Waiting For Godot

In 1969 the Labour Party talked about a National Development Corporation to co-ordinate and expand the activities of the public sector. Three coalition governments have talked about it. They are still talking about it.
One of the major concessions won by the Labour Party in the Joint Programme for Government looks set to be reneged upon by the coalition cabinet. Legislation to set up the prooposed National Development Corporaation is to be published this summer, and is currently being drafted in the Attorney General's office, and sources within the Labour Party now privately concede that the NDC will be a much weaker and less significant body than was agreed in the Joint Programme.

In the November 1982 negotiations between the Fine Gael and Labour parties which led to the formation of the present coalition government, a list of demands was prepared by a Labour Party advisor who had been involved in the previous short lived coalition. One of the priorities of the Labour Party was the setting up of a National Development Corporation, a concept to which many in Fine Gael - notably John Bruton - were strongly opposed. One of the Labour demands was, therefore, that if the Ministry for Industry was not controlled by Labour that a Labour junior minister be given responsibility for the NDC.

Not only do they not have their junior minister - they have John Bruton as Minister for Industry.

The concept of a National Developpment Corporation first surfaced in the Labour Party in 1969, and has been discussed and refined many times since c; then. An Industrial policy document adopted by the 1969 Labour Party conference proposed the setting up of a Department of Economic Development, which would become the share- ~ holder of all state companies and cor- '" porations.In addition, a State Development Corporation was to establish and extend new industries in areas with growth potential.

There were areas of the economy which had not been developed by private industry, according to the prooponents of such a State Development Agency. Particularly, private enterprise was unwilling or unable to invest in the development of natural resources and other areas which involved a high capital input, and a long wait before profits were finally realised. The Labour Party view was that the State should get involved in these industries.

The ideological argument used by supporters of such state involvement in industry is simple and straightforrward. In our private enterprise econoomy, they say, profitable industries are in the hands of private individuals, while the state runs loss making service industries which are necessary to keep private industry going, and any other industries which private enterprise is not prepared to run. As a result, they say, industry is run not in the interests of social or economic policy objecctives, but in the interests of private profit for a small group of individuals.

In addition, this situation is used by supporters of private enterprise to argue that state industries by their very nature lose money, and that therefore private owners of wealth should be given as much freedom as they want to run whatever industries they want. State involvement should be limited to handing out cash to entrepreneurs to give them some enncouragement.

The Labour Party view expressed in the 1969 and subsequent policy docuuments and election manifestos, was that the economy should be planned by the state in the interests of certain social and economic objectives. A National Development Corporation, acting as a holding company for exissting state companies, with power to establish and invest in new industries was seen as central to this policy.

Prior to entering the 1973-77 coalition with Fine Gael, Labour had insisted on getting a major econoomic ministry. They got Justin Keating as Minister for Industry, who put a major submission on the NDC to cabinet in 1976. There was, according to Labour sources, "fierce opposition" to the idea from senior civil servants in the Department of Finance as well as from Fine Gael cabinet members, and the idea never got anywhere until prior to the 1977 election, when it was agreed to at the last minute by Fine Gael, and just as quickly buried in the coalition's ensuing electoral disaster.

During the 1981/82 coalition, the idea was re-introduced by the Labour ministers, couched in economic rather than ideological terms; with an emphaasis on joint ventures between the NDC and private industry "in order to break down Fine Gael's ideological hang-ups about it," according to one Labour source. In his budget speech of 1982, John Bruton said that the government was "giving detailed consideration to the organisational set-up and functions appropriate to the Corporation." The government, however, fell a few hours later.

As time went on, some Labour ministers appeared to become connfused about what the NDC was suppposed to do, or indeed why they wanted to set it up in the first place. During the subsequent election cammpaign, the Tanaiste and then Minister for Industry and Energy, Michael O'Leary held a departmental press briefing to explain the details of the proposed National Development Corporation. For 0 'Leary's advisors and civil servants from his department, it turned out to be a major embarrasssment. For the press it was the most hilarious event of the election cammpaign.

Flanked by his economic advisor, David Grafton, and a senior civil servant from the Department, 0 'Leary displayed a total ignorance of what the NDC was, or what it was supposed to do. Under questioning by journalists present, he frequently contradicted himself, was corrected several times by the civil servants, and got more and more flustered. The journalists began to laugh, the civil servants began to laugh. Even 0 'Leary himself laughed at the end. It was not the best adverrtisement for what was described in the press release as "the single most imporrtant initiative this decade for intensiifying Ireland's industrial development drive and thus expanding job creation activities. "

In the November 1982 Joint Proogramme for Government, it was stated that the National Development Corrporation would be established "as an early priority" and its role and functions were clearly spelt out. The NDC was to have "a primary innovative and developmental role directed particularrly towards potential growth areas of the economy."

