Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Wednesday, 28 Jun 1961

Vol. 54 No. 9

An Bille Toghcháin (Leasú), 1961. - Cork Gas Order, 1961— Motion of Approval.

I move:

That the Cork Gas Order, 1961, proposed to be made by the Minister for Transport and Power and laid in draft before Seanad Éireann on the 17th day of June, 1961, under subsection 4 of section 10 of the Gas Regulation Act, 1920, be approved.

The purpose of the Order is to give the Cork Gas Consumers Company statutory authority to make certain modifications in its capital structure and to alter its practice as regards a number of minor matters incidental to the administration of its affairs. The main provisions of the Order provide for the increase of the authorised capital of the company from £150,000 to £750,000; the extension of the limit on its borrowing powers from £150,000 to £500,000; the capitalization of the company's undistributed profits by the issue of bonus stock and the extension of the area in which it may supply gas.

The Cork Gas Consumers Company is a statutory body set up under a private Act and is not subject to the ordinary provisions of company law. To secure statutory authority to cover the matters referred to, it must seek a special order under Section 10 of the Gas Regulation Act, 1920, which enables me to grant additional powers to the company. Before the Order is made, it must be laid before both Houses of the Oireachtas. The Houses of the Oireachtas may, by resolution, approve the draft Order in the form submitted or may approve of it with modifications or additions. When such approval is given I may make the Order in the form in which it has been approved.

This is an Order which provides, first of all, for the building up of reserves out of profits in the supply and sale of gas in Cork city; secondly, the issue of bonus shares from its reserves; thirdly, an increase in the capital of the company; fourthly, to permit of this hiding of the accounts from the general public; fifthly, a change of the name of the company from the Cork Gas Consumers Company. I think the latter provision is the only apt one because quite obviously it is not a consumers company.

The Order does not say that in so many words. Certainly, those things are not in the order I put them but clearly that is the intension behind the Order. I should like to go through the sections of the Order before us and show that is the case. The first section is that dealing with the change of name. It will be permissible for the company, subject to the approval of the Minister for Industry and Commerce, to change its name. There is nothing in that to say that it is quite appropriate to the general intentions behind this Order to change the name of the company from Cork Gas Consumers Company. Certainly it will not be a consumers company, if it ever was such.

The second section which is relevant is that which provides for the increase in the capital from £150,000 at the moment to £750,000. Another £604,000 may be created by the company but in paragraph 10 of the Order, there is provision for the capitalisation of the undistributed profits of the company and the distribution of those profits by way of bonus capital in regard to the existing shareholders. We are not told how much of the £600,000 it is intended to take up by way of a bonus issue or whether it is intended to look for public subscription and widen the basis of ownership of this company.

Let the Seanad be very clear about this. We are dealing with a gas company. Parliament has always been very careful to control, in a special way, companies dealing with special essential services. It does not come under the ordinary company law. Certain companies, gas companies, waterworks, water companies, when we had them, railway companies, when there were such things as railway companies, came under special control by Parliament. Parliament was right in doing that and made an originating Act for the Cork Gas Consumers Company in 1868. It could not be set up under the companies law, as such, but by a special Act of Parliament. Parliament put certain very definite controls on the Cork Gas Consumers Company as well as on other gas consumers companies, waterworks companies, and other undertakings.

It is very important that we should know what a gas company is doing. When it is proposed that capital should be increased from £150,000 to £750,000 and, furthermore, when it is provided that reserves can be built up out of undistributed profits, profits out of the sale of gas to the consumers, we should look at the matter very carefully.

I do not know what is exactly the current position but up to recent years the State did control the charges and dividends of gas companies.

The less they do now, the better.

In Dublin, there was an arrangement whereby there was a link between the dividend the Dublin and Alliance Gas Consumers Company could pay to its shareholders and the price of gas. In other words, if the gas company could reduce its prices to the consumers, could share its efficiency, it could also have its own share by increased dividends to the shareholders. I do not know what the Cork Gas Company pays at the moment.

