I observe that amendment No. 18 and amendments Nos. 3 and 4 to amendment No. 18 are related, so I suggest that we discuss amendments Nos. 1 and 18 and amendments Nos. 3 and 4 to amendment No. 18 together by agreement.
Private Members' Business. - Turf Development Bill, 1988: Committee Stage.
SECTION 1.
I move amendment No. 1:
In page 2, subsection (1), lines 10 and 11, to delete the definition of "cutaway bog".
Amendment agreed to.
Section 1, as amended, agreed to.
SECTION 2.
I observe that amendment No. 13 and amendment No. 2 to amendment No. 18 are related and I suggest therefore that we discuss amendments Nos. 2, 13 and amendment No. 2 to amendment No. 18 together by agreement.
I move amendment No. 2:
In page 2, line 30 and in page 3, lines 1 to 19, to delete subsections (5) and (6) and substitute the following:
"(5) The Board may—
(a) not offer preferential loans to its wholly or partially owned subsidiary companies;
(b) not provide any subsidies, nor provide goods and services on preferential terms to its wholly or partially owned subsidiary companies;
(c) guarantee, in such form and manner and on such terms and conditions as it thinks fit, the due repayment by a company of the principal of any moneys (including moneys in a currency other than the currency of the State) borrowed by the company or the payment of interest of such moneys or both the repayment of the principal and payment of the interest and any such guarantee may include a guarantee of payment of incidental expenses arising in connection with such borrowings and may be a guarantee of payment of a promissory note made by a company or a bill of exchange drawn or accepted by a company.
(6) (a) The exercise of the Board of any power conferred by this section shall be subject to consent of the Minister and where the value of the capital funds committed, or the value of any longterm contracts entered into by the Board exceed £10 million, shall be subject to the consent of the Minister for Finance.
(b) The Minister shall refer any proposed company trading in the home market to the Fair Trading Commission to establish Fair Trading Rules, if the Minister has reason to believe the proposed company might take a dominant position in the market liable to conspire against the public interest.
(c) The Board shall publish each year a full set of accounts in respect of the ventures established under this section.
(d) The Board shall present the Minister every five years with an assessment of each venture established under this section outlining the return on capital achieved and the justification of retention by the Board of its shareholding.".
This amendment proposes a number of changes to section 2. The purpose essentially is that where the board set up subsidiary companies they would be at an arm's length basis. It is not appropriate that there should be a system of preferential loans made to subsidiary companies because many of these would, perhaps, be in competition with other businesses which would not have the advantage of a preferential loan. In any event, for the purpose of transparency as to what is going on, the purpose of setting up the subsidiary and hiving off a business to give it that sort of independence would be defeated if the board were allowed to have a system of hidden subsidies available to them. The purpose of subsection (5) is to ensure a certain arm's length basis in their operation with subsidiary companies which they would establish.
We take the view that in establishing these companies there should not be a necessity to get the dual consent of the Minister for Energy and the Minister for Finance except in cases where the sums involved are very large. It seems to be defeating the purpose of giving Bord na Móna a certain degree of discretion in organising their business affairs if duplicate sanction has to be sought and obtained from the Minister for Energy and the Minister for Finance. A level of £10 million should be set beyond which the Minister for Finance — as well as the Minister for Energy — will be brought into play. After all, the sums involved in establishing a company are not directly from the Exchequer; this is a company set up by statute to operate on a commercial basis independent of the Exchequer. Therefore, they should not be policed in this very bureaucratic way by having to seek dual sanction for their commercial decisions. The principle we should seek to apply to our State agencies is that they are held responsible for the results they produce but they should not be policed and overseen in the heavy-handed way which appears to be suggested in the Bill.
In subsection (6) (b) I suggest that where the Minister feels the company might be getting into a business where they would be in direct conflict with some existing operations in Ireland, he should, if he feels there might be a danger of the Bord na Móna subsidiary taking a downward position or in some way conspiring against the public interest, refer the matter to the Fair Trading Commission for sets of fair trading rules.
