Dáil Éireann debate -
Tuesday, 1 Aug 1961

Vol. 191 No. 13

Committee on Finance. - Transport Act, 1950 (Additional Powers) Order, 1961—Motion of Confirmation.

Minister for Transport and Power (Mr. Childers)

I move:

That Dáil Éireann hereby confirms the Transport Act, 1950 (Additional Powers) Order, 1961.

The Order will not come into operation unless and until it has been confirmed by Resolution of each House of the Oireachtas.

The purpose of the Order is to confer on C.I.E. the power necessary to establish a subsidiary company to take over, operate and develop the Board's Great Southern hotels and catering services. The new company will be a private company set up under the Companies Acts and will have a share capital of £100,000 divided into 100,000 shares of £1 each. All of this capital will be taken up by C.I.E. The number of directors will be not more than six and the remuneration will be subject to my approval and the consent of the Minister for Finance. The Board of C.I.E may appoint not more than three of themselves to be directors of the new company as well as the Chairman; the appointment of the remaining directors will be subject to my approval. The Chairman of C.I.E. for the time being, will be Chairman of the company.

The Memorandum and Articles of Association of the new company and any alterations therein will be subject to my approval, but they cannot be finalised or the new company set up until the Oireachtas has approved this Order. The name of the new company, which will be in Irish, has not been finally settled, but the Board intend to continue the use of the name Great Southern Hotels to which very valuable goodwill attaches. The report and accounts of the company will be presented annually to the Oireachtas.

The new company will take over the seven Great Southern hotels by way of conveyance or lease. It will also take over the Board's Hotels' Department Headquarters at 141 Thomas Street, Dublin. In addition the company will operate the various catering services at present provided by the Board on dining cars, at station refreshment rooms, at Busarus, on the Aran steamer and Shannon pleasure boats.

The extent of the business undertaken by these hotels and services can be judged from the figures quoted in the Board's financial accounts for recent years. For the year ended 31st March, 1960, receipts from the hotels and refreshment services totalled £885,000 whereas expenditure, including provision for superannuation, amounted to £824,000 in the same year. In the year ended 31st March, 1961, receipts amounted to £991,000 approximately and expenditure, again including provision for superannuation, to about £915,000.

It is not the intention that the company will receive any direct or indirect financial subsidy from the Exchequer apart from whatever grants or other assistance it may be entitled to receive in common with other hotel companies, for example through Bord Fáilte. To the extent that such grants will not be sufficient to finance future development it is the intention that the company will finance development through capital raised on the security of its own assets or alternatively through borrowing guaranteed by C.I.E.

The number of staff involved varies from about 550 in the Winter season to 900 in the Summer season. There has been full consultation between the Board and the unions involved in regard to the transfer of staff to the new company. Transferred staff will retain their existing rights to superannuation benefits and redundancy compensation and I have given an undertaking that amending legislation in order to provide for retention of such rights by the staff concerned, will be introduced.

The proposal to establish a separate company for the Board's hotels and catering services represents a welcome decentralisation of management and control. The operation of hotels has little in common with transport problems and it is desirable that the higher management of C.I.E. should be able to concentrate on the difficult transport problems they still have to face. Conversely, the hotels and catering services can have the undivided attention of specialised management staff and this will be all the more important as a major scheme of improvement and extension of the hotels is now under way. There will be room on the new Board for new blood with specialised qualifications.

I recommend that the House should confirm this Order and I am sure that the House will join with me in wishing the new company every success.

Mr. Dillon

I think this is a proposal to create new jobs. The Minister says the Board of C.I.E. may appoint not more than three of themselves to be directors of the new company as well as the chairman. The appointment of the remaining directors will be subject to his approval. There are to be six directors. The Minister calls this justified, since it will be a welcome decentralisation of management and control. Surely all the trend in modern management is for diversification. Messrs. Guinness are now making toffee and Thomas Tilling has so diversified himself that he has not a horse and cart left. He is in everything but transport and glories in the fact.

