Seanad Éireann - Volume 95 - 20 May, 1981
Nítrigin Éireann Teoranta Bill, 1981: Second and Subsequent Stages.
Questions proposed: “That the Bill be now read a Second Time.”
Mr. Staunton Mr. Staunton
Mr. Staunton: Should we adjourn for ten minutes?
Professor Murphy Professor Murphy
Professor Murphy: Is there a palace revolution?
Minister of State at the Department of Industry, Commerce and Tourism (Mr. Meaney) Minister of State at the Department of Industry, Commerce and Tourism (Mr. Meaney)
Minister of State at the Department of Industry, Commerce and Tourism (Mr. Meaney): I wish to apologise. The Minister has been delayed.
Mr. Staunton Mr. Staunton
Mr. Staunton: Did the Minister of  State say that he would like to apologise for the Minister being held up?
Mr. Meaney Mr. Meaney
Mr. Meaney: The Minister was held up.
Mr. Staunton Mr. Staunton
Mr. Staunton: Is the Minister coming?
Mr. Meaney Mr. Meaney
Mr. Meaney: Yes. As set out in the explanatory memorandum already circulated, the purpose of the Nítrigin Éireann Teoranta Bill is to increase the authorised share capital of the company by £50 million, that is, from £27.5 million to £77.5 million, and the limit on the company's facility to borrow under ministerial guarantee by £50 million, that is from £100 million to £150 million.
As Senators are aware, NET were established in 1961 as a State-sponsored company to produce nitrogenous fertilisers at Arklow. From relatively modest beginnings the company have grown to a point where they are now a major industrial and chemical undertaking, providing permanent employment for over 1,150 people. Total assets are more than £170 million and net sales revenue in 1980 was over £60 million. The Marino Point plant in Cork produces ammonia — a raw material for the manufacture of nitrogenous fertilisers — from natural gas supplied from the Kinsale Head gasfield. The ammonia is mainly used to produce urea at Marino Point and calcium ammonium nitrate — or NET -nitrate as it is more commonly called — at Arklow — both straight nitrogen fertilisers.
NET have established over the years a reputation for consistent supply of high quality product and have made a major contribution to the phenomenal expansion in nitrogen usage by Irish farmers over the past 15 years, increasing from 32,000 tonnes of nutrient N in 1965-66 to 247,000 tonnes in 1979-80. NET supply up to 85 per cent of the domestic market for straight nitrogen and the company's operations ensure national security of supply in respect of this strategic commodity for Irish agriculture, as well as making a valuable contribution to the country's balance of payments. While it is fair to say that sufficient supplies of  nitrogenous fertiliser seem to be available at present on the international market to meet the needs of this country, this has not always been the case in the past and may not necessarily be the case in the future.
It is hardly necessary to give this House any further background on the company's operations as few State-sponsored companies have been subject to such extensive attention, publicity and study in recent times as NET. Senators will be particularly aware of the fairly comprehensive report on NET's activities which was published by the Joint Committee on State-sponsored Bodies on 4 May.
NET received Government approval in 1974 to proceed with their major expansion programme at Marino Point. The history of this project has already been well documented in the Joint Committee's report and was the subject of extensive debate in the Dáil in connection with this Bill. For that reason I do not propose to go over the same ground again on this occasion. The House will be aware that major difficulties were experienced in connection with this project which resulted in a delay of over 15 months and an eventual cost of £137.3 million compared with what NET regard as the first detailed estimate of £63.5 million.
As the construction of this project advanced, it became clear to me that there was reason to be very seriously concerned about the cost escalations and delays involved. As a result I had extensive discussions on many occasions during the past three years with the board and management of NET and impressed on them my deep concern about the way the project had developed. In mid-1978 I set up a system whereby NET were required to submit quarterly reports in relation to the project and the content of these reports has been extended since then. By the end of 1978 I felt that the history of the project was such as to warrant a confidential independent consultancy review to discover how the capital costs had increased to such an extent and what lessons could usefully be learned from NET's experience. However, the  fact is that once the initial decisions are taken and contracts entered into in respect of a project of this kind, it is extremely difficult to abandon it in midstream and no amount of monitoring or supervision will change for the better its basic economics.
A number of Deputies in the Dáil made the point that there should be greater control by central Departments of the State-sponsored Bodies. This is a very controversial issue as the rationale behind the establishment of many of these bodies in the first place was to remove their activities from what was regarded as the constraining effect of central controls. The NESC Report on “Enterprise in the Public Sector” published some months ago, came out strongly against what they regarded as the excessive level of central control of these bodies. Admittedly the NET experience would seem to suggest otherwise but a lot depends on the calibre of the management and on their sense of accountability to the Departments concerned. Indeed, I am reviewing at present the general question of the relationship between my Department and the State-sponsored bodies to assess what changes, if any, are necessary in the light of experience in recent years.
The increased expenditure associated with the Marino Point project has had a profound effect on NET's finances. This has been exacerbated by the separate problems affecting the Arklow plant, which has been trading at an increasing net loss in recent years. Losses directly applicable to Arklow have grown from £0.8 million in 1975 to nearly £8 million in 1980. The principal reasons for the losses at Arklow have been changes in production technology in the fertiliser industry which made the company's involvement in the manufacture of phosphoric acid and compound fertilisers unprofitable, increased competition from bulk-blenders of cheap intermediate fertiliser products, general overmanning in NET, depressed price levels for fertilisers which have failed to keep pace with input costs and unfavourable industrial relations and labour practices. These problems have forced NET to engage in a very  substantial level of borrowings with associated crippling financing charges. NET's accumulated losses at the end of 1979 amounted to £24 million and the loss for 1980 is expected to be £56 million. The total amount of NET's medium and short-term borrowings at the end of 1980 was over £200 million, with associated annual financing charges of £30 million. The company are now in serious financial trouble, as their capital base is completely eroded and they are unable to service their borrowing commitments. NET have proposed a capital restructuring of the company, and have requested additional paid-up equity of £90 million, which they say will enable the company to return to a commercially acceptable debt/equity ratio and reduce the very large burden of bank interest which prevents them returning to a viable position in the long-term.
NET are facing an immediate financial crisis as they are obliged to repay a short-term, non-renewable bridging loan of $80 million — equivalent to £50 million approximately — by 29 May 1981. Although there were references to specific borrowings by NET in the Joint Committee's minutes of evidence, I feel that this particular aspect of the company's finances was not sufficiently highlighted in the committee's report. Furthermore, NET have, at present, up to £50 million in existing medium-term loans which are not the subject of ministerial guarantees under the NET Acts and it is desirable, in the context of any new legislation, that provision should be made for formal guarantees in these cases. These guarantees will also enable a marginal reduction to be secured in respect of the interest rate for the medium-term loans in question.
As I indicated in the Dáil, the Government have concluded that the immediate financial difficulties facing NET must be tackled now and the specific purpose of the present Bill is to enable the $80 million bridging loan to be repaid by 29 May 1981 and to provide formal guarantees for the existing unguaranteed medium-term loans of £50 million. Failure to tackle these problems at this juncture would, in my opinion, inevitably precipitate  the immediate closure of the company. Although I have been aware for some months of the company's impending financial difficulties I felt it appropriate to await the publication of the Joint Committee's report on NET as it would have been improper of me to bring a Bill of this nature before the Houses of the Oireachtas when publication of such a report was imminent.
I wish to stress that the present Bill does not signify that the Government have concluded their examination of NET's future prospects. In this regard, the Government share the view of the Joint Committee that further study and specialist advice are necessary under a number of headings, before any final decisions can be realistically taken about NET's future. Some analysis has already been undertaken of the possible options open to the Government but it is clear that further work needs to be done as a matter of urgency. With this in mind, the Government have now decided to establish an inter-departmental committee of senior officials to consider in detail all the options for the further of NET with a view to reporting to me as soon as practicable so that proposals can be presented to the Government at an early date.
It is my intention that the committee will use independent specialist consultants to advise on specific aspects of this matter where they consider it necessary. Obviously one of the matters which will have to be considered is the dramatic change which has taken place in the energy field since the original decisions relating to Kinsale Head gas were taken. There may be better uses to which this gas can now be put and the full implications for this in relation to employment, balance of payments, energy efficiency and returns to the Exchequer will have to be examined. My understanding is that the position at the moment is that there are no immediate alternative uses to which NET's substantial offtake of natural gas can be put and this position is unlikely to alter for the next two to three years pending developments in relation to the proposed Cork-Dublin pipeline and possible conversion/adaptation of ESB generating capacity. However, the  problem about exercises in which possible alternative uses for the gas are assessed is that the correct answers three years ago would not necessarily be the correct answers today and it is possible that the correct answer today will not be the correct answer in three years' time. A fundamentally important factor is how energy and fertiliser prices and supplies move in the meantime.
Without prejudice to the future deliberations of the proposed inter-departmental committee, I must say that I have been impressed by the resolute action taken by NET, and in particular the company's new managing director, during the past year in attempting to restore order to the company's operations and finances. I was also glad to see that this action was endorsed by the Joint Committee. As a result, I must admit that I am now more optimistic than I was some months ago about the company's future prospects. The action to which I refer comprises the closure of the unprofitable Arklow Gypsum subsidiary, the retirement from phosphoric acid and compound fertiliser operations at Arklow, a re-organisation of the company's management structure and a general slimming down of excess manpower with a view to increasing productivity. It is, of course, deeply regrettable that action of this nature, involving the loss of a very significant number of jobs, has to be taken. However, it must be recognised that these measures are absolutely necessary if the company are to have any prospect of future viability. Furthermore, the results of NET for the first four months of this year were very encouraging and output from the company's plants was well up to rated capacity.
In the Dáil, I said that my attention had been brought on numerous occasions to extraordinary and hair-raising work practices which apparently exist at NET's Arklow plant. While I indicated that poor management in the past had enabled this situation to develop, I sincerely hope that for the future, there will be a new attitude of responsibility and realism on the part of workers as well as on the part of management. NET's financial difficulties are  very real and the company's future prospects would be very much improved by a positive approach from management and workers alike, acting in a spirit of mutual co-operation to tackle the company's difficulties. For example, I very much doubt if NET could survive a deterioration in industrial relations, further industrial action — such as the prolonged strike in October, 1978 — or excessive pay demends. The fact that a State company are involved will have little bearing on the situation if adverse circumstances such as these should occur.