The reason I suggest this is that in the recent past where a similar provision was put in for the ESB to set up trading in coal and other substances there was quite a degree of public unease that the ESB, with their commercial might, would swamp others who were legitimately trading in the sector they chose to enter. It does not mean that Bord na Móna — or any State company — should not be diversifying but it would at least protect them if they were entering a business and there was a danger that they might assume a dominant position.
The other element in (c) and (d) is the suggestion that we should have clear accounts published for any company which the board would seek to establish so that there would be transparency. It goes hand in hand with our suggestion that they should have more commercial freedom and be more accountable in presenting their accounts. In (d) the suggestion is that if a company are established the board should, at the very least, have a five year review where they look at the operation of the company and produce for the taxpayer and the Dáil the reasons for them continuing to trade in this business. It is important to have a five year review of the success of the business in the same way as the Government are now looking for a five year programme for the future of boards, companies and subsidiaries.
Before proceeding further I wish to draw the attention of the House and the Members to the following printers' errors in the list of Committee amendments to this Bill dated 21 February 1990. In the fifth line of paragraph (c) of amendment No. 2 to section 2, in the name of Deputy Richard Bruton, "interest of such moneys" should read "interest on such moneys". The section heading for section 5 should be inserted before amendment No. 14 in the name of the Minister. In the first line of amendment No. 2, in the name of Deputy Richard Bruton, to amendment 18, in the name of the Minister, to section 7, "sixth and seventh lines" should read "fifth and sixth lines".
I will be very brief. Why not put the restrictions on all companies which Deputy Bruton wanted to put on Bord na Móna? Have restrictions been put on the debate on the Companies (No. 2) Bill which is before a Special Committee? Everything contained in the amendments amounts to restrictions on Bord na Móna and they reflect the attitude generally of the Government, and the main Opposition party, to the semi-State bodies. That is the only comment I wish to make on the amendments.
Deputy Sherlock reflects the time of night in his contribution. He must be tired if he thinks he heard Deputy Bruton asking the House to put restrictions on Bord na Móna. Deputy Bruton wants the board to have the freedom to operate a five year plan but, on the question of finance, he does not want one company put against another. What is wrong with asking Bord na Móna to set up subsidiary companies in such a way that they will be able to operate independently and will not be liable to sink with what is the colossus of Bord na Móna? The Minister admitted that today he received a major report about the finances of Bord na Móna and that he is studying it. The dogs in the street know that things are ominous financially for Bord na Móna, that they cannot be expected to trade out of the financial position they are in. Is the Deputy suggesting that a subsidiary company that may be carrying on a successful operation should be allowed to sink because of the mismanagement of the parent company?
Deputy Bruton seeks to give independence to the subsidiary companies from the bureaucracy of the Department. He wants such companies to be given an opportunity to set targets and operate within their own budgets. They should be allowed to operate to a five year plan or, if necessary, to a three year plan. The Minister should see merit in giving the management of such subsidiary companies an opportunity to expand without being inhibited due to the financial difficulties a parent company may find itself in.
I agree with Deputy Sherlock that what Deputy Bruton is proposing would place many statutory restrictions, indeed, severe restrictions, on the new subsidiary companies Bord na Móna will have power to establish following the passage of the Bill. I do not think it would be in the interests of the new companies that they should be restricted in the manner Deputy Bruton is proposing. Certainly, they should not be restricted under statute. The primary purpose of the Bill is to give commercial freedom to Bord na Móna and to allow them to operate in many respects in the same way that private companies operate. It is my intention, and the intention of the board, that sound business practices should obtain in relation to subsidiary companies. It is not considered necessary to set this out in statute. If it is considered that the relationship between Bord na Móna, the parent company, and the subsidiary company should be subject to certain controls along the lines suggested, there is ample provision to do that and to deal with it administratively under section 2 (6). I should like to direct Deputy Bruton's attention to the powers given in that section. I suggest to him that that is the most appropriate way to proceed in establishing these powers for Bord na Móna which are designed to allow them to create subsidiary companies to undertake new developments and restructure their operations.
