Seanad Éireann díospóireacht -
Wednesday, 13 Feb 1963

Vol. 56 No. 3

Nítrigin Éireann Teoranta Bill, 1962 (Certified Money Bill) — Committee and Final Stages.

Section 1 agreed to.

SECTION 2.

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

Professor Dooge

There are a few points on which I wish to seek clarification from the Minister. The section, as it stands, is permissive in that it allows the Minister for Finance to acquire shares in the company being set up under the Bill. I should like the Minister to tell us the degree of participation by the Minister for Finance which is envisaged under this. I think it is clear that initially it is to be 100 per cent. participation by the Minister for Finance but I should like to know if that is to remain as long as any Government money is outstanding.

Secondly, I should like to ask the Minister whether there have been any offers from private individuals or private industry who would wish to participate in this particular industry, and, if so, what has been the attitude towards them. If there have not been such offers what would be the attitude of the Minister to any such offers from private individuals or from private companies operating either inside or outside the fertiliser industry?

The third question I should like to ask is: what is the anticipated length of participation by the Minister for Finance in this particular company and if there is a complete repayment of capital and no guarantees outstanding, does the Minister for Finance intend to withdraw completely from the operation of Nítrigin Éireann Teoranta and leave it in the nature of a completely private company?

Minister for Industry and Commerce (Mr. J. Lynch)

The answer to the first question is that the Minister for Finance's participation will be complete participation subject to the allocation of smallholding shares to each member of the company. Interest was displayed in the project by outside firms, by private enterprise firms, but that interest did not amount to an offer for share participation in the company that could be considered. The enterprise having been set up by this industry, I cannot say for all time what the attitude would be if private enterprise made such an offer in the future. This is an industry which of its very nature, having been set up by the State, might well be continued in operation on the basis on which it has been set up. Again, I cannot give a guarantee for all time as to what changes might occur. What I have just said would represent my present thinking about the operation of the company. I do not know if there are any other questions raised by the Senator that I might have missed.

Professor Dooge

Do I understand the Minister correctly in saying his present opinion is that for a considerable number of years ahead this company will be operated in the form in which it was proposed to operate it in the beginning, namely, virtually 100 per cent of the shares being held by the Minister for Finance, except for the directors of the company? Is that anticipated as the course which will be followed?

Mr. J. Lynch

That is so. I might say that, as the Senator knows, this industry has been spoken about as a desirable one since the foundation of the State, but up to now there has been no practical effort on the part of anybody, much less on the part of private enterprise, to establish it.

Question put and agreed to.

Section 3 and 4 agreed to.

SECTION 5.

Professor Dooge

I move recommendation No. 1:

To add the following new subsection:

"() If any advance made under subsection (1) is at an interest rate less than that of the immediately preceding national loan or for a repayment period of more than ten years, the Minister for Finance shall lay before each House of the Oireachtas a statement of the terms of such advance as to repayment, interest and other matters determined under subsection (2)."

There is no need for me to recapitulate the arguments which I made on Second Stage to the effect that if Nítrigin Éireann Teoranta were allowed to repay money over a period longer than, say, six years, there would, in fact, be a subsidy of this particular company. If there is to be a subsidy of a company of this type from State funds, I think that the manner and the general terms of such a subsidy should be known. The Minister indicated in his reply on the Second Stage that this is something which he should not reveal to the Seanad while this Bill is passing through. However, I should like to join issue with the Minister on that particular point. This is not an attempt to seek any information concerning the operation of the company. It is not any attempt to seek information analogous to the information mentioned by the Minister, which was information in regard to percentages to wholesalers; nor is it analogous to information in regard to the actual economic production of nitrogenous fertilisers at Arklow. It is information in regard to the nature and the general extent of subsidisation by the State of this particular company.

In the course of the debate on the last day the Minister stated that this company, while not analogous to the ESB as it stood at present, was in some way analogous to the ESB when first founded; but it was perfectly clear, when the ESB was founded, just precisely the extent to which the Government were subsidising the ESB in the sense that it was perfectly clear what the terms of repayment were for the capital advanced in regard to the development of the Shannon power. In this particular case, too, I think this is information which the Dáil and the Seanad are entitled to before a Bill would be passed in which £6,000,000 would be made available to this particular company.

As I mentioned, I think private industry would think of a project of this type in terms of six years' repayment. I have not put six years in the recommendation. I have given the Minister and the company a measure of freedom in putting down the figure of ten years. If the Minister lends money to the company and the company undertakes to repay in less than ten years, no information whatsoever would have to be laid before the Houses of the Oireachtas if this recommendation were accepted. All the recommendation asks for is that if the Minister and the Minister for Finance wish to lend Nítrigin Éireann Teoranta capital moneys, either at an interest rate less than the going rate of interest or for a period of repayment greater than ten years, then this information should be made available and deposited on the Table of both Houses, not that the Houses would have any right to alter such a decision but the information should be given to them.

Mr. J. Lynch

There are two aspects of this recommendation. One is that the interest rate should not be lower than that of the immediately preceding National Loan. In effect, the Minister for Finance never lends money at less than that rate. It is not necessary, I suggest, to write the rate at which the money will be lent into this Bill. The fact is that in any advances by the Minister for Finance of moneys procured by way of National Loan for national or other purposes, these moneys have never been advanced at a lower rate. For example, Local Loans Fund moneys have never been advanced at a lower rate of interest than that which obtained when the National Loan was offered.

