Dáil Éireann debate -
Wednesday, 24 Nov 1965

Vol. 219 No. 2

State Guarantees (Transport) (Amendment) Bill, 1965: Second and Subsequent Stages.

Minister for Transport and Power (Mr. Childers)

I move that the Bill be now read a Second Time.

The State Guarantees (Transport) Act, 1962 provides that the Minister for Finance may guarantee the due payment by Córas Iompair Éireann of any moneys payable by the Board under contracts for the provision of goods and services or both goods and services entered into by the Board with my approval, given with the consent of the Minister for Finance.

I have been advised that the State Guarantees (Transport) Act, 1962, does not provide explicity for guarantees of payments due under contracts entered into by the Board to be expressed in any currency other than Irish currency; and the purpose of the present Bill is to remedy that defect. The only guarantee given under the 1962 Act was in respect of a contract entered into by the Board in 1962 in US dollars for the purchase, by extended payments, of diesel locomotives from General Motors Corporation, USA.

Amending legislation of a somewhat similar nature was necessary in the case of Aer Lingus and other companies covered by the State Guarantees Act, 1954 and, more recently, in the case of the Electricity Supply Board; and the necessary provision was made in the State Guarantees (Amendment) Act, 1964 and the Electricity (Supply) (Amendment) Act, 1965. In the present case, however, the guarantees which the Minister for Finance may give extend only to payments in respect of contracts for the provision of goods and services and do not extend to borrowings.

Section 2 of the Bill extends the powers of the Minister for Finance in the State Guarantees (Transport) Act, 1962 to enable him to guarantee payments by the Board in foreign currencies and establishes the method of calculating the equivalent in Irish currency of moneys due by the Board in foreign currency. Rules for conversion follow those in the State Guarantees (Amendment) Act, 1964. Such conversion is necessary to determine the value in Irish currency of the guarantees given by the Minister for Finance for the purpose of subsection (2) of section 2 of the State Guarantees (Transport) Act, 1962, which prescribes the maximum amount of principal in Irish currency which may be guaranteed at any one time.

I recommend the Bill to the House.

Mr. Lindsay

We accept the necessity for this Bill and appreciate the technical nature of it and accordingly propose to give the Minister his Second Reading by agreement today. We are nevertheless, somewhat perturbed, as I have already said in relation to the State Guarantees Order, about the continuing and ever-recurring need on the part of the Board to seek State aid.

Not so very long ago I was very pleased to see a newspaper headline; "CIE saves £½ million." Whatever good news value that headline might have had is shattered, to my mind, by this Bill because to me it means the necessity for the State to come to the assistance of CIE in its current contracts. I take it this is a question of purchasing diesel engines from General Motors and that it is necessary for the State to guarantee moneys in that regard. If that is right, I think the situation as portrayed in the newspaper headline to which I have referred is very strange indeed.

Altogether I think the people of this country are surprised, disagreeably and uncomfortably surprised, as each year passes that companies of this kind which said years back that they only required a certain amount of time to pay their way—CIE was given a five-year plan some years ago and at the end of the five years, we found that we had to come to its assistance again — have to come back to this House again and again for support. There must be some reason for that, some reason that prevented the original five-year plan from being put into operation. I would be worried about this because CIE is operating less mileage of railway lines and as this Bill is concerned with the purchase of diesel engines, I cannot understand the necessity for more money to purchase more engines when lesser mileage is being operated.

Perhaps it is because the cost of replacement is great. We are all aware that the cost of all replacements and, indeed, the cost of everything else, has risen to a very high degree but there should be something in the planning of companies such as this that would obviate the necessity for coming to the House in such a recurrent manner and looking either for a guarantee or for direct financial assistance. In the circumstances we are prepared to give the Minister a Second Reading of this Bill but we would like some kind of an assurance that the time has now arrived when companies such as this will pay their way or else go into the money market and borrow so as to relieve the burden on the State. Perhaps I have been expanding my references to CIE but at a time like this when everybody is being asked to tighten his belt and to bear the present financial strain and stress, State companies should do likewise.

Mr. Childers

With regard to what the Deputy is saying, I would like to say that we are not asking for more capital for CIE. This comes within the terms of the programme envisaged at the time of the last Transport Act whereby CIE receives an annual subsidy of £2 million for five years and is to be advanced £6 million for its capital programme. These payments come within the capital programme and do not involve any further advances from public funds.

Mr. Norton

I appreciate what the Minister has said that the purpose of the Bill is merely to guarantee by the Government the payments owed by CIE to the General Motors Company of America. I find it strange that in the year 1965 the Government find it necessary to have this matter rectified because the contract was entered into in 1962. It is no great tribute to General Motors, CIE or the Department of Transport and Power that the Minister now has to rectify something done in 1962. I would like to know the circumstances that led up to this matter being discovered. The principle of guaranteeing the price of goods purchased by CIE is not objectionable to us and I am glad to support the Bill.

Mr. Childers

This Bill is the result of advice given to us by the legal authorities that there was an imperfection in the previous legislation and we want to make it clear now that the money could be expressed in dollars. This has been the procedure in a number of such cases. Perhaps we should have had more forethought in regard to this but we are putting the matter right now.

I have dealt already with the questions raised by Deputy Lindsay. This House has controlled the total capital expenditure of CIE as between now and 1969 inclusive under which CIE receives a subsidy of £2 million a year and is allowed to borrow capital up to a certain figure. The provisions of this Bill come within that capital programme. We do ensure that capital expenditure is not used for unnecessary or extravagant purposes but diesel engines are essential to CIE. Old engines have to be replaced and standards of performance improved. This provision might be described as basic financing for CIE. It is nothing of a marginal character.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment, received for final consideration and passed.

An Leas-Cheann Comhairle

This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.