It is a poor administration that cannot provide adequate managerial capacity for refreshment in transport. I remember when I first went to America, if you travelled on the Santa Fe rail-road, you dined in a Harvey restaurant. Now every company does its own catering. The Santa Fe and the Canadian Pacific and the Southern Pacific all do. There is no railway company which does not do its own catering. All this is a great deal of trouble to create three jobs.

Mr. Corish

Six.

Mr. Dillon

No; I take it the directors of C.I.E. are not to get two sets of fees. I cannot imagine the Chairman of C.I.E. participating in a scheme like that. He is not a hungry man.

Mr. Corish

They can appoint three directors.

Mr. Dillon

That is not the kind of thing the Chairman of C.I.E. does and I cannot imagine the directors of C.I.E. getting two sets of fees. But there is a provision that there are to be three additional directors and the interesting part is that the three boys who are to come into the dough will be appointed by the Minister for Transport and Power. The Chairman of the Board can appoint three.

Mr. Corish

He will be Chairman himself.

Mr. Dillon

Yes, but he will not get two sets of fees and neither will the other three, but there are three boys in addition whose appointments must be approved by the Minister for Transport and Power — incidentally not the Minister for Catering. Can you guess who the three boys will be?

Mr. Kyne

Fine Gael lads.

Mr. Dillon

Possibly one Fine Gael, one Labour and one Clann na Talmhan and, I suppose, if pressed he would make a place for the National Progressive Party if there were enough of them. It is a lot of trouble just for three jobs. I should like the Minister, having discovered that he has been let down, if he can find any other instance in the Western world, this side of the Iron Curtain, where a transport company has felt it necessary to segregate its catering facilities for the purpose of appointing seven directors to supervise it. It would be almost like a breath of fresh air to the public life of this country if the Minister got up, put his hand on his heart and said: "I have three indigenous hangers on for whom I want to make provision for the rest of their days."

Mr. Childers

The Deputy will get the surprise of his life when the directors are appointed.

Mr. Dillon

He will not. He will tell us here that three of the noblest and most disinterested citizens of this State will be appointed to adorn this Board and to protect the travellers from indigestion. It does not matter a damn, I suppose. I hope they will get us better food than we get in the Dáil Restaurant.

Mr. Davern

We have the best food in the city of Dublin.

Mr. Childers

I take it we are in humorous vein.

Mr. Dillon

Does the Minister enjoy the victuals in the Dáil Restaurant?

An Ceann Comhairle

That does not arise on this Motion.

Mr. Childers

I am prepared to follow the Deputy in his light vein.

Mr. Dillon

This is based on the assumption that this is to create three new jobs.

Mr. Childers

Is the Deputy serious?

Mr. Dillon

I have no doubt it will be done under a shroud of responsibility that will dazzle the neighbours, but if that is not the intention, what are the three jobs being created for? Why cannot the managerial element required to direct this enterprise hire a hotel manager and the requisite staff if they are not already available?

Mr. Davern

Suspicion haunts the guilty mind.

Mr. Dillon

He would be an innocent man who did not know the manners and customs of the Fianna Fáil Party. I ask Deputy Davern, who, of course, is as innocent as an angel, has he heard any argument advanced by the Minister for the establishment of this independent board, other than that he will have three nominations at his discretion?

Mr. Davern

Deputy Dillon will have to start slimming for all the travelling he will have to do.

Mr. Dillon

I do not think an exchange of compliments on that basis between the Deputy and myself would be seemly. Let us talk about Coras Iompair Éireann, and the board, and the six directors, three of whom are to be approved by the Minister. This is an order to make jobs and I deplore it. I know of nothing that cannot be done without the creation of the new board. We have set up a body to inquire into the Companies Act in order to prevent this type of abuse in which one company begins to hive off a whole series of subsidiary companies. That practice is largely rooted in the direction of duplication of directorships, and duplication of fees. I am proceeding on the assumption that in so far as the directorships here are duplicated, they will not involve duplication of fees.

Will anyone tell me what on earth is the purpose in setting up a new board of directors, of whom the majority are existing directors of Coras Iompair Éireann? Could not a committee of the Board of C.I.E. act as the board of the catering division of the company's activities, with full authority to hire any administrative assistance they require, technical or otherwise? Of course they could. This is put forward in order to create three jobs. I wish the Minister and his colleagues joy of their patronage but it is not edifying and it is not seemly. It is time to root that kind of unsavoury patronage out of the ordinary public life of this country.