With regard to the suggestion that a repayment period of longer than six years would, in effect, amount to a subsidy, I do not know what is so sacrosanct about a six year period that the Senator suggests would mean a subsidy if it were included in the terms of repayment. However, this is a commercial company. As I said on Second Reading, it will have to compete with the products of nitrogenous fertiliser factories from any part of the world. I said that farmers and merchants will be quite free to import these fertilisers, notwithstanding that we have our own State company operating here.

While I acknowledge and admit that the Senator does not want disclosure of the terms of repayment, just for the sake of disclosure, nevertheless, to make such a disclosure would enable competitors of this company to calculate fairly finely what the cost of production of this fertiliser would be. I do not think any company operating in commercial circles would be obliged to disclose its costs to the extent that it might weaken its competitive position against others.

Secondly, with regard to the repayment period of six years, I cannot accept in any way that extending the period beyond six years would be tantamount to a subsidy. I suppose it would if the State invested £5,000,000 in equity or some other kind of risk that might or might not pay off and, if it did pay off, it would probably mean that the rate of interest repayable would be much higher than the rate of interest that the nitrogenous company would be expected to pay.

The State does not invest in these kinds of risks, though normally State capital moneys are amassed for national purposes and this, I suggest, is one of the most outstanding national purposes to which we could devote State money. I do not accept at all that if the repayment period exceeded six or ten years, to the extent that it would extend these periods it would amount to a subsidy. I just cannot see that. I must submit to the Seanad that it would not be fair of me to disclose the terms of repayment in respect of this company because it would disclose its trading position to potential competitors.

Professor Dooge

Let me reply to some of the points which the Minister made. He seems unwilling to meet this recommendation on the ground that it would reveal to competitors the trading position of the company. But surely the first time that Nítrigin Éireann Teoranta places nitrogenous fertiliser on the market it reveals its trading position? I am not asking for detailed costings—merely for one element. Surely this is not the revelation in any way of the economics of operation of Nítrigin Éireann Teoranta which might be valuable information for a competitor? I think, and I assume, that as soon as Nítrigin Éireann Teoranta enters the field its competitors will know. I think this consideration should be well outweighed by the consideration that not only the public as taxpayers, but the investing public, and also private investors of cognate industries, are entitled to know whether particularly lenient terms are being provided to Nítrigin Éireann Teoranta in regard to the money which the State is lending to it.

The second and cogent point that the Minister brought forward was that State money is borrowed in a national loan for national purposes; that it is lent under certain conditions for those purposes and that this is one of those purposes. There is no doubt that State money is borrowed in a national loan for many purposes, but if the Minister for Finance went for his next national loan and listed as the purposes for which he required the money projects of the type of Nítrigin Éireann Teoranta and nothing else, I do not think that that national loan would be one which would gain the confidence of the people of this country.

The position is that this is risk capital. While it is true that for certain purposes the Government are entitled to enter industries which private enterprise does not enter and to lend public moneys for risk purposes, this should be an exceptional thing. If the Government decided to invest all of their national loan in risk capital, I am afraid, indeed, the borrowing power of the State would be severely damaged and so I think that since this would be an exceptional pur-pose—risk capital—for the expenditure of a national loan it does require exceptional consideration and I do think it would be reasonable, just as in the case of any private industry that sets up here in this country under the various forms of encouragement and subsidisation which are now available for private industry, those are there for everybody to read. We will be discussing some of them later on this evening.

Everybody can read and can find out precisely what are the incentives towards the setting up of industry. But here we have a case in which nothing whatsoever is being revealed at all in what is the essential point. As to whether the lending of money for longer than ten years is or is not a subsidy, the Minister and I do not seem to agree. I would be content to leave that argument to the economists. I am absolutely confident that they will back the interpretation that if you lend money for risk capital at a given interest rate for a longer period than it would get on the open market, then this is, in fact, a subsidy. The credit of the State is being used to borrow the money and the money is then being used for risk capital which the credit of the State is being used to cover.

Mr. J. Lynch

I do not think there is any dispute between Senator Dooge and myself about the obvious advantages which the availability of nitrogenous fertiliser to our farmers would bring to our economy generally. I should like to bring the House back to what I said in the course of my Second Reading reply. I mentioned that the first committee charged with the investigation of this project had as its terms of reference the utilisa-tion of milled peat for gasification purposes. When that committee brought in its report, or rather before it brought in its report, there was a sudden drop in the price of nitrogenous fertilisers available to the farmers in this country. The price was £4 5s. per ton less than these fertilisers were available for in their countries of home production. It is obvious that this is a very keenly competitive business.

Competitors abroad would not hesitate to reduce prices deliberately for a time in order to defeat a project like this. I do not have to spell out to the Seanad why, just before this Committee reported in 1960, there was a sudden drop. It was decided then, having regard to that drop in prices, not to proceed with the project at the time. But, as I told the Seanad, the committee was reconstituted and was asked to keep the matter under review without any regard to any particular raw material. It was only after very lengthy investigation it came in with the report that nitrogenous fertilisers could be produced at Arklow, based on gasification from fuel oil, and sul-phuric acid from imported sulphur, that would sell at prices comparable with existing import prices, which are still substantially below prices in other countries. To indicate what the term of years should be in which repayment of the capital advance would be made would disclose immediately the provisions for depreciation which would have to be made.

