Seanad Éireann - Volume 78 - 10 July, 1974
Industrial Credit (Amendment) Bill, 1974: Second and Subsequent Stages.
Question proposed: “That the Bill be now read a Second Time.”
Minister for Finance (Mr. R. Ryan) Richie Ryan
Minister for Finance (Mr. R. Ryan): This Bill is designed to increase the statutory limit on the borrowing powers of the Industrial Credit Company and also to increase the limit on the extent to which the Minister for Finance can guarantee the company's borrowing.
The existing statutory limit on borrowing by the Industrial Credit Company is £30 million. Actual borrowing is now £23.5 million and a further substantial rise is in prospect because of the rate of expansion of the company's business. On the basis of firm commitments already entered into by the company, it is probable that the statutory limit will be exceeded in the second half of 1974. It is therefore necessary to raise the statutory limit on borrowing in order to enable the company to meet the demands for finance for industry. The new limit proposed in section 2 of the Bill is £75 million. While this is a substantial increase, it reflects the growth in ICC business and the likelihood that the upward trend will continue.
For the period April to December, 1974, the company have budgeted to provide financial facilities totalling £14.6 million for industry. In the previous 12 months the company disbursed £13 million which was in itself a record figure. Of the £14.6 million which the company will advance up to December next, £5.5 million relates to their subsidiary company, Shipping Finance Corporation, which provide loans for new shipbuilding. The balance will be disbursed by the ICC for the benefit of industry in general. Most of the capital used by the ICC for their own purposes is secured from non-Exchequer sources and it is  hoped that this position will continue. The capital required for the operations of the Shipping Finance Corporation is provided from the Exchequer.
The Minister for Finance has power under the existing legislation to guarantee borrowing by the ICC and it is proposed in section 3 of the Bill to raise the limit on his power of guaranee from £30 million to £75 million to correspond with the new limit on borrowing. At present the total amount borrowed under guarantee is £6 million and it is unlikely that the Minister will be called on to guarantee all borrowing by the company. It is the usual practice however to fix the same limits for borrowing and guarantee purposes.
The Industrial Credit Act of 1933 conferred wide powers on the company enabling them to underwrite capital issues, to provide issuing house facilities and to make large and medium-term capital available, particularly for the establishment of new industries. While the Industrial Credit Company operate as a commercial undertaking and have been a profitable enterprise since their establishment, their primary aim is to contribute to national economic expansion. They examine sympathetically every project brought to their notice having regard particularly to economic soundness, employment potential, possible contribution to the reduction of emigration, importance to the proposed locality and utilisation of indigenous raw materials and of the services and products of existing industries. Their facilities have been availed of over the entire range of industry and in all parts of the country by large, medium and small undertakings.
In the last decade the ICC have considerably expanded their activities. The company have extended their services to include the provision of hire-purchase facilities for plant and machinery, equipment leasing and finance for distribution. In addition to the provision of capital, the ICC have also a subsidiary company, Mergers Limited, which specialise in the field of mergers and takeovers by undertaking share evaluations and by advising in negotiations for mergers between firms. As I have already mentioned, they are also  concerned with shipbuilding finance through their other subsidiary company, Shipping Finance Corporation.
Since our entry into membership of the European Economic Community, the demand for ICC facilities has expanded rapidly. Given the trading opportunities now open to us and the need for increased industrial investment to sustain economic growth, there will be a continuing demand for the facilities provided by the company. I am most anxious therefore that the company should be in a position to contribute to industry the financial and organisational expertise which they have built up over the years in addition to financial assistance. The present legislation, when enacted, will enable the company to maintain a reasonable flow of funds to industry.
Because of the high demand for industrial finance and the capital intensive nature of modern industry it will not of course be possible for the company to provide all the funds which industry is likely to require. In seeking funds from the Exchequer, the company's requirements will have to be balanced against demands on behalf of other important services. It is hoped therefore that the commendable initiative shown by the company in the past in raising capital from non-Exchequer sources can be maintained.
In the past few years the company have made significant advances in tapping sources of capital abroad. They have established a very valuable association with the World Bank, with which they have negotiated a loan. It is also confidently expected that our membership of the EEC will redound to the company's advantage by enabling them to draw on the resources of Community institutions such as the European Investment Bank and to make contact with the national development banks and other financial institutions in the other member states.