Mr. O'Sullivan

I should like to ask the Minister whether when people in Deputy Davern's constituency, Deputy MacCarthy's, and mine, on a journey to Limerick last Sunday, were charged 11d. per bottle for minerals by C.I.E., it was the intention to meet some of the additional charges involved in the appointment of this new company?

Mr. Corish

I should like the Minister to clarify one or two points. He said in his speech that:

The purpose of the Order is to confer on C.I.E. the power necessary to establish a subsidiary company to take over, operate and develop the Board's Great Southern hotels and catering services.

I should like to know from the Minister is it the intention of the board to establish new hotels. He specifically refers to the take-over of seven hotels, so I should like him to say whether or not this company will be concerned with the seven hotels only, or is it their intention to engage in the establishment of new hotels?

I must confess I am somewhat in agreement with Deputy Dillon when he queries the necessity for the establishment of this company. The Minister has done himself an injustice in that he has given us the minimum information about this proposal. He said:

The operation of hotels has little in common with transport problems and it is desirable that the higher management of C.I.E. should be able to concentrate on the difficult transport problems they still have to face.

It seems peculiar to me, too, that the three members and the Chairman, who are at present members of the Board of C.I.E., will be concerned with the running of these hotels. On the other hand, the Minister says that these people should be much more concerned about the great transport problems which still confront us. If this constitutes the great problem the Minister says it does, there should be a brand-new board, and we should not have the Chairman of C.I.E. and three existing directors concerning themselves with what the Minister describes as problems which should not concern them at all.

The Minister also says:

It is not the intention that the company will receive any direct or indirect financial subsidy from the Exchequer apart from whatever grants or other assistance it may be entitled to receive in common with other hotel companies, for example, through Bord Fáilte.

If the Minister and the Government want to nationalise hotels, that is another kettle of fish, but this dabbling in the hotel business does not satisfy me. For that reason, I think the Minister should state specifically whether or not it is the intention that the proposed company will concern itself with the seven hotels exclusively, or will go more fully into the hotel business.

However, no matter what the outcome of this proposal is, we are all concerned—at least, I know I am— with the type of service provided by C.I.E. in their dining cars. Certainly there is much room for improvement and if this company insists on a proper catering service by C.I.E., and a clean catering service by C.I.E., they will indeed have done some good for the country and they certainly will have done the tourist industry a great amount of good. I do not have occasion very often to travel by train but I did some years ago, and I was appalled at the type of meal which was served, and the manner in which it was served. In fact, I made a complaint to an official of the then Department of Industry and Commerce. It was not only an impression I got, because I had evidence that the teapot was just dumped in an urn and taken out. They did not even take the trouble to wipe the teapot with a cloth.

Mr. Childers

Things are very much improved since then.

Mr. Corish

I hope so. I must confess that was two or three years ago but it was filthy at that time. If there has been an improvement, I welcome it, but if it is operating in the same manner as it was the last time I travelled by train, it must be very bad indeed.

Mr. Childers

I do not know whether or not to keep to the humorous vein which Deputy Dillon tapped. The idea that jobs are being created through the establishment of a separate hotel company is really too ludicrous for words. This is the result of an examination by the Chairman of C.I.E. in connection with the whole reorganisation of the company. I and the officers of my Department have been thinking along similar lines. I would imagine that we thought almost coincidentally—

Mr. Dillon

That would not surprise me very greatly. You have been thinking coincidentally now for about thirty years

Mr. Childers

——in regard to this matter. I do not know to whom the ultimate credit goes of believing there should be a separate company managing the hotels manned by a board of people who, when they come to a directors' meeting, have nothing to do but think about hotels and catering and who do not have to consider the whole examination of the monthly agenda of the C.I.E. organisation in all its aspects. They come prepared to discuss and debate hotels and catering matters. Under them, there will be a specialist management staff who will equally concern themselves only with hotels and catering matters.