I am confident that the Nítrigin Éireann Teoranta Bill will commend itself to the Seanad and I recommend the Bill for its approval.
Mr. Staunton Mr. Staunton
Mr. Staunton: Our party support the broad principle of this Bill which aspires to increase the share capital of Nítrigin Éireann Teoranta by £50 million. The alternative to doing this at this stage is a continuation of the catastrophe there has been in relation to NET because a failure to do so would simply mean the bankruptcy of this company and the immediate unemployment of about 1,000 people.
It is interesting, debating this Bill in the House, to realise why it is before us. This Bill is not before us so that we may debate general policy considerations of NET so that the Houses of the Oireachtas might consider the Joint Committee on State-sponsored Bodies' report relating to NET. We are not establishing guidelines in the interest of this country in so far as this company is concerned in future years. This Bill is before us because it is a crisis Bill. It is an example of the mess there has been in NET over a number of years that this crisis continues and continues in Government.
This Bill is a crisis Bill because NET, in their debts structure, are obliged to repay a bridging loan of 80 million dollars, which is non-renewable, by 29 May 1981. The 80 million dollars is approximately £50 million and 29 May, looking at my diary, is Friday week. It is a crisis Bill in the sense that if the Houses of the Oireachtas do not pass this NET Bill, 1981, this company will go bankrupt. The  implications of it being a Government company and the lack of financial prudence by Government, should it go bankrupt, is an appalling indictment and a continuation of the same saga.
The Minister has pointed out that he does not see this as being the ultimate solution in so far as this company are concerned. I appreciate his view on that. But let us get first things first and brutally see why this Bill is before us.
What has happened in NET over a number of years must lead to the utmost disquiet among people concerned with public life and public expenditure. We are a small country with a limited budget and the extent of the debacle here in relative terms must be much greater than that in British Leyland, for example, or the British economy or other examples throughout western Europe. I do not know of one on this scale. We have had a saga not just of mismanagement but lack of control of a major project involving enormous capital expenditure. There has been an apparent lack of control within the Department of Industry, Commerce and Tourism, lack of control by the board of NET and mismanagement by the company both in the development of the capital investment and in the operations of the company.
It is interesting that even in the Minister's speech today, whilst we are handing out bouquets to the new structure, and apparently this company are being run better than they had been, we are told about the level of losses in the Arklow factory. In 1975 losses amounted to £800,000. In 1980 losses were estimated at £8 million and we are given the reasons for this. It is a very interesting and simple point but it is part again of the continuation of the saga. The NET accumulated losses at the end of 1979 were £24 million. The loss for 1980 is expected to be £56 million and we are having a debate on 20 May. Regardless of the size of the company, some of the largest multinational companies in the world can produce a balance sheet on 1 February to tell you what happened in the previous year. Accounting efficiency within this company should have allowed them to know  by mid-February or March what happened in 1980.
The Minister is now present and I wish to make one or two points. I was suggesting that in so far as the affairs of NET are concerned there is still a continuation of problems concerned with controlling this company. I was pointing out a very small example of what I see as a continuing loss of control in this company. We are told in the Minister's speech, which the Minister of State read here, and the speech the Minister made in the Dáil, that the NET accumulated losses at the end of 1979 were £24 million. We are told that the losses for 1980 are expected to be £56 million. The Minister in his speech on 12 May referred to the loss of NET for 1980 and said it was expected to be £56 million, instead of being precise. Regardless of the size of the company, the biggest companies in the world can produce a balance sheet by 1 February or by the middle of February 1981 to tell you what happened in 1980. Why in this company where we were so concerned about the saga of lack of control over the years, is there a suggestion in May 1981 that the loss for 1980 is expected to be so much, instead of being precise? There seems to be a continuing lack of control which is very disturbing.
One of the benefits of this debacle has been the emergence of the excellent work which is being done within the Oireachtas by the Joint Committee on State-sponsored Bodies. I should like to pay a tribute to that committee and the members of it for the excellent, quite work behind the scense which they have been doing and who have put in a great many hours, I am sure at personal inconvenience both politically and financially, in their excellent work.
I was one of those who applauded the establishment of the committee because of the problems which are arising in a State where such a huge proportion of public revenue is moving into the semi-State sector as opposed to the pure departmental area, and the dangers of lack of adequate control. One of the healthiest things which has happened to democracy in this country in the last decade has been  the establishment of this committee. The report, in so far as NET are concerned, is a classic one and the committee have done and excellent service to this country. I hope, having read that report and having listened to the debate on it, that the lesson will be learned.
In these areas these matters cannot continue. What has happened here has been a case of squandering public funds by a semi-State body, gross mismanagement of the development of the capital structure and the building of the projects and mismanagement in the operational area. We are told of the level of the Arklow losses which rose from £0.8 million in 1975 to £8 million in 1980. Reasons are given as to why this happened. The first reason stated in the speech by the Minister is in regard to changes in production technology in the fertiliser industry which made the manufacturing of phosphoric acid and compounds unprofitable. This is unacceptable.
With the relatively recent investment in the fertiliser industry in Arklow, where people can see down the road to what may possibly happen in that industry, it is not a sufficient excuse, after such a major capital investment and after such an extremely short time to say, in a blasé fashion, that losses were due to changes in production technology and so on. Of course, we support the semi-State structure. Most of these companies have done an excellent job and serve a distinct national purpose. At the same time, one must consider the price that would have to be paid if any company in the fertiliser industry in the private sector here was involved in that type of capital investment and ran into a loss situation of £8 million in 1980. In brutal terms, in the private sector it would mean bankruptcy because there is no fall guy at the end of the line to pick up the tab.
The second reason given, of increased competition from cheap intermediate fertiliser compounds, is again not sufficient excuse. The third reason given for the losses being so high is overmanning. Why should there be overmanning? Overmanning is at the root of so many problems in industry today, where we do not have  sufficient productivity. We support, for obvious reasons, the £50 million which will be injected into this company. This Bill pinpoints the fact that NET cannot pay their $80 million debt next week unless they get the £50 million. This is a crisis Bill, not a fundamental appraisal of the committee's report. There are so many areas of national interest demanding funds that in the future there must be much more critical control over where the money is going.
There is room for great disquiet about the arrangements with the Kellogg company. This notion of a fee of about £6 million to supervise plant erection and the blank cheque to buy such a massive amount of machinery without penalty clauses has been unsatisfactory. I do not know if the decision of the Minister to establish an inter-departmental committee will help. The history of some inter-departmental committees in the past has not been all that great. A committee within his own Department, under his control directly, rather than an inter-departmental committee composed of people each individually responsible to different Ministers, would be a better arrangement.
I note that the company have closed Arklow Gypsum. We see the reasons for that, because the company is out of phosphoric acid and compound fertilisers in Arklow. Again obviously a commercial decision had to be made and presumably the right decision was made. One can be extremely critical of so recent a decision concerning capital investment which put the company into this area and which now, after such an extremely short time, it is getting out of. There are indications in the international fertiliser industry to suggest that if people in the company had been looking at the international scene and structures and what was likely to happen in the future in this industry these investments might not have been made in the first place. The cost of the project, the original estimate being £63 million in Marino Point, escalated by about 120 per cent to £137 million.
The magnitude of this debacle is incredible. There is also another a very interesting issue which is addressed to the  fundamental viability of the project in terms of natural gas as the raw material which the company are using for much of their operations, regarding the price of this natural gas to the nation. There are suggestions that an extra £30 million might have been lost last year if an economic price had been charged for this natural gas. The whole notion of using natural gas at a subsidised price to shore up what would otherwise be an inherently inefficient industry, leaves room for question and, certainly, is an issue which I imagine the Minister will face up to.
I want to compliment the committee on the work they have done. They have spelt out what has happened here. On Kelloggs they said: “The Committee has established to its satisfaction that there was a serious misunderstanding between NET on the one hand and Government and Government Departments on the other as to the amount of estimated capital cost.” On Marino Point: “The Committee considers that the time taken by NET Management to transmit vital capital cost information to the Government Departments concerned, and on occasions the NET board, was too long.... From the Committee's examination of the evidence given NET Management were premature in proceeding with the execution of the project by issuing the Letter of Intent to Kellogg...” There is so much more that could be said. The report makes valuable reading. It is a classic document.
It is said that this Bill should be before the House, but I appreciate the reasons for it. The Minister was not here when I started my speech but let me just repeat that this party support the Bill. Again, it is a crisis Bill so that NET can pay the bill on 29 May and so that the company's financial solvency remains. That is why we are supporting the Bill. There is room for great disquiet. I wish the company well in the future and hope they turn the corner, but on the more fundamental points of control and the spendings of public funds, there are many lessons to be learned from this.
Lady Goulding Lady Goulding
Lady Goulding: There are several differences between State-owned concerns  and private enterprise concerns which are truly astonishing in two senses. The first is that they could scarcely be more simple to comprehend. The second is that nobody seems to comprehend them. Of these differences the greatest is that if a private enterprise concern sets up a productive activity, budgets for its capital costs, its running costs and its predicted profits and then proceeds grossly to overspend on capital, hugely over-employ and incur steady losses on sales, the outcome is straightforward. It becomes insolvent. In fact, it goes “bust”. It may be tragic, but it puts fully paid to the whole stack of errors and, incidentally, sacks all those who were responsible for them. If the activity is State-owned there is no such word as “insolvent”, still less “bust”. All that happens is that the miscarriages, however complete, are regarded as normal to pregnancy and a happy birthday is contrived by the delightful formula called “capital reconstruction”. The equivalent of that treatment in a private enterprise company would be for the shareholders to attend a special meeting, receive from the board a proud display of the horrors already informed and then would readily absolve the auditors, the board, the management, the workers, from any form of blame. They would then unanimously agree to subscribe for as much more capital as the aforesaid team proposed, as appropriate to keep them in the state to which they were accustomed. What I seek to emphasise now, even before we come to the direct question — what to do about NET — is the iniquity of excusing inexcusable management and accountancy conduct, by the anaesthesing, by a State rigged system of bogus financing.