It is in cut-throat competition.

I do not know what rate of dividend they pay. I suppose they pay five per cent. on their present capital of £150,000. That means they distribute £7,500 annually. But, if you issue out of accrued profits from the pockets of the ordinary consumers a bonus capital of £600,000, and thereby increase the nominal capital to £750,000, and pay five per cent. on that, you are then, on the real capital of the company, on the paid-up capital of the company, paying a dividend of 25 per cent.

That may appear nonsense. Strangely enough, I came across exactly the same—not such a big dividend— device by a railway company recently. Yes, a railway company was paying a dividend. I shall not name it.

In Monaghan.

I wish the Senator would let us in on it.

On first appearance, this railway company appeared to have reduced its dividend to its ordinary shareholders last year. When I looked at it more closely, I found that the actual money paid out, distributed by way of profit to the shareholders, had increased. What had happened? Strangely enough, there was no reference to this in the newspapers and no reference in the directors' report. In the interval, they had issued a bonus by way of accrued profits over the years out of their reserves to their shareholders: they had issued free bonus shares.

The rate per cent. appeared to have gone down, but, on their previous capital, they were paying about 11 or 12 per cent, which was doing very nicely for a company that was claiming it could not afford to do certain things. I think we should look very closely at this proposal. The Minister should make a better effort to convince us that it is right for the Oireachtas to release largely from control of Parliament an undertaking like the Cork Gas Consumers Company, a very efficient undertaking, in regard to what they do with the profits they make out of the sale of an essential commodity in Cork city and how they will deal with the capital we are allowing them to create under this Order.

Section 14 provides for the building up of reserves. This Parliament has already done something about that. An Order was made in 1948. That Order put a limit of £10,000 per annum as the amount which could be put to reserve. It said in effect: "you shall not put to reserve more than £10,000 per annum out of your profits." Such reserves were to be used not by way of issuing bonus shares to the shareholders but for the redemption of loans, mortgage debenture or other debenture stock. Now, in the last paragraph of this Order, we are repealing that section of the 1948 Order so as to permit the gas company, without any control, to put whatever it can into reserves and take up any portion of the £600,000 extra capital we are providing for in this Order.

Section 19 provides that the accounts of the company need not be published in any newspaper. Does that not strike anybody as strange? This is a company supplying an essential commodity. It is nonsense to say they are in competition. We all know that gas, as such, is regarded by housewives as the favourable way of cooking. The Minister may shake his head. If the gas company are in such great difficulties as the Minister might think, or might be led to believe, what is the need to provide for an increase in the capital? What is the need for the withdrawal of the limit, which previously applied to them, £10,000, as the amount to be put into reserve?

We said previously in effect: "You shall not put more than £10,000 per annum to reserve." Now the Minister wants us to remove any limit to what can be salted away in reserve and issued by way of bonus capital. I cannot see the sense of providing under this Order that the company need not, in the future, publish any statement of their accounts in any newspaper.

Again, it is perhaps apt that they should ask for permission to change their name from the Cork Gas Consumers Company. It is now to be some sort of secret society. They are not to be bound to publish their report in the newspapers. I suppose the Minister will say that we can go to the appropriate office and get a copy of their accounts. We will not oblige them to embarrass themselves by having to say what profits they are making from the sale of gas, or what amount they are putting to reserve, or what bonus capital they are issuing to their shareholders. They are not to be embarrassed at all in the future.

