B & I Line Bill, 1990: Second Stage.

Minister for Tourism and Transport (Mr. S. Brennan)

I move: "That the Bill be now read a Second Time."

The purpose of this short Bill is to increase from £100 million to £106 million the amount of additional share capital which the Minister for Finance may invest in the B & I Line. This enables the Minister for Finance to purchase sufficient additional shares in the company to give effect to a recent Government decision to provide the company with up to £6 million in Exchequer equity in 1990.

In 1988, when the House had before it the B & I Line Act, 1988, the company were going through a very difficult period. Mounting financial losses required the implementation of a plan of action involving major restructuring which had across-the-board support from the company's workforce. The major elements of the plan were implemented during the course of 1988. They included a reduction in staff numbers by 565, from 1,464 to 899, a pay out of 5 per cent and a pay freeze until July 1989. In addition, the Dublin-Liverpool car ferry service was terminated and the m.v. Connacht and some North Wall properties were sold. Furthermore, a consolidated loan agreement was agreed with the banks on repayment of the B & I's borrowings subject to a mortgage on the company's assets.

As a result of these and other measures, the company's performance improved substantially during 1988 and this favourable trend continued during 1989. B & I's performance during 1989 included an upturn in both freight and passenger traffic, an improved financial outturn, as well as a generally good industrial relations record. A significant agreement was reached during 1989 with Sealink Harbours Limited following intervention by my predecessor, Deputy Wilson, under which B & I obtained more suitable sailing schedules at Holyhead from January of this year together with a new formula for calculating port charges. These new measures will assist the company's future operations.

In 1989 we also saw the successful negotiation of a general pay agreement within B & I, based on the Programme for National Recovery, covering the period up to the end of June 1991.

Since the implementation of the plan of action, the company have operated four principal services. The main route is the Dublin-Holyhead route, using the m.v. Leinster which accommodates passenger, car and roll-on/roll-off freight traffic. The Rosslare-Pembroke route will be serviced this year by the recently chartered m.v. Munster carrying passenger, car and roll-on/roll-off freight traffic. B & I also operate roll-on/roll-off freight services on the Dublin-Liverpool route, in conjunction with Pandoro, with the m.v. Bison and m.v. Buffalo. Finally, the company operate a European container service from Dublin for lift-on/lift-off freight to Le Havre, Antwerp and Rotterdam using the m.v. Tipperary and m.v. Kilkenny. It is clear, therefore, that the services provided by B & I play a very important role in Ireland's merchandise and tourism trading links with our EC partners.

I would like to make it clear at this stage that, contrary to some recent media publicity, this current Bill is not part of a further "rescue" package for B & I, born out of some new crisis in the company. In fact, as I have indicated, the company have performed well over the past years and continues to do so. I would like to remind the House that the plan of action implemented in 1988 was a five year one. We are now in year three and the turn around in the company's fortunes have been encouraging. At the same time, I do not wish to give the impression that there is any room for complacency. There is still a long way to go and further sustained effort from the management and workforce of this company continues to be a major imperative. We cannot overlook the fact that the company are still very much dependent on the Exchequer for financial support.

Nonetheless, I would like to acknowledge the sacrifices that have been made by all within the company to ensure the survival of B & I. That spirit of commitment must be maintained if progress is to continue.

I am glad to report to the House that the B & I plan of action has enabled B & I to return operating profits of £1.8 million and £2.8 million in 1988 and 1989, respectively. However, corporate interest charges exceeding £4 million in both years have meant that net losses of £2.9 million in 1988 and £1.5 million in 1989 were incurred. I would emphasise in that regard that, were it not for the burden of interest charges on historic debt arising from losses accumulated by B & I prior to 1988, the company would at this stage be recording net profits. However, the burden of debt is unfortunately, a commercial reality with which the company have to cope. I also think it important at this point to recall that the financial results of the B & I over the past two years have been better than those envisaged in 1988 when the affairs of B & I were last debated comprehensively in this House. It was envisaged at that time that the company would require some £17 million in equity over the two years 1988 and 1989. In fact, the Exchequer was called on to invest only £1 million in the B & I over that period, or £6 million less than originally envisaged. This outcome is due in no small measure to the joint efforts of management and staff in turning the company around.

