Irish Shipping Limited (Amendment) Bill, 1959—Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. S. Lemass)

The purpose of this Bill is to provide for an increase in the authorised capital of Irish Shipping Ltd. from the present figure of £5 million to £12 million; to provide for an increase in the maximum borrowing by the company which may be guaranteed by the Minister for Finance from the present limit of £2 million to £5 million; and for the repeal of the provisions of the Irish Shipping Ltd. Act, 1947, whch empowered the Minister for Industry and Commerce to pay subsidies to the company.

Irish Shipping Ltd. possess at present a fleet of modern vessels totalling 140,000 tons dead-weight, consisting of 17 dry cargo vessels, one deep sea tanker and one coastal tanker. A second deep sea tanker of 18,000 tons deadweight has been launched and will be delivered later on in this year. As Senators are aware, the company have grown to be a very considerable enterprise, giving employment now to some 900 persons either ashore or afloat. The scale of their operations may be deduced from the fact that, in the five years which ended on 30th April last, the freights earned by the company amounted to approximately £9½ million.

The Irish Shipping Ltd. Act, 1947, provided for a maximum authorised capital of £5 million and for borrowing, with the consent of the Minister for Finance, up to £2 million. These limits are no longer adequate. Expenditure on the present fleet, including payments in respect of the tanker under construction, has amounted to approximately £12½ million. Of that sum, the company contributed from earnings some £5¾ million. Five million pounds, being the full authorised capital of the company, has been contributed by the Minister for Finance in the form of share capital. The balance of approximately £1¾ million is covered by overdraft with the company's bankers. The overdraft was arranged for the purpose of financing the purchase of two deep sea tankers and is guaranteed by the Minister for Finance.

When, after the war, the programme of expansion for Irish Shipping Ltd. was determined, the target aimed at was a dry cargo fleet of 250,000 tons deadweight. In the light of our wartime experience, that was considered to be the minimum size of fleet required to carry essential imports to this country in time of war. Because of increases in the size and in the speed of the dry cargo vessels with the consequent improvement in their overall efficiency, it is now considered that minimum emergency requirements could be put at a figure of 200,000 tons. The cost of an additional 80,000 tons required to put the company's fleet up to 200,000 tons in respect of dry cargo vessels will, at present prices, be of the order of £9,000,000. I should like to make it clear that it is not intended to limit the company's growth to that tonnage but expansion beyond that figure must depend solely upon commercial considerations.

The Board of Irish Shipping Ltd. consider that the best shipping practice requires that they should replace their vessels when they become relatively uneconomic to operate. On that basis, a number of the company's vessels will fall due for replacement during the next few years. I should mention that, as an alternative to replacement, the company have undertaken the conversion of two of the older vessels to diesel propulsion.

The cost of replacing vessels would in the normal way be met from the sale of the older vessels and from depreciation reserves. Since the vessels of the present fleet were built, however, the cost of new vessels has risen very considerably and, moreover, the company's entire reserves have been applied, at the direction of the Government, to the acquisition of new tonnage. The cost of replacements which will, over a long period ahead, amount to many millions of pounds will, therefore, have to be met to a considerable extent from new capital. Outstanding commitments on the tanker due for delivery this year amount to about £420,000 and the payment of the outstanding sums is expected to bring the company's overdraft to over £2,000,000. In view of the present shipping slump, the company will not be able to pay that overdraft from earnings in the relatively short time originally envisaged. It may be necessary eventually, therefore, to liquidate the overdraft by long-term borrowing or by payment from capital account.

The Irish Shipping Company, Ltd., like other shipping companies, have been affected by the present severe slump in freight rates. They have been fortunate in that a large part of their fleet is modern and relatively economic to operate, and that a number of their vessels is on long-term charter at rates which were negotiated before the slump began. The company expect that in the present year they will break even, the profits on some vessels offsetting the loss on others. They have, however, been forced to lay up two of the older and less economic vessels. The company are unable at present and for the time being to devote any part of their earnings to the liquidation of their overdraft or to the acquisition of new ships. The extent to which they may be able to do so in the future will depend very much on developments in the freight market.

It is not possible in present circumstances to estimate with any degree of precision what the gross capital requirements of the company may be for a considerable number of years ahead or what contribution the company may be able to make from their earnings towards the cost of future replacements and expansion. Any such estimates would have to depend to a considerable degree on developments in the world shipping market. The Government, however, consider that adequate statutory provision should be made to meet whatever developments may be found to be practicable and desirable in the light of future experience.

It is proposed, therefore, that the maximum authorised capital of the company should be increased from £5,000,000 to £12,000,000. That figure of £12,000,000 is in any case more in keeping with the present value of the company's assets which amount to £13,000,000. It is also proposed to increase from £2,000,000 to £5,000,000 the amount which the company can borrow under guarantee of the Minister for Finance. Taking into account the prospects for a return to normal conditions in the shipping industry within some reasonable time the provisions now proposed should be sufficient to meet the company's requirements on capital account for some years.