Section 20 provides for the adjustment of charges. The Oireachtas is being asked to give this company, which more and more is to be a private organisation, arbitrary powers to adjust accounts. The gas company can say: "We are going to decide that Mr. A will be charged so much. We have not had an opportunity to read his meter but arbitrarily we are going to decide his charge will be so much." If the person is away on a fortnight's holidays and if the meter reader cannot read the meter, the gas company are not going to worry. They are to be given the power to say that the charge is so much and that is that. They have the backing of Parliament for that. Under the section there is an alternative in regard to their method of charging. Presumably, they might contemplate a reduction, or maybe an increase, but if you are away for a fortnight, it does not matter. They will decide you would have used so many therms, or whatever the description is, even though you are not there and your account will be adjusted accordingly later on. You might get credit for it but in the meantime the gas company are to be given the power to do it.

In Section 21, we are providing that the ownership of the meters shall be retained by the company and we are to provide that the company will be indemnified against any damage by way of fire, theft or such eventualities. I am not happy, and I am sure other Senators will not be happy, at the thought that a poor person who has had his meter rifled is to be responsible for the damage. Surely if the meter is to be the property of the gas company, they should carry the risk involved if there is any damage or if it is destroyed by fire or rifled by a burglar. Why should the consumer be held responsible? Surely it is reasonable that when a gas company owns meters, they should provide an insurance charge in their accounts for such risks. It is nonsense and an injustice to provide that the company will be indemnified against any damage to the meters. The more I examine the Order, the more I wonder who drew it up. Was it the gas company and did they ask the Minister to put it through? Certainly it is drawn up in favour of the gas company without any regard at all for the consumer, the person who will have to pay.

It was all published in the press in Cork and all the objections were dealt with.

As a House of the Oireachtas, we are asked to agree to this Order. I am against it and I am entitled to put my arguments.

The Deputy is entitled to make his arguments. He is making good socialist arguments.

The Minister would want to make a much stronger argument as to why we should agree to this Order. The next section is Section 22, which I think, to some extent, I confused with Section 21. Again, there is this provision for the arbitrary estimation of charges by the gas company. I do not think that is right. I do not think we should give them the authority to estimate the charge against a particular consumer and to insist on the charge being collected.

The concluding section in this Order is probably the most important section because it deals with repeals. The Minister has not told us what is being provided by this section, or given us any explanation as to what is being repealed. Sections of the 1868 Act are being repealed. I had some trouble getting that Act but thanks to the assistance of the people downstairs, I did get it. The first section of that Act which is being repealed provided for the payment of a one-fifth part of the amount of shares before they were allotted to a shareholder. Of course that needs to be repealed now because of the intention to issue bonus shares for which the shareholder does not pay. He will get a present of shares.

Section 58 of the 1868 Act which is also being repealed provides for a limit to the charge the company may make for gas and the rent for a meter. We are now being asked to agree that the provision in the 1868 Act which provides for a limit to the charge the company may make shall be repealed. I imagine that has been amended at various times since 1868 but apparently the provision still stands and we are being asked to wipe it out.

In paragraph (b) Section 23, we are being asked to revoke certain Articles of the 1948 Order. The first Article we are asked to revoke is in relation to the borrowing powers. Section 2 deals with the issue of debentures and provision for an interest payment of four per cent. That is being repealed. The third one being repealed is one I have already mentioned, where the 1948 Order says very fully that the gas company cannot put a greater amount than £10,000 per annum out of its profits to reserve and those reserves can be used only for the purpose of the redemption of loans, mortgage debenture or debenture stock. If my interpretation of the Order is correct, it is sensible that the provisions of the 1868 Act and the Articles of the 1948 Order should be repealed and revoked to permit the company to do what it seems to me in any case it is their intention to do.

This is a gas company which is not in competition with any other gas company. There is no control over it. It is a company supplying an essential service, granted, but it is not now perhaps as essential as before the advent of electricity. But electricity has been with us quite a long time in Cork anyhow. It was there before the E.S.B. as Senator Mrs. Dowdall, I am sure, can confirm but still up to now and as recently as 1948, Parliament thought it desirable to be a control and keep a hand on the company which supplies gas to the consumers in Cork.