Let me turn to NET and apply these principles. NET's first phase of history is contained in smaller figures. It installed two plants of laughable inefficiency, operating a process which was then being ruthlessly written off by the big companies abroad, and erected them in a particularly unsuitable place. It has taken almost 20 years for most people to recognise that this is the genesis of the Arklow story. How does the Marino Point exploit relate to this record of achievement? The  answer is perhaps curious. It is both good and ill. Much technical experience had then been acquired by NET people, so that carefully chosen, advanced and very complex installations were selected and ordered. Therefore, however desperate the present situation, and one's fury, one should be broad enough to recognise some resemblance to the case of the Sydney Opera House which, despite the national scandal of its cost, now exists as a national advertisement of grand dimension.
But, two other considerations require our attention now. One is recrimination, the other contrivance. As to recrimination, one cannot be constructive backwards, but one has a duty to prevent recurrences. What is Heaven's name are the excuses for allowing such monstrous extensions of plans and costs without doing what any reputable auditor would insist on doing to even the most exalted private enterprise firms — refusing to sign the accounts, or else qualifying them so censorially that they would be quite unacceptable to the shareholders in general meeting?
The second recrimination — when NET defended themselves on the count, the final cost included much more plant than was originally planned. How can such innocence be condoned? Imagine a general meeting of a private enterprise company, where the board reported that it ordered twice as much as it needed, at several times the cost, and asked shareholders to be good enough to fill in their cheques and leave them with the secretary before leaving the meeting. There is an unavoidable dilemma here and we should face it squarely. One of two things, with certainty, happened. The first is that the Auditor-General's Office was annually and grossly irresponsible in reporting no alarm at the cost of the figures. This is an extremely improbable eventuality, because that office has the same probity and detachment but, alas, lack of authority versus Government, as has the Central Bank.
The alternative was that the reports were presented and the facts were given starkly to the shareholder, in this case a  Minister. This has been going on for a number of years and it is not this Government's fault. This Minister did not like it, but concluded that the situation could hang on for another year. Another possibility is that he was never properly briefed by his officers. Even in this situation, however, very harsh blame can not be withheld from the Dáil and the Seanad. However tardily and craftily the course of things was presented to them, they dreamily, in effect, crossed their arms and dozed off. Now, immediately, we must turn to contrivance. What are we to do? Scrapping the whole Marino installation sounds very clearheaded. Cut your losses. Never throw good money after bad. It is almost surely too narrow-minded. It results largely from the sequence that I have been sketching about fudging and covering facts for so long, so as to produce suddenly an overexcited feeling of scandalised alarm when, at last, the searchlight beam hits its target.
Stated more calmly, we now possess an advanced industrial installation, though of inordinate cost. Difficult as judgment is in this case, I would consider it sounder, under certain conditions, to lay the costly ghost and keep the plant fully fit. The first of my conditions must be the preparation and public issue of a White Paper, or the like, setting out clearly what shall in future be the only and exceptional conditions wherein the auditing, presentation and publishing of a State-owned company's results and commitments may differ from those of a private enterprise company. The most evident exception would be where uneconomic production of services was authorised for social benefits. These must be quantified in advance and separated in result from the State accounts.
The second condition is that the employment role at NET must be cut to the bone. We have been told that cuts have been made already. We may realistically be sure that they are not to the bone, perhaps not even near it. A mentally high decimalisation is essentially a route to competitive costs and competitive products. If it be allowed to become a cushion to standby employment, we are  neck deep into false logic. Redundancy money is the cheapest possible form in which we can benefit the invalid who calls upon us, so, let us have redundancy money paid in proper figures. Closely connecting with this, another condition for granting the money called for is probably necessary. It seems unlikely that, at any rate for a time, there will be adequate user demand, even including exports to permit the plan to work full year, full course and full employment. Let it then be firmly pre-arranged that they shall work through only such period as allows their operation at full capacity, and staff efficiency. Only in those periods shall full pay and other costs be extended.
I conclude by emphasising the stark fact that if we vote more of the nation's wealth to NET — and I think, on balance, and on the conditions I offered, that we should do so—it is an act of critical trial. We should first make the strictest behest now that, at least until things are, as we hope, shipshape, regular reports shall be made by special delegations from the Auditor-General's office and these shall include a report of the subsidies to the company inherent in the price of natural gas being paid by the company as against the energy-related value of this gas on the open market.
Finally, all these findings shall be relayed without any departmental cotton-wool to us, the nation, who are the shattered.
Mr. Harte Mr. Harte
Mr. Harte: I do not want to debate the major problems that have arisen in relation to the project which went 15 months over its time and which resulted in an increase of 116 per cent over the original estimate of £63.5 million. I am quite satisfied that the Minister has played his part in trying to get at the reasons behind the delays and subsequent escalating costs. I agree with the Minister's view that once the project had got under way and had been put in train, it had become extremely difficult to either monitor or abandon it. I accept the Minister's bona fides in this. He has done everything necessary or advisable in all the circumstances.
It was imperative that we took the gamble  and a number of lessons have been learned. The cost escalation arose mainly through delays in getting the Marino Point project off the ground. Admittedly it was exacerbated by the trading losses of the Arklow plant, but there are two separate and distinct problems. We are dealing with the question of delay in construction and the actual losses arising out of that. That is a de facto situation and it cannot be rectified. I believe in the right of Senator Goulding and other Senators to make critical contributions on behalf of the public on how things were handled and to highlight the facts surrounding the whole question of the construction cost escalations.
The Members have a duty to question the quality of the personnel who were charged with the task of getting this particular project under way. Whichever Government is in office there must be a continuance of examination. I welcome the views on this which the Minister put forward on Second Stage in the Dáil and that he is pressing for more reflective studies and seeking specialist advice. The Minister is looking at the problem with a great deal of honesty and attention under many headings. I would ask that prior to any final decision being taken on the future of the company both Houses would have the fullest possible opportunity to debate the matter in toto. I take it that we will be kept well informed and that we will have the opportunity of having the widest possible debate. That type of a debate is not suitable for this occasion where there is a time factor involved and, if the money is not coming across, we might be faced fairly quickly with a complete closure. This is not the right place to do the knocking or arguing. It is a debate for another area at a later stage under different circumstances. Knocking is not going to solve the problem and it may not even help matters forward. We have a problem here and must do something to get things moving in the most desirable way possible. There is no alternative at this time but to assist in the best way possible, that is to enable the Bill to realise its purpose of giving formal guarantees for the medium term loan of £50 million and in helping to repay the bridging  loan. To talk otherwise is to suggest that we precipitate a closure of the company.
I do not know if I got the full gist of Senator Goulding's speech, but its tone went close enough to that. I was a little saddened to hear it. We are talking about 1,500 jobs with some serious effects following for Kinsale and a threat to the national security of supply of a very essential commodity. That is what we should keep uppermost in our minds at the moment. Even though present signs may not appear to everyone to be very hopeful, to me they do seem hopeful.
That there has been an expansion in the company, that they supply 85 per cent of the domestic market, that it is a major industrial chemical undertaking, that they have assets of £170 million and that they had a net sales revenue of £60 million in 1980 may not be the answer to everything, but they are hopeful indications, coupled with the Minister's assurance of further examinations and a fuller monitoring programme. Given that situation, there is a great possibility of this company becoming viable. If that viability can be restored, many redundancies will be avoided. We have enough redundancies at the moment. No matter how much redundancy money people get, it is destroying to be out of work. If there are circumstances that permit us to allow that situation to be circumvented, where we keep people at work, then it is not nice to here anybody talking about increased redundancy payments. Inevitably, by the nature and change of progress, we will from time to time have to discuss this question of what redundancy payments should be, but in circumstances where people have been already very hard hit, we should not talk about how we should buy ourselves out of our trouble by paying people extra money and getting them off the plant. It does not begin and end there.
The concept behind the establishment of NET was to provide nitrogenous fertilisers to supply our largest industry, the agricultural industry and to remove our dependence on imports. Those are very important developments. Nobody in this  House or in the other House could deny the overwhelming success of those developments. One of the additional benefits is that it was our first major chemical industry and led to other developments in the chemical area. A lot of people in the chemical industry have grown up on the ideas and experience obtained in this area.
People in Arklow and Wicklow are going through hard enough times at present. We have already lost 138 jobs in the subsidiary company of Arklow Gypsum and £10 million of public funds in the last six months. In the parent company, we have had redundancies of almost 400 people. This has all been done in an attempt to rationalise the position of the parent factory in Arklow, but I am a little disturbed. Arklow and Wicklow, in general, have suffered enough in this respect and even if we have to lean backwards, we should do it and I do not think we will be leaning backwards in view of the points that were made earlier on. I believe that it is possible to make it a viable concern.
There are 800 people not only in the Wicklow area but in the adjoining area of Wexford who are very concerned because their jobs are threatened. The pressure we are applying by knocking the company may in fact be the means of inducing the people concerned to rationalise in such a way that they would get round the abolition of those 800 jobs. There may be pressure because here we are talking about not only the Arklow situation but about the whole question of the Cork project.
With all due respect to everybody and not having anything against the Cork people, I do not think the people in Arklow should suffer any more. They have paid a heavy penalty for whatever behavioural patterns the management have followed. There is no way now that the staff there should be asked to take any more drastic cut-backs. It is nice enough to talk about redundancies, about rationalisation, about the best way to deal with people when they become redundant, but we are not talking about redundancy as such. We are talking about the economy of south Wicklow and north Wexford. We are talking about a whole range of  matters that have grown out of this project. Much has been built around it.
