Irish Shipping Limited (Amendment) Bill, 1984: Committee and Final Stages.

Question proposed: "That section 1 stand part of the Bill."

I thank the Minister for answering my question in regard to the 1982 Act. There was one point I made about the other seven ships, of which two were purchased, a large one and a medium-large, and there are seven others. Is the status of those other ships that of a chartered ship under the exact same conditions as obtained before the purchase of the two?

Mr. Mitchell

No, there are different dates for the ending of the charter of each ship. Those ships will continue under charter and, in almost every case, there has been a substantial downward renegotiation of the terms or, in some cases, a suspension or deferment of the terms.

It is in that connection that perhaps the Minister would give his view about the actual cost. He gave the actual cost in dollars in his speech. Perhaps he would give me his view and that of his Department — you know I am an Ulsterman — on whether they were a bargain, in other words, did we get them at a good bargain price, or are we paying the full price? I suppose Japan is the keenest country pricewise now for shipbuilding. If, for example, we had had to have them built in Japan would they have cost much more?

Irish Shipping Limited, as part of their charter agreement, were committed to the purchase of some of these ships at the end of the charter anyway; that is number one. Secondly, the value of a ship fluctuates with the value of the trade carried by that ship. Therefore, it is very much connected with the tramp shipping rates. The cost of building these ships would exceed the price being paid for them. That is the best way to put it. We are getting them for considerably less than it would cost to build them anew.

Let me ask the Minister if there was any condition in the original chartering agreements for any of the other seven that they had to be purchased. Are the two that were mentioned originally in the chartering agreement two that would have to be purchased by Irish Shipping?

Out of the total of nine ships there is a condition or an option in some cases to acquire 50 per cent of the ship at the end of the chartering term.

Is it 50 per cent?

Yes. In the case of five of the ships they would have an option to acquire. I am not sure whether that option would be compulsory. I will explain that. When the chartering period is over they would then own 50 per cent of the ship.

In other words, the charter fees could be taken as being in the nature of a hire purchase type contribution to the cost of the ship.

And what has been paid already is being taken into account in the final purchase price. Is that inclusive or exclusive of the £42 million? Is the £42 million extra?

That is the extra.

Another thing which did not surface at all is the question of the position of the Ocean Bank as a holding company. Have any of the losses that Irish Shipping assess, that is £22 million up to 31 March 1984, been attributed to the Ocean Bank connection or — which I think more likely — how much worse would be the liabilities have been were it not for the Ocean Bank connection?

I have not got those figures offhand but the Ocean Bank development continues to be a highly profitable ancillary activity for Irish Shipping Limited. It is 75 per cent owned at the moment with a possibility of reducing it to 70 per cent because of an option that the minority shareholder has. It is 70 per cent to 75 per cent.

Is that Allied Irish Banks?

Yes. Part of the sale of some of those shares brings it down to 70 per cent and brought in about £9 million which helps in the very difficult circumstances. Ocean Bank continue to be a very profitable ancillary of the Irish Shipping group.

Would it be £31 million then were it not for the Ocean Bank operation?

Our difficulty is that the financial year ended only 11 days ago and we have not got the returns, but we can take it that the loss of the group would be considerably higher but for the ancillary activity.

Question put and agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."

With regard to section 2 I have a point that I intended to make on Second Stage on the question of employment. I have in my notes from some couple of years back the figures for total employment in Irish Shipping Limited and I have a related question with regard to the employment of foreigners. The Minister in his Second Stage speech dealt with the crewing of some of the charter ships. My first question, which may have been answered on Second Stage, is that two largish vessels that have been purchased are manned totally by foreigners, I understand. Are the other seven chartered all manned by foreigners? How many are employed by Irish Shipping Limited now and how many foreigners are employed? When might we have Irish crews on the ships that are now being crewed by foreigners?

The total number of people employed by Irish Shipping Limited is 489 and by their subsidiaries 403, giving a total for the Irish Shipping group of 892. I have only rough figures, but I understand that on each of the other nine charter ships the average number employed is about 30, so about 270 foreigners are on board those ships. It should be said that part of the charter agreement — remembering that these are owned at present by foreign ship owners — was that the crew came with them so they were employed in that company.

If, for example, some of the foreigners on these ships leave the crew, as sailors do occasionally, are we free to have Irish personnel employed on them? There is no stipulation that excludes Irish sailors from filling vacancies, is there?

We would have to distinguish between the two ships it is proposed to purchase and the remaining seven chartered ships. It would be possible, and it is the intention of Irish Shipping Limited some time in the future, to convert to Irish crews when they get out of their present financial difficulties. The problem is that, believe it or not, that would require physical changes to the ship because of the different sizes of Far Eastern crews and Irish crews.

Bigger men.

That is a fact. It would cost approximately £250,000. In addition, of course, Irish crews are somewhat more expensive. Nonetheless, Irish Shipping would want to have Irish crews and they propose to do so as soon as they get back on to an even financial keel.

One effect of the Bill going through the Dáil at this moment is to protect present employment. A short few weeks ago it seemed as if all these jobs were gone and the negotiations which gave rise to this Bill have managed to retrieve them at least for the time being.

The ships will be now Irish owned and consequently the conditions of service etc. will somehow or other be affected by Irish law. Is there any indication that the crews being employed on those ships now are being employed at a much lower rate as in the Orient and how does this affect the new ownership by Ireland and Irish laws?

It is not proposed that there will be any change in the immediate future. It is proposed that the existing crews would continue to serve the ships even after they are purchased for the time being. As I have said, Irish Shipping will be anxious to convert to Irish crews as soon as it is financially possible for them to do so.

Will the ships be registered here as soon as the deal is over?

It is fair to say that all that follows from that will happen in due course.

The Minister gave the figure of 489 employees in Irish Shipping and 403 in its subsidiary companies. Is there any element of employment in Belfast Ferries included? Irish Shipping has a minority interest in the latter company.

No, it is not included.

There is the anomaly of the chief executive having his other foot nailed to the ground by statute. It seems to me very strange wording in a Bill that will decide on the amount of borrowed money to be guaranteed by the State. It puts in a kind of cross for the chief executive to carry in the future with regard to negotiating his salary and conditions. It seems to be interfering with the free exercise of the chief executive's duty in a very heavy handed way by incorporating it in the statute. Has it been done before? What is theraison d'etre?

This section is quite normal and is provided for in most State and semi-State companies. For those State companies for whom this provision has not been made an opportunity will be taken to do so.

Question put and agreed to.
Sections 3 and 4 agreed to.
Title agreed to.
Bill reported without amendment and passed.