Now we are being asked to let them go ahead and increase their capital and thereby increase the real dividend they will be taking out of the ordinary consumers in Cork and do other things as well. The dice is to be completely loaded against the consumer. I would ask the Minister to look at this again. It seems to me that this is drawn up completely in favour of the company. I will not call it a consumers company. It is completely in favour of the company and against the interests of the consumer. I should like the Minister to look at this Order. I do not know what procedure we can follow or whether it is possible at a later stage to suggest amendments to it but, as it stands, I am completely against it.

I am very sorry that Senator Murphy interprets this Order in the manner he does. Usually, he is a very gentle and tolerant person but he talked about the profit making of the Cork Gas Company and became almost bitter as if making profits were immoral. I can tell the House that the Cork Gas Company is accepted in commercial circles as one of the best run companies in any part of this country. It has served the people of Cork well. It has given excellent employment over the years. It now finds itself in very keen competition with other firms in the matter of heating and cooking. It is all very well for Senator Murphy to say that using gas is the one way you can really cook well. Senator Murphy might secure consideration from the gas company if he is prepared to go round the country and say that in the convincing manner he says it here.

I will not be bought that way.

The Senator may not be bought but it sounded convincing. On the other hand, the Senator says there is no competition. My family has had connections with this company for many years, practically since its foundation. I am one of the people who do not think it is immoral to invest in private companies and that the making of profits by these private companies is immoral. I do not agree with that. The petty socialist attitude of Senator Murphy is to be deplored. If this company were a semi-Government company and one which borrowed the people's money, perhaps the Senator would like it better.

This is a company—I do not think it is generally known—which has now to change its complete policy in the manufacture of gas and I take it that this money is necessary for that purpose. I think it is quite wrong of Senator Murphy to assume that this additional capital is to be divided up amongst the people who have shares in the company. I think that is quite wrong. That is the impression the Senator gave here tonight.

Why are we asked to allow them to do that?

There is need for capital for a new policy in the manufacture of gas which is going to be very expensive. I think Senator Murphy is quite wrong in his interpretation and his presumption that all this is being done to defraud the working people. The competition that has been talked about will deal with all that in the price of gas vis-à-vis the prices charged by other firms engaged in the provision of heating and cooking facilities. At this very late hour of the night, I do not want, like Senator Murphy, to get heated on this subject, either by gas or electricity. I should like it to be recorded that it is accepted that this is one of the finest public utility companies in the country. After its long history of good service, it is strange that a Corkman should come here and try to insinuate that some terribly sinister plot is afoot in the company in Cork. I should like to raise at least my voice to contradict him.

I think Senator Murphy has done a great service, even at this late hour of the night.

We will pin a medal on him when we have time.

Nobody would appreciate from what little the Minister said the changes which Senator Murphy read out.

He read it from beginning to end.

Nobody would imagine it was the same document as the Minister asked this House to approve of. The Minister gave us a very cursory account of the reasons this Order was being made. The information which Senator Murphy gave comes as a revelation to me. I understood the plea the Minister put forward in his short statement was that the Cork Gas Company was in competition with other forms of fuel for cooking, lighting and so on. That might be so. I do not see how that affects the publication of the company's accounts.

They have not been published for years and years.

That is a bad reason. Because people have failed to obey the law, because they have failed to carry out a statutory function and should be released from it in the future is a poor reason for asking this House to sanction breaches of the law by the Cork Gas Company.

There were never any demands to see their accounts.

The Minister will tell us a whole lot of things in a sweeping way and in order to completely debar any further conversation or discussion, he will tell us we must take it personally from him. I will not be put off by the Minister's saying: "You must accept it personally from me," and, if you do not, he will take off his coat and say you are calling him a liar. I do not understand why the accounts should not be published in the press in the same way as a variety of other companies publish their accounts. If the company is as good as it appears to be and as Senator Mrs. Dowdall would have us believe, then I think the publication of accounts is an advertisement for their very high state of efficiency.