It is proposed to repeal the provision in the 1947 Act which empowers the Minister for Industry and Commerce to pay subsidies to the company. When that Act was being passed Irish Shipping, Ltd., was beginning to meet, for the first time in peace, the brunt of competition from established shipping companies. It was expected that competition would become more acute and that the company would have to face the discriminatory practices operated by some Governments to protect their own shipping and unfair competition from some combines of private shipping concerns. The provision of subsidy is considered to be no longer necessary and the retention of powers in legislation to pay subsidy could give rise to misunderstanding and difficulty. Since 1947 this country has become a member of the interGovernmental Maritime Consultative Organisation, one of whose aims is the elimination of discriminatory and restrictive practices in the shipping industry. While it is not to be expected that these practices will be eliminated entirely it is hoped that some mitigation of them may be brought about. In our circumstances discriminatory action in favour of our own vessels would be impracticable even if it were desirable. Our national interest, both from the narrow point of view of the success of Irish Shipping, Ltd., as well as from the broader aspect of the freight levels which affect the cost of our imports and exports, is best served by supporting the abolition of discriminatory and restrictive practices in the industry, and as a token of our view in that regard we are moving to delete this power to pay subsidy which, in fact, has never been utilised.

Dr. O'Donovan

Whatever remarks I may have made when we were discussing Bord na Móna a while ago can be raised to the power of n in relation to this proposition. The capital at present in Irish Shipping, as the Minister remarked, is £12,500,000 provided as to £5,000,000 by the Minister for Finance, by earnings, in the early years particularly, of profit on marine insurance on which the former chairman of the company was constantly reiterating that the company paid income-tax with an overdraft of £1,750,000.

The proposition that is now being put to us is that the capital of the company should effectively be raised by £10,000,000. I find it hard to believe that, if we take any one of the ordiary tests which we should apply in this country at present to capital expenditure, this proposition would pass them. The cost of the ships that were built in the first building programme of Irish Shipping two or three years after the war was £40 per ton. They were built with the profits, as we are so often reminded, on the marine insurance carried by Irish Shipping. I have no doubt that it would have been better not to have made these profits, that it would have been far better if the State had covered the insurance in the same way as the Export of Livestock Insurance Act was operated instead of allowing the cost of the goods at that time to go up enormously.

The second building programme, from October, 1950, to May, 1951, put five vessels in service at a cost of £2,500,000 or £60 a ton. The third building programme, as far as my recollection goes, cost about £100 per ton. The proposition that is now before us is that we should accept the proposal by the Minister to provide another 80,000 tons of shipping at a cost of £9,000,000 or £112 per ton. When the Minister said the cost has risen very considerably he was understating the matter very much. It has trebled since the war and we are expected to do this at a time when, in accordance with the very full figures the Minister gave to the Dáil, the freight index for shipping is at a very low point.

These ships are not being built in this country but abroad. We are told, on the one hand, that we require very badly that people should bring capital in here and, on the other hand, that we can afford to spend an additional £10,000,000 on ships to be built abroad. I know new merchant ships can look as nice as any other ships but I do not think there is much prestige to be got from merchant shipping, and the expenditure of this money on the building of these ships will give no employment in this country. When this money has been spent—taking the information the Minister gave us that the existing ships employ 900 people—the only additional advantage to be gained in real terms would be on such occasions as the ships would be provisioned here, or have some painting done. We shall give the Minister full credit for the fact that the existing fleet takes 900 people to operate it, not bothering to deduct the overheads of the staff employed in the office.

The new vessels will employ 400 people. What do I get as the cost per man of this employment? The existing fleet cost £12,500,000. The cost is about £14,000 per man employed but the cost of the new fleet will be £22,500 per man employed. We had a discussion this evening in which I was accused of being unduly critical of an industry here. What is the cost per man employed in that industry? Somewhere about £2,000 to £3,000 per man. I suppose the figure for industrial employment is gradually getting higher. Certainly there was a figure of £3,000 per man for putting people into industrial employment a few years ago but in recent times I have seen the figure of £5,000 quoted both here and in Britain.

Do not forget we are being told ad nauseam that there was no capital for housing, nothing for this and that, yet we have here a proposition which, as far as employment within this country is concerned, will cost about £22,500 per man put into employment. I know it will be argued that the fleet is kept for other purposes—for security in time of war and so on. I shall come back to that at the end of my speech.

Unless I misread the signs, this is the second time the Minister has insisted on Irish Shipping doing a job they were not prepared to do. They stated publicly in their report in relation to one of the earlier building programmes that they were ordered to do it by the Government. On this occasion I read the last report of Irish Shipping Ltd., a report of a meeting held on Wednesday, 9th July, 1958.

I feel this is the relevant paragraph of the report:—

"It would seem that many of the experts believe that the present world-wide slump in the shipping industry will last for quite some time, and there is nothing which we or even the Government can do to protect our shipping from the effects of a world-wide shipping depression. We must rely on our own resources to survive this difficult period. We must intensify our efforts to economise and, if necesary, we may have to lay up the more costly units of our fleet. Above all, we will require the co-operation of all our employees, both ashore and afloat, to eliminate wastage and any uneconomic practices. We have sufficient knowledge and skill amongst our personnel and we have a sufficient number of the right type of ships to be able to carry on as well as other companies of our size and type. I hope that it will not be long until we will be again able to resume at full strength and continue our task of adding further to our ships and to the prosperity of our Irish Merchant Marine."