In this regard I am pleased that the company have completed negotiations with the European Investment Bank for a loan of £2½ million, the full details of which will be announced in the near future. They have also recently signed a co-operation agreement with the other institutions specialising in long-term  credit in the European Community.
The main purposes of this agreement are to foster joint studies and an exchange of information and to enable projects having a European significance to be financed by the various parties to the agreement. It is envisaged that one of the practical effects of this would be that the ICC might be invited to assist the financing of a transnational project in another member state and that the other development banks would participate in a project of direct benefit to this country.
For more than 40 years the ICC have been to the fore in the financing of Irish industry. At present the company have more than £30 million invested in industry. Many of the successful industries established in the past 40 years started from modest beginnings with the assistance of finance provided or arranged by the company. Facilities are provided for the establishment of new industries as well as the expansion of existing firms and the company have a tradition of giving special attention to proposals in regard to small projects. The continuing increase in the demand for the company's facilities is proof that their importance has in no way diminished with the enlargement of the industrial and financial sectors of our economy. The present legislation will enable the company to continue their important role in the development of the economy and I confidently recommend the Bill for the approval of the House.
Mr. E. Ryan Mr. E. Ryan
Mr. E. Ryan: I have pleasure in welcoming this Bill. It was certainly necessary in relation to an institution which have a very worthy past, which have played an extremely important role in building up industry in this country. I understand that something in the region of 54 per cent of the capital provided for industry between 1933 and 1968 was provided by the Industrial Credit Company. That is an extraordinarily impressive figure. It is certainly true to say that without the part which the company played in helping industry our industry could not have progressed at the rate it did during that period.
 Consequently, I should like to start by complimenting the company on what they have done and to pay a tribute to Dr. Beddy, who played a large part in building up the company and who has now retired; and a tribute also, of course, to the many other officers of the company during that period. We are not merely talking about what the Industrial Credit Company have done in the past. It is quite evident from the figures which the Minister has given that they are not only continuing to do this good work but are doing so at an ever-increasing rate. The figures which have been given for the past two years and the projected figures for the future show that they are playing an ever-increasing part in the provision of capital in a number of different ways for industry in this country.
In these circumstances, although the increase which is sought by the Minister in this Bill looks on first sight to be a very big one, we can accept it as being reasonable. It is perhaps a little bit high, but nevertheless in all the circumstances I think that it is a reasonable figure. The only reason that the House would examine a figure like this and keep it fairly low is to ensure that the Minister would have to come back from time to time to enable the House to give its comments, give its praise, give its criticism to the Industrial Credit Company.
I am particularly glad to note and to agree with the Minister when he points out that a very high proportion of the borrowing which the company are making is from non-Exchequer sources. That eases the position of the Government and it is very necessary that the company should look outside Exchequer sources for funds. It is also of course very creditable and satisfactory that they have found it possible to get funds from those sources.
I see that the guarantee which the Minister is giving is being increased at exactly the same figure as the borrowing. It is quite obvious that this guarantee is no longer required at the same figure as the borrowing. The Minister has said that it has been the practice to have the guarantee at the same rate as the figure for borrowing.  I think this is a practice which might be reconsidered in the future because as the resources of the Industrial Credit Company increase—and they have, of course, increased very much—and as the good name of the company spreads and becomes accepted widespread, not only at home but abroad, then the necessity for a guarantee no longer seems necessary. I think that the figure at the moment means that only something like £6 million out of £22 million in borrowing by the company is in fact guaranteed. This should be recognised by the Minister and by the House. The company should not only be encouraged to borrow without the necessity of having a guarantee but they should be given credit for the fact that they can borrow without a guarantee. As this is to be the situation—and it will improve in the future in the sense that they will find it less and less necessary to have a guarantee—this should be recognised as time goes on and they should be given credit for the fact that they do not have to lean on the Minister for a guarantee when they are borrowing.
I should just like to say a few words about Mergers Limited, which are a very excellent organisation, one which have done very good work in the past and which have indeed very good potential for doing work in the future. I may be wrong, but I feel their image is not as good as it deserves to be. This is perhaps because they have not projected themselves in the way in which most of the merchant banks have. Perhaps they have a certain inhibition about doing this.