In tandem with these financial improvements, B & I have gained increased business in their car, ro/ro and lo/lo activities. In each case, B & I business grew significantly between 1987 and 1989 and further increases are projected in 1990.

While the company's financial and operational performance has been better than expected, it is nevertheless clear that the B & I remain in a difficult commercial position. Their trading environment remains highly competitive. There remains too, for various reasons, the problem of a significant diversion of freight traffic from the Republic via Larne, notwithstanding the greater road distances involved in using this route. The financial performance of B & I over the coming years will clearly depend, therefore, upon how well the company can cope with this difficult trading environment.

I have already said that there is no room for complacency notwithstanding the improved results over the past two years. The B & I plan of action has been relatively successful to date. However, it is important that the options for the company's future development be reassured. In order to determine the future capability of the B & I to survive commercially and to develop without the need for continued Exchequer support, I intend to carry out over the coming months a review of the company's prospects with a view to identifying the best options for their future development. It is timely to carry out such a review at this stage, now that the B & I plan of action has had two successful years of implementation, and also in view of the increasing importance with which the Government view our access transport services, having regard both to our trade and tourism needs and the development of the Single European Market. Looking at the wider market, it must be remembered that B & I already contribute substantially to the development of trade and tourism in Ireland. In volume terms, the dominant access mode is sea tansport, accounting for over 80 per cent of total merchandise trade and 50 per cent of passenger movements. Our dependence on reliable and frequent shipping services is very high. Notwithstanding greater competition from air services in recent years, shipping services continue to play a major role in servicing our growing tourism industry.

While the importance of foot passenger traffic has declined by 34 per cent for all sea carriers on Irish Sea routes since 1985, car and coach passenger traffic has held up well and B & I will again make a significant contribution to Ireland's tourism industry this year by carrying a projected 310,000 visitors and 70,000 foreign cars to Ireland.

Ireland's competitiveness has been adversely affected in recent years by a lack of resources for investment in shipping services and in associated infrastructural facilities. This has caused problems for Irish industry in the areas of transit delays, poor delivery times and diseconomies of scale. The National Development Plan, 1989-93, has already pointed out that transport costs for Irish exporters account for between 9 per cent and 10 per cent of export sales values, which is effectively double that borne by Community countries trading with one another on the European mainland.

Clearly, therefore, the future performance of Irish trade and tourism, as well as Irish shipping services, will critically depend on existing infrastructural inadequacies being remedied. This was recognised not only in the National Development Plan but also in the more recent decision of the European Commission to make available, through the Community Support Framework for Ireland, EC funding designed to offset the effects of Ireland's peripherality in the Community. To the extent that they contribute to reducing the effects of peripherality, the Commission has indicated that investments in roads, ports, airports and railways will qualify for EC assistance. My Department, in conjunction with other relevant Departments, are preparing a number of investment proposals for consideration by the EC Commission in the context of the operational programme for roads and other transport infrastructure. Negotiations on this integreted programme should be finalised before the summer. The programme, when implemented, will significantly improve the overall transport network, including shipping services of this country, and thereby alleviate the cost disadvantages we currently suffer in moving our goods to our main export markets.

In so far as freight services specifically are concerned, the House will already be aware that I have commissioned a consultancy study from Stokes Kennedy Crowley, the object of which is to recommend an investment strategy appropriate to, inter alia, the development of more intensive sea freight services to our major Community trading partners. A steering committee representative of the Departments of Tourism and Transport, Finance and the Marine, as well as the European Commission, are overseeing this study which should be available to me within two months. Apart from recommending desirable future investments, the study will also examine organisational factors in the Irish transport sector which affect the competitive position of Irish exporters vis-à-vis our European trading partners. It is hoped that, in the light of the consultants' study, appropriate EC funding will be made available to improve Ireland's freight links with our Community partners.

The challenges and opportunities facing Ireland as we move into the nineties demand a fresh appraisal of how Ireland's locational disadvantages vis-à-vis other more central European States can be eliminated or at least alleviated. Clearly, this requires a coherent investment programme in transport infrastructure and services. The Government's overall aim is to focus the State's and the Community's investment resources in a manner which will maximise the benefits to Ireland's trading and tourism industries and help the economy realise its full potential.