What do we find when we examine the the freight index and go back to the period when this company was operating with its new fleet of ships—at the time, nine or ten ships? We find that the freight index in January 1956 was 144.3. That was towards the end of the Suez crisis period. The company had a very good year that year, just as they had a good year at the time of the Korean war. As the Minister was good enough to say in the Dáil, they had dropped in April 1958 to 52.7 and had recovered 12 points in December 1958 to 74.6. So that it was still at only about three-quarters of the level it was at prior to the tremendous rise that took place at the time of Suez. The Minister said in the Dáil, putting all his cards on the table this time— I suppose if he has a really bad proposition the best thing to do is put all his cards on the table—that out of 114,000,000 tons of shipping in the world, 7,000,000 tons were laid up, including ships of Irish Shipping. It was interesting that there were 7,000,000 tons laid up as compared with an addition to the world tonnage of shipping the preceding year of 7.7 million tons. In other words, for every ton added there was a ton of shipping laid up somewhere in a river or in a bay.

I want to refer to one other thing about this company. It is all very well to talk about the manner in which you build up a number of ships and replace them, all the time requiring additional capital. I want to point out that no dividend has ever been paid by this company to the Minister for Finance for his investment. I might be wrong in these facts, but that is my recollection. The second thing I want to emphasise is that it pays no income-tax. Lest somebody might take me up on it, there is an item of £7,800 income-tax on investment income. My recollection is that income-tax was specifically excluded under the earlier Act.

This company pays no dividend. After all, even if it has been paying only a low rate of interest on its advances, Bord na Móna has been paying a rate of interest, which was originally fixed at 2½ per cent. That is not bad if you compare it with the 3½ per cent. the E.S.B. were paying at the same time. But this company pays nothing at all to the State and there is no suggestion that it will ever pay anything. We put this immense amount of money into this company and there is no suggestion that the Minister for Finance will ever get a bean out of it.

Do not forget that under the system we have the Minister for Finance has to pay very substantial amounts for such money—about 5½ per cent. at present. The answer usually given is to refer to the target of shipping necessary in time of war. The Minister tells us that target is 250,000 tons. Again subject to my recollection being accurate that figure has been inflated. That is not the figure used ten years ago. I am quite certain of that. As the fleet came up to the tonnage which was regarded as the minimum necessary in time of war, the target was inflated. I do not think the Minister's statement that the target aimed at was 250,000 tons is correct. He has deflated it now to 200,000 tons. That is not correct; that is my distinct recollection about it. It is an inflated figure to justify this proposal.

The Minister made use of a few phrases—I notice he made use of the same phrase in the Dáil—"The best shipping practice." I am not in a position to disagree with the best shipping practice. Let us say the best type of motor car is a Rolls Royce, but I do not know that any Senator runs a Rolls Royce. There would be general agreement that the Rolls Royce is the best type of motor car. The best shipping practice is the same mentality—the millionaire mentality.

I notice that the company, despite the reference to the best shipping practice, are prepared to depart from it a little. This best shipping practice is the replacement of ships at the age of ten or 12 years. How does it compare with the way this country scraped through the war with the old tubs bought from Central American Republics, from Greece and Turkey or wherever they could be got, owing to the fact that the matter was not attended to before the outbreak of war? I understand quite well why it was not attended to. The Government relied on promises made by the British Government and did not attend to it. They could have bought shipping very cheaply as there were tens of thousands of tons of shipping lying idle in the Clyde. I am not criticising the Government on that. This is an historical matter which has happened from time to time. What the guarantee is that you will not have, literally, hundreds of miles of shipping tied up I do not know. I saw a programme on television some time ago showing ships laid up in one of the bays on south-east England. Certainly it was a very impressive sight to see that number of ships laid up there already.

The Minister, perhaps not deliberately, gave the impression that £10,000,000 was being added to the capital of the company. I may have misunderstood his phrase but in fact the existing assets of the company, the assets on the balance sheet, are £11,000,000. The Minister said these additional moneys were roughly equivalent, or rather that they were not, to the present assets of £13,500,000. I do not understand the relevancy of that.

Finally, I should like to reiterate, and emphasise, the warning given by Deputy Kyne in the Dáil about this matter. This is very dangerous and shaky territory. If there was massive employment to be given at home in the business of building these ships I would not be as critical as I have been, if I were satisfied that we wanted to provide security in the next war, but we are adopting a Maginot Line mentality, as if the next war will be fought on the same lines as the last one.

This proposal of the Minister reminds me very much of a previous occasion when he did exactly the same thing. That was in the autumn of 1952 when—certainly not owing to any action of the Minister—his Government, following the Budget of April 2nd of that year, were in grave difficulties. I do not think anybody would be so unfair as to blame the Minister for these particular difficulties but all I can say is that I hope the Minister will not be in as unhappy a position as when the Taoiseach was in Utrecht. It will be a case of history repeating itself and next winter the Minister will find himself in the same position. This is extremely unwise. That is not an opinion I have arrived at for the purpose of this Bill. It was an opinion which I also formed about the programme which was forced on the company against their wishes some time ago. If that applied at that time with shipping freights relatively stable, following the end of the Korean war, how much more does it apply now with the shipping index 72 points compared with an index for shipping of 100 points when costs were greatly lower than they are to-day? I doubt that this is a wise proposal.

Mr. Murphy

I welcome this Bill and the particular aspect of it that I consider to be of importance is the building up of our tonnage to what would be regarded as the essential minimum for survival in the event of war. I would not be in favour of spending millions of pounds on jet fighters but certainly I would favour investing millions in providing Irish shipping with what would be regarded as an essential minimum.