It is also due, possibly, to the feeling that certain companies which are considering takeovers or mergers feel that Mergers might to some extent be inhibited or curtailed by public policy by the national interest or by considering whether a particular merger or takeover is one of which the Government would approve or whether it is something which should be given their support. When one goes to a merchant bank, the bank is concentrating entirely on the problem of their client and doing the very best for him. I do not know whether the Mergers Limited would be  in any way constrained by the desirability of the project from the public policy point of view; but people who are considering whom they should consult in the matter have the feeling that this might be an inhibiting factor and they are for that reason inclined to go to a merchant bank rather than to Mergers Limited.
In any event, I feel that Mergers do not get the image they deserve for their work in the past and their potential in the future. If anything can be done to improve this image it should be done. I appreciate that this may be difficult. There are certain proprieties which must be observed and it is difficult to do this, but in so far as it can be done it should be considered.
Finally, as regards the financial health of the ICC, judging from the last report it is very satisfactory, making almost £1 million profit. Whereas one must give credit to the company for this profit, there is always perhaps the feeling that they have been too good— that they have been succumbing to the tendency to make large profits and put aside large figures in reserve. Naturally they should always bear in the mind the function they have. They should, if they find themselves making too much money, perhaps take a few extra risks or give money at a slightly lower interest rate. In that way they could ensure that they observe and comply with their responsibilities and objectives. However I am not saying that they have succumbed to this tendency: perhaps in spite of taking very considerable risks and giving money at a very reasonable interest rate, they have made a very substantial profit. Certainly, in view of their record in the past, I am willing to give them the benefit of the doubt in regard to their report for last year.
I have much pleasure in welcoming this Bill and wishing the Industrial Credit Company the best of progress in the future.
Dr. West Dr. West
Dr. West: I join with Senator Ryan in welcoming this Bill. I note the general air of euphoria which overtakes both Houses of the Oireachtas when a Minister in charge of any of the semi-State companies comes in and wishes to increase the borrowing power by a trivial sum such as £40 million or £50  million. It does not seem to matter to us if we were asked for £70 million or £80 million more. As I stated on a previous Bill when we increased CIE's borrowing powers by an enormous sum, it was welcomed by everybody because it reflected the national attitude to semi-State corporations such as the Industrial Credit Company. There is a reason for this attitude. People realise how important a part these institutions have played in our industrial development. They realise that without such State intervention, in the best possible sense of the term, it would not have been possible to develop our economy to the its present level.
Two of the things about which we ought to blow our trumpet a little more —I stated this last week in the debate on Northern Ireland—are first, we have our economy developed to its present level which is on a par with the economic situation in Northern Ireland, which receives a large subsidy from the UK Government; and secondly, we have a reasonably stable political situation. These achievements are not sufficiently well known, especially in the North.
One of the things the Industrial Credit Company should do is to make their operations better known to the general public. They are known to people in the upper echelons of industry and to most people in management but the general public have only a vague idea of how the Industrial Credit Company work. I will ask the Minister some questions which will reveal the vagueness of my knowledge. As Senator Ryan has pointed out, the company have a success story to tell and should take a bit more time and trouble in their public relations and not be afraid to tell this story to the general public. More emphasis on public relations would be a good thing. It could happen that if too many people knew about the success of the ICC then it might result in a large increase in the demands for assistance, loans and the kind of financial backing which the Industrial Credit Company give. On balance, I do not think better public relations would do the company any harm. It would give rise generally to more confidence in such an institution and it  would reflect well on the fact that the State is providing such a large increase in the borrowing power of the company.
To give the Minister an example— this may just be indicative of my back-ground—the Agricultural Credit Corporation have a much better image and are more widely known in the country at large. They are both very worthy organisations. The ICC should pay more attention to their public image.
As far as I can gather the main difference between the ICC and a merchant bank is not so much the rate at which one can obtain a loan but the actual length of the term of the loan at a fixed interest rate. This the basic difference. There are no merchant banks willing to provide money for such long terms at fixed rates. They do not operate on that basis. Therefore the ICC, being a company which operate this way, have played a very important part in the development of our industry.
There is another point on which I should like to consult the Minister. On page 2 of the Minister's script, he says:
The Industrial Credit Company have been a profitable enterprise since their establishment.