While it is, of course, important to bear in mind the future environment within which shipping services will operate, the Bill before the House today has a much more short-term focus. While B & I's financial position has improved in recent years, it is nevertheless necessary to provide further Exchequer equity in the current year to assist the company in meeting their scheduled financial commitments.

While scheduled repayments totalling £5.2 million will require to be met by B & I in 1990, it is worth mentioning that the company plan by 1995 to discharge almost all of their currently outstanding capital obligations.

The Government are anxious that B & I's reliance on Exchequer financial support should be ended at the earliest possible time. This issue will continue to be a primary focus in examining the future options for the company. Only when the B & I are commercially self-sufficient can they truly realise their full development potential.

I commend the Bill to the House.

Mr. G. Mitchell

I welcome the Bill in so far as it attempts to strengthen the balance sheet of a troubled State company now, thankfully, recuperating from a long illness. It is not ungenerous of me to put on the record that the treatment of that illness started long before 1988 but during 1982 to 1987 when the then Minister for Communications had responsibility for that sector. However, I am concerned that the B & I may be about to become yet another piece of State silver to be sold off. I note that the Minister said in his speech that it was not a question of a rescue package but later he said that it was important that the options for the company's future development be reassessed. In a later part of his contribution he said:

I intend to carry out over the coming months a review of the company's prospects with a view to identifying the best options for their future development.

It seems clear to me what the Minister has in mind is the privatisation of B & I and that that is his ultimate objective but he will not speak out here today and say that is the case.

Fine Gael are not opposed in principle to the sale of State assets but will judge each proposed transaction on its merits. In the case of B & I I would have serious reservations about selling the company at this time. The need for a multiple of carriers in the Irish Sea is self-evident. In an island economy we must not put at risk the future availability of floating infrastructure which is a life-line to commerce. In addition, the State bought B & I in 1965 for £3.5 million, this is about £35 million in today's money. The State put into B & I a total of about £181 million, including the £6 million provided for in this Bill, at today's values.

Sealink, a much larger company, were privatised for £66 million sterling in 1984. The sale of B & I would only make sense if the State's investment could be recovered. Trading profits and losses for the B & I Line have been: 1987, losses of £3.6 million; 1988, profits of £1.8 million; 1989, profits of £2.8 million and for 1990 there are estimated trading profits of £2.1 million. The trading profits of recent years have been turned into losses by interest charges — which will be of the order of £3.7 million in 1990 — and exceptional items. Nonetheless, the company are trading profitably and should not be considered a lame duck in an open season for shipping entrepreneurs. The company have a two year pay agreement, vessels now valued at £6 million more than book values, new operating slots at Holyhead since January and a multipurpose carry ferry on charter which is being refurbished and will be going into service on the Irish Sea in a couple of weeks.

The turning point for B & I came with the plan of action put in place by the Fine Gael-Labour Government of 1982-87. We did not turn this company around to dispose of it easily to some bargain hunter. There are strategic and economic reasons for retaining B & I within the public sector for the foreseeable future and I would ask the Minister and the House to bear this in mind. I shall be returning to this question on Committee Stage. I think it is fair to point out, particularly in view of the fact that The Irish Times reports this morning that the Irish Continental Line have approached the Government with a view to becoming a partner in the State-owned B & I Line. It is timely to remind the House that B & I are a valuable asset, they are not a lame duck, they are not a company which the Minister has said are in need of rescue. The rescue is well under way. The improvement which took place between 1987 and 1989 in trading profits of £6.4 million indicate clearly that this company are on the up and up. They are not a lame duck which are there to be taken by some other company without adequate compensation to the State. The State have invested an enormous amount of money in this company.

In relation to tourism and passenger cars, in 1989 B & I carried 162,000 cars, an improvement of 36,500 over 1987, an increase of 29 per cent. In the ro-ro area, they had 51,000 units, an increase of 59 per cent over 1987. In the lo-lo continental freight units they had 43,000 units in 1989, an increase of 65 per cent on 1987. Obviously that is not a company who are in need of rescue and I accept the assurance given by the Minister to the House this morning that this is not a rescue package.

