There is a point I should mention here as an introductory note. As Deputies are aware and as indicated in footnotes to this Supplementary Estimate, the amount provided for in the original Vote was for the services administered by the former Department of Industry, Commerce and Tourism. It is the practice when a change of departmental functions occurs during a financial year, as happened this year in my Department, the original Vote, having had Dáil approval, continues the disbursement of the funds provided for that financial year in respect of all the services covered in the Vote. A part of the increase now being sought in respect of what may be referred to as "shared services"— for example, salaries, travel, post office services — is related to the transferred functions, but in the circumstances mentioned they are included in this Supplementary. Likewise, savings from whatever service within the original Vote are utilised to reduce the amount required.
The principal factors giving rise to this Supplementary Estimate are the extra provision needed for the bread and flour and wheatenmeal subsidies arising mainly from the increase in the level of both subsidies from 10 May 1981 and the further provision for bread subsidy increase from 5 July 1981 as well as for the introduction of a margarine subsidy, also from July 1981.
Adjustments are necessary also in respect of a number of other subheads of expenditure arising from circumstances which could not have been foreseen when the Estimates were prepared originally. The additional costs are being met in part by savings on some other subheads and partly by increased appropriations-in-aid. The details are as follows:
Under subhead A. 1 — Salaries, Wages and Allowances — the additional amount required, £230,000, arises from the cost of special claims for certain grades the awards for which have been approved by the Department of the Public Service. There was no provision in the original Estimate for such awards as they could not have been foreseen then.
The extra £50,000 sought under this subhead B. 1 — Travelling and Incidental Expenses — reflects the additional costs which arose during the year from increased air fares and higher rates approved by the Department of the Public Service for subsistence and mileage allowances.
The extra provision of £13,000 under subhead B. 2. — Office Machinery — is needed to meet the cost of essential storage equipment for the Companies Registration Office and waste paper disposal equipment at headquarters.
The additional £54,000 sought under subhead C. 1 — Post Office Services — is mainly to defray the increase in telephone charges arising during the year which had not been foreseen and provision had not therefore been made originally for them. Also, extra telephone facilities, which were required due to relocation of some offices, were installed during the year.
On subhead E. 1 — Bord Fáilte Éireann: Grants under section 2 of the Tourist Traffic Act, 1961 — the continuing economic recession and the Northern troubles had a damaging effect on tourism during 1981. To counteract this Bord Fáilte were authorised to spend an additional £400,000 on promotion. The deviations in exchange rates during the earlier part of the year led to extra costs being incurred by Bord Fáilte in their marketing activities abroad and a further £350,000 is needed to meet those rate fluctuations. An additional £330,000 was required to meet the cost of applying some grade claims awarded in the public sector to comparable grades in the board. Bord Fáilte have been able to effect some internal savings amounting to £150,000 and the additional amount required is therefore, £930,000.
This year's Estimate provided £9,730,000 towards the grant-in-aid for Córas, Tráchtála, who now require an additional £1,964,000. Of this sum, £83,000 is needed to meet increased pay costs following certain approved grade pay awards. The balance is to fund the cost of the necessarily high level of promotional activities undertaken by the organisation during the latter part of 1980, and continued throughout the present year, leading to substantial over-expenditure on the original provision for 1981 and contributing to a deficit in 1980 which was carried into 1981. The deficit situation is now being eliminated.
Given the depressed world trading conditions which characterised 1980 and which became more difficult still during 1981, it was imperative that every possible step should be taken to build on the many past export successes of Irish firms so as to improve our export performance. Our balance of payment situation demanded that we earn abroad as much hard currency as possible, to pay for the rising cost of our essential imports.
There is little need to stress how vital it is that we maintain a successful export effort if we are to combat unemployment and protect our living standards. For the five years up to 1979, Ireland had the highest export value and volume growth in the European Economic Community. Total export value rose by 18.1 per cent in 1980. In the first nine months of 1981, the total value was up 15.0 per cent and the prospects are that the outturn for 1981 will measure up to Córas Tráchtala's target for the year.
It is against this background that the over-expenditure by CTT, to which I have referred earlier, must be considered. Because of the difficult trading climate being experienced in 1980, CTT decided, in the latter part of that year, to increase their activities and to boost their incentive grant schemes. CTT introduced the new measures in the mistaken belief that they had adequate resources to meet the costs. This was not so and by the end of 1980 CTT had seriously overspent. It also appears that their accounting system failed to monitor adequately the ensuing overdraft, which reached proportions far exceeding anything incurred in earlier years. Part of the Supplementary Estimate is required to wipe out this overdraft.
There have been detailed discussions with CTT on these matters and I am now satisfied that steps have been taken not only to introduce a modern dependable accounting system in Córas Tráchtála but also measures are being taken to ensure that similar problems do not arise again in the future. I believe that the overspending by CTT, while unfortunate, is understandable, given all the circumstances, and I am confident that Deputies will agree with this view and that the additional finance now required to fund the essential services provided by Córas Tráchtála in especially difficult times should be made available.
In regard to subhead J. 1. — Shannon Free Airport Development Company Limited — Shannon Airport in 1980 had one of its worst ever years in terms of passenger traffic. There was an overall decline from the 1979 level of 1,168,317 movements to 917,374, representing a drop of 21 per cent. This decline in traffic can be attributed to many factors. The worldwide economic recession obviously had a dampening effect on traffic. In addition, Shannon, being a transatlantic airport, was particularly affected by the reluctance of North Americans to travel during 1980, it being the year of the American Presidential Election. The build-up of the crisis in Iran was also a restricting factor at that time.