Let us consider the effects for a moment. There is the whole question of the ports in Wicklow and Wexford, the question of the employees themselves and their families, of shops, pubs and farms, of lorries hired to transport materials and of hotels. We are talking about £500,000 every week already gone, taken out of the economy of south Wicklow and north Wexford and it is not good enough to be talking about further redundancies. Everything that it was possible to do has been done and I hope no more pressure will be applied in this particular area. I do not mind people highlighting the problem. They should go after them and do their public duty but when the Minister himself considers that there is a way of monitoring things and that the future of the industry will be looked at at a future date I do not think this is the time to do the knocking. We should wait to see what happens and until such time as we can have a full debate on the full merit of the matter. In the meantime let us do the right thing now, support the Bill and get it through as quickly as possible.
I would make this final plea. There are no alternatives in this area of south Wicklow and north Wexford and the IDA should look at this area as a crisis area and see what immediate attention they can give to it. I know there are great demands on them but I would make that plea to them. The evidence is there that it needs special attention.
To some extent I have been congratulating the Minister on his whole approach to the matter and on the way in which he has been sympathetic to the problem but that does not excuse the Government as a whole. The Government must bear some responsibility for the position of NET today. Because of their own economic policies, or lack of them, the value of the Irish pound has dropped drastically in the last few years. This has happened at a time when NET had to borrow substantial sums in US dollars, Deutschemarks and so on, borrowings which had to be paid back in those currencies which over this particular period appreciated by  30 per cent largely because of the collapse of the Irish pound on the foreign exchange market.
I do not want to dwell too much on that area. The main concern is that there would not be any undue pressure put now on the workforce who have suffered the penalty of losing their jobs. I would make the appeal that there be no more pressure exerted in this particular direction regarding more cut-backs in jobs.
Ruairí Brugha Ruairí Brugha
Ruairí Brugha: This whole disastrous episode relating to NET points to the great difference referred to by an earlier Senator in relation to accountability in private enterprise and from time to time to the absence of that accountability where the people's money is involved. I have some sympathy with the Minister in having to bring in this proposal. Of course I support the provision of an additional £50 million to NET in order to save that industry but I have some sympathy with him because as he says himself the major expansion at Marino Point was authorised by the Government in 1974. We should learn from this sort of experience. It is an expensive lesson that there seems to be a lack of accountability in relation to capital expenditure in a major State body. There was obviously a lack of experience and foresight in the signing of a contract for £63.5 million which ended up at £137.3 million.
As a Senator said earlier, not even a multinational corporation in private enterprise would allow this to happen because the people who are appointed to executive and board positions have a sense of accountability and the sense comes right down to the success of their jobs and to the continuity of their jobs.
I support the Minister and this measure but I would like to put one question which came up during the debate and that is how far are the Comptroller and Auditor-General's staff responsible for checking capital commitments in State boards? This is a crucial question because when the people's money is being made available — and that is what you are doing when the Exchequer and the Minister guarantee borrowing — when the people's money is being committed in  capital expenditure it is essential to ensure that all the normal safeguards that would be introduced by any outside concern would be applied.
Professor Murphy Professor Murphy
Professor Murphy: I will not detain the House long. I just want to point out that apart from the national interest and concern generated by this debacle the questions are of particular interest to those of us who live in the vicinity of Cork harbour. Not only are we concerned about the employment question involved, as Senator Harte pointed out, but as one walks down by Monkstown on a Sunday afternoon and looks across at that gigantic plant across the harbour, one thinks that it is bad enough to have one's aesthetic sense offended and one's lungs polluted by these dark satanic mills but to reflect as well that one's money is going up in smoke is more than can be tolerated. But what else can be done? I agree with those who say that they have to go along with the Bill and that there have been exhaustive investigations and endless hand wringing. I do not intend to add to that except to share Senator Staunton's complimentary remarks to the Joint Committee.
There are just one or two points that strike me as one who is very much an amateur in the field. One is that throughout the pages of the Minutes of Evidence the NET people emphasise repeatedly the enormous financial charges that have arisen and that are now being serviced. Words like “tremendous increase in borrowings,” “large increase in finance charges” and “the interest charges are now the worst factor” are phrases which occur throughout. For example, Mr. Crumlish, as reported at page 14, said that the major burden the company are stuck with at the moment is servicing their investment. Mr. Conlon said that the company are borrowing money to pay interest on borrowings. Deputy Lawlor made the observation that so far as he could see the financing banks were the people making all the profit out of this, that they were getting the interest on the money and because there is this underwriting by Government these institutions  are prepared to advance vast sums of money continuously and reap tremendous profits.
When the employee representative group circulated a brief memo on the critical situation they pointed out that the company's serious under-financing situation was highlighted by the loss of over £50 million for 1980 and that one reason for this was the financing charges of £27 million which was mainly interest on borrowing.
I am simply making these observations to point out that although there has been much hand wringing about incompetence and industrial disputes and so on, no one seems to raise an eyebrow about these particular villians in the piece, and the pound of flesh that they continually exact at our expense. Is it because the State is so used to paying vast sums of interest to international financiers that it cannot raise the question of the morality of this kind of parasitical leech-like activity? Is it because the State itself is in “hock” because of the incompetence of Government that it cannot question this aspect of the crisis? I sometimes think it is a great pity that there is not a joint committee of the Houses to investigate the mismanagement of Government.
This extremely well-publicised episode has, of course, attracted all kinds of public scrutiny and has got much coverage on television and in newspapers and so on. Once again, predictably, it has raised the old denigration of public companies and of the public sector. Predictably NET were a godsend to those who are continually complaining about waste of funds. We had indeed — surprise, surprise — a classic censorious contribution from Senator Goulding in which she took the lazy workers, inter alios, to task and gave a reasonable imitation of a kind of composite Marie Antoinnette and Margaret Thatcher. I suspect that if NET have put in an appalling performance over the last several years that that does not necessarily mean — and the Minister's script sensibly makes this point — that all State companies are therefore tarred with the same brush. One cannot possibly, for example, talk about Córas Iompair Éireann, which must perform a public service,  or Aer Lingus which must, in the national interest, carry a disastrous loss-making trans-Atlantic service, and other public bodies, in the same breath as NET.
I want to raise what seems to me to be a contradiction in the matter of departmental supervision of all this, because I take it that there are officials in the Department who keep a watchful eye on semi-State proceedings. The Minister said today that he was aware that something was beginning to smell, if you will pardon the expression, in NET's operations as far back as three years ago, and that from mid-1978 he was keeping a periodic supervisory watch over the project in Marino Point. In his reply to the Second Stage debate in Dáil Eireann he said, and I quote from column 2671 of the Official Report for 12 May 1981:
... the worst aspect of this whole sorry affair was the Arklow Gypsum affair... It is the worst aspect because they lost a little over £9 million, which seems to be relatively small here but in fact is the more serious aspect of it. I was not aware of anything even approaching the true situation in Arklow Gypsum Limited until March or April 1980.
Am I right in thinking that there is a discrepancy here between the initiation of concern in one case in mid-1978 and in another not until the spring of 1980, two years later?
Dr. Whitaker Dr. Whitaker
Dr. Whitaker: The appalling background to this Bill is set out extremely well in the Joint Committee's recent analysis of NET. Their report gives a most disturbing picture of the ineptitude of the board and management of NET and of their confused and irresponsible approach to the laying up of public liabilities. One wonders how they came to think it was their business to decide national social policy and keep on unprofitable activities and, indeed, undertake extremely doubtful new schemes of expansion for employment or other social considerations. I thought it was a kindly aberration of the Joint Committee, in paragraph 13 of their report, to say that NET has been “highly successful”  in meeting its first objective, namely “that of providing Irish farmers with a continuity of fertiliser supply, particularly nitrogen, at prices competitive in relation to EEC prices.” This obviously needs to be qualified, and indeed is qualified later by the committee, by a recognition that the fertiliser was supplied only at a massive and mounting loss which adds to the State's liabilities. As if these losses were not enough, NET added inexcusably, by its unwise Arklow Gypsum venture, a further £9 million to the taxpayer's burden.
It is not my wish to go over this sad story or to be censorious — it is better treated as a caution to those who may be too enthusiastic about the contribution that State enterprise, or a National Enterprise Agency, can make to development of a viable kind. Any other kind of development is a waste of scarce national resources and offers no solution of our employment problems.
An emergency or interim payment from public funds of £50 million, as provided for in this Bill, is a serious matter, given the present state of the public finances. But it seems that it is only the tip of the iceberg. A table of NET's indebtedness published in the Dáil Official Report of 18 February last shows total borrowings by the company at the end of 1980 at £204,877,000. Current losses are adding to this at the rate apparently of £56 million a year. Even when the £50 million of debt due at the end of this month is repaid, will there not still be up to £200 million outstanding — all of it now to be covered by State guarantee? There is no assurance whatever that this liability will not also have to be taken over and met by the Exchequer. The lesson from this is that we indulge a very dangerous belief when we think that a State company can borrow on their own account as if they were an independent private commercial entity and go into receivership if they fail, leaving the creditors to scramble for whatever the assets realise. In reality a State enterprise is ultimately pledging the credit of the State and it seems that the State must accept an obligation to repay the debts in full.
I sympathise with the Minister who  needs a little time to decide the fundamental questions posed in paragraph 53 of the Joint Committee's report, particularly the second question — namely, “is there a need, nationally, to secure the fertiliser requirements of the agricultural sector of the economy?” This needs cool, competent and objective appraisal and I hope the Minister is satisfied that the inter-departmental committee will have all the requisite expertise at their disposal.
This basic question has long roots, going back to the latter half of the fifties when, as I recall, the Department of Finance were fighting hard against the establishment of a nitrogenous fertiliser factory by the State for the simple reason that it was clearly of advantage to Irish agriculture to be the cheap dumping ground for nitrogen over-produced elsewhere. There was no assurance that our own nitrogen could be produced as cheaply. These considerations seem to be still relevant. I read in the committee's report that there is an over-supply of ammonia at present and we know from experience that we have so far been unable to produce fertiliser economically. I hope that, in any case, the Minister will assess most carefully whether there is anything in the security argument or, even if there is, what is the best way of meeting it — whether it could be met by a certain amount of storage or even by moth-balling the plant—putting it on a care and maintence basis—until it is needed, if there is no early prospect of its being made economic. The loss involved at present in keeping it going must give one pause. If a little light relief is permissable in this gloomy scene, I am tempted to suggest that, at a time of crisis, indeed even now, we might spread some of that surplus Lough Sheelin slurry further afield.