There are a number of concerns which I would like to express at this stage. It is worth noting that B & I have been turned around despite some of the most outrageous trade union practices not tolerated or encouraged by the official trade union movement, for which I have a very high regard.

A specific control in this company was broken and which, combined with the weak management, left the taxpayer in a disgracefully weak position. This company was a leader in the disturbing development of the national finances in the seventies and in the eighties. All that cancer which was within the B & I has been eliminated. That is welcome. Having done that, I do not think we can easily hand over this State asset to anybody. I do not think anybody who is interested in getting involved either in joint ventures or otherwise with the State should think that this is a bargain which can be easily taken over.

The company face a major cost disadvantage at Dublin port as the chamber of commerce have recently pointed out. I take this opportunity to say that the port must be put on a sound financial footing either by incorporation as a semi-State company, as recommended in the Horgan report, or as a privatised company along the lines of associated British ports. Retaining the operation of the country's major port as a quasi-local authority is an anachronism and unless the Minister grasps the nettle Dublin will continue to lose traffic to Larne, Dún Laoghaire and Rosslare. At present, approximately 125,000 units are collected by Northern Ireland carrirs from as far south as Cork. They cross the Border and they exit not only through Larne — as pointed out by the Minister — but also through Warrenpoint and Belfast dock and are carried as far south as London by the same Northern Ireland carriers. All of this can be done more efficiently and more economically than exporting through either the southern or the central corridor of Rosslare or Dublin at a loss of £56 million per year, on the most recent estimates, to the State.

Dublin port is an anachronism and the Minister should replace the port authority with a more efficient semi-State body, or a private port authority, as a matter of urgency. When B & I were in dire straits, because of airline deregulation in 1986, their rescue strategy was largely based on the Slattery bus company. CIE chose to use Sealink. That is their decision and they are entitled to make that decision on their own assessment of the commercial situation. Given that the Slattery bus company was crucial to the survival of B & I one must ask why the shipping section of the Department do not tell that to the bus section. Why do CIE use Sealink exclusively? The Minister who has responsibility for both of these State companies should ask that question. Surely B & I are entitled to expect a certain slice of the CIE group's business.

The policy of the bus section of harassment of the bus operator is ridiculous and the Minister should reform the outdated 1932 Act immediately. He should use all the resources within his Department to ensure that the bus and train transport companies within the CIE group give B & I a fair crack of the whip and do not put all their business in the way of Sealink. Sealink, as the harbour authority in Holyhead, have not done any favours for B & I, yet Sealink get very favourable treatment at Dún Laoghaire. The Minister mentioned that since January 1990, B & I have negotiated better times and a better deal for themselves at Holyhead. That has been frustrated over a long number of years by Sealink — in the normal commercial sense they are entitled to attempt to frustrate a commercial opponent — but on the other side of the coin, on this side of the Irish sea, Sealink are treated quite well. If B & I are being treated unfairly by Sealink, as the port authority in Holyhead, then I do not see why the Minister should allow CIE to put all their business in the way of Sealink. The Minister should ask CIE to look at the situation again, to see if they can be encouraged to give some of their business to B & I.

Access transport is crucial to doubling tourism by 1992. The tourist with his car travels around the country and is most valuable to hotels and guesthouses. The B & I have a vital role to play there. I would like the Minister to give consideration to how passengers with cars are treated when they arrive in Dublin. Something like 16 per cent of car owners coming back by B & I and Sealink ferries carry petrol, and why not, having regard to the cost of petrol here. The Minister should consider giving ports, particularly Dublin port, a facility to sell duty free petrol to cars coming off B & I ferries, and perhaps they could do the same at Dún Laoghaire. The Minister should talk to Aer Rianta about that as they have been good at bartering services for fuel with Aeroflot and they know something about the fuel supply business and port control, albeit airport control. Aer Rianta might be the right vehicle to supply duty free petrol at our ports to visitors to make the country attractive to visitors coming from Britain with cars.