I consider that Irish Shipping, its officers and its seamen generally, have done a very good job and they deserve the congratulations of this House. In the Dáil, the Minister, on the Second Reading of this Bill, referred to the rise in the dry freight cargo rates as shown by the British Chamber of Shipping, and indeed the fluctuations are very steep. The maximum was 189.4 points in December, 1956. It went down to 62.7 in April, 1958 and rose slightly to 74.6 in December, 1958. We have often heard, as an explanation for rising prices and increased costs, about the rise in the costs of shipping. To clear any doubt in my mind I referred to the cost-of-living index for about the same period to see if the substantial drop in the shipping freight dry cargo index had shown itself in the cost of living.

Unfortunately, it did not seem to work in that direction. The cost-of-living index for February, 1957, would, I suppose, be related to the dry freight index of December, 1956, and it was 135. It had gone up to 146 by December, 1958. The same can be said—it is even more marked—in regard to the index for tanker freight levels, because the peak there was December, 1956, at 435 whilst at May, 1956, it had gone down to 424. The cost of petrol and oils increased substantially when that peak of tanker freight rates was reached. The cost of petrol has gone down by ½d. in the meantime; it never seems to go down as much as it goes up.

I know that in regard to the building of ships the facilities available here so far are not quite suitable for building the type of ship required by Irish Shipping. I would say to the Minister, and I think he agrees with this, it is the viewpoint of the trade union movement that, in so far as we cannot get things done in this part of the country, before going outside these shores, we should endeavour to get them done in the North. I know that he has given a direction to the Board of Irish Shipping that they should always ask the Belfast shipyard to quote for their ships and I hope that wherever possible the work will be given to Belfast before it is given to some other country.

Another aspect of our shipping problem to which I should like to turn is the rather vexed question of passenger facilities between here and Britain. There has been some improvement in that direction by the introduction of sailing tickets for which a deposit has to be paid when application is made for the tickets. I suppose that that tends to reduce the confusion and chaos which obtained on previous occasions. This is a peak problem which occurs usually about July and August and again at Christmas.

I know that British Railways do make extra shipping available, as far as they can. The B. and I. make no effort at all. They simply carry on more or less as they do for the rest of the year. No matter what is done, I am sure that there must be many thousands of would-be visitors, returning emigrants or others, who do not come to this country because of the difficulties involved in getting accommodation at the time they want to come, when they have their holidays, who cannot get sailing tickets or secure accommodation. Irish people working in Britain have told me that it is such a problem trying to get sailing tickets so far ahead, trying to put up with the crush, etc., that they have abandoned their former practice of coming home regularly for their summer holidays to Ireland. There must be many such and there must be many English people who would come if the facilities were better and they could be assured of getting accommodation at the time they want it.

I do not know how far Irish Shipping could help in this direction. It would be quite unrealistic for Irish Shipping or any other concern to tie up £1,000,000 in a modern passenger steamer simply for that short peak period; but I am wondering is it practicable for some sort of vessel providing simple seating accommodation under cover to be put into service during that peak period in the summer or daylight sailing. Such a vessel might be available and might be suitable for carrying cars, and for some other traffic, during the rest of the year. It might be suitable for a container service or for the purpose of carrying trailers.

I do not pretend to be an expert in this matter, but I think it is very desirable and necessary for the economy of the country that any tourist or returning emigrant should have every facility to come here whenever he wants to come. Even though such a service might not be immediately economic, it would be desirable from the point of view of the overall benefit to the economy. I would ask that that problem should be reviewed. I am sure it has been considered already. There might be some way of making some vessel available for that peak period, not providing cabins such as are usually on the cross-channel service but with seating accommodation for daylight sailing, and it might be possible to use them for some other purpose during the rest of the year.

Tomás Ó Maoláin

I am prompted to intervene in this debate by hearing Senator Dr. O'Donovan using his pet phrase about the Maginot Line mentality. I intervene for the purpose of reminding him that the normal interpretation placed by the ordinary man in the street in 1938-39 on the Maginot Line was the system of defences which ran along the Franco-German border up to the North Sea behind which the French dug themselves in.

Dr. O'Donovan

It did not go to the North Sea, unfortunately.

Tomás Ó Maoláin

They believed they were impregnable and that nothing could ever happen them. In other words, it was the system of defence which unfortunately did not run the whole way along the vulnerable Belgian border to the North Sea. Senator Dr. O'Donovan in using that phrase to-night makes it quite clear that in connection with Irish shipping, turf development and many other facets of our national economic progress, the only people who have that mentality to-day are Senator Dr. O'Donovan and some of his colleagues on the other side of the House. The Maginot Line mentality of which Senator Dr. O'Donovan is an exponent was the mentality which resulted in the sacrifice of the five Constellation planes which were bought in 1947, which resulted in the disappearance of our short-wave broadcasting station and wave-length——

Dr. O'Donovan

It was a great loss.

Tomás Ó Maoláin

——which resulted in the disappearance of the possibilities at that time of a heavy industry, and in the disappearance of the airframe factory at the time that Senator Dr. O'Donovan and his friends took over the Government. It is annoying to hear Senator Dr. O'Donovan, in referring to this Bill on Irish Shipping, say that if we took any of the ordinary tests this would not pass. He had much the same mentality on the proposals in the Turf Bill which was passed through the Seanad earlier to-day.