I see again in this further report of the Joint Committee an expression of the dangerous fallacy about equity debt ratio which appeared in their reports on the Sugar Company and on Aer Lingus. I had only a very brief time in the debate on the Aer Lingus motion to explain why commercial norms in this matter are irrelevant  and inapplicable to loss-making State enterprises. I appeal to the Minister not to be misled. Interest on capital, as he knows well, has to be paid by someone. It is absolutely no good describing the current level of interest charges as “crippling” or indulging in the rhetoric that Senator Murphy treated us to a moment ago. The fact is that if anyone is suffering from present interest charges, given the present high level of inflation, it is those who are lending their money, not those who are borrowing. The people who are borrowing are not paying, in general, a real rate of interest. Those who are lending money through deposits and otherwise are suffering a real loss. Let us not indulge in the fancy that interest rates are crippling and must therefore be shifted to someone else—the taxpayer. We are told of the enormous losses that would have to be faced “in the absence of a capital injection by the State”. But what this really means is that a permanent subsidy is being sought at the taxpayer's expense. The £50 million the State has to borrow has to be borrowed at current rates of interest. It does not come out of thin air. Even NET, not noted for the reliability of their forecasts, do not promise profitability of the Marino plant in the foreseeable future. Paragraph 78 of the committee's report refers to a submission by the company that they are capable of returning to profitability by 1985. But in the very next paragraph this projection is withdrawn. The Joint Committee rightly warn everyone concerned about the company's tendency to overoptimism.
Finally, let me say that I am as concerned as anyone about preserving and creating employment of a sound and lasting character. I would, however, like to make a point which has some bearing on the social aspects of this question. A once-for-all allocation of £50 million or so from public funds—the equivalent of one year's loss at present—would suffice at current interest rates to assure every one of the 800 employees at Marino Point an income of £10,000 a year for life. I am not advocating this, of course, but one has to keep some sense of proportion when deciding how much scarce public  money should be devoted to supporting even viable projects for the sake of the employment they afford.
Mr. Cooney Mr. Cooney
Mr. Cooney: If one takes into account all that has been written and said about this company before the Joint Committee reported and since they reported, there is not a lot left to be said in the course of this debate.
There are a couple of points about this, however, that I should like to deal with. The first is the decision by the Minister to pay £50 million immediately to NET in advance of an in-depth examination. With regard to the order of magnitude of the losses involved in this company, we are inclined to lose our sense of proportion about millions and the figure 50 in relation to the hundreds of figures that have been exposed in this whole investigation does not look that big but, as Senator Whitaker has properly pointed out to us, it is an immense sum and the cost to the State is also immense. I sympathise to a degree with the Minister in the predicament in which he found himself in having to make a decision to seek authority for this money and to pay it over in advance of the examination recommended by the Joint Committee, the need for which he agrees with. I presume that while he has left the Bill until the committee reported nevertheless he has had continuing discussions with the management of the company concerning their future prospects. I presume he has got some grounds for continuing to believe that this company might be turned around.
It is a bit disappointing that the Minister did not give us any figures in relation, for example, to the first four months of this year. We would like to see how the company have been performing so far this year under the new management. Also we would be entitled at this stage to have a projection from the company for the years ahead. I know that in the report we expressed some doubt about the forecasting of the company in light of the fact that some projections, as we have said, proved to be seriously over-optimistic. But one would imagine  that at this stage in light of the publication of the report and the reservations that were expressed about its forecasting ability, a tighter look would have been taken by the company into the future and a realistic projection furnished. I presume the Minister has sought, and I am sure has obtained, this projection. It would be of considerable assistance to us in the House when debating the merits of this further grant to the company, to know what sort of projections the company are now putting forward and what sort of a future they see for themselves, because we are in the dark.
The Minister was, I suppose, totally coerced into paying this money because it is required to meet a specific short-term loan which the company secured. Because the State is involved and the State's reputation is involved, there can be no question of not paying it. If we were given no other reason than that we would have reluctantly to agree, but it would ease the pain of our agreement if we had more hard figures from the Minister, if any are available. I would imagine that at this stage some should begin to become available.
On the other hand, we may have to face up to the previously unthinkable thought of wondering whether the plant in Cork and the company generally have a future at all. Senator Whitaker raised the spectre of the plant going into a care and maintenance situation. The Minister in the concluding stages of his speech used a sentence that is grim and he might spell out what is behind it a bit more when he is replying. He said:
The fact that a State company is involved will have little bearing on the situation if adverse circumstances such as these should occur.
It seems to me that in that the Minister was echoing also the unthinkable, that very fundamental decisions might have to be taken with regard to the future of this plant. I would hope that that would not happen and that it would not have to happen. Certainly the implications that such a decision would bring will have to be teased out and I hope that the interdepartmental committee which the Minister  has set in train will do the fundamental teasing out that is so necessary.
I do not know that it would be altogether prudent for us to dispense with our own source of fertiliser and to rely, as Senator Whitaker suggested, on supplies coming from countries with a surplus and who want to dump the surplus. It would be very nice and very acceptable to Irish farmers if one could guarantee that for all time such dumping would continue but I would have some reservations as to whether we could expect such a thing to continue.
I understood during the course of our sessions with the company that the number of manufacturers of this product in the western world is diminishing and that one of the advantages for us in this country with this new and highly efficient plant—technically first-rate we understand—is that it will leave us in a superior position to any other agricultural user in the west. The competition in the future is expected to come from producers in the Middle East with their own feed-stock, developing their own chemical industries and producing this product. I understand the competition from that source had an adverse effect on other producers in the west. I do not know that it would be altogether wise for us to leave ourselves totally at the mercy of producers in the Middle East. They may be in competition with each other, they may have a surplus and they have to dump their surplus, but on the other hand they may not. I do not think we could risk our agricultural industry in that way. Obviously this is a factor that will have to be considered very seriously by the inter-departmental committee. My personal view—it has to be a superficial view—would be that it is a risk the Government should not take and consequently that is an argument for the continuance of Marino Point.
The other matter which emerges from this report and which is a lesson for the future is the level and frankness of communication between the management of State-sponsored bodies and their sponsoring Government Department and through that Department to the Government  themselves. It is extremely disturbing to read that at a critical stage of this development, at the very beginning when Government approval was sought, there was such a discrepancy between the understanding of the Government and the advising Departments on the one hand of the cost and the knowledge of the proposing company on the other hand. The discrepancy was literally huge. If that discrepancy and misunderstanding had been removed, one wonders whether the green light for this project would, or could, have been given at all. There was a very serious breakdown in communications at that critical time. I do not suggest that there was any deliberate concealment in order to ensure that the project would get the green light. Nevertheless, there was a carelessness about the presentation of figures which is reprehensible. It is imperative in any future developments by State companies that there be total and complete frankness between them and the sponsoring Department.
I am aware that the NESC published a paper critical of the dampening effect which responsibility to Government Departments has on the initiative of those working in semi-State companies in calling for a freer hand. In theory that is fine. Initiative should get its head but, on the other hand, with the bitter experience of this venture one must qualify how much freedom is given. Indeed it is odd that all the executives of State companies who came before the committee indicated that they were perfectly satisfied with the relationship which they had personally and which their companies had with the sponsoring Departments. They were hardly too shy to tell us something different from what they told the economists from the ESRI. There is a certain contradiction here but, in any event, even if they feel that the Departments impose too great an inhibition on their activities, in the light of the painful experience of this venture there will have to be, certainly at the stage when the new developments are being put forward, extremely careful control and extremely detailed investigation of plans which are put forward. In retrospect it is extraordinary  to think that the company were aware that this project was going to cost £60 million while the Department of Industry and Commerce, the IDA and the Government were under the impression that it was going to cost £40 million. It is an extraordinary situation and, while it is historical now, the Government and their Departments in the future must be extremely careful when analysing submissions made from State-sponsored companies.
In paragraph 109 of our report, we indicated two key factors that had to be taken into account by the Government when evaluating the company's request for additional funds. The envisaged growth in the Irish nitrogen fertiliser market is one of these factors. I would like to know from the Minister the company's advice to him in regard to that. I know that he is coerced into paying the £50 million to maintain the State's reputation. Nevertheless, it would be of interest to the House to know how the company sees the position with regard to these two factors isolated by the committee.
Again, on page 41, in paragraph 109 of the report, we set out certain guidelines to be borne in mind. I wonder if the Minister considered them, or will he leave them for consideration by the inter-departmental committee which is examining the whole scene? It would be of interest to us here to be informed by the Minister in more detail than he did in his opening speech of what information he has got so far and what views he is forming on the problems which face this company.
Another factor which we touched on in the report was the optimum use of the feedstock, the natural gas. We have very few indigenous raw materials in this country and one so valuable as natural gas must obviously be used in the best possible way. One of the criticisms that was made of the company was that its position is even worse than it seemed, because it is getting a hidden subsidy in the sense that it is getting the gas for less than its energy-related value. I would not altogether go along with that criticism. The company first of all told us that it negotiated the price it paid the producing  company. If it was able to negotiate a good price, then why should it not get the benefit of it? That is fair enough.
In any event there is something contradictory in wanting to use an indigenous natural resource available to us and to pump it into the industry at an energy-related price when we blame the price of energy as being the cause of all our inflation. I made this argument in connection with Bord na Móna's application to charge an energy-related price for their turf. What is the point in having a natural resource if we are going to jack up the price ourselves to the same level as the oil-producing countries charge for their energy? It was argued in the other House that one consequence is that if we are selling our fertiliser abroad we are giving to a foreign consumer the benefit of the cheap price the manufacturing company is paying for the gas. I do not know what is the answer to that. We do not put up the price of the fertiliser abroad because it will not be competitive. The other alternative is not to manufacture it at all. That, again, would have other economic consequences for the company and for the trading affairs of the nation. If the company struck a good price for the gas it should get credit for it.