We now have capacity problems between Ireland and the Continent during the summer. The Minister should seek a joint venture between B & I and a North Sea ferry company, to give a high class cruise service from Germany or the Benelux countries to Ireland. He might also look at Scandinavia. Why do we just look at the Irish Sea, at Le Havre or Cherbourg? I do not criticise Irish Continental Lines for seeking to advance the best interests of their company's shareholders, but that is not the only option open to the Minister. He should look at the possibility of a North Sea ferry company giving a high class ferry service in a joint venture with the B & I. Not only would that give B & I a new lease of life but it would give the tourism industry access to a market which it has not had heretofore. Already there are enormously successful sea ferry operations from Germany, the Benelux countries and Scandinavia. They probably have the leading sea ferry companies in the world. The options the Minister is looking at should not lead him to automatically consider selling off B & I, because there are other options.

There are strategic and economically important reasons we as an island economy should ensure that there are at least two carriers on the Irish Sea with no question of anyone being able to take over B & I as a lame duck which will be closed down leaving no competition on the Irish Sea. Leaving aside those reasons, B & I has been turned around and can be developed into a successful company, and a strategically important company, for developing tourism from Germany, the Benelux countries and Scandinavia through a joint venture if B & I do not have the capital base. Will the Minister consider that option?

Fine Gael have no principled objection to selling State assets and we will examine such proposals on an individual basis. In view of the strategic importance of B & I, if there is any intention to sell the company I would ask the Minister to make sure that it will not be done before he comes back to get the consent of the House. I will address that question again on Committee Stage. So far as this Bill sets out to strengthen the balance sheet of B & I and to improve their operation, I will support it although I will attempt to amend and improve it as it goes through the House.

Mr. Moynihan

I welcome the further investment of £6 million in B & I whose performance over the last two years fully justifies that investment. There has been a major turn around in that company from substantial losses to modest profits. The foundation stone of that success was laid in the three year plan on productivity in 1987 coupled with the pay agreement of July 1989. There has been a major contribution by the workforce who were prepared to work to get the company into a profitable position. In addition to their contribution a major improvement in industrial relations augurs well for the future of the company.

Currently B & I are taking 43 per cent of all Irish exports. That indicates the tremendous confidence of Irish exporters in this shipping line. With the continuing expansion in industrial and agricultural exports and the projected expansion in tourism along with the Channel Tunnel, there will be greater opportunities for the expansion of the B & I services. The Channel Tunnel, because of its historic innovation bringing car traffic to Great Britain, must benefit Ireland, which is the last bastion of isolation on the west of the Continent, with a new influx of people driving cars willing and anxious to travel to Ireland. This would put pressure on shipping services between Britain and Ireland. I hope the Minister, the Department and B & I are conscious of the projected new demand which can be of such value to our economy.

I hope the Minister will not contemplate selling off B & I. Unlike Deputy Mitchell's party, my party have a principled position in relation to State and semi-State bodies, believing that the best development of our economy can be derived from a combination of private and semi-State bodies. In this case, there is no fear of a sell off.

I am disappointed that B & I found it necessary to discontinue the ferry services to Cork causing substantial damage to the commercial and tourism interests and earnings in that area. Because of the interest both commercial and tourism organisations are demonstrating in the B & I and the opportunity for major expansions which will arise in tourism from Britain and the Continent from the development of the Channel Tunnel I want to impress on the Minister the need for the review body to contemplate an expansion of the existing services of B & I, which could include a return of the Cork service. The Minister is well aware that there is no rush by private enterprise to take up the vacuum left by the withdrawal of B & I from the Cork service.

Over the years the voluntary energetic Cork-Swansea committee have tried with all the resources at their command to provide a shipping service to replace the service provided by B & I. As the Minister again knows a reduced service which will operate for only five or six months of the year can only be assured by way of substantial guarantees from the State — perhaps a grant of £500,000 and a loan of £500,000 — and the three local authorities involved. This demonstrates the competitive nature of shipping services at present. The main responsibility for this company must remain with the State. B & I have the expertise and capacity to expand substantially to meet the requirements which I believe exist for an expansion of their services both within the existing ports at Dublin and Rosslare and a restoration of the service which made such a contribution to the economy of the south-west.