There is no doubt in the world that Senator Dr. O'Donovan had the same mentality at the time when many of the great industrial and economic projects which were put into action here from 1932 to 1938 were in their infancy. That was the mentality of his Party during all that period, and it is unfortunate and deplorable to see that even at this late stage there are members of the Fine Gael Front Bench who take the same view as many of their colleagues in the other House took in the early days in 1932 when efforts were being made to gear this, country for an industrial revival. Senator Dr. O'Donovan could not see that there was much prestige to be got out of merchant shipping and he seemed to think that the only advantage that could accrue to us here was if the new ships were provisioned or painted here in Ireland. Otherwise, nothing was to be gained out of them; and to prove that, he wanted to know how this country scraped through with old tubs during the war, which after the war were reconditioned.

Dr. O'Donovan

I said that we did scrape through.

Tomás Ó Maoláin

Yes, with old tubs. It would be a good education to Senator Dr. O'Donovan to look up the newspaper files of recent months. He will find a series of articles which dealt with our position when the war began in 1939 and the efforts that were made all over the world and, in particular, from a very friendly Government, to secure even one ship at that time, and how deplorable was the reception we got in many quarters when ships were at a premium. It is not very much use for Senator Dr. O'Donovan to talk about hundreds of miles of ships laid up already, to indicate, perhaps, that a great shipping depression is about to follow. The fact remains, ní hé lá na gaotha lá na scolb. The time to take precautions against the future is not when the blaze comes, but now; and as for wondering whether the pattern of the next war will be like the pattern of the last, nobody knows, not even the scientists who will, probably, create it. All we do know is that according to the information we have and the system under which we work we have to take the precautions which seem to us to be necessary to ensure that if a crisis does come, either a big one or a small one, we will have at least sufficient tonnage to ensure that the necessary raw materials to keep our industries going are imported in our own ships because, if war does come, we will not be in a position to get ships any more than we were on the last occasion.

It is absolutely silly for Senator Dr. O'Donovan or anybody else to be computing in the mathematical way in which he did compute that the 400 people who would secure employment in these new ships would cost £22,500 per man employed. If the people of this country were in a position in 1940, 1941, 1942 or 1943 to buy a few new ships they would not have computed whether the cost per man employed was £22,000 or £252,000, if they could have got them.

I would like to pay tribute to Irish Shipping Ltd. for the tremendous achievements which they have chalked up to their credit since the company began. I hope that they will continue on that very progressive and prosperous way and that they will in the future, as in the past, be not alone a credit to this country but one of our best insurance policies for survival in the future.

Mr. Burke

The Minister gave us an interesting survey of what had been achieved and what was proposed to be achieved by Irish Shipping Ltd. The points made in his speech in regard to the numbers employed and their aims and objects have been adequately explained.

It is interesting to note that efficiency will now allow us to do as much work with 200,000 tons of dry cargo shipping as could have been done in the middle forties with 250,000 tons. That should help to make Irish Shipping Ltd. a more competitive force than it would have been if the yardstick of 1945 were applied to present-day conditions.

Shipping must be one of the most difficult businesses that one could engage in and in this case it is well that Irish Shipping Ltd. has the fairy godmother of the State to stand behind it and encourage it in it various enterprises. It is a great source of joy to all of us to see very fine Irish ships entering our major ports.

I should like to feel that if we are not able to build ships in Cork or Dublin they would be built in Belfast. Even if we have difficulties with people in Belfast or across the water from time to time, we would be pouring coals of fire on their heads by having our ships built in Belfast. Senator Murphy has said that the Minister was interested in having ships built in Belfast, and naturally they would not be built there unless they were built at the right price.

The aspect of shipping which I want to mention is a facet which has been neglected, in my opinion. We are speaking about the big ships, and the ships we are now building will enter only two or perhaps three ports in this country—Dublin, Cobh and Foynes. The other major ports such as Limerick and Waterford will not be able to take the largest of the Irish ships. These ships will probably engage in the highly competitive international tramp ship competition. It is fortunate, indeed, that many of them are first-class modern ships and have been engaged on long-term charters at remunerative rates, but it often strikes me as a member of a harbour board and a person interested in this problem, that we have done nothing to encourage the development of the small ship which, in my opinion, has been the most significant development in the shipping line in Western Europe since the war. Anyone who visits the ports of Cork, Waterford or Dublin, or any of our ports for that matter, will see the flags of the Low Countries, Western Germany, France and some of the Scandinavian countries, carrying small cargoes to our shores.

The Irish economy has the nature of a small economy and our needs can often be served better by the smaller ship than by the larger. Our industries may want to buy a 500 ton cargo of raw materials for manufacture and may not be interested in chartering a 10,000 ton or 12,000 ton cargo in an Irish Shipping bottom. That amount is not required. They may not be able to finance it and the industry may not require so much raw materials. The Minister has the imagination necessary for dealing with these matters. The State should encourage, whether by financial support or by remission of taxation, conditions which would allow this type of shipping to develop in all Irish ports. These small ships could be built and serviced here and operated by people living around our seaboard who have a seafaring tradition.

I remember reading in the library some weeks ago a book which showed that in the Penal times our people were not allowed to hold land and, therefore, they had to engage in trade in the cities like Waterford and Cork, and the ascendancy at that time were complaining that the Irish were outstripping them in trade and commerce. The history of Waterford, Cork, Clonmel and other towns shows that many people from these places were well known as far south as Cadiz in Spain and all over the Low Countries for their trading. That trade was done in the schooners and small ships they had at that time.