I do not think it can be said that the Seanad has no information. I am coming to the Seanad for £6 million. I have sanction for the allocation by the Minister for Finance of £6 million by way of repayable interest-bearing advances, £5 million of which is roughly the cost of the erection of the factory, the remaining £1 million being for working capital and commissioning fees and other contingencies. Therefore, taking £5 million over a stated period would enable the competitors of this industry to calculate what the provision for depreciation is and having regard to the known process under which this factory would operate, it would be very easy for competitors to know exactly what the cost of production ex-factory would be very closely. How do we know that these big foreign combines with that information available to them fairly closely would not act to the detriment of our native industry? I am afraid I have gone as far as I can. This provision for depreciation in any company is a matter that has to be kept confidential. With regard to the suggestion that there is an analogy between what has been done here and what we shall be discussing later on under the Industrial Grants (Amendment) Bill and Undeveloped Areas (Amendment) Bill, I suggest what we will be doing in the main in these Bills is providing for outright grants without interest and without any repayment or obligation.

It is a very easy matter to say that X company set up in Carrickmacross in 1961 received by way of grant £20,000, £50,000 or £100,000. It is there because it is recorded for all time. But nobody else knows in relation to that company what other capital was necessary. Certainly, its competitors will not know what capital was necessary or what the provision for depreciation is from time to time. Therefore, the analogy between this Bill and the Industrial Grants Bill or the Undeveloped Areas Bill is not good and on this question I am afraid I must continue to resist the Senator's recommendation.

Professor Dooge

There is one point which I made which I should like to press again with the Minister. The Minister rightly says that it would be an awkward thing if this information were laid on the Table of both Houses of the Oireachtas and foreign competitors of the company were able to guess rather accurately a price which would undercut the price of Nítrigin Éireann Teoranta and drop their prices accordingly. But surely as soon as Nítrigin Éireann Teoranta fixes its selling price exactly the same position will arise? They will know it exactly then. The Minister says that once they know the depreciation provision they can guess at the price and take appropriate action, but surely once they know the selling price from Arklow, then they will know exactly what the price of the product at Arklow is and so can take similar action. The Minister is faced with dumping either on the first occasion when, I submit, the information should be laid on the Table of both Houses of the Oireachtas or later when the price at Arklow is fixed. If the Minister has the power and the will to prevent dumping in the second case, surely he can do it in the first case? I think the position is that if the Minister is able to prevent undercutting of the final Arklow price and provide against dumping by foreign competitors, then surely the fact that competitors could at an earlier stage, say 12 months earlier, make a reasonable guess at the Arklow price would not seriously impair the viability of the Arklow project?

Professor Quinlan

I have one question on this. Are the repayments, including interest and that, not paid into the Exchequer? Will they not be available in the published returns for the Exchequer for that year? So there is no secret about it then. It would be only a simple calculation as to the amount advanced when we have in the records the amount the State received back in any one year.

Mr. J. Lynch

But from year to year competitors will not know what the final year of repayment will be.

Professor Quinlan

But they are only one year behind.

Mr. J. Lynch

In reply to that and to Senator Dooge's point, it is the cost of production, not the selling price, which we want to keep confidential. The selling price must be known obviously, but the resilience of the company will not be known to outside competitors in case they might be tempted to indulge in dumping. Let us face it: fertilisers are being dumped here at the present but even at the present time it is not intended in the ordinary way to deny these favourable terms to our farmers.

I am afraid I cannot answer Senator Quinlan more fully, but even if the Exchequer returns disclose payments by the nitrogen company they will disclose them from year to year but in no year except in the final year will they indicate that the final payment has been made and at that stage I hope and I am confident that Nítrigin Éireann Teoranta will be so viable as to be able to withstand any type of competition.

Professor Quinlan

Surely the first payments will disclose at what rate the Minister for Finance is asking for repayments? They will say in such a year so much was received from Nítrigin Éireann Teoranta.

Mr. J. Lynch

They will not be regular rates. They will be more or less according to the profits made in a particular year.

Professor Quinlan

Does that not disclose more? If the Minister for Finance drops payments, competing firms are going to say things are pretty tough for Nítrigin Éireann Teoranta when the Minister for Finance had to come to the rescue by cutting out payments.

Mr. Sheldon

The nature of the Exchequer return would not disclose the difference between repayment of capital and interest. If £100,000 is shown in the Exchequer return who is to know what proportion of that is capital and what proportion interest? You could not tell.

Apart from that there is a psychological point in the business of possible competitors dumping and how they could be dealt with. If you disclose in advance anything that will help competitors abroad to undercut, you are put in that position before your price has appeared. The Minister would have to deal with a dumping situation and there would be an outcry from farmers that they had been harshly treated, whereas once the national product came on the market everyone would appreciate what the national position was if subsequently dumping had to be met. Everything is in favour of keeping every possible piece of information back from foreign competitors.

If we are willing to back this project I cannot see that it is of any real material interest to the Dáil or Seanad to know what precisely is happening regarding capital repayment. I was interested in Senator Dooge's remarks and I think he was being somewhat illogical when he suggested that this was risk capital and if the Minister for Finance were to go to the country seeking a national loan specifying this and similar projects as his reason for wanting the money it would not be subscribed, for surely when a national loan is offered subscribers are offered the credit of the State as backing, not the credit of any particular item for which the money is raised? Take housing, which is heavily subsidised. Investors might look a very long time at their money if they were given as backing the houses which would be built and the rents that would come from them. That is quite illogical. It it not a material argument at all. What the State decides to do with the money is not of immediate importance as far as investors in a State loan are concerned because they are offered the credit of the State, not the credit of the items concerned.

Professor Dooge

I used those words: the credit of the State to cover risk capital.

Mr. Sheldon

Then I can see no point in the argument.

Recommendation, by leave, withdrawn.

Question proposed: "That Section 5 stand part of the Bill."