In addition to the commercial element, tourism has a major part to play in the continued growth of this company. I believe that tourists who have travelled by car to Ireland have had a major impact on traditional tourism earnings but, as Deputy Mitchell pointed out, our high petrol costs have acted as a disincentive to British and continental car owners who may otherwise have come here. Having regard to the aspiration for a doubling of tourism and the capacity of B & I to meet this increase I urge the Minister to provide some new incentive, perhaps by way of a petrol voucher, to continental and British car owners to travel to Ireland. This would increase returns to the Exchequer by increased sales while at the same time give a substantial boost to our tourism economy.

The Minister said it is time to carry out a review of the company in view of the increasing importance with which the Government view our access transport services, having regard both to our trade and tourism needs and the development of the Single European Market. I am sure the board and workers of B & I are conscious of the challenging times ahead with increased competition from air transport and other shipping services. Because of the isolated position of Ireland, the volume of tourists who want to come here, the development of the Irish export business, the growth in industrial exports and the continuing high level of agricultural exports there is a bright future for this country. As I have said, B & I have the tradition, the expertise and the capacity to meet any additional tourism requirements. I hope that in the future we will not have to consider what other service may have to be brought in as a substitute for this company. Irish Shipping has gone under the waves and we must ensure that B & I, as an Irish owned and Irish controlled company, continue to provide an efficient and excellent service and remain as a permanent feature of this country. This company have served us well. They have had their difficulties but they have now left those behind them.

I welcome the additional money being provided to the B & I. I hope this company will be regarded as a permanent feature of the semi-State companies who are developing the Irish economy. I believe they will get the best returns for our economy through their tradition, experience and expertise. I welcome the Bill.

Mr. Rabbitte

As in the case of my colleagues, my contribution will be brief. I am proud to have been prominently associated with the 1986-87 negotiations which led to the rescue plan for the B & I. This plan was subsequently approved by the Government and forms the background to this Bill.

It is important to put this Bill in the proper context in regard to the 1987 agreement. The Minister has been fair in doing this in his review. One might get the impression from some of the media coverage that this was a case of the B & I again coming with the begging bowl to the Exchequer because of financial and trading difficulties, etc., but the contrary is the case. Since the 1987 plan was put in place, as the Minister acknowledged in his contribution, the company have gone from strength to strength and have exceeded projections in all areas. This is not to say that the company are not operating in a difficult competitive environment but we must put this in a positive frame rather than make any reference to a troubled semi-State company with a difficult industrial relations record or whatever.

The 1987 plan which forms the background to this Bill was exceptionally painful for everybody concerned. That agreement was unique in the history of Irish industrial relations because not only did it involve the second bite by way of a major redundancy programme in which almost 600 people lost their jobs but it also guaranteed industrial peace in the company for the duration of the plan. In addition to all that — and there are many other elements of the agreement — there was a pay standstill for a period of three years operating from the date of the air fares deregulation which was in July 1986. Then, unprecedentedly, the remaining employees accepted a 5 per cent pay reduction.

One would have to know a little bit about the history and background of this company to appreciate how painful that was for the workforce. There is no need to dredge over the history and background in this debate this morning because, happily, we are facing a much brighter future and the measures, although they were very unpalatable to many people at that time, have proved to be correct.

It is important to refer to the remarks of my colleague, Deputy Mitchell, about outrageous trade union practices having contributed to the historical problems of the company. In fact, up to the time of the air fares deregulation — immediately prior to and after that period — there was a very difficult period in the industrial life of this company. In fact, one of the striking features of this company since it was taken into public ownership in 1965 was the extraordinary level of industrial peace enjoyed in the company. Some nine industrial days were lost during that period.