The Minister's speech should have contained some figures to indicate that there has been a profit. I do not think he would be letting any secrets out of the bag if he gave us some figures to prove that in fact over the period of their operation—40 years—the ICC have been a profitable enterprise. I presume he means by that statement that the ICC have in toto ended up in credit rather than in debt. This to me seems an excellent thing. With long-term loans at a fixed interest it must be difficult to end up in the black rather than in the red. Certainly some of the loans which the company make must have failed to be honoured. They were not repaid. Presumably the company have guarantees such as mortgages, and so on, on the organisations to which they lend money. I should like to have some idea from the Minister how the actual operation takes place. What rates of interest are being paid currently? What are the terms of the loans? I should like figures to show  the correctness of the statement that the ICC have been a profitable enterprise.
I would also ask the Minister to detail the relationship of the ICC to the other two organisations which operate in this area—the IDA and Fóir Teoranta. I know that the IDA operate to quite an extent outside this country with the object of bringing industry into the country. It is also true that they help Irish industrialists, but not to such a large extent. I believe that the IDA tend to make outright non-repayable grants to industries setting up in this country. The ICC make long-term loans once the industry has been established. Fóir Teoranta are there as a fireman when the whole thing blows up. We have therefore three organisations which would need to dovetail their operations. I presume that there are links between these organisations, formal and informal, so that we do not have good money being thrown after bad. The Minister should say something on the relationship between these three bodies.
I would also like the Minister to tell us the locations of the offices outside Dublin. I know the main ICC office is in Dublin. There are sub-offices in both Cork and Limerick and perhaps in other centres. How long have the branches in Cork and Limerick been in operation? How much authority have they got? What sort of ceiling is there on the grants they can issue without consulting the main branch in Dublin for authorisation? This is important because it has been the policy of the Governments over the last eight, nine or ten years to attempt to move industry away from the Dublin region.
Many of us think that the Dublin region is top-heavy with industry and that this policy should be pursued more vigorously. It will not be pursued unless conditions in other areas are good and ancillary services are provided. The ICC are one of these ancillary services and they are very important. Clearly there is a great advantage in having ICC offices in other areas of the country. Offices should be established in a sort of ring around the country. They should not be located only in Cork and Limerick. Perhaps the Minister would say something about the company's future plans to open other branches.
 I would also like to ask the Minister about his statement on the commendable initiative shown by the company in the past in raising capital from non-Exchequer sources. Some of the sources here are underlined—long-term loans from the World Bank, prospects of a loan from the European Investment Bank and other national development banks. Anything we can get from these sources at reasonable rates of interest will be welcome. Presumably if one gets money from the World Bank at 8 per cent and lends it out at 15 per cent, even long-term, that is one way of making a profit.
What about the proportion of Irish investment in the ICC? Here again, I should like to compare the company with the Agricultural Credit Corporation, which have a very vigorous and extensive campaign to persuade small investors to invest in the ACC. They give good competitive rates, which certainly compete with the building societies, if not with the merchant banks. They have an 8 per cent tax-free rate which is an attractive rate nowadays. As far as I am aware there is no parallel effort by the ICC to advertise and encourage investment by small investors. Maybe it is not the ICC's policy to take money from small investors. If the ICC can offer a competitive rate and give good terms they should make a greater effort than they do to attract small as well as large investors. I also know that the Agricultural Credit Corporation give preferential borrowing rates to people who have lent them money. Is this also the case with the ICC? Do they give preferential rates to people who have invested money with them at some stage or other?
What about the operation of shipping? The Shipping Finance Corporation are a subsidiary of the ICC. They provide loans for new ship-building. As people are aware, there is one large shipyard in Ireland, which builds large ocean-going ships and completely dominates the Irish ship-building scene. There are also a number of smaller yards building coastal vessels. We should do everything we can to encourage the smaller operator. There is only room for one  large ship-building firm in the whole country. If you take Harland and Wolff and Verolme, we have two. Of course only the Cork dockyard would come under the aegis of the Industrial Credit Company. I would like the Minister to say if the £5.5 million which the ICC are advancing to Shipping Finance Corporation will be given by directly payable grants. Are the grants repayable at the same rates of interest, roughly, as at the rate at which the ICC are lending money to other sectors of industry? Are there differences in the mode of operation as between Shipping Finance Corporation and the Industrial Credit Company? In other words, do they lend money out in similar ways or is one operating a non-repayable grant system and the other operating long-term repayable fixed interest loans?
Finally, I should like to ask the Minister about the relationship between the ICC and the Northern Ireland Finance Corporation which, I believe, does a similar job in Northern Ireland. I constantly advocate links between bodies doing the same tasks North and South of the Border. There are difficulties, but none of these difficulties is insurmountable. Great benefits can accrue from working together, from joint operations. For example, a firm which has operations North and South of the Border might be dealt with jointly in consultation with the Northern Ireland Finance Corporation and the Industrial Credit Company.