Professor Quinlan

On the advances to the company, its capitalisation: first of all the point was raised by Senator Sheldon about not being able to calculate. That is simple because the Minister has already stated that the Minister for Finance would not lend money at a rate less than the prevailing rate in that year so it is a case of back to the national school to calculate the amount of principal and interest involved in repayments as shown in the Exchequer return. The kernel of the matter is here in subsection (2) where the Minister for Finance controls the rate of repayment, obsolescence, interest and so on. Therefore, the Minister for Finance is really empowered to vary the cost of production of the firm — within relatively narrow limits but still the Minister has admitted that he can vary this. I think this is a good provision because the setting up of this industry is very welcome. We must ensure that it does what we expect of it. I cannot see exactly why such emphasis should be placed on the fact that this was going to operate without any subsidy whatever because we have two Bills coming before us this afternoon which give very large subsidies to industry.

I do not see anything immoral about Nítrigin Éireann Teoranta getting a subsidy. The Minister and the Government have assured us that this company will not be a burden on agriculture and that agriculture will get its fertilisers at the prevailing rate. There are going to be difficulties in deciding that rate. I take it that the offer of the Government is for proper rates, or international rates, and if before this company started, or was just about to open, prices which are acknowledged as being dumping prices at present were dropped further, it would be right for the Minister to invoke the anti-dumping laws, because where prices are deliberately marked as dumping prices surely we cannot allow them to take from a coming Irish industry? I hope this section will be used at least to cushion a certain amount of that.

It is unrealistic in the commercial sense to expect a repayment period of longer than about six years at present. In the national interest the Minister may, by way of what is a subsidy, make it a longer period but this process may change drastically within six years, and something more revolutionary may be discovered and may make this almost obsolete—just as the coming of the jet airliners made propeller airliners obsolete—and you might say that if we had ten years ago built a nitrogen factory, today it would be obsolete and we might, if we wished to stand by the promises given by the Government to provide fertilisers at world prices, be forced to change over to the new process, it being so much more economical than the other. Senator Dooge is quite right when he insists on the repayment period of six years. The Minister's answer is quite satisfactory but he will have to accept the fact that there is a hidden element of subsidy. I think we are shortly to become members of GATT and in such event, when they decide what is fair trading and what is not, surely in their calculations obsolescence is going to loom very large. I doubt that giving a longer period of repayment would get by GATT as far as pricing considerations are concerned. I think that it would be even better in getting by GATT if we had given a subsidy such as there is in the following Bills. However, we have taken this course and I hope subsection (2) will be used in the national sense by the Minister for Finance and that the Minister will not hesitate to invoke the anti-dumping laws if they are necessary. The anti-dumping laws should not apply to any price which would take the present level as the level to which the Minister has given a commitment to the farming community.

Mr. J. Lynch

We have applied for membership of GATT but our application was suspended pending the outcome of our application for membership in the European Economic Community. The question of reviving our application for membership of GATT is one of those questions that will have to be considered in the light of recent happenings at Brussels. The purpose, mainly, of GATT is that members agree to extend to all other members of GATT the benefits of tariff reductions or remission of restrictions that they will negotiate bilaterally with other nations. They extend these benefits to all other member nations. There are other separate agreements possible but the main purpose is to extend tariff reductions to all members.

Professor Quinlan

Are they not concerned with dumping also?

Mr. J. Lynch

I am not so sure about that; that is provided for in the Treaty of Rome but I doubt if it is in GATT.

Professor Dooge

I have several questions I should like to put to the Minister. It has been said not by the Minister, but by others, that of the £6 million that will be advanced, £5 million is ordinary capital and £1,000,000 is floating capital, but further provisions later in the Bill have guaranteed payments. I should like to ask the Minister if in his opinion any part of the £6 million is floating capital. In regard to making advances under this particular section I do not think there is any disagreement at all. It is proper that advances should be made under this section for the purpose of producing nitrogenous fertilisers at Arklow, but the position is that the powers of Nítrigin Éireann Teoranta, under its memorandum and articles of association, are very much wider than the manufacture of nitrogenous fertilisers. I do not want to discuss this at any great length but there is one particular provision specifically mentioned in the articles of association and that is in paragraph (3) (c) where it says that one of the objects which the company is to promote is the production of complete concentrated fertilisers incorporating the products of the company's factory. It goes on to deal with that in greater detail.

The position is that there is a CIO report which was published towards the end of last week on the fertiliser industry generally and on page 65 it says that a particular fertiliser industry proposes to proceed immediately with the manufacture of complete concentrated fertilisers. I should like some elucidation from the Minister as to the position here. As I say, we are all agreed that advances in relation to nitrogenous fertilisers are perfectly reasonable but in the event of any advances being made for the production of complete concentrated fertilisers which would be in competition with any similar product produced by another existing private industry, what is going to be the position? This is something on which we would all like information.

That Nítrigin Éireann Teoranta should come into a field which private enterprise is unwilling to enter, there can be no dispute about, but that Nítrigin Éireann should be advanced money under Section 5 of the Bill, money for which the period of repayment will not be made known to the Dáil, the Seanad or to the competitors in private enterprise, is a separate question. I should like to know if there will be any restriction on the purposes for which the advances will be made. If they are to be used for any of the purposes of the company other than its primary purpose of nitrogenous fertilisers, will that fact be reported to the Dáil and Seanad?

Mr. J. Lynch

In regard to the first question the Senator asked as to whether the £6 million is all fixed capital or if there were any floating capital, it is all fixed capital. Secondly, in regard to the CIO report on fertilisers which he quoted, that report certainly mentions the interest now being displayed by fertiliser manufacturers in what they call ccf's, complete concentrated fertilisers, but the report also recommends in another part the establishment of an adaptation council in the industry to see to what extent ccf's would be required in the country to ensure they would be made available at the best possible rates, and they say that the production of c.c.f's should be explored by this council. The council has not yet been established.