That is a quibble.

She comes from Cork and she says she has associations with this company stretching back through generations.

There is nothing wrong with that.

She is not the most impartial person nor could we expect her to be in these circumstances. I do not understand how it can be said that Senator Murphy made a socialist attack almost to the point of becoming bitter upon this company when what Senator Murphy is trying to do is not to have any changes but to preserve the position that was established in 1868 when "socialism" was hardly known as a word. I doubt if it was——

And when handlebar moustaches were the fashion.

That has nothing to do with the gas company.

The Senator should relate his remarks to the Order.

I am relating my remarks to whether or not what Senator Murphy is advocating is a socialist approach. What Senator Murphy is advocating is no change, or very little change, from the 1868 position.

He is advocating sheer socialism.

I do not know that socialism was even an inchoate form in 1868. It was probably then beginning but I am quite sure socialism in 1868 had not reached the dictionaries——

You can look it up and see. It was much earlier than that.

The Senator knows quite a lot about these things.

Senator O'Quigley is getting his information from Senator Murphy. He quotes him as giving information. It is only presumption about what is going to happen.

At this late hour of the night and in view of the variety of important matters in this Order, I would prefer that no further decision be taken on this matter tonight.

I am sorry; I will push it through.

If the Minister will not do that at this late hour of the night, when we are sitting one and a half hours past our usual time——

Delaying tactics.

If the Minister will not extend that co-operation, it will be unreasonable to expect co-operation the next time. As regards delaying tactics, I have not sat in the one office for 29 years, which is rather a bit of a delay——

I am proud of it. You will never see the day when you will be 29 years in the one county. The people there are good judges of Irish nationality, too, and always were.

The Senator's vote in the local elections would suggest that.

His vote was so low——

He is destined for higher things after the next general election.

An Leas-Chathaoirleach

The Senator, on the Order.

We got three out of five seats in my area as a result of my standing. It achieved that effect.

He got 150 votes——

It was more than that.

It was a lot more than he was worth.

One could carry the Senator's vote in a match box.

An Leas-Chathaoirleach

The Senator, on the Order. There is an escape of gas.

The gas Senator Brady would supply would be very poisonous, I am afraid.

It would not be nearly as poisonous as the gas Senator O'Quigley would supply.

In view of the importance of this Order and of the fact that the Minister has given us very little information about it, either in his speech or in advance, I think we ought not be asked to take a decision on it tonight.

It appears we are to be asked to take a decision on it tonight. The Minister says he will push it through. That is not a very nice term. Senator Murphy has taken a lot of time in the preparation of his contribution here. Senator Murphy is an esteemed member of the Labour Party—I understand he is leader of the Labour Party in this House. That means he would not take as conservative a view of it as perhaps other members would. I feel that anybody who has spent a lot of time preparing his contribution for such a debate and who has given his views is entitled to a reasoned analysis of his views by those who do not agree with him. He is also entitled——

Come to the Order. The Senator is moralising. It is too much to expect us to listen to the Senator moralising at 2 o'clock in the morning. This is too thick altogether.

Senator Murphy is quite entitled to expect that courtesy from the Minister. I shall sit down when I am ruled out of order.

An Leas-Chathaoirleach

The Senator must be allowed to make his speech.

On the Gas Order.

An Leas-Chathaoirleach

He is commenting on the views of other Senators.

Senator Murphy is entitled to get from the Minister a reasoned argument against his views. I do not think that to talk of pushing it through is a reasoned argument. I have listened to most of Senator Murphy's speech: I was out for about a moment. I listened to the Minister's statement before that and I read the debate in the Dáil. I think there is nothing wrong with most of what is being done. I honestly feel that when a company is doing well and has a hope of future profits, then binding regulations, as it were, should be loosened up and high capital expenditure should be allowed over a number of years. Therefore, I think the increase is necessary. At the same time, I also say that in the case of a public company such as this for which the shares were subscribed many years ago, it is necessary that, as a public utility, the price to the consumer, based on the service he gets, should also be looked to. That is the view Senator Murphy put forward.

