Committee on Finance. - Shannon Free Airport Development Company Limited Bill, 1959—Committee and Final Stages.

Thursday, 5 November 1959

Dáil Éireann Debate
Vol. 177 No. 6

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[870] Section 1 agreed to.

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

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Would the Minister distinguish between the company in respect of which he may take shares and the various companies that may set up in the area?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The companies are quite separate from the Shannon Free Airport Development Company. The Shannon Free Airport Development Company makes grants covering up to one half of the cost of machinery and the cost of training. In relation to the factories for which the capital is being provided by the Minister for Finance, the companies remain separate entities entirely from the Shannon Free Airport Development Company Limited.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  The outgoings of the development company will be the provision of buildings, on the one hand, and the giving of grants to individual companies, on the other, and also in relation to employment and the other matters mentioned by the Minister.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  That is so. The income in relation to capital cannot, of course, be envisaged at the moment, but there will be rents charged both on houses built for the executives and the factory space leased. They will provide a measure of income in return for the capital. It is impossible to foretell what that will amount to.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Why is this company being authorised to continue to give grants when we have just passed an Act of Parliament to ensure that all industrial grants will be gathered into An Foras Tionscal? Why wipe out the Industrial Development Authority, and everybody else, and canalise all grants through one authority, when it now appears that this company will have power to make industrial grants in addition to the powers enjoyed by [871] An Foras Tionscal? Why is it thought expedient to do that?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Liaison is maintained between the Industrial Development Authority and the Shannon Free Airport Development Company in that all proposals for new industries are sent to the Industrial Development Authority to make sure there is not undue overlapping and that grants are not given for industries to which it would be considered undesirable to give grants. The whole basis of the Shannon Free Airport Development Company is that it is a company which, so to speak, specialises entirely in the conception of developing Shannon Airport and the type of industry being set up there is attracted, not only by the taxation incentives, but more particularly because of being able to send their completed products by air freight, plus the fact that the aeroplane can literally taxi up on the apron to the door of the factory and take the goods.

I feel very strongly that this is one case where a specialist institution is required. I do not think Foras Tionscal could be expected to keep staff in Shannon to live in, extend and exploit the atmosphere of what is the first airport industrial area in the world, so far as I know. I do not think that could be expected. All overlapping is being avoided by consultation between the Industrial Development Authority and the Shannon Free Airport Development Company.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Another point is that it distinguishes between the various classes of shares of the company. Can the Minister indicate what different types of shares he thinks the company may issue?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  All the capital is being taken up by the Minister for Finance to the aggregate amount of £1,500,000. That is the maximum that can be advanced but the Minister for Finance will take up, so far as I am aware, a similar class of share on each occasion when the capital has to be increased. There is no suggestion of having several types of shares. This [872] is the usual type of share capital investment by the Department of Finance as in the case of Aer Lingus and Irish Shipping Ltd.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  What interpretation are we to attach to the words: “The Minister for Finance may from time to time take up by subscription any class or classes of shares of the Company ...”?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I suppose it might so happen in the future that the Minister for Finance might take up preference shares as distinct from ordinary shares. There is always an optimistic feeling on these occasions when State companies are set up that they may progress to the point, for example, where the company itself would achieve a certain degree of independence of the State, and that the Minister for Finance might think it wise to take up preference shares as distinct from ordinary shares. I have very little knowledge myself of what has happened in the past, but I think the Deputy will know that in most of these companies it is simply ordinary share capital taken up by the Minister for Finance. As he is the only shareholder, those shares have priority. The Minister for Finance has priority rights in regard to the control of the company.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Is there any advantage in making the shares preference as distinct from ordinary?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I imagine in present circumstances there is no special advantage because ordinary shares amount very nearly—I think I am right in saying this—to the value of preference shares and they are equivalent to preference shares to the value of debentures. The Minister for Finance exercises absolute priority rights over any other person.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  I would not bring in the debentures.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Has the Minister any idea how long we may expect the £1½ million to be run before we call it in?

[873]Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I cannot say that. As I say, I do not like to be over-optimistic, but I was reassured by the chairman of the Company that there are a number of prospective industries. I cannot say more than that.

Question put and agreed to.

Section 3 agreed to.

Question proposed: “That Section 4 stand part of the Bill.”

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Can the Minister say what short term and long term policy in the matter of disposing of shares may be contemplated by this section?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I am afraid I am unable to say that. It depends on the progress of the company. I imagine the shares will be held in exactly the same form as in the initial period for quite a number of years, as in the case of other State companies in which the Minister for Finance has invested.

Question put and agreed to.

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

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Does this section mean that the Minister for Finance will be the managing director and the general “runner” of the Company?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  He acts as only shareholder, but, as the Deputy will know from reading the general character of the Bill as a whole because the Minister is the only shareholder, he has to give his permission, after consulting the Minister for Transport and Power, for the expenditure of the money. He has to know what the objects are and he exercises control in that sense but the managerial control is exercised by the board of directors of the company. There again is a parallel with Aer Lingus, for example, where if this independent company want to raise capital from the Minister for Finance, they have to state the purposes and the objectives.

[874] Question put and agreed to.