The report, as the Senator observed, was made available only in the past few days but I think it will be obvious that it is in the interests of the industry as a whole, as well as in the interests of the consuming farmers, if such a council were established, to ensure rationalisation, so far as rationalisation can be achieved, in the manufacture and distribution of fertilisers so that the greatest possible economies can be effected. At the moment it is not contemplated that the industry at Arklow would proceed beyond its main purpose of producing ammonia for the manufacture of sulphate of ammonia and ammonium nitrate. I am afraid I cannot look further into the future than that. However, I should imagine if private enterprise failed to produce a commodity like ccf's that would be not only useful but essential to our farming community, then I do not think there will be any objection to the nitrogen company going into that type of production; but it is reasonably certain that private enterprise will be able to deal with the manufacture of ccf's. I hope that if they do, they will have regard to the recommendation of the CIO and set up a council to ensure that such manufacture will be in the best interests of the farmers and that it will be as economical as possible.

Professor Dooge

If such a council is formed as recommended in the CIO report, it will be the Minister's wish that Nítrigin Éireann Teoranta should co-operate fully with it and be a member of it?

Mr. J. Lynch

Yes, and they are very anxious to do it.

Professor Dooge

I am happy on that, but I should be anxious that there would be competition between Nítrigin Éireann Teoranta and some of our existing industries in regard to ccf's. The Minister does not envisage this?

Mr. J. Lynch

I envisage competition but the Senator will remember that one of the recommendations of the CIO was the regionalisation of the country to maintain competition to ensure greater economies in the industry as a whole.

Professor Dooge

Does the Minister consider that in arriving at such an arrangement Nítrigin Éireann Teoranta would be willing to discuss within the confines of the adaptation council the figures which the Minister is not willing to give to us, for example, in case they would be available to foreign competitors?

Mr. J. Lynch

I am afraid I cannot say that. It is hardly likely.

Professor Dooge

The Minister, I take it, would be disturbed if Nítrigin Éireann Teoranta, because of its special position, were to gain an advantage over the existing private industry?

Mr. J. Lynch

I would certainly, and I do not think it would be possible for it to do so, as long as the Minister for Finance holds the shares.

Professor Dooge

The Minister, I would be willing to answer questions in the Dáil if this came to his notice?

Mr. J. Lynch

I cannot answer questions in futuro.

Question put and agreed to.

NEW SECTION.

Professor Dooge

I move recommendation No. 2:

Before Section 6 to insert a new section as follows:

"The directors of the Company shall be appointed by the Government and shall include—

(a) at least one person whose income is mainly derived from agriculture;

(b) at least one person with formal training in technology and experience of the chemical industry."

It is possible to provide for the appointment of the directors of the company in the body of the Bill, in the Schedules to the Bill or in the articles of association. At present it is provided in the articles of association of the company set up under the Bill and indeed the Minister nominates the directors of the company. I hesitate to say whether this recommendation should be a recommendation amending the body of the Bill or amending the Schedule, but I think it is in the correct place here, particularly in view of what the Minister said in reply to some questions which I asked him on Section 2. When dealing with Section 2, the Minister said he envisaged for a great many years that this company would be a company in which the Minister for Finance would hold 100 per cent. interest. Therefore this company will be a company directly operating through directors who are nominees of either the Minister as provided in the Bill or of the Government, if this recommendation is accepted.

This recommendation might perhaps not be so readily acceptable if the company were eventually to be returned completely to the operation of private enterprise. However, if that were to happen—and the Minister has already said he does not envisage it would happen—there is a great deal which would have to be done in order to alter the operation of the company. In fact, it would need an amending Bill because if this company were to go back and become a private company, it would be in the position of a company with fixed capital of at least £6 million and the share capital would be £100. If these shares were to become ordinary shares and available on the stock market, the value of a £1 share of the company would be something of the order of £100,000. I think it is clear from the way in which the company has been set up with its share capital of £100 that this is a Government company set up for a social purpose. Accordingly, it is proper that we should make statutory provision in regard to the appointment of directors.

I do not intend any disrespect to the Minister in his person or in his office when I move the recommendation that the appointment should be an appointment by the Government. This is an industry which will impinge on many aspects of our public life. It is an industry which will provide a very essential raw material for agriculture. It is an industry which will set up a whole new field of manufacturing industry which we all expressed our hope on the last day will stimulate further advances in this sector. I think indeed it has this number of facets and accordingly it is well that the appointment be made by the Government on the recommendation of the Minister in much the same way as appointments are made to the Turf Development Board, already spoken of in the explanatory memorandum as being a project of the same nature with the same provision for repayment.

The second point made in the recommendation is that provision be made in the Bill for proper representation of the particular interest of agriculture, and secondly that there should be representation of the particular expertise of technology which is the field of operation of this industry. The Minister has in his original appointment of directors already indicated that agriculture should be properly represented among the directors of the company. I think that he or the Government, whoever is to make the appointments, should also ensure that at least one person among the directors should be a person with formal training in technology and experienced in the chemical industry. As I indicated on the last day, this is a business in which persons with such training and experience are given a very large share in the highest administrative control of the companies concerned. The Minister has said repeatedly that this is a highly competitive business, and what the competitors of Nítrigin Teoranta have done to improve their own competitive position should also be followed by us. It is for those reasons that I move Recommendation No. 2.