It is expected that 1981 should show a slight improvement in the traffic figures but if Shannon is to prosper a healthy growth in traffic is essential. The only way to achieve this is by aggressive marketing which the company is implementing. This intensified marketing drive was initiated early in 1981, but the allocations for the year had been decided previously. £100,000 additional to the original 1981 allocation is, consequently, required.
The downturn in business had also led to unexpected losses by Castle Tours whose operations include, for example, the Bunratty Banquets. Both Aer Rianta and SFADCo are involved in this venture. The sum of £130,000 is required to meet SFADCo's share of losses for 1980 and 1981. The future of Castle Tours and the restoring of the operation to profitability are under discussion between Aer Rianta and SFADCo.
An additional £60,000 is required by the company to cover the cost of extending the recent grade pay awards made to some civil service categories to comparable grades in the company. The total amount needed is, therefore, £290,000.
Under subhead K.2. — Credit Financing of Certain Capital Goods Exports — provision was made for the expenditure of £825,000 in 1981 for the financing of certain capital goods exports. This was the best forecast which could be made at the time of the preparation of the Estimates having regard to: (a) the likely take-up of the scheme by exporters, measured against previous experience; (b) the unknown future fluctuations in interest rates; and (c) the unknown degree of exposure that would arise in the case of foreign currency financing for contracts.
The export credit finance scheme is designed to enable Irish exporters of capital goods to compete successfully overseas. I am happy to say that since the preparation of the 1981 Estimate, Irish exporters of such goods have been remarkably successful in obtaining export orders against severe competition. This is reflected in the increased use of the scheme. In fact, unprecedented use was made of the scheme in the 12 months ended June 1981, clearly indicating the success of our exporters in obtaining an increasing volume of export contracts. I would remind the House that our capital goods sector has a very high "value added" and employment content.
Almost all of our capital goods exports are sold in foreign currencies, mainly sterling or US dollars, and due to the weakness last year of the Irish pound relative to these currencies an increased amount, by way of interest support, has had to be paid.
The above two factors, when taken together, have resulted in the increased expenditure under this subhead. Accordingly, a further amount of £657,000 is required to meet the additional and very worthwhile expenditure necessarily incurred in connection with the support of our capital goods exports.
Several circumstances have given rise to the need for extra funds for subheads R.1.R.2., bread, flour and wheatenmeal subsidies. As other colleagues of mine have had to do when presenting their Estimates I must emphasise that, in the first place, there was an under-provision to the extent of £1 million in the original allocation made for them. That is evident from the estimate of their cost, based on known factors, as compared with the provision finally decided upon for them by the then Government. Then in May, 1981, the previous Government decided to increase the rate of subsidy on standard bread by 5p per 800gm loaf and the rate of subsidy on flour and wheatenmeal sold for domestic use by 4p per kilo, with effect from 10 May. Provision had not, however, been made for these unforeseen subsidy level increases in the original allocations under the relevant subheads.
Subsequently, an application was received from the bakery industry for an increase in the price of bread, with effect from the beginning of July. Following a detailed examination of the application, the National Prices Commission recommended an increase of 5p per 800gm loaf. However, in line with the commitment to stabilise the price of certain basic food items, the Government decided that the recommended increase in the price of bread would not be implemented but would be met by way of an increase in the subsidy on standard bread from 5 July.
As a result of all these factors, it is necessary to increase the allocations for the current year to provide for the shortfalls which are expected to arise, of £14,475,000 on the bread subsidy and £1,150,000 on the flour and wheatenmeal subsidy.
On subhead R.3. — margarine subsidy — following a detailed examination of an application from the margarine manufacturers, the National Prices Commission recommended price increases of ½p to 1½p per ½ lb. on margarine, with effect from the beginning of July, 1981, and ½p to 1p per ½ lb. with effect from the beginning of October, 1981. However, in line with its commitment to which I have just referred, to stabilise the price of certain basic food items, the Government decided that the recommended increases would not be implemented, but would be met by way of subsidy. Accordingly, an amount of £250,000 is required to defray the cost involved in stabilising the retail price of margarine to the end of the current financial year.
The total amount of the increased expenditure is £20,063,000 but there is an offset of £9,511,000 in savings mainly made up of £930,000 on the Bord Fáilte provision for Development of Holiday Accommodation — Capital subhead E.2. — due to grants not being taken up to the extent anticipated; £2,221,000 saving on the Industrial Development Authority — Administration subhead I.1. — provision because that subhead has benefited from additional income deriving from internal resources of the Authority related to factory rents; £5,750,000 saving on the Industrial Development Authority — Capital subhead I.2. — due to the Authority's success in securing a higher level of investment by the private sector in building of factories and to some claims for payments of moieties of approved grants coming through more slowly than might have been expected; £390,000 on the capital provision for the Irish Film Board — T.2. capital — because aid to new projects this year will not reach the level originally anticipated due to the limited period of the board's operations since appointment.
There will also be a surplus of £534,000 in appropriations-in-aid mainly attributable to increased receipts under the Patents and Trade Mark Acts — £300,000 — because of higher fees having been introduced. There is also £170,000 by way of extra receipts from premiums under the Export Guarantee Scheme due to increased volume of business. The net amount needed is, therefore, £10,018,000.
I have explained the reasons for the increased expenditure and I now recommend the Supplementary Estimate to the House.