The committee were satisfied that the plant which is now in existence at Marino Point is a first-class plant. It is modern and is technically efficient. There were some initial teething problems, but these are not unexpected in any new plant of that complexity. As a resource to the nation it has something of extreme value. It leads me back to the other point, whether we will have to face the unthinkable, of putting the company on a care and maintenance basis and closing down this plant. I do not think we should, because if that should happen the startup problems could be immense again. The expertise that has been assembled would be dissipated and there would be social hardship in that. It has to be avoided. The Exchequer has to pay a certain social price but this is inevitable in a developing country. We have to pay a certain social price in many of our activities and NET should be continued for social, strategic and economic reasons.
 The lessons that come out of what happened are clear to be seen. I have no doubt that the Minister is aware of them and will take all steps to ensure that the full lesson has been learned.
Mrs. Cassidy Mrs. Cassidy
Mrs. Cassidy: It would seem that a majority of the Members of the House in welcoming the Bill have taken the opportunity to indulge in a little plain speaking about the activities of a State-sponsored body some of whose operations have been described by the Minister as hair-raising.
It is very proper that as Members of a Parliament who are responsible for voting large sums of money in order to keep these concerns going we should concern ourselves with the accountability or the lack of it by those to whom we give the authority to spend this money. What we are talking about, basically, is public accountability; to whom should a State-sponsored body be accountable? In the final analysis it should be accountable to the taxpayer on whom falls the burden of paying for these bodies, and who trusts his elected representatives to see to it that his money is spent wisely.
The criterion for Government spending, whether it is on State-sponsored bodies or on anything else, surely should be the same that applies normally to private concerns, whether one is budgeting for an industry or for a family. That criterion is that one cuts one's cloth according to one's measure. If government spending is shown to be wasteful, how can ordinary people be expected to respond to exhortations from on high to stay within their budgets?
The report of the Joint Committee on NET makes sad and shocking reading. Although their terms are more moderate than the Minister's, the words “misleading” and “misunderstanding” only serve to illustrate a long litany of waste of time and of money. The Minister has to mount a fire-brigade effort to try to save something from the wreck. At this point we have an obligation to ensure that the boards of semi-State bodies will not be allowed to assume that because they provide a social service they are being  handed a blank cheque and can spend public money like drunken sailors. This concept of a social service is arrogant and unacceptable to most taxpayers. It has never been authoritatively defined or quantified by government, and this has resulted in what the NESC report on “Enterprise in the Public Sector” calls “the confusion of social and commercial objectives within State-sponsored bodies”. If it were possible to specify on tax demands how much of each pound goes on NET, CIE and all the other bodies, then the taxpayer himself would be obliged to sit up and take notice. Until this happens the responsibility rests with Parliament, and I suggest that this responsibility can best be discharged by enlarging the powers of the existing Joint Committee on State-Sponsored Bodies to allow them to monitor carefully the operation of these bodies, giving them far-reaching powers, including the powers of hiring and firing.
I note with interest the Minister's statement in his speech that he is reviewing the general question of the relationship between his Department and the State-sponsored bodies to assess what changes, if any, are necessary in the light of experience of recent years. I am more concerned with the relationship between the Houses of the Oireachtas and State-sponsored bodies. I think a working committee composed of Members of both Houses is essential if we are to avoid a similar public scandal in the future.
Mrs. Hussey Mrs. Hussey
Mrs. Hussey: I should like to say a few words about this Bill, which we obviously have decided to welcome albeit unwillingly and gritting our teeth. I would imagine that the very act of passing this Bill and giving this injection of funds to NET, which will go straight out of the country to pay a foreign bill, means inevitably that we will be back here another day giving more money in the same direction. That is why everybody here has felt it is important to make a contribution to this debate. We are all very conscious of the fact that we have not heard the end of State involvement in NET.
As it was described at the beginning of this debate, it is very definitely a crisis  Bill. It is quite astonishing to think that on 29 May the money that we are voting today will be needed to keep NET actually going at all. We are passing this Bill with our eyes closed because all we have at the moment is an absolutely damning report from the Joint Committee on State-sponsored Bodies about NET. We have had some words of the Minister that he waited for the report of the committee and he assured us that he has been conducting an ongoing investigation with the company. I hope that the fact that he decided to give this money means that that ongoing investigation has yielded something hopeful to change the picture, which is very black from what the ordinary observer can see.
We are passing a crisis Bill to save the company from immediate bankruptcy. That is the main purpose of this debate today. It is very sad to consider that NET, which began with such enthusiasm and hope and with such a very brave idea of establishing a certain strength for Ireland in the field of self-sufficiency in nitrogen for agriculture, now appears to everybody in this country as some kind of monster, something which is like a chain around the taxpayer's neck which cannot be shrugged off. Whether we like it or not that is the general feeling about NET around the country. It must be a great weight around the Minister's neck also.
We should think about the people involved in this problem. A factor which is very important to remember here is the health and well-being of a small town in the south of Wicklow and an area surrounding it in south Wicklow and Wexford, where there have been alarms, excursions and depressions. Rumours and counter-rumours were rife in the town and in the area for a long time, and a feeling that the bottom was about to fall out of the economic viability of that town. One of the reasons, I gather, why we are deciding to extend this rescue net to NET is that it may put at rest some of the worst fears of the people of that town, a town which came to life over the past ten or 15 years and which gradually emerged into an extremely lively and prosperous town full of very concerned people with a very fine community spirit.  It was a great shame to go from meeting to meeting in that town and realise the degree of depression among the people.
As the Minister mentioned, there have been extraordinary, hair-raising stories about the kind of things which have been going on in NET. I do not know if all of those stories are true. I am quite sure some of them are. I might mention one of the more hair-raising ones which I heard from three different sources and which I found it difficult to believe when I heard it first. I found it difficult to believe when I heard it the second time but, by the time I had heard it three times, it seemed to me that there must be some rationale in it.
It was that inside the NET plant in Arklow there was a room which was referred to by everybody as the office of the dead. The reason it was referred to as the office of the dead was that four highly paid technologists went into that office every day. There is no telephone in it. I am not quite sure what they did all day. I was told they played cards, or something, all day at some enormous salary. Because they were all on some form of contract they could not be got rid of and so there was this office of the dead. That is the kind of story I presume the Minister had in mind when he talked about hair-raising practices in Arklow. If it is true that kind of thing is terribly depressing and disheartening for workers and management. The practices of a management which would allow that kind of situation to arise must be questionable. It is very disheartening for workers who feel there is no direction coming from the top and that there is room for that kind of strange procedure. It must be very hard for them to feel they have a motivation to make something succeed.
In Arklow the families of the workers look for a scapegoat, and it is natural for everybody in this sad situation to look for a scapegoat. Blame must be laid fairly where it really lies. I would prefer to look forward, but it is of interest that in Arklow so many people become very locally patriotic or parochial about it. They point the finger at Cork and at Marino Point and say if it were not for that debacle in Cork they would be all right today and  would not have these worries. A totally irrational resentment builds up against another part of the country because people are looking for a scapegoat, and it is perfectly understandable.
The whole sorry story is, as somebody mentioned earlier, one of the most expensive lessons the Irish taxpayer will ever learn about our own democracy. Because it is a lesson, and because it is so expensive, we cannot say “NET will never happen again”. We have to say “This cannot happen again and, whatever is wrong with our system, whether it be inside the State-sponsored bodies, whether it is because of the way we run the Government, or whatever the basic underlying reasons are for all this, they must be tackled because otherwise we will have more NETs in the future.” It is a very painful lesson but it is one that must be taken to heart.
When NET were being set up the siting of the company caused a very great furore at the time, but that is ancient history. One of the small prices—to some people it would not seem so small—paid for the siting of NET is the devastation to the foliage, the trees and the surrounding area. They crouch near the Vale of Avoca like an enormous white elephant emitting smoke, fumes and mist which may be perfectly harmless. I am told they are but they do not seem to be perfectly harmless to the foliage and the trees. It is worth mentioning the environmental price we pay for large chemical plants which seems to be inevitable. Obviously it was considered that the employment element in NET, and the benefit to the country, far outweighed the environmental hazards of siting the company. It is important to mention that en passant.
I join in the compliments paid to the Joint Committee's report on NET. Very few of us would be in a position to make a meaningful contribution to this debate were it not for that very comprehensive report. In the report, while they range over a very wide area of causes, effects and conclusions, which should be required reading for every legislator, they are also constructive in their approach. I should like to mention one  particular paragraph in which they go into the question of employment; 800 people are still employed at NET and 800 families in that area depend on NET, and 800 families amount to a very important element in a small town.
In the Joint Committee's report they note with approval that
“The Board in the NET Board Resolution of 5 February 1981 has also undertaken to give sympathetic consideration to the provision of alternative employment to displaced workers in any activity which can be determined as viable. To this end, the services of all appropriate Government Agencies will be fully utilised. Furthermore, the question of the utilisation of any redundant equipment for other viable commercial operations will be fully and expeditiously examined.”
Other Senators have said that the IDA should give special attention to the south Wicklow area in the light of the problems faced by NET. I fully endorse the suggestion that workers who find themselves in this extremely uncertain situation through no fault of their own should get the first consideration of any Government agency in a position to do anything for them.
The NET problem is an extremely valuable lesson to us all, a lesson which cost the taxpayers a great deal of money at a time when we are told money is extremely scarce. We have to ask ourselves why this can happen and what can we do as legislators, as elected representatives, to make sure that this kind of thing cannot happen again. One of the problems which caused the NET debacle was a breakdown of information between the board of NET and the Department of Industry, Commerce and Tourism on the question of how much the Marino Point plant would cost, if it would cost £40 million or £60 million. That is an absolutely staggering breakdown of information and I find it rather alarming, to put it mildly. The Joint Committee on this point said:
The Committee has established to its satisfaction that there was a serious misunderstanding between N.E.T. on the one hand and the Government and  the relevant Government Departments on the other hand as to the amount of the estimated capital cost of the project during the critical period covering Government approval of N.E.T's authorisation to Kellogg to proceed.