The problems in the B & I that led to the plan of 1987 were due to factors, I would submit, other than fractures of industrial peace, and they are detailed at some length in the most recent edition of the third report from the Joint Committee on Commercial State-Sponsored Bodies. That report took time out to go in some detail in to the background of the problems that led us into the situation we found ourselves in the mid-eighties. Very briefly and superficially I will put on the record what that committee said when summarising the factors that led to this overall state of decline. They said it was over-expansion in the late seventies resulting in increased financial charges and over staffing; substantial fuel price increases from 1979 onwards which particularly affected operators on long cross-Channel sea routes; the general economic recession in the 1979-84 period; depressed market conditions up to 1985 and intensive competition and price cutting; service disruption because of industrial disputes mainly in the United Kingdom in the late seventies and early eighties; the introduction of air fares deregulation in 1986; substantial provisions for losses associated with extraordinary items and high finance charges associated with a high debt equity structure.

I submit that that assessment and analysis still stands good and in so far as industrial peace or industrial relations problems are concerned, they relate to difficulties in the United Kingdom. That is not to say that there was not a problem in terms of some operational practices in the B & I on the side of the trade unions, or that there were not some difficulties in terms of over-staffing which is touched on in this report; I respectfully suggest that the problems of over-staffing and so on were endemic to that era and had as much to do with the political culture obtaining in this country as it had with industrial relations. I do not want to go over it or make any provocative remarks here, but politicans were engaged in securing employment in many of the leading State companies when probably there was not productive work to be done, and I do not think there is any point, in retrospect, in blaming the workforce for that. That situation, however, has changed beyond recognition and the B & I management would concede that a very slimmed back workforce have been performing exceptionally well with no regard to old demarcation disputes or who does what in this company——

Mr. G. Mitchell

Hear, hear.

Mr. Rabbitte

——and that in a climate of pay restraint, by taking a pay reduction they have contributed more than their fair share to the improving situation that is reflected in the Minister's address in this House this morning.

Mr. G. Mitchell

I fully support that comment.

Mr. Rabbitte

That is the background to the Bill the Minister is introducing this morning. It is very important, because it may be thought that because people in the media have short memories if they start again to write stories about the B & I looking to the Government for £6 million injection of equity, that implies that there are some new difficulties in the company. That is not so. This is part of a plan that was negotiated in 1987 which envisaged a capital requirement of £35 million, if my memory serves me correctly, and the senior management and the board of B & I argued at that time for an injection of capital of that order for a number of reasons, one being to avoid this situation where year after year we are discussing this in this House as if it were a matter of great moment or as if it were another crisis. That would have been avoided if we had taken that suggestion on board at that time. The second reason is that the senior management of the B & I recognised that, because of the debt equity ratio and this extraordinary burden of debt and interest repayments, we would have this situation for some years immediately following on the 1987 plan. In other words, no matter how well the company traded it was not possible to trade out because of the accumulated deficit and the very heavy schedule of loan repayments required to fund that accumulated deficit.

Everybody in the company acknowledged that that would be the case, and the Minister referred to that this morning when he said: "I would emphasise in that regard that were it not for the burden of interest charges on historic debts arising from losses accumulated by B & I prior to 1988 the company would at this stage be recording net profits". That is a fair comment and, in a nutshell, represents the present position. We can go back over that if there is a desire to do so, but I think the reason the accumulated deficit of the order that was on the bottom line of the balance sheet was allowed to develop is history. The fact is that it did develop and the costs of financing it were so crippling that at that time the company recognised there was a need to deal with it in the manner I have said.

The Government did not take that approach. At that time they required the management and the unions to agree a plan that would have the support of everybody in the company and, rather than making a major once off injection of equity at that stage, they decided to adopt a phased approach. B & I Line anticipated that £17 million would be required by the company during the first two years of the plan as well as a further £7 million in the current year. Instead of £17 million — this should be put on the record because people get these things out of perspective—£11 million has been needed to date by the company and £11 million has been the amount that has been invested because of the company's performance during 1988 and 1989 that being substantially ahead of all the targets set and, therefore, the company have revised their requirement of £7 million down to £6 million which is being provided in the present plan.

