I move:
That a sum not exceeding Six Thousand Six Hundred Pounds (£6,600) be granted to defray the Charge which will come in course of payment during the year ending 31st March, 1933, for payment of subsidy in respect of leather (sole and insole).
When the Executive Council was considering its tariff policy, prior to the introduction of the Budget, the matter of sole and insole leather arose on an application made by the Tanners' Federation for the imposition of a protective duty. The matter was examined with considerable care, because it was felt, in so far as leather was the raw material of an important industry, any action taken in respect to it would have to be such that the fortunes of the allied industry would not be adversely affected. It was felt, however, that, in so far as it was desirable to impose a tariff, arrangements might be made which would permit of boot and shoe manufacturers procuring their requirements, in so far as they had to import them, free of duty, although there were certain difficulties arising out of the fact that a number of manufacturers were also merchants, and that it might be impossible to distinguish between leather imported for manufacturing purposes and leather imported for merchant purposes. The main difficulty we came up against was that there are established throughout the country a number of hand boot manufacturers, a type of craft which we would be very slow to damage in any way. The imposition of the duty on sole and insole leather, involving as it would a slight increase in the price of sole and insole leather, would have a very serious effect on hand boot manufacturers. We decided, therefore, that the method of tariffs was not the one to adopt in this case. I said that the imposition of a tariff would have the effect of increasing prices, because it is clear that leather is being imported at prices which are either uneconomic, or that can barely repay the cost of production and transportation. The leather trade journals published in Great Britain and in other parts clearly show that price cutting is widely practised, and that in the depressed condition of the industry in other countries all sorts of methods are being adopted to hold trade. A particular effort was being made by English tanners to secure themselves in the market here.
Having, however, ruled out the method of tariffs we considered what alternative methods might be adopted to preserve and to develop the tanning industry. As Deputies are aware, the tanning industry was once very widely established here. Its decline is, of course, largely attributable to the substitution of motor cars for horses, and in no circumstances, no matter how favourable, could the tanning industry ever be restored to the position which it formerly occupied. At the same time there is considerable scope for development. There is at the moment one fairly large tannery, and a number of smaller tanneries, all reasonably equipped and reasonably efficient, producing leather of a very high quality. In one small tannery leather of a particular quality is produced which is, in fact, exported. The present production in respect to sole and insole leather is very, very far from all our requirements, although the tanneries are equipped and are in a position to supply in quantities all the requirements of the Saorstát. They are not, in fact, supplying more than ten per cent. at the moment. We decided, therefore, upon the method of subsidy and got into consultation with the Tanners' Federation and discussed it with them. Certain proposals were put up by them as to the rates of subsidies they suggested. These rates were, in our opinion, excessively high, and would have involved the State paying not merely all the labour costs of production, but some part of the cost of raw material as well. We went into the matter again in as great detail as was possible, and ultimately decided that a rate of 1½d. per lb. for sole and insole leather manufactured after the 1st July would be sufficient to put the Free State tanners in a competitive position, would not impose any undue burdens upon the taxpayer, and would meet all the circumstances of the case. The information available to us would seem to indicate that the payment of this subsidy would reduce the cost price of Irish leather to in or about the selling price of English leather. In so far, however, as Irish leather is admittedly of much superior quality to imported leather it was felt that manufacturers were in an advantageous position to secure the market here in the event of the subsidy and the rate fixed being given. The present position is that roughly 10,000 hides are tanned in the Saorstát every year and, of these one-half are manufactured into sole and insole leather. At the rate of subsidy we propose the annual cost would be £1,650 upon the present output. If the output increased four times from 5,000 to 20,000 hides, the total annual cost would be the amount provided for in this estimate, £6,600, which is as much, if not something more, than we anticipate will be required in the present year.
A number of Deputies have probably received telegrams and other communications from the Tanners' Federation, in which they state that the rate of subsidy proposed here is too low and will not have any beneficial effect upon the industry or result in any substantial increase in the output of sole and insole leather here. I ask the House to appreciate that we have to take into account a number of factors and we are satisfied that the rate proposed— 1½d. per lb.—is adequate to offset the natural disadvantages which the Irish tanners are labouring under vis-á-vis their English competitors. Although it will not permit of their making any large profits and will involve a hard fight on their part to improve their position in the market, nevertheless it is as much as the taxpayer might be expected to give them to help in that process. The revival of the industry is undoubtedly of importance, because there is a very large annual consumption of leather of one kind or another here. If we get a start made on sole and insole leather, we may be able to branch into other parts of the tanning industry and engage in the manufacture of other types of leather of which there is a fairly large consumption here. The subsidy is being provided for by estimate because it is largely experimental. If, after the experience we gain during the present year, following the passing of the Estimate and the operation of the subsidy, we consider that it is desirable to proceed further along these lines, a Bill will be prepared and introduced in the Dáil to deal with the matter. It will be necessary, of course, to take powers to examine the books of producers and to take other steps to ensure that no unjustifiable claim will be made against the Vote. We are satisfied that it is not necessary to have these powers for the present year, as we hope to be able to take the necessary steps to safeguard ourselves against fraud, and get all the information necessary for the allocation of the Vote. But the legislative proposals which will give us the necessary power will be introduced, if it is subsequently decided to proceed with this subsidy arrangement. I may add that it is intended to limit the subsidy paid to any one firm to the amount which would be paid on 25,000 hides. In other words, if in the case of any one firm, production exceeds 25,000 hides, the subsidy will be paid on 25,000 only. It is not expected, however, that total production will reach that amount in the present year. I think the Dáil should pass this Vote. It is, in our opinion, likely to lead to the development of an industry which offers considerable possibilities in the future. If it has the effect which we anticipate and leads to that development, the money will have been well spent. If it does not lead to development, the money will not be spent at all and the taxpayer will have suffered no loss.