It is not, perhaps, the first time there have been breakdowns between Governments and the rest of the community. We should ask if we are reasonable in asking Ministers for Industry, Commerce and Tourism in this rapidly developing country to carry on their shoulders the weight of responsibility they are expected to carry. The Minister has my sympathy in this matter. He did not enjoy going into the Dáil with this Bill and I am sure he has not enjoyed coming here with it today. I do not believe that, in this day and age, our system is modern enough, or is properly designed, to cope with the kind of decisions Ministers are expected to make. It is too much of a load to ask Ministers to carry. I said it before and I say it again, that every Government Minister in a Ministry like The Department of Industry, Commerce and Tourism should have a cabinet of his own drawn from outside the civil service to help him to make decisions.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: I want to remind the Senator that this is not appropriate to the Bill.
Mrs. Hussey Mrs. Hussey
Mrs. Hussey: I am trying to establish how we could possibly prevent this disaster happening again and having to come in here and vote millions and millions of pounds for companies which have cost the taxpayer so much. It might not have happened had the Minister had a cabinet system like the system which exists for the EEC Commissioners. I strongly believe that would strengthen our whole system of Government and that it would strengthen the way in which the civil service can deal with these companies.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: The Senator has already make her point. That is not a matter for this House.
Mrs. Hussey Mrs. Hussey
Mrs. Hussey: I am very glad to hear  that there is an inter-departmental committee to study NET. The Government are giving a great deal of money to the company, which rather constrains the deliberations of the Committee because they will hardly say: “That was money down the drain.” It seems to me that is one more rather sad feature. We have had several gates closed to us because of the exigencies of pressing debts which have to be paid.
Like other Senators, gritting my teeth I welcome this Bill. I am sorry the taxpayers have to foot the bill but, for the sake of the future of NET, and the future of the workers and their families in Arklow and the surrounding areas, I am glad we are doing this, and doing it in time to give NET a breathing space leading to what we hope will be a very healthy recovery.
Mr. Mulcahy Mr. Mulcahy
Mr. Mulcahy: I recognise the necessity for this Bill and I support it. I want to take this opportunity to make a few points. The report prepared by the Joint Committee on the State-Sponsored Bodies is very helpful like all the other reports. I certainly welcome the development of these joint committees. I find that the report is weak in that it does not help me to make up my mind about the future of NET. It does not tell me what added value is being generated by NET and what added value per employee is being generated. It does not tell me what competing groups in other parts of the country are doing in the terms of added value per their employees. It is one thing to say that the trading profits are low or non-existent but it does not show me whether this operation is productive compared to other operations in the world.
Before the Japanese decide not to continue to invest in an operation of this kind they work to a criterion which is that they will continue to invest as long as the added value per employee, or per unit of investment, is in or around the world position, particularly the world market share leader. If the report does not tell me that, I find it difficult to make a decision. Because of other preoccupations I have not had the time to do the work  myself. It is lacking in that, and because of that I fault the report.
It tells us that the output per employee is about £20,000 compared to £40,000 in the UK, but that does not give me the figures in value added terms. This company are turning over £60 million. They are generating that level of income from their operation. That is a sizeable operation. It took a sizeable investment to bring it about but, if it is important for us to develop our indigenous resources to a particular point, we have to measure it in terms of the value we add to those indigenous resources through the operations we set up. There is a weakness there.
I also find a weakness in a statement in paragraph 95 of the Joint Committee's report: “The Debt: Equity ratio had slipped from 1.1 in 1974 to 1.9:1 in 1976, 5.2:1 in 1977 and 7.8:1 in 1978.” It reads a little bit like the jargon of the business press. In operations of this kind in Japan, a debt to equity ratio of perhaps one to ten will be quite tolerable where they are trying to build up market shares. It means nothing to me that they talk about having a one to one debt to equity ratio. I find that meaningless. An interest cover of four to one would seem to me to be somewhat of a luxury in an operation where you are building up market shares based on an indigenous resource, particularly at a time when energy costs are consuming such a large proportion of the input costs. I make that point because I find it difficult to come to a conclusion based on the facts before me.
On the positive side of the report, it draws attention to the £5 million loss brought about by demarcation arguments. It is high time in the industrial relations scene, particularly when we are trying to build up industries based on indigenous resources, that the trade unions began to play their part. The Minister referred to the question of the relationship between the Department and the boards of the semi-State bodies and said he is looking into it himself. Obviously there is some weakness here. The Cathaoirleach has already pulled up Senator Hussey for discussing this matter so I will not go into it. I would point out  that there is a development in other countries, like the US, at the moment where directors of companies are jointly and severally responsible for the decisions of those companies, and particularly the main investment decisions. They are finding it more and more difficult in the US to get people to act as directors of boards because of this responsibility. Directors have to take out insurance to cover themselves against a loss situation. Directors of semi-State bodies might not rush in to take on these responsibilities if that development took place here.
Mr. O'Malley Mr. O'Malley
Mr. O'Malley: Could the Senator estimate the premium?
Mr. Mulcahy Mr. Mulcahy
Mr. Mulcahy: You would not get away with £500 a year. Sin é an méid atá le rá agam.
I find that the report is lacking. I certainly would not make a decision on this unless I knew what the added value generated by the company is per employee compared to other operations of a similar kind.
Mícheál Cranitch Mícheál Cranitch
Mícheál Cranitch: If Gilbert and Sullivan were alive today they would have the material for the greatest comic opera of all time. It is not so comic when you look at the money involved for the State and through the State for the taxpayer. It is a very sorry story, a saga of disaster from beginning to end. I was very intrigued by the Minister's statement that he said in the Dáil that his attention had been brought on numerous occasions to extraordinary and hair-raising work practices which apparently exist in NET Arklow plant. I was wondering what these hair-raising practices could be, because in my lifetime about the only one who was capable of raising the hair on my head was one, Bram Stoker. Senator Hussey told us — and this was a startling room called the office of the dead to which people retired, cut themselves off from the outside world, and played cards, or whatever people would play in such circumstances. Now the company say to the Minister: “Domine exaude vocem meum” and the taxpayer must answer not  in pounds or in thousands of pounds but in millions. I wonder if in times to come NET will be regarded as the Dracula of the State-sponsored enterprises.
We have been taught a very serious lesson. I hope we learn from that lesson. It makes one ask oneself the question: “Are we the type of people who, under State-sponsored auspices, can handle enterprises such as NET in which there is colossal capital investment?” We are told 1,150 workers are involved. My heart goes out especially to the workers who have been declared redundant. I know a man who devoted his whole life to the Marino plant in Cork. Now his life is in shreds and his ambitions are unrealisable. He does not want to be redundant. He wants to continue to work. It is a very sad story. I hope the lesson will be learned and that never again will such a disaster take place. We will have to be on our toes all the time watching the State-sponsored bodies. Had this been a private enterprise, I do not think there is any doubt that this disaster would not have taken place. Having said that, I think the Government are right to give them this £50 million. Two things are involved: the hope of keeping as many workers as possible at work and, as Senator Cooney mentioned, the desirability of being independent as far as our own resources and facilities are concerned for producing fertilisers to ensure that our agricultural industry will be up to date at all times.
Minister for Industry, Commerce and Tourism (Mr. O'Malley) Desmond J. O'Malley
Minister for Industry, Commerce and Tourism (Mr. O'Malley): I should like to thank the various Senators who have spoken. I will deal as rapidly as I can with as many of the points as I can. Senator Staunton spoke first and inquired why — and he used this phrase — the loss for 1980 is expected to be £56 million and why the exact position is not known. The exact position is known but the figures are not audited by the Comptroller and Auditor General and until he specifies precisely what the loss is I cannot give the figure. It is not unusual for the Comptroller and Auditor General not to have the figures available at this time of the year. It does not matter greatly in this  case, but it does in some others, particularly in some other more developmental boards.
He also inquired why the committee I am establishing is an inter-departmental one rather than just providing supervision by my Department alone. The answer is that the Department of Agriculture obviously have an interest in this matter because the likely usage of fertiliser and the type of fertiliser to be used in the years to come are of considerable importance in trying to plan for the future. The Department of Energy, perhaps above all, have an interest because they are responsible for trying to achieve the optimum utilisation of the natural gas in the national interest and it would be quite unrealistic not to allow them their appropriate input.
Equally the Department of Finance surely have an interest in a matter that has cost the taxpayer as dearly as this enterprise has and where there are, as of today, outstanding loans in excess of £204 million effectively in respect of which the taxpayer will have to pick up the tab, whether or not a formal legal guarantee is given, for reasons to which a number of Senators adverted. Surely that is the kernel of one of the weaknesses of the whole system of public manufacturing enterprise in this country. Once it starts it scarcely ever stops. There can be no question of a normal liquidation where the creditors, particularly the banks, have to take their chance. They do not have to take their chance. I wonder whether the banks, for example, who have, almost uniquely in this country, the tremendous gilt-edged, copperfastened guarantee of lending to these State companies, would take that into account when they are asked to bear some element of risk in lending to other companies. I was rather taken aback to discover recently from the IDA, for example, that of the companies which started under the enterprise development scheme last year, 70 per cent of the loan capital had to be guaranteed by the IDA, otherwise the banks would not put it up. You often wonder how any bank could succeed in losing out almost on any loan in industry  in this country when they approach the matter in this way and when they have the bonanza of lending large sums of money to State bodies in the circumstances which I have described.
Senator Murphy inquired as to why the Arklow Gypsum situation was not picked up in the quarterly reports which I initiated in mid-1978. They were not picked up by me until the spring of 1980. The reason is that these reports essentially cover the Marino Point plant and the Arklow fertiliser operation and no details of subsidiaries were given in them in relation to such reports. My Department, like any other, are dependent on what information the company chooses to provide. The quarterly reports have recently been extended, and we are looking at other ways of improving the information flow from the company. With the limited staff resources that are available in a Department we are simply unable to duplicate what the management can or should provide in either this or many other companies. I do not want to give the impression that I am expressing the view that the information flow currently being made available is inadequate. So far as I can see it is adequate and has been for the last nine months of so. Equally assuredly it was not prior to that.