This sort of co-operation is to be encouraged. I would like to see us working together with the Northern Ireland Finance Corporation. I presume the Northern Ireland Finance Corporation operate in a similar way. Even if they do not, we could say to them: “Look, how can we work together? How can we share our experience? How can we share our pool of information so that we can benefit both parts of the country?” The attitude has changed greatly in the last five to ten years. There is much more openness in the Northern community in regard to operations of this kind. Even though an initial breakthrough was made by Mr. Lemass in economic co-operation North and South, the spirit has changed greatly in the last five or ten years. I  think that the Northern business community are ready to do a deal with us in the South. Semi-State bodies in both parts of the country should be working together.
I hope the Minister will be able to tell us definitely that there have been informal or formal discussions between these two bodies and, if not, why not and when they are going to start. We are inclined to be a bit too cautious in our cross-Border approaches. I think if we were bold we would get a good return. I am strongly of the opinion that before we can have any worthwhile political discussions with our Northern fellow-countrymen we will have to have many economic and social contacts. These contacts are the meaningful ones at the present time. The lead should be given by the Government. It will not be rejected by the Northern administration. It may have to be handled carefully. At certain times it may have to be done without any great advance publicity. However I am absolutely certain that proper approaches by the people in the ICC to the Northern Ireland Finance Corporation would receive a warm welcome and there would be very fruitful areas of co-operation.
Minister for Finance (Mr. R. Ryan) Richie Ryan
Minister for Finance (Mr. R. Ryan): I am grateful to the House for the manner in which they have received the Bill. As happened in another place, it has been generally welcomed as a sign of the optimism which exists in Irish industry and of the readiness of Irish industry to avail of the opportunities which are now opening for industry.
Senator Eoin Ryan queried whether it was necessary to extend the right to the Minister for Finance to guarantee the full amount of the authorised borrowing of the company, that is for £75 million. I would say that in reality it probably is not necessary, but nevertheless it is desirable to extend that power because we could at some time be in the happy position that all the funds required by ICC could be made available from sources other than the Exchequer. If we were in that happy position I think it would only become operative if the guarantee were there. In fact all the borrowings by the ICC  other than the normal working bank overdraft are guaranteed by the State. As of October, 1973, for instance, the State had advanced £12½ million and the borrowings from other sources were as follows. The Irish banks' loan, then £1.3 million; the loan from the International Bank for Reconstruction and Development, £1.3 million; and deposits —in the main from the Irish people— and short-term loans amounting to over £2 million.
These are the kind of loans to the ICC which are guaranteed. It is almost a universal practice for international organisations such as the World Bank, the European Investment Bank and other organisations of that kind to require a State guarantee from any body other than the State itself. Of course, if the loan is made to the State they also require the guarantee of the Minister for Finance. It is no reflection on the good standing of the ICC in the international monetary scene that the State guarantee is required. This is just standard practice. But in case we ever arrive at the happy day when there is more money on offer than is absolutely necessary, it is just as well to leave this umbrella there so that the State can provide the guarantee instead of the State itself advancing the money. Of course if the State is advancing money to the ICC, or indeed for any other purpose, it must invariably leave some other demand in some other place further back down the queue.
Senator Eoin Ryan, I am afraid, repeated a mistake that was made by some of his colleagues in the Dáil in interpreting a figure in an erroneous way. It has been suggested here and in the Dáil that 54 per cent of the capital used by Irish industry between 1933 and 1968 had been advanced by ICC. That, in fact, is not so. That figure relates only to the underwriting of the capital required by Irish industry, which of course is quite a different thing. Far more has been advanced from the private sector to Irish industry than has ever been advanced by ICC. I would not think that situation is likely to change in the future, nor do I think it would even be desirable that it should hange.
 However that is in no way to diminish the great record of ICC or to discredit the very significant contribution they have made in this vitally important field, because ICC have certainly gone in where other financial angels feared to tread. And if they did go in, they made precious few mistakes. It is greatly to the credit of the company that they have operated in a field where certainly 30 or 40 years ago the prospect of success was not as assured as it is today. Any profits made by ICC are ploughed back into further advances by the ICC for industry. They are not profits enjoyed to any significant extent by any private shareholders.
