When I spoke earlier I placed in its historical context the financing of Irish Shipping Limited and indicated how the changing demands were met by legislation, starting with the 1947 Act and going on through the Acts of 1959, 1980 and 1982. I asked the Minister about the £50 million guarantee in the 1982 Act and its relationship to the £45 million mentioned in this Bill.
The company had a very good record in profit-making to the end of the financial year ending on 31 March 1982 but in the following year net losses were £14 million. Deep sea tramp operations are now in a parlous state throughout the world. The Minister gave statistics and answered beforehand a question I have on the Order Paper about relative rates for this kind of activity. They are nothing short of shocking. We have been reading that there is an upturn in the world economy and specifically in the economy of the United States. Perhaps the Minister would let us know whether there has been a progressive improvement, even in actual dollars, with regard to rates in the deep sea areas. Certainly the US economy is experiencing an upturn, although it may be artificially induced by the fact that there will be a presidential election at the end of the year. Has the Minister any assessment as to how the US recovery will affect the activities of Irish Shipping and can there be any reasonable estimate as to what effect it will have?
One must ask whether there was a question of bad judgment with regard to chartering. Was it bad luck or bad judgment or a combination of both? In any business of this kind there is a problem of assessment. If everybody knew a recession was coming they would take remedial steps beforehand. It looks as if judgments regarding charter rates may not have been as soundly based as they might have been. As the Minister indicated, there is a heavy carrying of the company by the ancillary activities. It is really shocking to hear the report to this House that substantial losses of the order of £22 million are estimated in respect of the financial year which ended on 31 March last.
The purchase of ships is again a question of judgment. Was the original chartering in of nine vessels soundly based? I know it is easy to talk with hindsight. The Minister stated that a total of 393,000 tonnes dead weight was chartered in and the horses backed were coal, steel and lumber. We do not have to mention what has happened to the steel industry all over the world. We know from the EEC that Luxembourg, which depended almost totally on steel, had some people unemployed for the first time. Our own steel enterprise has had to be shored up and buttressed to a very great extent by Government subsidy. There has been trouble in all the great steel-making areas, including the UK and the US. The Minister does not give any judgment and simply says that the chartering in at that time has proved disastrous. It would be as well if we made some kind of assessment as to whether for the future this kind of project should be entered into. If it had come off, if the slump in the world economy had not taken place, we would all be clapping. The track record was so good that nobody would have challenged the judgment of the directors at that time. If there is any lesson for the future, then we should try to learn that lesson. The hope was that freight rates would be much higher.
The link with the Cardiff ship owners seems to have been a wise move at the time and this was borne out by the fact that they could undertake projects which neither the one nor the other would have been able to undertake on their own. However, that company is in trouble and I should like to know if any losses suffered by Reardon Smith have rebounded on Irish Shipping, if they actually lost by the combination.
I am pleased that the negotiations with the foreign owners of the nine chartered-in vessels have been, at least to a limited degree, successful and that concessions have been obtained. Could the Minister say who the owners are and how many ships of the nine each company owned? I am not asking for any of the commercial details, because there is no point in letting competitors know what you are up to. This is also emphasised by what I read out from Mr. Lemass's original speech in 1947 when that Bill was being discussed in this House. There is no guarantee that a number of companies will not engage in a conspiracy to down the smaller companies. Even though it is a State company, this is a small company in that league.
The company are purchasing for $42 million two of those vessels, the Panamax with 62,000 tonnes deadweight of 1982 and the Celtic Venture of 32,000 tonnes, constructed in 1983. The House will be able to judge what value has been got by comparing that with the price of the ship which is being constructed now in Verolme (Cork) Dockyard.
Would the Minister say if the other seven are still in fact under charter to ISL? Did Irish Shipping get out of any of their obligations on foot of this bargain and their buying out of the one large vessel and one medium to large vessel? It must be said in the House that the purchase of the two vessels would not be seen to be wise at this juncture if the well based assessment of the situation did not indicate that profit making was up front — and not too far away up front, either.
As the Minister rightly says, he cannot speculate but there must have been a cold, calculated assessment in the boardroom before the company came to the Minister. They must have given argument on which to base their plea that it would be wise to do this. What were the spin-off benefits with regard to the other seven ships? The main purpose of the Bill is to deal with the Government guarantee on borrowing. It is amusing to find so much — nearly half the print — about remuneration and superannuation of staff. The Ministers for Communications and the Public Service in putting into a statute some conditions about remuneration of staff and about national guidelines seem to be breaking a nut with a sledgehammer. It is reminiscent of the black humour joke "If you do not stop shifting about, I will nail your other foot to the ground"— nailing the negotiations by writing them into a statute.
As I said at the outset, I have known for some time about the difficulties of Irish Shipping. I accept that the Minister has given a clear outline of these difficulties. He mentioned them in his 1983 Estimate speech and also in 1984 in that context. I have here a document which I put together in my own Department when Minister for Transport, in connection with our national economic plan which also dealt with the difficulties as they appeared then in the deep sea market.
I have asked a number of questions which I hope the Minister will answer. There is an obligation on this House to sustain Irish Shipping on account of the usefulness in general of a national shipping company; on account of their history originating in emergency powers orders; on account of the philosophy for them by the late Mr. Seán Lemass in his speech at the establishment by statute of Irish Shipping Limited in 1947; on account of what successive Ministers have done in 1959, 1980 and 1982. However, this should not preclude Members of this House from challenging various decisions. They may have been the right decisions, but at least we should examine them because, after all, it is the taxpayer's money that we are dealing with and we are responsible to the taxpayer. For that reason, I am not opposing this Bill, although I am more uneasy about it than I have been about any of the other Bills which have come before the House asking to sustain various semi-State bodies.