Mr. J. Lynch

The articles of association of this company provide that the Minister for Industry and Commerce shall make an appointment to the Board after consultation with the Minister for Finance. The Senator has suggested that this might be put on all fours with the Turf Development Bill when he suggested that the directors of Bord na Móna are appointed by the Government. That is not so. In all these State boards the appointments are made by the Minister directly responsible for the activities of the particular organisations concerned. Therefore, I do not see any reason why there should be a departure from the established precedent in this case. I can assure the House, and I have given similar assurances in respect of other boards for which I have responsibility, that those appointed will be persons in whom I can have complete confidence, and the House can also, as being people able to do adequately the business in hand. It has always been my practice to ensure that any appointments I make to such boards will be of people who are well qualified having regard to the type of operation undertaken.

I am sorry. I have just been told that Bord na Móna are, in fact, appointed by the Government.

Professor Dooge

And the ESB also, I think.

Mr. J. Lynch

I am not so sure about that. In any event, the practice is that when appointments of this nature are made by Ministers, or I should say when vacancies occur and prior to appointments being made by Ministers, the Minister usually consults the Government informally about appointments to be made. After all, it is a question of collective responsibility anyway, and the action of one Minister is the action of the Government in that regard. As far as appointments of people representing different interests are concerned, I have always set my face against that type of appointments. I always say that when a board or a committee or a body like this is being set up to do a specific job, it is not a convention that is being set up; it is a working body, and, therefore, I believe the Minister or the Government, as the case may be, must be free to choose the type of persons who they think will best serve the interests of the body concerned. I must, therefore, regretfully inform the Senator that I cannot accept the recommendation.

Professor Hayes

Are there not other examples where the type of person is specified in the Bills? I thought there were. I have not looked it up, but I think that there are examples where the class of person to become a director of these companies is specified.

Mr. J. Lynch

An Foras Talúntais, yes, but not otherwise that I know of.

Professor Hayes

In this particular instance the Minister has not said whether the type of person whom Senator Dooge puts into his recommendation is the type of person he has in mind. Will he consider, for example, that he ought to have a person trained in technology and the chemical industry in the board, or will it be sufficient to let it be a lay board of management experts? I think the modern tendency is to have technical experts on such a board.

Mr. J. Lynch

I am not so sure that I favour it in this case. However, I have not closed my mind to it.

Professor Dooge

On a point of clarification, might I say that I in no way wish that the members of the board should consist exclusively of representatives. I agree with the Minister particularly that a board of directors of this type should be a board of members who are absolutely free agents. All I am concerned with is that persons with particular qualifications should be on the board for the sake of the board and the company, and not so that there would be in any sense participation or representation of outside interests.

Recommendation, by leave, withdrawn.

SECTION 6.

Question proposed: "That Section 6 stand part of the Bill."

Professor Quinlan

I should like to urge on the Minister again very strongly in selecting this board to have a look at outside boards. In other words, he should take the boards of ICI, Fisons, or any of these, and he will find that in those boards there is a far higher percentage of technically trained people than we have been appointing to boards here. I am not saying that the Minister's appointments are not good, but the system of appointment we have got by which the Minister makes an appointment advised by his Department is essentially somewhat titled against appointing technical people, because the main advisers in the Department are themselves non-technical and all seem to subscribe to the myth that an administrator is best if he does not know anything about the technical part of the process concerned. We are alone in western Europe in clinging to this outmoded idea. Western Europe has found that technically trained people are giving highest service in management, and it is recognised that they are responsible for the great success of industry in places like Holland and Denmark where all members of boards have technical qualifications. Here it was only at our second last sitting that we had a Bill giving greatly increased responsibilities and powers to the sugar company, and on that occasion eloquent tributes were paid to the management. The lesson to be learned from that, which I hope the Minister will apply in the present case, is the part that the technically trained people have played in the development of that magnificent concern. So I hope that we will see a departure from the past in this case and see that the Government, through the Minister, have recognised at last that we have to keep in step with western Europe, and in the management of technical matters have to ensure that the bulk of the management have got good qualifications or training in the process concerned so that they may guide it to the fullness of success.

An Cathaoirleach

The Senator has gone very very wide of the section.

Professor Quinlan

This is on the section which deals with the appointment of the board.

An Cathaoirleach

Yes, but the Senator has gone very wide of that.

Mr. J. Lynch

The Senator in using Comhlucht Siúicre Éireann as an example upsets the whole purpose of his argument, because there are no technical men on the board of that company. Nevertheless, that fact will not preclude me from having full regard to the desirability of having such a person on the board of this company if I find it reasonable.

Professor Quinlan

All the management are technical people.

Mr. J. Lynch

You were talking about the board.

Question put and agreed to.

NEW SECTION.

Professor Dooge

I move recommendation No. 3:

Before section 7 to insert a new section as follows:

"Any revision of the memorandum and articles of association of the Company made in compliance with section 6 of this Act or otherwise shall be laid before each House of the Oireachtas."

The Minister was good enough to say in answer to a Dáil query that he would table the memorandum and articles of association of the company or rather make them available in the Library of the House. I would ask the Minister if he would not be willing, if at any time in future the articles of association or memorandum are amended, to lay them before each House of the Oireachtas. No power could be exercised regarding them by either House but due notice would be given to each House that changes had been made in the memorandum or articles of association.