While there are a number of private shareholders in the ICC, they are a predominantly State-owned company and receive more money from the State than they give back.
The advances made by the Exchequer to the ICC are lent at 9 per cent, which is almost a derisory figure in comparison with figures offered today. It is much less than the State has to pay for money which the State itself is borrowing. We consider this is justified by the great work done by the ICC. The ICC have lent money in areas where in the short-term profits were not obtainable, though in the long-term in most cases the ICC have fully justified the loans made as considerable profits have been made eventually.
Senator West raised the point that the activities of the ICC were not so well-known as the activities of the Agricultural Credit Corporation. This may be so in a popular sense, but it is not material. The ACC by their nature makes smaller loans available to a much larger number of people. They make small loans available to small farmers for comparatively minor purposes, whereas the Industrial Credit Company, even though they treat particularly favourably the small concerns, are nevertheless advancing larger sums of money to a much smaller number of persons.
Senator West also queried whether the ICC had enough offices. They have offices in Dublin, Cork and Limerick. Again, because the decision-making is in respect of fewer people and for larger sums of money, there is more  direct consultation with headquarters in Dublin than there might in relation to the ACC where local area officers might be empowered to make advances up to a certain limit or for specific purposes. On account of the much smaller workload which ICC have this process of necessary consultation does not involve delay. There have been no complaints of which we are aware from people in the provinces about any lack of contact between their area and Dublin or of any lack of understanding.
Dr. West Dr. West
Dr. West: On the other hand, supposing there was an office in the north-west, which is a region which does not appear to be covered by this or by many other State institutions as well as more favoured regions, they could build up business there. They could publicise and deal with local problems on the spot.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: That is true. But one must not overlook that the Department of Industry and Commerce and the IDA act as agents or informants. When people from any area are seeking credit for industrial purposes, if they are not already aware of them, the Department of Industry and Commerce, my own Department or whatever other Government agency or local authority may be involved, inform the potential user of industrial credit of the services to be obtained from the ICC. The regional development officers are all aware of the facilities granted by the ICC. There is no lack of salesmanship so far as the services of the ICC are concerned.
The deposit record of the ICC is not as dramatic as that of ACC. We must look at the different nature of the two concerns. The ACC deal with a large number of small people as borrowers or as depositors, whereas the ICC have tended to collect deposits from people who have larger sums to deposit. If the ICC had more offices undoubtedly they would attract more deposits, but there are a number of money-attracting agencies which have opened more offices than would be warranted by the amount of deposits which they can attract. There seems to be some contradiction in the argument which says that our banking system should be rationalised to reduce the number of bank  branches, but allowing at the same time building societies and other organisations which attract funds to multiply their offices.
The ICC are successful and have a good record because they have not lost their heads. They have advanced according as the demand for their services advanced. They have not engaged in prestigious promotion. They have made capital available whenever it was required and could be given prudently. This is the reason for their success. I share the expression of gratitude which Senator Eoin Ryan expressed to Dr. Beddy and his colleagues for the careful way in which they have managed the affairs of the ICC for the last 40 years. This is a record of commendable success which could well be emulated by other concerns in the public and the private sector.
Senator West asked about the terms on which ICC loans are made. They are usually made for periods of seven to 15 years. It is possible to negotiate longer or shorter terms. Occasionally the advances are made with specially tailored provisions which allow a borrower to postpone the payment of capital and even interest for some time after the loan commences. This is done deliberately in the light of the not infrequent experience that a new concern or a development of an old concern requires some years' experience before it can be in a profit-making situation to enable it to repay advances. Interest is related to current market rates. At present the minimum interest is 14¼ per cent for a five to seven year loan, 14½ per cent for a seven to a nine year loan and 14¾ per cent for a nine to 11 year loan.
Senator West also asked about the Shipping Finance Corporation. It is important to remember that the ICC do not make grants to anybody. The IDA are the grant-making organisation. Fóir Teoranta are the rescue organisation who go in to provide capital for a company which has a prospect of making profit as long as they receive an injection of capital. Fóir Teoranta might be regarded as mounting the fire brigade operation, going in to put out the fire. The ICC of necessity have to  operate more cautiously than Fóir Teoranta.