Section 6 agreed to.

Question proposed: “That Section 7 stand part of the Bill.”

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Has the Minister any explanation to give of this section?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I think it is a standard provision. It exempts the company from payment of stamp duty in respect of any increase in capital. It is a standard section.

Question put and agreed to.

Question proposed: “That Section 8 stand part of the Bill.”

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Is this additional to the £1½ million capital?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Yes. This provides a maximum of £500,000 in grants and the grants will be allotted to the general expenses of the company, such as the administrative expenses. The grants also cover payments made to industry.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Is this a total sum or an annual sum?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  A total sum of £500,000. If more is required, we must come back to the Dáil for amending legislation.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  It is a £2,000,000 job as it stands at present?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Yes.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  £1,500,000 capital and £500,000 for running expenses?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  That is right.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Did I understand Section 2 to mean that the aggregate amount of grants under this section would not exceed £500,000?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The Bill contains provisions for two types of contribution to the company. One is £1½ million in the form of capital for providing [875] factories and housing and £500,000 in the form of non-repayable grants voted to assist the industry and the running expenses of the company, and for the promotion of any other trading activity.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Has that to be included in the Estimates each year according as it is required?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Yes; it is included in the Estimates each year.

Question put and agreed to.

Question proposed: “That Section 9 stand part of the Bill.”

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  The money to be expended under this section will come from the money available under Section 8. Is that right?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Yes.

Question put and agreed to.

Question proposed: “That Section 10 stand part of the Bill”.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Perhaps the Minister would elaborate on this section?

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  What are the implications of the section?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  This section provides that the provisions in the Schedule shall have effect in certain circumstances. The provisions in the Schedule relate to the alteration of the company's memorandum and articles of association; the keeping, audit and submission of accounts; the furnishing of annual reports; the nomination for, and election to, the Oireachtas of directors, officers and servants of the company and the making of superannuation schemes. Each of these provisions imposes a degree of restriction on the powers and functions of the company as authorised in the memorandum and articles of association. It is necessary to include the provisions in a Schedule and to provide that they shall have effect in certain [876] circumstances only, that is, whilst the Minister for Finance has a financial interest in the company.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Does it imply that the company may be handed over into private hands?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Yes. The implication is that it can be, but nevertheless it must be definite that it relates to these various matters that I have already indicated.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Is it the implication of Section 10 that this measure as it is drafted holds out the suggestion that the day may come when this company will completely be handed over into private hands—in other words, that private capital will take up all the shares and that, when that is done and when the company is no longer indebted in any way to the State, the Schedule goes by the board?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  This is a private company. The restrictions on the company's activities continue to remain so long as the Minister for Finance holds shares in the company.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Surely the provisions of this section are such that there is the suggestion that, in presenting the measure to the House, a thing is being done here in respect of which the day may come when private capital will step in and say: “This is such a valuable concern that we will take over these shares.” It will be so successful that the shares will be taken over by private capital and, when they have paid back any debts that may be owed to the State, the Schedule may then go by the board.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  There is that optimistic suggestion underlying it. I do not think that day is very close at hand, if one is to judge by the history of State companies.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Have we actually passed the stage at which we even pretend?

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  We come to a bright spot in the Bill.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I think we are in fairly good company. I do not see in [877] reports published abroad references to the sale of companies in which Ministers have shares of this type and that they go back to private companies.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  British Steel Industries is an example. If the Minister was fortunate enough to have invested his savings in it or if he had been one of the purchasers when the British Government sold it he would have profited greatly.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  That started as a private concern.

Question put and agreed to.

Question proposed: “That Section 11 stand part of the Bill.”

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  This puzzles me. The Taoiseach, just before he became Taoiseach, came in here and exhorted us to agree with him that all this business of making grants ought to be concentrated in one authority. After a good deal of argument and discussion we accepted his view that An Foras Tionscal was the appropriate body. I think we took all the powers for making grants from everybody else and settled them in An Foras Tionscal. It is not six weeks ago since we did that and now this section of this Bill provides:—

After the passing of this Act, An Foras Tionscal shall not make a grant in respect of the establishment, development or maintenance of an industrial undertaking at the airport.

I am blowed if I understand that.

I could understand the argument that all powers of industrial grants should be concentrated in one body so that there could be no conceivable conflict. I could understand the thesis that there was a variety of different circumstances in which industrial grants might be appropriate and that it was necessary to have a corresponding authority for each set of circumstances who would be charged with the responsibility of making these grants. I cannot understand a mixture of both.