To-day the Dutch principally are engaging in that type of shipping, I presume as family businesses, while we are doing nothing to assist the private sector in the shipping economy. If we did that and encouraged that business acumen and seafaring tradition that is latent in our people they would be the main people to operate a big business in shipping afterwards. We have neglected that. That is one aspect of our economy that the Minister for Industry and Commerce should certainly keep in mind. We could build those ships ourselves.

I want to touch on one point made by Senator Murphy, that is, cross-channel shipping. I was engaged recently in several conferences with British Railways with regard to new arrangements made to give facilities to the port of Waterford. We were promised that conditions would be very much better in the western region that would serve the ports of Rosslare and Cork than they had been before. Some of the trouble that has occurred in Dublin was that during the war period all the passenger traffic came through Dublin and when it returned to the other routes the same facilities were not provided. For example, the best boat trains on the western region average only 36 m.p.h. as against, probably, 55 to 60 m.p.h. on the Irish Mail service. I understand that these things are being attended to. When a service comparable with the Irish Mail service from Euston to Holyhead is given from Paddington to Fishguard on the western region, and modern ships are operating at that port, the bottleneck at Dún Laoghaire will be obviated.

Irish Shipping Ltd. have before them to-day a very difficult problem. Until the international situation is a little bit clearer, we should be slow in spending this £9,000,000 which it is suggested will be required to bring our tonnage up to 200,000. I believe that Britain will be obliged to reduce the cost per ton of ships. Otherwise, she will lose, and she is at the moment losing in competition with Western Germany and Japan. It might be prudent to bide our time, so that we may be in a position to purchase ships at good value. Any new ships we purchase to-day will have to be bought at peak prices. Maybe, in a year or two, we will be able to purchase ships at a price that will not be a burden on Irish Shipping Ltd., who will have to operate these ships when they come down the slip-way into the sea and fly the Irish flag.

Mr. McGuire

Like everybody else, I regard Irish Shipping Ltd. as a most creditable and efficient organisation and one that an island country such as this simply could not do without. It was one of the first things we always looked forward to when we got self-government.

I read the debate which took place on this Bill in the Dáil and I have heard the debate on it here to-day. There was almost unanimous approval of the proposals of the Bill in the Dáil. Here, Senator Dr. O'Donovan opposed the expenditure and gave very good reasons for doing so. It is important that every Bill that comes here—especially one involving expenditure of some £10,000,000—should have critical examination and some opposition, even if only for the sake of opposition, though I do not think that Senator Dr. O'Donovan made his objections from that particular aspect. I think he was genuine but, even if he were not, it is well that somebody should make such a stand.

I am very much in favour of the expenditure proposed here. It is good foresight, even though there is a slump in the world. On the occasion of the last slump the Americans got out of it by providing for the future, looking forward and beyond the immediate future. Otherwise, the difficulty might have been perpetuated. The same thing might apply here. I would ask the Minister to answer seriously the case made here. There is a natural temptation to be slightly annoyed with rather strong criticism of one's proposal. I should like to hear, and I am sure the public would like to hear, the answers to the case that has been made. I believe that the answer has already been given, not only in the statements of the Minister, but in the actions of the company.

I rose just to say—as I said previously in respect of Senator Sheehy Skeffington—that those people who do not agree with everybody else, even if everybody else is in agreement, perform a very useful function. On this occasion, it is particularly useful that the public should know that an expenditure of this kind has been objected to and that the Minister can show a case for the expenditure as I am sure he will.

Professor Quinlan

While I do not wish in any way to oppose the proposed expenditure, I want to make one or two observations. We are being faced with a number of development Bills such as this and I understand that others are on the way. Personally, I feel that if we had a really good debate, extending perhaps over several weeks, on our economic future and on where we go from here, we would be in a better position to judge the priorities to be accorded to such developments.

We are all in favour of putting millions into every industry that gives hope of development here and of providing some measure of relief of our unemploment and emigration problems. But there is a very limited amount of money available—as has been made crystal clear in the Survey on Economic Expansion by Mr. Whitaker. A system of priorities should be set out and this House and the Dáil should play a very important part in pulling together and discussing on a completely non-Party basis how our resources can be spent wisely. That is my query in relation to the present expenditure. It is all very well but there is a commitment for at least £3,000,000 of State capital by the Minister for Finance. The point was then made by Senator Dr. O'Donovan that, so far, no dividends have been paid on such capital by the company; in other words, that this is not a very highly-productive type of investment. Yet it is one, perhaps, that we should continue.

I should like a general debate. If we could have one before we sanction very much more expenditure such as the £5,500,000 on jet airplanes, and so on, we would perhaps be able to spend our resources more wisely.

There is one cargo carried by Irish Shipping Ltd. at present which I hope can be dispensed with very shortly, that is, imported wheat. I hope that any expansion in Irish Shipping Ltd. will not create a vested interest that will prevent or postpone the day when we will have the 100 per cent. Irish loaf. I should also like to get far more convincing evidence as to why we should be in the tramp-ship business. Apart from the fact that we want to provide for future wars, and so on, it seems that a development of our own home shipping would confer much greater advantage on our economy than too much of this tramp-ship business.