Senator Harte referred to the difficulties that exist in south Wicklow and north Wexford. I am aware that there are serious difficulties there. One of the things that struck me when we looked at that area very hard six months ago when we saw what was coming up in relation to NET was why there was so relatively little industrial development in the area, apart from the old traditional industry of Arklow Pottery and its more recent spin-off, Noritake. The reason, which was explained to me, and I do not doubt that it is right, was that it was impossible for anybody to establish what I would call normal industry, paying normal rates of pay, in the hinterland of the NET plant at Arklow because no normal industrialist could hope to compete with the wage rates that traditionally have been paid in NET.
 Senator Brugha made reference to the Comptroller and Auditor General and the difficulties that seemed to arise. I dealt with that point fully in column 2677 of 12 May 1981 in the Dáil. I do not think it is necessary to go through all that again fully, but we have had to look very carefully at the position of the Comptroller and Auditor General, who was established originally in the last century and certainly carried over into our own administration in the early twenties in circumstances totally different from those, for example, that we are discussing today. It was never envisaged that there would be such companies at that time. While I do not doubt that the Comptroller and Auditor General's powers, functions and abilities are appropriate to his primary job of auditing the public finances, his very suitability and the suitability of his powers and functions for that job may render it difficult for him to deal as adequately as he would wish with the kind of problems that face a company such as this, particularly the sort of auditing that one feels perhaps should——
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: There is a division in the other House.
Mícheál Cranitch Mícheál Cranitch
Mícheál Cranitch: I move: “That the sitting be now suspended until 5.20 p.m.”.
Sitting suspended at 5.10 p.m. and resumed at 5.20 p.m.
Minister for Industry, Commerce and Tourism (Mr. O'Malley) Desmond J. O'Malley
Minister for Industry, Commerce and Tourism (Mr. O'Malley): A projection dated 4 March 1981 which was based on the implementation of the CCF rationalisation programme and on the making of an equity subscription of £50 million in May 1981, forecasts a movement into profit in 1984 of the small sum of £1.1 million. There was an inquiry about NET's present projection. It would be wiser to wait and see. I have read many projections of the company and I can only hope that they are more realistic in the eighties than they were in the seventies.
The company's results for the first  quarter of 1981 to 31 March are not audited, needless to say, but I do not see why I should not give them. The net loss for the period after interest and depreciation charges amounted to £3.77 million, an improvement of £1.30 million against the budgeted net loss of £5.07 million for the period. The interest charges for the quarter amounted to £6.5 million and depreciation charges were £2.78 million, giving a trading profit of £5.51 million before interest and depreciation. Fixed costs were generally in line with the budget expectations for the period. In the case of raw materials and electricity, there was a considerable saving on budget resulting from higher on-line times achieved on ammonia and urea production at Marino Point. The budget had provided for two breakdowns per month for tube failure prior to the reharping of a reformer furnace since September 1980. In the quarter under review only one tube failure incident occurred, which was a significant improvement in performance. CAN production in Arklow was very consistent throughout the period and was some 14,500 tonnes ahead of budget for the quarter and some 18,000 tonnes ahead of the corresponding period last year. There was a very brisk demand for nitrogen products for the months of January and February. However, sales in March dropped back, particularly in the case of urea, due to unusually wet weather conditions and the effects of a price increase at that time. However, budget prices are better and were achieved for all products sold in the first quarter.
The somewhat higher degree of optimism I have expressed in relation to this company since December is, at least to some extent, justified by those results. I have not got the results for the month of April in tabular form but they are in line with the first quarter results and are ahead of budget in terms of sales and prices obtained and the loss is smaller than what was projected.
Senator Cooney inquired about the fertiliser market situation. There has been a tremendous growth in total nitrogen usage—that is straight N and N in compounds—in Ireland since the mid-sixties.  In 1964/65 approximately 25,000 tonnes of nutrient N were used but by 1979/80 this had increased by a factor of ten to nearly 250,000 tonnes. This growth was brought about by more efficient farming methods, the increase in cattle numbers and the more favourable economic structures resulting from EEC membership. There is still considerable potential for further nitrogen consumption here. For example, in the UK the application rate is twice as high as in Ireland, whereas in the Netherlands, where dairying is the predominant farming activity, it is four times greater than here.
When NET were planning the Marino Point project in 1974, it projected that usage of nitrogen on the Irish market would increase by about ten per cent per annum, and these projections have proved to be broadly correct up to the present time. While the current depression in the agricultural sector undoubtedly has had an impact on fertiliser sales, which dropped slightly in overall terms for the fertiliser years 1979-1980 and 1980-1981, some experts believe that the depression is levelling off and demand for fertiliser should pick up next year. The fall-off in fertiliser sales has not affected nitrogen to the same extent as other fertilisers, particularly straight phosphorous and potassium and compounds.
The nitrogen application gives an immediate financial return to the farmer whereas P and K application may be deferred for one or two years without any obvious disimprovement in soil fertility. On the assumption that the market for straight nitrogen fertilisers increases at the rate of ten per cent per annum, the total output of NET's urea and CAN plans, that is approximately 250,000 tonnes of nutrient N, would be required to meet home demands for straight N by 1986.
The Department of Agriculture and the Agricultural Institute believe that NET may be over-optimistic in their forecasts, and they see NET having to continue to export urea up to the end of the eighties. The Agricultural Institute believe that much will depend on how  quickly the beef industry can recover from the present depression, as they believe that increased application of fertilisers mainly depends on the level of agricultural incomes. Nevertheless, the Institute is confident that in the medium term further demands for nitrogenous fertilisers will continue to grow at a significant rate, perhaps levelling off at twice the present utilisation: that is 500,000 nutrient N tonnes by the end of the decade.
NET's marketing strategy in respect of urea is that the anticipated increase in demands for straight nitrogen in Ireland will be met through sales of urea produced at Marino Point, and the company is actively marketing and promoting this product. The Agricultural Institute have carried out extensive tests on the suitability of urea for the Irish market and have come out strongly in its favour. In the past there has been some doubt about the acceptability of urea to Irish conditions but, with proper application, the Institute believe that urea will ultimately form up to 50 per cent of straight nitrogen usage in Ireland by about the end of the decade. Indeed, urea which has been imported into Ireland for many years has been growing in popularity recently. Over 80,000 tonnes were used in 1979-80 compared with 41,000 tonnes in 1977-1978. NET's production of urea amounts to 310,000 tonnes per annum. NET has been successful in recent years in capturing a very significant share of the home market for straight nitrogen fertilisers: that is up to 85 per cent with the balance represented by imports, mainly from the UK and other EEC countries.
Senator Whitaker raised the question of whether we, even at this stage, still need our own independent indigenous source of nitrogenous fertilisers. Of course, we do not. From the start we were presumably planning against a situation where there would be non-availability. So far as I know, we have only encountered that situation once since this company was started in the beginning of the sixties. It is only fair to say, therefore, that the Department of Finance read the  situation correctly in the late fifties. It would not have seriously disrupted Irish agriculture if this company had never been formed.
The same question can equally validly be asked today, and the potential disruption in the world is greater today than it was perhaps in the late fifties. The likelihood of demand for nitrogen in new farming areas is greater now than it was then. On the other hand, of course, the potential supply of ammonia is much greater as well. There is no doubt about that. Because the supply of ammonia is greater, the potential supply of nitrogen is greater. On the other hand we are in the somewhat different situation from the happy days of the late fifties when nothing had been spent whereas today £200 million has been injected.
Several Senators talked about the possibility of mothballing these two plants. I am sure if one were in the situation where you were a major multinational producer of nitrogen and ammonia and you had ten such plants or 15, as many of them had and you felt the need to mothball some of them, you would certainly give very serious consideration to these two. On the other hand, this is a company which has no other manufacturing facility and if you mothball these, the company may, in part, go out of business. I certainly hope that it will stay in business, but I am not going to keep it in business at what I would consider too high a cost to the taxpayer who, unhappily, has already paid more than his share.
While the £50 million proposed by this Bill to be put in as equity is described by some Senators and other commentators as a short-term crisis re-injection of money to meet a liability that will occur on 29 May, nonetheless, I am of the view that, while if it is paid now rapidly in the short-term to meet that particular liability, and if the company cannot, after this further large injection, survive on it, I, for one, would be very slow to ask the Irish taxpayer to put more into it. I think the company can do it. As I said, the parameter of the projection that I read out was the investment of £50 million in this month.
I would like to pay tribute as I did in  the Dáil to the efforts and dedication of the new managing director, Mr. Conlon. He is capable of bringing about the salvation of the company. The results it has shown, while they are bad by anybody's standards, in the context of this company are very heartening and are a considerable improvement on what the position might otherwise be. If Mr. Conlon gets the co-operation that one would like to see him get at all levels within that company, he can bring about the situation that I am sure all of us would hope can be achieved. There are those who would say it would be better not to harp back to the problems and difficulties of the last five or six years in relation to this company, but if we do not do that to some extent we are increasing the chance of a repetition of it in some other area.
Some emphasis on the way this company was run and the practices that were tolerated within it is no harm if it does anything to kill the notion that is widely prevalent in this country that any kind of State company is a bottomless pit and that it does not matter what attitude is taken up by those running it or working it because the taxpayer will at all times be there to bail it out. In this respect, I would like to signify my agreement with what Senator Whitaker has said, that we must not lose sight of the fact that this £50 million is costing the Irish taxpayer a lot of money. He has borrowed it, he will pay interest on it, and he will ultimately have to repay it. Realistically, can he expect to get any dividend on this investment? Would anybody in the private sector contemplate putting even £500 into such an enterprise? Quite obviously he would not. This company, its present situation and this legislation which arises out of that situation will, I hope, at least, be a milestone in the consideration of Irish public manufacturing and trading enterprise. If it is not, and if the lessons of this unhappy saga are not learned widely, then we might well have to face the fact that Irish public enterprise in the commercial field does not work.
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 95 Nítrigin Éireann Teoranta Bill, 1981: Second and Subsequent Stages.