Having watched the success of Bord na Mona and the growing success of C.I.E. and the increase of £1,000,000 in their revenue last year, I respect the judgment of the Chairman, which, incidentally, concurs with my own, that is would be good for the hotels and good for tourism to have a company specialising in the management of hotels and the catering services. The Deputy ought to believe my statement is made sincerely.

Secondly, as far as the directors to be appointed from outside are concerned, those who are not already directors of C.I.E. the Chairman of C.I.E. will make proposals to me in regard to appointments. I can assure the Deputy he will choose persons who are qualified either in the hotel business as a specialist business or in business administration or have a knowledge of catering—persons with particular administrative skill. I can assure the Deputy that the persons appointed will be of high calibre and will be able to perform their functions well.

Mr. Dillon

I could nearly name them.

Mr. Childers

I should also like to reject the suggestion made by Deputy Dillon that recent appointments to State companies over which I have control have included only those persons whom the Deputy described as people who need some kind of political reward. Quite a number of young men who have proved themselves to be excellent managers of other companies have been appointed to State companies recently, or perhaps older men with very great experience either of other jobs they were asked to undertake or jobs similar to the jobs we ask them to undertake. If the Deputy will examine some of the new directorships in the State companies, he will be unable to disagree with my view that they are people of ability and not the type of person described by the Deputy as appointed solely because of some political reward they thought they required or the Government thought they needed. It was a very unfair observation on his part. Some of the recent individuals we have appointed to State companies—I shall not mention them by name—are able men of the younger generation.

As far as the fees of the Hotel Board are concerned, they will be given the usual fees applicable to their work.

Mr. Dillon

Not duplicated.

Mr. Childers

But the Chairman will not be given any additional fee.

Mr. Dillon

But the other three will not get duplicated fees?

Mr. Childers

They will be given fees, yes.

Mr. Dillon

In addition to what they are getting as directors of C.I.E.?

Mr. Childers

Yes.

Mr. Dillon

We will have forty companies soon.

Mr. Childers

They will be carrying out additional activities.

Mr. Dillon

We will have a company for the lubrication of the railway carriages.

Mr. O'Sullivan

And a company for the abolition of the branch lines.

Mr. Childers

The Deputy will find the fees they are offered will be extremely modest and not likely to be of a kind which could be regarded as an excessive reward to the persons concerned.

Mr. Corish

I thought they had enough to do in looking after transport?

Mr. Childers

I have already explained it is a very different matter being able to approach the problems of running a hotel at a board meeting where nothing else is concerned, where the whole of the problem of hotel management and of expanding the hotel services can be considered by itself. If the Deputy has any experience of business, which I daresay he has, he would know the value of that. Any person in a business of any kind will know it is very valuable to come to a meeting and to have nothing else to examine save a particular activity such as hotel administration.

Deputy Corish asked whether the new hotel company will have the power to construct new hotels. I shall certainly be asking the Chairman of C.I.E. to consider that matter. As I indicated in the course of the debate on the Estimate for Transport and Power, one of the duties of the Minister is to ensure that the companies relate their activities to the needs of the national economy. When the hotel company is set up I shall certainly, as I think anybody else in my position on any side of the House would, recommend the new board to consider the establishment of hotels in areas where hotels are required and to consider what changes are needed or what new facilities should be provided in respect of the catering services. I hope this new company will show the same dynamic character as other State companies.

Mr. Corish

Are they confined in this Order to the management of these seven hotels or may they branch out and establish hotels?

Mr. Childers

They may establish new hotels under this Order.

Mr. Corish

It is a bastard sort of nationalisation we have.

Mr. Childers

As the Deputy knows, the articles of association have to be prepared and they will be offered for the consent of the Minister. So, we shall be able to see in every aspect how the company intends to develop its powers and privileges and what it intends to do.

Mr. Corish

The Minister must admit that is a very important departure. Just to gloss it over in a few minutes is not good enough.

Mr. Childers

The Deputy can question the decision of the Government in regard to this. When we consider the State companies that have been formed and the valuable work they have done for the community, Bord na Móna, Comhlucht Siúicre Éireann and all the others——

Mr. Corish

I am all for them.