The following is the position regarding the Shipping Finance Corporation. From the commencement of their operations in 1961 to 31st October, 1973, the Shipping Finance Corporation have approved loans amounting to £23.3 million towards the construction of 11 ships, all at Verolme dockyard. Of this sum, £11.8 million has been issued to date. Total loans outstanding at October, 1973, amounted to £4,097,000. The company are providing credit finance of £5.7 million in respect of a 50,000 ton bulk carrier at present under construction at the dockyard. They are committed to providing a similar credit for a sister ship in 1975.
They have a nominal share capital of a mere £100 and the company's sole source of capital, apart from their own cash flow, is loans from the ICC which in turn borrow the necessary capital by way of Exchequer advances. The Shipping Finance Corporation are prepared to advance up to 80 per cent of the total construction cost of a ship. The maximum credit period is eight years and the interest rate does not exceed 7½ per cent. These terms are in accord with those prescribed in the OECD understanding on shipbuilding credit. Proposals for an amendment of the understanding are at present being considered by the members. These envisage a reduction in the maximum credit period from eight to seven years, a reduction in the maximum limit on credit from 80 per cent to 70 per cent of the total cost and an increase in the interest rate from 7½ per cent to 8 per cent.
Since 1969-70 an interest subsidy is being paid to Shipping Finance Corporation on the Vote of the Department of Industry and Commerce to cover the difference between the rate at which the company lend and the rate at which they borrow from the Exchequer, which of course, as I mentioned earlier, is a mere 9 per cent plus a margin of 1 per cent to cover out-of-pocket expenses and to allow a reasonable reserve to be built up. The amount paid in 1973-74 was £166,000 and the budget for the current year for the same purpose is  £142,000. This is a financial facility which is comparable to financial aids given in other countries to the ship-building industry and it is one which can be fully justified.
Dr. West Dr. West
Dr. West: May I ask the Minister about the smaller shipbuilding firms, firms building trawlers, yachts, and dredgers? I referred to this in my speech. There are a number of these firms, particularly on the east coast. I note that the Minister said the Shipping Finance Corporation have dealt only with Verolme. Of course that would be a much bigger sum with a totally different entitlement. Would the smaller firms go to the ICC directly or would they go to the Shipping Finance Corporation? I am rather surprised that none of them is included under this heading because there is quite a thriving boat-building industry for small boats in this country and it is very important that we develop it.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: I am sorry to say I have not got any details available to me on the Senator's query. It may be that applications have been made. I have not heard that they have or that they were either granted or turned down, but I certainly will make inquiries and will communicate with the Senator.
Dr. West Dr. West
Dr. West: If the Minister would let me have the information I would be very grateful.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: I expect that in relation to trawlers the principal agency would be An Bord Iascaigh Mhara, which advance up to 5 per cent of the cost of a trawler.
Dr. West Dr. West
Dr. West: I think they advance the cost to the purchaser but I am not sure about the builder.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: I think it is fairly certain that they advance it in such a way as to ensure that it goes into the building.
Dr. West Dr. West
Dr. West: Yes, in that case; but there are a number of small boatyards which are doing very good work and which are not restricted to fishing vessels only. They should be supported. Perhaps the Minister could get the information for me.
Mr. R. Ryan Mr. R. Ryan
 Mr. R. Ryan: I will certainly make inquiries, but I do not think the boatyards to which the Senator makes reference are in any difficulty or they would not be operating. However it will be worthwhile making inquiries and I certainly will do so. I am glad the Senator has stimulated my own curiosity. I will convey to him any information I get in the matter.
As Senator West and Senator Ryan mentioned, the ICC have been profitable since their establishment, but unfortunately I have not got the figures since 1933. For example, since 1962 their profit has increased from £400,000 to about £1 million in 1973. Of course we have to take account of depreciation in the value of money in the transition period. Apart from shipbuilding finance, they make finance available to a number of enterprises on terms which are more favourable than would be available in the ordinary commercial market, having regard to the fact that they are not out to make a handsome profit. It is very commendable that they make this profit, which in turn enables them to continue the favourable terms upon which they make money available to new applicants at the stage when these firms must struggle for some little time.
Dr. West Dr. West
Dr. West: Basically they make their money by borrowing money at a reasonable rate of interest and lending it at a higher rate. That is where the profit comes in.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: Yes, it is. Senator West wanted to know if there was any working arrangement between the Northern Ireland Finance Corporation and the Industrial Credit Company. So far as I know, no projects have arisen which involved in any way any joint contribution from them; but we know that there are informal contacts between the members of the two organisations. Of course, if some trans-Border project were to arise which would be suitable for a joint contribution or for joint lending, the Senator can be certain that ICC would not have any doctrinal objection to it. In fact, the ICC are already a member of the European organisation which promotes transnational arrangements. Just as Britain and ourselves are members of the EEC,  this would be an automatic arrangement if the necessary project came on stream. It has not come yet, but I share with Senator West the hope that it may.