What was stated in the Joint Proogramme was very close to Labour Party policy. The NDC was to initiate new jo b creating projects, to invest in state enterprises, private enterprises or joint projects with the private sector. It was also to act as the holding company for eight commercial State manufaccturing companies, including Irish Steel, Nitrigin Eireann Teoranta and the ESB. It would have initial equity capital of £200m and a borrowing limitation of £500m. As described in the Joint Programme, the NDC would mark a radical change in industrial policy, with the state taking an active, interventionist role in the economy.

John Bruton had other ideas, despite the joint programme.

"From day one," according to one Labour source, "Bruton set about dismantling the notion of the NDC." He maintained that the NDC should only get £40m equity capital, and in an extraordinary interpretation of the Joint Programme, saw the NDC as a means of privatisation of state resourrces such as forests, bridges and roads.

In January 1983, a Labour Party briefing document was prepared for the Tanaiste, Dick Spring, outlining the proposed role and functions of the NDC, and warning of the expected opposition from Bruton, the IDA, the cn and the Minister for Finance. John Bruton also received a copy of this document, and went through it with a marker, writing comments such as "Rubbish!" and "Not true" in the margin beside various points.

Magill is in possession of a copy of this document, at the end of which Bruton has written some of his views on the NDC. The NDC should not be allowed "to soak up millions oftaxpayers 'money," he wrote. Existing state agenncies should be used, and tax advantages should be given to investors. "Role for NDC could be the development of privatisation," he said. The Labour view had been that the NDC was necessary to innvest in industries which reequired a larger amount of capital than private enterprise was prepared to invest. Bruton did not agree. "Remember," he advised, "lack of capital is never a problem to a man with a good idea well thought out."

Clearly, Bruton's view of the NDC differed radically from that agreed in the Joint Programme for Government. To clarify Labour's position, Spring decided to devote eight pages of his address to the Labour Party conference of 1984 to an elucidation of what the NDC was to do. This section of his speech was shown to and agreed with Garret FitzGerald.

The day before Spring's speech, John Bruton issued a press statement announcing details of the NDC. A few hours before Spring made his speech, according to Labour Party sources, Garret FitzzGerald rang him at the connference in the RDS to say that his speech could serioussly embarrass Bruton, and could he do anything to avoid such embarrassment. Spring said that he could not, and went ahead and delivered the speech.

Some weeks later, Bruton presented his proposed White Paper on Industrial Policy to cabinet, which contained his view of the NDC. Extraorrdinarily, the Labour Ministers present agreed to it. The White Paper was published in July last year, and said that £7m would be allocated to the NDC in 1984, despite the commitment in the Joint Proogramme that £200m was to be the total equity capital. The document also implied that NDC sponsored compaanies would be automatically sold off to private enterprise after a number of years, though this had not been stated in the Joint Proogramme.

In effect, the Labour minissters had agreed to John Bruuton's version of the National Development Corporation. Reasons given for this by Labour sources vary. Some say that the European elecction campaign was on at the time, and everybody was disstracted by campaigning. Others say that they didn't realise that a White Paper was a statement of government policy. Another reason given is that they didn't understand what Bruton was talking about and just passed it on the nod. Whatever the reason, it gave Bruton the chance to explain his view of the NDC to the Dail.

Labour backbenchers and rank and file members were furious. Since then, the
proposed legislation has been renegotiated, and Labour ministers claim that they have won back 85% of what they were looking for. This does not appear to be the case.

The heads of the Bill to set up the NDC were agreed at cabinet during the week prior to the Labour Party conference. Labour sources claim to have won substantial concessions in two main areas.

1. The equity capital of the NDC has been agreed at £200m. But this money is to be allocated to the NDC in parts on a year to year basis. Any future government - or indeed this government ~ could decide to allocate as small an amount of money to the NDC as they liked.

2. It has been agreed that the NDC will not be obliged to sell off its investments after a fixed period of time, but that the NDC itself will decide. There is however no reason to believe that the board of directors of the NDC will opt to hold on to its investments, particularly if the Minister for Industry, John Bruton, appoints the board.

Whatever the final struccture and powers of the NDC, it will fall far short of what was agreed in the Joint Proogramme for Government. One of the major functions - that of acting as a holding commpany for existing commercial State manufacturing compaanies has been abandoned, and there are serious question marks over the amount of capital that will be given to the NDC and the autonomy that it will have.

In this year's address to the Labour Party conference, Dick Spring devoted two paraagraphs of his script to the NDC. Last year he devoted eight pages to it, saying that "the National Development Corporation will become a reality this year (1984) . . . by the time I address you again, the NDC will be workking actively in the Government's attack on unemployyment."

He also said: "The essenntial prereq uisite for the success of the National Development Corporation is commitment. Above all else the government which establishes it must beelieve in it, otherwise it will be setting up another white elephant." There is no eviddence that John Bruton, the Minister under whose Departtment it will be set up, believes in the National Development Corporation. •