Mr. Childers

——there is no reason to suspect there is some fell plot in the establishment of this hotel company. It is done with the same objective of getting more work done, more imaginative thinking, speeding up whatever plans they have and of helping the tourist industry. That is the purpose of it, exactly the same object as when we decided to form a company for the production of machine-won turf. There is no difference in our attitude towards this company or the concept of this company. The same thing would apply to the Shannon Free Airport Development Company carrying out the new idea of establishing factories on an estate close to an airport.

Mr. Kyne

They will not be confined to one particular area?

Mr. Childers

No. This company will manage the catering arrangements of C.I.E., the food provided in the dining cars, in the Aran Island steamer, on the Shannon pleasure steamers, and in the station buffets, and it will look after the seven C.I.E. hotels.

Mr. O'Sullivan

There will not be a new one in West Cork, will there?

Mr. Childers

It is a curious thing, but it is one of the places I had in mind to recommend to the company. I have very frequently been to Castletownbere. The Deputy may not know I have walked most of the mountains there and I have noted, for example, the absence of sufficient hotel accommodation in the Castletownbere Peninsula. That is the kind of problem I hope the new hotel company will tackle. If there appears to be no private enterprise, then they will assess the tourist potential from the standpoint of hotel accommodation. There are other areas in a similar position. In North Leitrim there are very beautiful lakes and mountains and there is no hotel accommodation of any kind.

Mr. O'Sullivan

Was that tourist potential so competently assessed then that the Minister decided to abandon the railway system in that region?

Mr. Childers

We did not abandon public transport in abandoning the railway system. C.I.E. has provided alternative transport and I have been informed that it is much more suitable.

Mr. O'Sullivan

Question.

Mr. Childers

However, I am not discussing that on this occasion. I have given a full description of the objectives and I have placed on record the views of the Government in regard to the matter so that nobody can be under any misapprehension. It is part of the go-ahead spirit of C.I.E. and part of the plans formulated by the Chairman directed to bring about a dynamic change in the hotel section of the C.I.E. organisation.

Mr. Jones

With regard to the £100,000 capital, is the State undertaking to underwrite the capital requirement of the new company?

Mr. Childers

The Deputy was not in the House.

Mr. Jones

I read the Minister's speech.

Mr. Childers

The new company expects to be able to raise capital on the security of its own assets and on the basis of its financial success. If they cannot raise capital, C.I.E. will be able to guarantee their borrowing. It is not intended that the State will enter into the picture at all. I hope the company will have no difficulty in getting capital. They have had a fairly good financial record for a number of years. If the Deputy reads the report, he will see that they have been expanding and making sufficient profit to cover depreciation, superannuation and interest on what can be judged to be the capital of the company plus sufficient profit to cover the share of the general administration applicable to the hotel section of the C.I.E.

Mr. Jones

I am aware of that. I am aware they have been showing a profit. That is why I fail to understand the need for further State assistance.

Mr. Dillon

Is it not a recognised abuse of existing company law for existing directors of a company to hive off their activities into subsidiaries and constitute themselves paid directors of their own subsidiaries? Will the Minister not consider providing that the directors of C.I.E., who are already doing this work in consideration of the fees they are receiving, will follow the example of the Chairman and, so far as the law is applicable to the new company, act for the same remuneration as they are receiving at the moment for doing the work, a matter which was taken into consideration when their fees were originally fixed? If the Chairman recognised it would be an abuse for him to seek to get special fees as chairman of the new company, surely the other directors should accept the same self-denying ordinance.

Mr. Childers

I did not wish to complicate the discussion but one of the facts in relation to the fees Order is the fact that C.I.E. at the moment are ceasing the operation of one of their subsidiaries related to advertising. Some of the directors have been receiving a very small fee for that and the fee they will get, as a result of becoming directors of the new company, need not worry the Deputy at all. The directors' fees are so modest that no question of the kind the Deputy raises could arise at all.

Mr. Dillon

The precedent is thoroughly undesirable.

Question put and agreed to.

The Dáil adjourned at 10.5 p.m. until 12 noon on Wednesday, 2nd August, 1961.