The figure of £22,500 per worker employed shows the very high capital investment required in modern industry. There is the example of Whitegate Oil Refinery where the capital expenditure is even higher—£30,000 per worker. When considering such figures and when being forced to expand at such a high cost, I would appeal to the Minister to look kindly at expenditure in agriculture and to do a small sum and capitalise our present loss of an average of 7,000 workers from agriculture each year. If that is capitalised at the present figure of £22,500, it goes to the dizzy sum of something like £150,000,000 a year. Even if it is capitalised at a modest figure of £3,000 per worker employed, it shows it is good business for the State, a highly profitable business and an investment we should all support, to expend, say an additional £21,000,000 in agriculture, if by doing so we were able, at least, to halt the present flight from the land and maintain our present numbers.

Mr. O'Quigley

I do not intend to say very much on this Bill but I did notice that the Minister in the Dáil on Second Stage gave a figure of £9,500,000, the amount of money which Irish Shipping Ltd. had earned in foreign exchange through freight in the previous five years. I wonder would the Minister have counterparted that figure with the amount of money spent by this country by way of payments to other shipping industries? The question that arises on Senator Dr. O'Donovan's speech, which has been criticised by Senator Mullins, as to whether we are spending our resources in the best possible way seems to me to be entirely to the point in relation to the desirability of one expenditure rather than another. I do not think that is anything about which Senator Mullins should get so heated. It seems to me that we are now reaching the stage in relation to Irish Shipping—I think it is a most desirable thing— where the ministerial colleague of the Minister who wished that every British ship was at the bottom of the sea can now have his wish with impunity and without detriment to us.

Mr. S. Lemass

Like Senator McGuire, I think Senator O'Donovan is to be congratulated on having made a serious effort to understand what the Bill is about. He very nearly succeeded. The proposal here is that the limit now fixed by law on the amount the Minister for Finance can invest in the capital of Irish Shipping Ltd. should be raised. That is all the proposal in the Bill, except the subsidiary and consequential proposal about raising the limit that may be borrowed by the company on Government guarantee.

The actual outlay of the additional capital resources by the company on new vessels is a matter upon which decisions have not yet been taken. How and when that capital will be utilised in the purchase of new assets will be considered later. I said in the course of the debate on this Bill in the Dáil that I proposed to meet the board of the company after the measure had been passed for the purpose of hearing their views in that regard. That meeting has, indeed, already been arranged.

It is true that the minimum target of 200,000 tons of dry cargo tonnage is not strictly related to commercial considerations of the ordinary kind although, no doubt, the company will have opinions to express as to the trend of ship building costs and when and where the best value in new tonnage can be secured. Development beyond 200,000 tons will be influenced solely by the prospects of operating these ships profitably. The point, however, that should not be missed is that a new vessel delivered now can even at present freights earn profits. The difficulties which have been created for many companies by the slump in rates related to the older type of vessels which were much more costly to operate.

The company have to undertake new capital expendituure upon replacing the existing vessels. That is because they were not allowed by Government direction to accumulate depreciation reserves which a shipping company in the normal way would seek to accumulate. The Government, at any stage since the company restarted its operations after the war, could have provided new capital for the purpose of new tonnage and allowed this company to accumulate reserves to cover the cost of replacements. For reasons which Senators will understand—the reluctance of the Minister for Finance to part with money before he has to—the company were told to go ahead and use their own resources for the acquisition of new ships on the assurance, that when capital was required for the replacement of existing vessels the Minister for Finance would make it available to them.

It is impossible to attempt any guess now as to when shipping freights are likely to recover or the extent to which they are likely to recover. Certainly, short of another international crisis, they will not go to the levels which operated during the Suez business or the Korean war. It is to be recognised that in the long run world trade is always increasing. Populations are increasing and the demand for shipping will certainly not contract permanently. Therefore, it is probable that over any reasonable period of years freight rates will average out at levels where it pays people to operate ships and so long as Irish Shipping Ltd. keep the policy of maintaining a fleet of modern efficient ships they will be able to remain in business and make profits.

Senator O'Donovan was critical of the decision to allow Irish Shipping Ltd. during the war to go into the marine insurance business. He said the Government could have done that and made profits.

Dr. O'Donovan

If the Minister will allow me, I simply mean that the Government should have carried out the insurance and made no charge to the shippers.

Mr. S. Lemass

In fact, shippers were able to get insurance because of the intervention of Irish Shipping Ltd., at as low a rate as they would have been able to get it if Irish Shipping had not entered the field. There was no thought of the possibility of Irish Shipping making a profit in the business, when we permitted the company to go into the marine insurance business. We did see the possibility of building up a marine insurance market for the first time in this country by reason of that development. Indeed, an important marine insurance business has been established in which a number of companies are participating and which is still expanding, and will be a substantial earner of foreign exchange.

There is, apart from the strategic need to keep a fleet of deep-sea vessels upon the Irish register in circumstances in which an international emergency might deprive us of opportunity of securing vessels of other flags, the consideration that it is a very important earner of foreign exchange. The £9,500,000 earned over ten years in freights was a net gain for the country. There is no counterpart. The Senator who asked what was the counterpart missed the point. Nobody in this country lost anything by reason of the fact that Irish Shipping Ltd. earned that revenue on foreign trade. It was earned carrying goods from one foreign country to another. The freight charges paid out by Irish firms to other companies is not a counterpart in any sense of the term. They would not have avoided paying that if Irish Shipping Ltd. had not been in business.