I trust that I have dealt with most of the points raised by Senators in the course of the debate. I note I have not dealt with a point made by Senator Ryan in relation to Mergers Limited. We have no evidence that firms are hesitant about approaching Mergers Limited for advice, but of course there are many other consultants in this field who would be only too happy to give advice to firms about mergers, reconstructions and so forth. If the Senator is aware of any hesitancy on anyone's part in this field I would be glad if he would let me know about it and I shall see what and be done to allay the fears of these people.
There is no justification for any fears or hesitancy on anyone's part because Mergers Limited operate in complete confidence even though they are a State-sponsored body. The information which they get about the private affairs of applicants is treated in complete confidence and the Minister for Finance knows nothing about it. No Minister for Finance would ever want to know anything about the affairs of people who are applying to ICC. The board are appointed; they have their statutory powers. They do their work well. Unless and until we find they are doing otherwise we will leave the board to operate in confidence and in complete freedom. The day we find they are not doing that will be the day for the Government, whoever they may be, to consider the reconstruction of the board. In the meantime if we want them to do their work well we must leave them complete freedom and allow them to exercise their responsibility in the way in which we have invariably found that State-sponsored bodies are prepared to operate.
Mr. E. Ryan Mr. E. Ryan
Mr. E. Ryan: The query I made was whether Mergers Limited would feel that they had what would amount to an inhibition in regard to helping something which might not be in accord with public policy. Naturally a merchant bank would feel that was not their concern.
Mr. R. Ryan Mr. R. Ryan
 Mr. R. Ryan: I expect that the board would not give advice which would be contrary to public policy. Again I cannot say that this possible clash of interest has ever arisen. It may be that in a particular case they might feel themselves in some way restrained from advising a certain course of action—for instance, if it involved some question of taxation avoidence or evasion which would be contrary to public policy. No doubt, if that case arose, the people concerned would get their advice from another quarter.
Mr. Dolan Mr. Dolan
Mr. Dolan: Could the Minister say at this juncture if there is any effective liaison between the Industrial Credit Company and local authorities regarding the provision of roads to get finished products out to the ports? I think that is very important so far as industry in the north-western area is concerned. We find when we come near Dublin city we cannot get into the city because the road——
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: The Senator asked a question and then proceeded to make an argument. It might be helpful to him to point out that these points could be raised on section 2 of the Bill. If he wishes to develop a point at length rather than ask a question, this would be more appropriate.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: I do not mind replying to the specific question if the Chair will allow me. The ICC would not be empowered to advance money for the construction of roads. That would be a matter for the local authority or whatever other body would be concerned.
Mr. Dolan Mr. Dolan
Mr. Dolan: I fully appreciate that, but what I meant was whether there was any close liaison between them.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: There certainly is as regards passing on information and advising people where they ought to go to get their money.
Dr. West Dr. West
Dr. West: I should like to ask the Minister if he has thought how helpful it would be to Senators and Members of the other House if, when a Bill of this nature was being discussed, a report of the company could be given with the Minister's speech to Members of the House at the time. I know that  we get it through the post in the normal way, but it comes with a flood of other material which sometimes ends up in the waste paper basket. If, just for Members who are present and who wish to discuss the company, we could have a copy of the previous year's report with the speech, it would prevent people such as me from asking a lot of stupid questions. If the Minister would give a thought to this matter in regard to this and similar Bills, it would be a good practice.
Mr. R. Ryan Mr. R. Ryan
Mr. R. Ryan: I do not think it is necessary as a preventive against stupid questions, because there were none such asked this morning. However I would certainly regard it as courteous facility which would be advantageous and perhaps it could be arranged for a future occasion.
I should like to add that if and when we bring into being, as we hope to do, Oireachtas Committees to supervise State-sponsored bodies, then all Members of the Oireachtas could probably have a greater awareness of the problems and activities of particular companies.
Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for final consideration and passed.
Seanad Éireann 78 Industrial Credit (Amendment) Bill, 1974: Second and Subsequent Stages.