At an earlier point I mentioned the fact that wide powers are given to Nítrigin Éireann Teoranta as to all such companies under the memorandum. They can enter into many activities. If their articles of association, or even more so their memorandum, were amended they could go even beyond this very wide scope. There would, indeed, be power for the company to enter into other sectors of the fertiliser industry, to enter, for example, into the sphere of phosphatic fertilisers which are already handled by private industry here. I do not think it is very likely that this would happen but, nevertheless, it is very desirable, if substantial changes were made which might have repercussions of the type I have mentioned or of some other type, that due notice be given to members of the Dáil and Seanad that some particular change had been made.

It is all the more important in that, so far as I can gather from the new Companies Bill which has been circulated and which is under discussion at the moment in Committee in the Dáil, the amendment of the memoranda of companies will be a less onerous business under the new Bill than it has previously been under the Companies Act and I would ask the Minister if he would as a matter of courtesy to the Houses of the Oireachtas meet this recommendation.

Mr. J. Lynch

If I say that I do not propose to meet it I do not mean to indicate that I am showing any discourtesy. First of all, if Senators read the first paragraph of the Schedule to the Bill they will see that any changes in the articles of association of the company or any alteration of the memorandum shall not be valid or effective unless they are made with the previous approval of the Minister given after consultation with the Minster for Finance. It is one safeguard that the company will not embark upon activities beyond the scope for which we are providing without at least Ministerial knowledge. As far as the obligation to publish is concerned, the strongest possible obligation is imposed on the company by Article 22 which obliges it, like any other public company, to register with the registrar of companies any alteration or amendment of the articles of association. That is pretty adequate provision to cover any alterations such as this. There is no precedent at all—I am not regarding precedent as a sacred cow— in any other State company for an alteration in the articles to be notified in any way to either House of the Oireachtas. There is ample provision for bringing them to the notice of the public in the usual way, that is by notification to the registrar of companies of any alteration that would take place and that provision is certainly sufficient safeguard that this company will not embark on any activities for which we have not provided.

Professor Dooge

Very little is involved in this and the Minister has made it seem very small indeed. The Minister has said that he is not prepared to place in the Library of Leinster House something which is freely available elsewhere but is not very convenient for an ordinary member of the Seanad, particularly an ordinary member of the Seanad who is not resident in the city of Dublin, to examine or consult. I would press the Minister to do what I think can be described as an act of courtesy and make available within the precincts of this building information which is available elsewhere.

Mr. J. Lynch

I shall do that as an act of courtesy. I undertake to the Seanad that I shall do so but I do not want to write it into the Bill. Such a thing is without precedent but you may take my word—I hope you will take it—that I shall make available in the Library any alteration in the articles of association.

Professor Dooge

On that undertaking I withdraw the recommendation and I thank the Minister.

Recommendation, by leave, withdrawn.

Sections 7 to 11, inclusive, agreed to.

SCHEDULE.

Question proposed: "That the Schedule be the Schedule to the Bill."

Professor Quinlan

Paragraph 4 of the Schedule deals with furnishing accounts to the Minister. I should like to appeal to the Minister to try in this case to reverse the trend of the glossy accounts we have been getting from semi-State bodies. They are very expensively produced with all sorts of photographs when what is required from State companies is a factual account setting out the relevant statistics. This can be done as it was done four or five years ago in a simple inexpensive manner. In fact, the accounts of, say, CIE four or five years ago were a production that cost probably ten per cent. of what they cost now and I would suggest to the Minister that there was more factual information in the old accounts than in the new glossy-backed accounts. It is a complete waste of public funds, company funds, national assets, to spend so much on producing accounts with these photographs. They may be of interest to collectors of photographs but those interested in vital statistics need only a few pages in which to get it.

Professor O'Brien

I should like to draw attention to paragraph 5 of the Schedule. It is a matter I have raised in the Seanad on previous occasions. It sets out:

Where a director of the Company is nominated either as a candidate for election to either House of the Oireachtas or as a member of Seanad Éireann, he shall thereupon cease to be a director of the Company.

It is the rule for new State companies to say that a member of the Dáil or Seanad shall be ineligible to be a member of the board. I have protested against this on many occasions in the Seanad because it is very unfair that members of both Houses of the Oireachtas should not be allowed to take a normal part in the direction of State companies. This excludes from the boards of these companies a number of people who might have special qualifications to act on them and help in their direction. I should like the Minister to inform the House why this particular section was inserted in the Schedule—except that it has become almost a common form now, when any public institution is being set up, to exclude members of the Oireachtas from taking part in the direction of these institutions. I think it is a retrograde step. The more connection there is between public and business life the better for both. There are many members of the Oireachtas who could give valuable service on the board of this company, or on the boards of other companies, and I for one protest against this exclusion, unless there is some reason given for it which certainly has not yet been given.

Mr. J. Lynch

I can assure Senator Quinlan that my photograph will not appear on the accounts of this company. I will suggest to the company that they will have regard to his remarks. I should not like to condemn outright the practice which is coming to the fore in the presentation of annual accounts. No doubt the Senator has seen the accounts of non-State companies. They are very well presented and presentation is a part of modern life. Factual information may be given in less attractive ways but certainly given in the form they are, with graphs and colours, they convey a lot to non-professional people like myself. I can read them at a glance and they can give me a picture of what the situation is. However, I will ask the company to have regard to his remarks but I would not like to direct them along particular lines.

With regard to the objection about the exclusion of members of the Oireachtas from membership of the company, this is a practice which, quite rightly, has grown up recently. The Minister who introduces a Bill is usually responsible for the affairs of the company in so far as he may be taken to account by the Oireachtas. It would not be a wise thing if a member of the Oireachtas was also a member of one of those boards. He would be a member of the House and in that capacity he could, perhaps, criticise his board in public here and, perhaps unwittingly, disclose matters that should not be disclosed. There would be a certain conflict of interest as a member of a House and a member of one of these boards, because both Houses, in so far as they are entitled to receive, and I take it, take certain action, on the reports of these companies would then be in a position to criticise the companies and if necessary influence members. I think there is a certain conflict of interest which should be avoided if possible.