Senator O'Donovan is relying too much on his memory and his memory is letting him down very badly. The target of 250,000 tons was fixed immediately after the war. It was fixed by the committee which was then set up to plan for post-war economic development. It has never been modified from that up to this and the first announcement that the target could be reduced from 250,000 tons to 200,000 tons, because of the greater speed and higher carrying capacity of the ships available now compared with those that were available in 1945, was made on the introduction of this Bill.

The company does pay income-tax. Senator O'Donovan is misinformed on that also. As a non-profit making company it does not pay corporation profits tax but that is the only exemption it has. If it did not pay dividends to the Exchequer on the capital invested in it—it was a very small capital for many years; it is only in the last few years that it was increased from the original figure of £200,000 to £5,000,000 at which it is now—it was because the Government considered that it was better policy to leave the money with the company to be used by them for new investment purposes rather than draw it into the Exchequer. The fact is that with a total capital investment of £5,000,000 the company have built up assets valued at £13,000,000. That is where its resources went over the years and it was a very useful employment of its resources.

There is one further matter about which I want to put Senator O'Donovan right. I am not forcing the company into a development programme they do not wish to undertake. The Senator made that assertion and read an extract from the speech of the chairman at the annual general meeting.

Dr. O'Donovan

The Minister did it before.

Mr. S. Lemass

Let us get the facts straight about this. The company have been pressing me, so far as this measure is concerned, to raise by more than I propose the limit to which the Minister can provide new capital for them.

With reference to the cross-channel services, I do not think that is a field in which Irish Shipping Ltd. should contemplate operating at any time. Undoubtedly there are problems there and consideration will have to be given to them. They are different from those which Irish Shipping Ltd. face in the type of business in which they are engaged and to which they should confine themselves. That applies also to the continental trade to which Senator Burke referred. The smaller vessels which he has in mind owned by private companies are engaged in trade between Irish ports and the near continental ports. That sector of the shipping business in this country is available to private enterprise and Irish Shipping Ltd. will not enter it. An assurance has been given to that effect and the Irish companies which are engaged in that trade are showing considerable enterprise. It is not true that the Government gave no encouragement to private enterprise in that field. In the Budget of last year quite substantial tax concessions were given to private concerns in the shipping business as a result of which most of them are acquiring new ships and extending their services which, as I say, are in the main confined to those near continental ports to the extent that they are not operating to Great Britain. I would, indeed, hope to see private enterprise taking a still larger share of the development of our merchant fleet. I hope we shall see developments in that regard.

Senator O'Quigley talked about Irish Shipping Ltd. engaging in a different type of operation. Their ships are at present tramping, that is to say, they are carrying cargoes from port to port as these offer. There is another type of service which could be operated, where a ship sails on regular routes at regular times calling at specified ports, and taking cargo along that route as it is available to them. That type of operation, which Irish Shipping Ltd. does to some extent, is different from that which is their main activity and is one which requires not merely the provision of ships but an organisation which can arrange trade for the ships. The problem for this country is whether our own trade, the trade originating here, is a sufficient basis upon which to develop a service of that kind. It appears that it may not be so unless certain supplementary trades can be made available also. However, that is a matter to which some examination is being given at the present time.

Mr. Burke

May I ask the Minister if the tax conditions are comparable with those of other continental countries?

Mr. S. Lemass

I would not say with all countries but as far as I know they are as good as those available in Britain.

Question put and agreed to.

Agreed to take remaining stages to-day.

Bill considered in Committee.

Section I agreed to.

SECTION 2

Question proposed: "That Section 2 stand part of the Bill."

Dr. O'Donovan

There was reference by the Minister in the Dáil debate to the effect that increasing the capital of the company from £5,000,000 will be more in keeping with the present value of the company's assets which amount to £13,000,000. The Minister repeated that statement in this House and, frankly, I do not understand its relevance.

Mr. Lemass

It will look a bit better in the balance sheet. In fact any new capital expenditure will be for the purpose of creating new assets.

Dr. O'Donovan

I fully appreciate that; in other words, this figure will go up gradually in the balance sheet as the capital is issued.

Question put and agreed to.

Sections 3 to 5, inclusive, agreed to.

Title agreed to.

Bill reported without amendment, and received for final consideration.

Question proposed: "That the Bill do now pass."

Dr. O'Donovan

My recollection may be at fault, as the Minister says, but my understanding of that figure of 250,000 tons was that it was not the minimum required for safety in war but was the amount of transoceanic or long distance tonnage necessary for the full requirements of our trade.

Mr. S. Lemass

It will look a bit first target of the minimum requirements fixed——

Dr. O'Donovan

I admit my recollection may be at fault but certainly it was suggested that this figure of 250,000 tons was not really the figure that was to be aimed at but some figure in the region of 150,000 or 160,000 tons, which has already been reached. I am not one of those people who suggest that when you reach a target you can stop there. That is not the nature of my criticism of the Bill, and the Minister knows it. I have made no criticism of the technical organisation of the company, just as I made no criticism of the technical organisation of Bord na Móna or any of these companies.

My other main criticism was that really the company is of very little use to this country. Here is a huge investment. Dealing with one of my colleagues, the Minister said there is no counterpart to these freights. But there is the loss which has to be borne by the Exchequer in the payment of interest on loans to this company.

Seanad Éireann díospóireacht - Tuesday, 10 Mar 1959

Irish Shipping Limited (Amendment) Bill, 1959—Second and Subsequent Stages.

Seanad Éireann díospóireacht -
Tuesday, 10 Mar 1959