The extensive powers under section 2 are being provided to help them found new subsidiary companies, to help them participate in or take a share in other companies or, indeed, to take over companies. There is power given to them in the Bill to enable Bord Na Móna to lend to or guarantee loans for a company. It is only right that the consents of the Ministers, as proposed in section 2 (6), should operate.
Does that not amount to a severe restriction?
Let us hear the Minister. Deputy Carey will have ample opportunity to reply.
It is not like the severe restriction that Deputy Bruton is proposing in his amendment, No. 6 (a), where he is seeking to introduce a new provision in regard to amounts of money.
The Minister has misunderstood me. To clarify the position I should like to state that the purpose of that amendment is to introduce the criterion that the sanction of the Minister for Finance is required in order to reduce the cases where Department of Finance sanction is required. I am seeking to confine the sanction of the Minister for Finance to cases where the amount of money exceeds £10 million of company investment.
I do not accept that there is any need to have the statutory provision that the Deputy is suggesting. The Deputy has an extraordinary amendment in which he seeks to make it compulsory in regard to a referral to the Fair Trading Commission.
The Minister has misunderstood me again. The amendment states, "if the Minister has reason to believe the proposed company might take a dominant position". If the Minister is satisfied that that is not the case there would be no referral to the Fair Trading Commission.
We should hear the Minister out. This is a Committee Stage debate and Members will have the right to comment as they so desire. The Minister should be allowed continue without interruption.
I am anxious, as far as possible, to give commercial freedom to these new companies. Deputy Bruton will have to accept that what he is proposing does not apply to every other commercial company operating in the State. In that sense, what he is proposing is an added restriction. It has been normal practice in regard to commercial semi-State bodies that the consent of the Minister, and the Minister for Finance, is required in regard to certain matters which can be laid down in administrative arrangements, and in statute in regard to other matters. That is the normal practice and I do not see the sense in the proposed subsection (6) (a) where the intention is that only amounts over £10 million would have to be referred to the Minister for Finance. As we know, in practice there could be several transactions up to that figure which would amount to vast sums in excess of the £10 million and the suggestion is that they should pass without the permission of the Minister for Finance. I do not think there is any great merit in the suggestion and I do not think the House sees a lot of merit in it.
While the section and the amendment relate to financial limits it will be noted that apart from marketing at home or abroad activities being opened up by the Bill in foreign countries are generally subject to the Minister's control. The Minister for Finance has guaranteed all Bord na Móna borrowings and with total borrowings of £186 million, as was mentioned in the House today, I am sure the House will agree that the approval of that Minister must be sought before the board can make any commitments under that section.
The Deputy's proposed subsection (6) (b) refers to the Fair Trading Commission. I should like to tell the Deputy that they have wide-ranging powers under the Restrictive Practices (Amendment) Act, 1987. If the Fair Trade Commissioner feels that Bord na Móna are operating in an anti-competitive manner he may initiate an investigation of their practices. He has the same powers in relation to other companies and I am sure the House will agree that it would be discriminatory for the Minister to single out Bord an Móna in the manner proposed in the amendment. In addition, the Minister for Industry and Commerce has power to ask the Fair Trading Commission to carry out an investigation into any company who he suspects is operating in an anti-competitive manner. Why should Deputy Bruton ask the House to make it a statutory obligation in regard to Bord na Móna when the Fair Trade Commission powers already cover that in relation to all commercial companies? The House should seek as far as possible to allow Bord na Móna and the new companies to operate in the commercial environment. He is proposing that the board should publish each year a full set of accounts in respect of the ventures established under this section. The statutory framework, section 59 (1) of the 1946 Act, is already in place to enable the Minister to direct Bord na Móna as to the form of its accounts. In addition under the provisions of section 2 (6) of this Bill the power of the board to set up subsidiary companies is subject to the approval of the Minister for Energy and the Minister for Finance. Suitable conditions concerning the accounts of subsidiary companies may be attached to this approval if so required.
Progress reported; Committee to sit again.