Professor Quinlan

I thank the Minister for his reply regarding the matter of the accounts. I should like to support Senator O'Brien in connection with membership of the Oireachtas. I raised this issue on every Bill that has come before us in which this has been incorporated. I think it is a very retrograde step. I wonder if the Minister could explain the anomaly which exists here, and that is when a director of a company is nominated as a candidate for the Oireachtas he has to resign as a director, whereas an employee can go for election and he does not even have to seek secondment from the firm until he is elected. Why make fish of one and flesh of the other? Of course, I should like to see the provision removed altogether, but at least the director should be entitled to the same privileges as the members of the staff. The directors have to sever their connection with the company but surely it is time enough to do that when they have been elected to either House? Of course, the idea of anybody severing his connection with the company to take up full-time membership of either House is so absurd in view of the rates of allowances that prevail, especially in Dáil Éireann, as to make the section non-operative.

I think that Part B, which precludes the company from giving any salary or wages to the person concerned is wrong. In Holland where such interchanges are quite common, employees of State companies and others, have the difference in salary made up by the company in order to open wide the way for the best possible representatives to get into the Houses of Parliament and to ensure that nobody is kept out because he has to suffer a severe drop in salary by becoming a member. I know the Minister can do nothing about it in this Bill but I should like him to try to see that this anomaly is removed in future and that everything is done to ensure that the way will be wide open for the best brains and the most experienced people to become members of Dáil Éireann and Seanad Éireann without any financial sacrifice.

Professor O'Brien

I should like to emphasise the point raised by Senator Quinlan regarding paragraph (5). It is ridiculous to say that a director of the company is not even allowed to be nominated as a candidate to either the Seanad or the Dáil without forfeiting his directorship. I do not agree with the argument, although I can see it, that if he becomes a member of either House there might be a conflict of interest, as the Minister said. But to prohibit a director of a State company from standing as a candidate for the Dáil or the Seanad seems to be wrong. It excludes certain individuals who might have peculiar qualifications to add to the Dáil or Seanad if elected. I would ask the Minister seriously to consider slightly redrafting that paragraph simply by changing "nominated" to "elected".

Mr. J. Lynch

I do not accept at all that there is an anomaly here as between directors and employees. A director of a company like this is usually a part-time director and it will not affect his livelihood to any material degree if, by reason of his choice of becoming a candidate for election to either House of the Oireachtas, he has to give up his directorship. It is a different matter for an employee because it is usually his only means of income and, therefore, it is only fair that he should not have to give up his position when he goes for election, but if he is elected he will have to give it up for the duration of his stay in either House.

In regard to the suggestion that a director should be put in the same position, I should like to remind the House that we are all in politics and whether or not we like the term we are all politicians and when we go for election we have to do things which are not very nice. We have to knock on doors, talk to people, perhaps get abuse, and perhaps make an odd promise. Many of these boards have fairly good employment-giving potentialities and members of the board have a capacity to influence the giving of jobs. I think I need go no further. That is one of the reasons why a director on being nominated is required to resign his membership.

Professor Quinlan

The company is surely identified in the public image by its general manager, its highest paid official. He is the person we think of when we think of the ESB or the Sugar Company. If the general manager has to go knocking on doors he may do so, but the director is not allowed to do so. I cannot see the reason for the anomaly there. Furthermore, there are certain State boards which were set up by legislation within the past three or four years in which members of the board do not have to resign until they are elected. Bord Bainne is one and perhaps Mianraí Teoranta is another. There are two examples where directors can seek election and if they are successful, then they have to retire but not otherwise. I do not think there is any case for what is in this section.

Professor Hayes

The Minister has a point about the directors but the number of State companies and State boards is increasing steadily and it would appear the trend will continue. Preventing the employees of these boards from becoming members of the Oireachtas means you are restricting the number of people who are eligible for membership. We had this before in regard to other companies and boards. It is very undesirable that the number of people who are not eligible for membership of the Oireachtas unless they give up their livelihood should be increased. It would be much better, whether it is put in legislation or not, if they were eligible without restriction or if it were understood that if they succeeded in becoming members they would be allowed leave without pay or, better still, leave with some pay. It is desirable that the Oireachtas should have the widest possible base.

For that reason I would be more concerned about the prohibition upon the employees rather than that upon the directors as regards becoming members of the Oireachtas. I know there are certain practical difficulties in regard to employees but one compromise that could be arrived at would be that anyone who succeeded in becoming a member of the Oireachtas could after some reasonable period resume his employment. I say that in general terms without reference to what kind of people they would be or to what Party they belong.

Mr. J. Lynch

What the Senator is advocating is in the Bill.

Professor Hayes

Is it actually stated in the Bill they can get back?

Mr. J. Lynch

It is.

Professor Quinlan

By way of elaboration of what I said, I just remembered that we have in this assembly one of the directors of Bord Bainne, Senator Prendergast, and I also remembered that I myself am in a similar capacity in regard to another State body governed by a statute, the Board of the Institute of Advanced Studies. Therefore, I do not see any reason why the privilege we enjoy should be denied to members of the board of the new company.

Question put and agreed to.

Title agreed to.

Bill reported without recommendation.

Agreed to take remaining Stages today.

Bill received for final consideration and ordered to be returned to the Dáil.