This section appears to reverse the [878] policy which the Minister's predecessor pressed upon us as recently as six short weeks ago. The Minister says that it is because he wants to have everything associated with the Shannon Free Airport Development Company Limited in one Act so that these things may be fully understood and that he contemplates close cooperation with the Industrial Development Authority. I thought the Industrial Development Authority had been merged with An Foras Tionscal. Has it not? Has its power of making grants been merged with An Foras Tionscal?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Correct.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  The Minister will want to get the Shannon Free Airport Development Company Limited to collaborate not with the Industrial Development Authority but with An Foras Tionscal. Why have we again separated from An Foras Tionscal the powers which we sought to concentrate in their hands six short weeks ago?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  An Foras Tionscal itself has no administrative machinery for, for example, building factories in advance for letting. They have no administrative machinery and they have no offices for that purpose. However, the Shannon Free Airport Development Company Limited, through grants made available to it, also engaged in tourist publicity. It publishes leaflets which are placed on transatlantic aircraft advising people to come and to spend their time at Shannon. It publishes leaflets advertising the tourist attractions of the Shannon area.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Who does this?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The company which is the subject of this Bill. It encourages people to use Shannon as a centre for visiting the Killarney-Connemara area. There is no reason why it should not, if it considered it advisable, for example promote an exhibition in the Shannon area to attract traffic. It goes beyond any kind of development which consists purely in attracting industry to the area. It is a development company in the Shannon area. It would be [879] beyond An Foras Tionscal to engage in the different activities.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  The House will now see the evils which can arise. We divided up the Department of Industry and Commerce. We now have a Minister for Transport and Power and we also have a Minister for Industry and Commerce. Observe what has happened. We shall now have two grant-giving bodies. One is for Industry and Commerce and the other is for Transport and Power. I understood, before we made this division, that the desire of this House was to concentrate all the powers of making industrial grants in one hand and that hand was An Foras Tionscal which was subject to the general jurisdiction of the Minister for Industry and Commerce. That principle, I think, is accepted. Then we divided the Department of Industry and Commerce into two Departments.

Do I perceive here the inauguration of the operation of Parkinson's Law? Because we have two Ministers we must have two grant-giving bodies. Are we to have two organisations, one operating in the Shannon area and one operating outside it? The whole object of the legislation introduced by the Taoiseach, who was then Minister for Industry and Commerce, was to merge the underdeveloped areas and the areas outside it and to abolish that differentiation. Now because we have divided the Ministry into two Ministries, we are dividing the country into two areas, the Shannon Free Airport area and the area outside the Shannon Free Airport area. That is a retrograde step.

I concede at once that the Shannon Free Airport Development Company may engage in a number of activities such as publicity, organising functions or anything else they like to draw traffic to the free area in which they operate, but that does not mean that they necessarily should have power to make industrial grants. There is no reason why that power should not be left with the industrial grants authority which is An Foras Tionscal. The Minister himself says that before [880] recommending any industrial grant there will certainly be careful consultation with An Foras Tionscal. Why not leave the grant-making power in the hands of An Foras Tionscal and allow the Shannon Free Airport Development Company Limited to run its excursions, to publish its leaflets, to organise its trade fairs or do anything else it wants to do, but leave the power of making industrial grants in the hands of one authority? If you do not do that you will have this proliferation of authorities which, in my opinion, is not a good thing.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Could the Minister say how many different bodies publish publicity leaflets with regard to our air services?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  That is a matter which is engaging the attention of my Department at the moment. C.I.E., Bord Fáilte, Aer Línte and the Shannon Airport Development Company are all to a considerable extent carrying out publicity in relation to the generation of transatlantic traffic. We are determined to have a very desirable measure of co-ordination to ensure that there is absolutely no overlapping and that the publicity undertaken is such that there is no waste of effort and, above all, no waste of money. Discussion on those lines is proceeding at the moment but, of course, the Shannon Free Airport is naturally specialising in the field of attracting people to make a stop at Shannon for all the various reasons the Deputy well knows.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  We spent the greater part of the morning, because of allegations of lack of co-ordination and overlapping, introducing a measure to wipe out public bodies dealing with the matter of health. Here we seem to be providing a kind of thyroid gland for our air services. In this measure we are taking away from one body a function for the purpose of bottling it up in a little separate gland. This is supposed to help the development of the air services business, but it does seem to have the element of a Heath Robinson piece of organisation in it. The Minister suggests he is straightening [881] out the publicity side of things but he is doing something other than straightening out; he is creating confusion and causing a lack of co-ordination.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Naturally there can be two opinions in regard to this matter, but I spent a considerable time at Shannon recently consulting with the Chairman and his executives. I am absolutely convinced that the work of interviewing prospective industrialists, showing them the site of their factory, showing them what amendments and modifications are required in regard to the factory, discussing with them all the peculiar features of the Shannon Airport areas as an industrial site, discussing with them all the questions involving freight costs, the saving on packing and crating through using an airport where the aeroplane literally taxies to the door of the factory, then discussing in relation to that the kind of grant that is available and interviewing the prospective promoters of industry—all that simply could not be done mechanically by the central organisation and I just have to beg leave to [882] differ with the Deputies on this matter. I am convinced it is a specialised job. I do not think it sets a precedent for many other such departures from the general concept——

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  It very easily could in quite a lot of cases.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  ——as indicated in recent legislation in regard to An Foras Tionscal and the Industrial Development Authority. I do not think it does. This is a very specialised job.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Once it starts, there is the tendency to go on dividing.

Question put and agreed to.

Sections 12 and 13 agreed to.

Schedule and Title agreed to.

Bill reported without amendment, received for final consideration and passed.

The Dáil adjourned at 5 p.m. until 3 p.m. on Wednesday, 11th November, 1959.


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