I think that most of what has been done is correct. I do not agree that accounts should not be published. I have personally been fined in the district court, in a small way, for forgetting to register the accounts of a private company. Yet the position is that the Cork Consumers Gas Company as it now is—and which it will not be when it is renamed—has not published accounts at all over a certain number of years.

In the Press.

If this company is doing as well as it seems to be doing, it would be a very good thing to publish these accounts in the Press.

They should not be compelled to do so. People can see the accounts in the office.

I want to see the consumers getting the best service at the lowest price possible and I want to see the largest capital expenditure in the company. I think there is not much of a gap between Senator Murphy and the Minister. I feel that if the Minister would come towards Senator Murphy and reply to him in a reasoned way, this matter would go through without being pushed through.

The Senator is evidently trying to get the support of the Labour Party in the next election.

On a point of order, is it correct for the Minister to impute these things? I have no desire whatever to look——

An Leas-Chathaoirleach

I understand such charges should not be made.

That is all the speech was.


An Leas-Chathaoirleach

The Minister.

The astonishing thing is that Senator Donegan said that this had been discussed in the Dáil. It was not.

It was discussed.

In actual fact, Senator Mrs. Dowdall has already answered, quite successfully and completely, what Senator Murphy has said. There is complete and absolute competition in the gas world and there is no need to have the controls formerly applied to gas companies when there was no competition. Senator Murphy obviously wants to preserve the powers over these companies simply for the sake of preserving them, because they have long since ceased to have any meaning. There is absolute cut-throat competition between electricity, gas, paraffin oil, calor gas and all the other gases, and it is ridiculous to expect that we should retain outdated controls.

Other gas companies besides the Cork Gas Company are not required to publish their accounts in the press. They send them to the city manager and town clerk and they are available for public inspection. Senator Murphy tried to give the impression to the House and to the country that there was some sinister, dark motive in regard to this. It is as though I was engaged in a conspiracy to allow Cork Gas Company to make grossly excessive profits and to deceive the people of Cork. I thought he was a man with a more courteous and understanding mind. I am amazed at him and I suspect he has some extraordinary prejudice against Cork Gas Company.

No; I always found them most efficient.

In line with modern practice, the profits of the company have been reinvested in the undertaking instead of being distributed in the form of dividends, That is in no way objectionable. As I have already indicated, all the proposals for the company were published in the press and anybody was free to object. The only objections made were not in connection with anything Senator Murphy dealt with. In other words, his fundamental objections were not among those which formed the small number of objections when these proposals were published. The trade unions in Cork have had an opportunity of examining the proposals and to comment on them.

I should say that the gas company's product is subject to legitimate qualitative control and if it falls short in calorific value, it is obliged to make adjustments. In connection with the reading of the meters, if an arbitrary reading is given in relation to a particular period, should the consumer be away, it is adjusted in the course of the next period. Surely Senator Murphy did not imagine that the gas company would arbitrarily make a calculation as to what amount should be paid, based on the previous reading, and then not deduct in the future if there was an overcharge. Does the Senator think we are childish in this House? The Senator knew very well that the company did not intend to swindle the people.

Do not put words in my mouth.

I think I have answered all the points. This is an Order of the kind which has been proceeding in a general way in order to release gas companies from regulations that had no meaning in the modern world. A great many of them have difficulty competing with other forms of fuel. They are not universally prosperous. You require a very considerable genius for management to run a gas company in certain towns today.

What dividend are they paying?

I do not know what dividend they are paying but they cannot be making excessive profits if they are going to live.

The Minister is telling us.

Question put and declared carried, Senator Murphy dissenting.
The Seanad adjourned at 12 midnight until 3 p.m. on Wednesday, 5th July, 1961.