The trading performance of the company has been consistently advised, I understand, to the Minister's Department, and if I were to be critical of the Minister it would relate to the best of my knowledge, the Minister will be able to inform me otherwise if I am wrong, to the fact that there have been very few, if any, direct discussions between the Minsiter and the B & I board about the kind of thing one is reading in newspapers now. In The Irish Times yesterday the Minister's colleague or, should I say, former colleague, the Minister for Industry and Commerce, Deputy O'Malley, in the course of a broad ranging interview confirmed reports that had previously appeared in the same newspaper but which the Government apparently know nothing about, that is, that a large number of State companies are due to be privatised in whole or in part, made some extraordinary references to B & I. I quote:

The Minister also expressed his disappointment about the need for the Government to make provision to inject a further £6 million into the B & I group. It was "very unsatisfactory" and a matter he had "great misgivings about". He added that he "would love to see the end of it as a problem", with the ideal being that Irish Continental would take it over. But "they have not displayed a strong interest", up to now.

This is the real Taoiseach speaking again and I would like to hear the Minister refer to this. Does this mean there is resistance in Cabinet to the provision of the money that is envisaged in this Bill or is it ignorance on the part of the Minister of the context in which the Bill is being brought forward? I can hardly anticipate. This is a Minister who wears a halo when it comes to knowledge. I cannot reasonably anticipate that it is lack of knowledge on his part that this is part of a plan and of a commitment entered into by the Government with the B & I company, so he must know the context in which he is speaking.

To make remarks as Minister for Industry and Commerce to the effect that he would love to see the end of the problem, he has deep misgivings and so on and holding out the spectre of privatisation is surprising, to put it mildly. Then one reads instalment 2 in The Irish Times this morning where there is a prominent front page story which effectively tells us that this £6 million injection is only to prepare the company, British style, for privatisation. According to The Irish Times, discussions have been under way secretly. I quote:

Secret merger proposals between the State-owned B & I Line and the privately-owned Irish Continental Group have been set aside while the latter seeks clarification from the Government of its plan to inject a further £6 million into the loss-making B & I.

I do not know about my colleagues, but I knew nothing about this development. I would like to ask the Minister if the board of B & I knew about this development, if the board of B & I have been consulted, if the management have been consulted. I know, because I checked this morning, that the unions have not been consulted and, according to this, the managing director of Irish Continental said he had presented a proposal to the Government as long ago as the summer of 1989. I find it surprising, to use the mildest word I can think of, that this should be so. The board of B & I have worker-directors and so on. To the best of my knowledge the board have not been consulted about this prospect. It is incumbent on the Minister to address this matter when he is replying. It would appear that the Minister for Industry and Commerce and his party are dictating the privatisation of a good number of our commercial State companies.

Incidentally, I should remind the House that one does not often remember what politicians say at party conferences and so on, but the Minister for Industry and Commerce in his capacity as Leader of the Progressive Democrats a couple of years ago went out of his way at his annual conference to commend as an example to the rest of industry the agreement concluded in the B & I, to refer to it as a unique plan and to commend the response of the trade unions at that time. I have not had the opportunity or time to look it up, but I am sure the Minister for Industry and Commerce is on record to that effect. I remember it quite clearly because one does not often get praise from that quarter. Now it would appear the Minister has made up his mind that this company should be effectively privatised.

I agree with the remarks made by Deputy Moynihan and more ambiguously by Deputy Mitchell. I do not think it is in the strategic interest of this country that B & I should be privatised. I do not know what the response of the B & I management might be if they were consulted. They may consider that it could be a great opportunity to get this stran-glehold of historic debt from around their necks, but I know the response of the trade unions in B & I. As a result of the sacrifices they made a few short years ago they expected that this would be the end of the threat to the B & I in this manner.

I agree with the remarks made by Deputy Moynihan concerning the principled position as to whether the company should be privatised. In terms of the strategic contribution which the B & I make, having regard to the fact that we are an island nation and to what happened to Irish Shipping, I do not see how it is in the interests of this country that B & I should be privatised. The Minister should refer to that when replying. In so far as the Minister referred to it he said:

In order to determine the future capability of the B & I to survive commercially and to develop without the need for continued Exchequer support, I intend to carry out over the coming months a review of the company's prospects with a view to identifying the best options for their future development.

The meaning of that sentence embraces what is presaged in The Irish Times today. The House is entitled to ask the Minister to be more explicit. I do not see why the Minister should consider it is now timely to carry out a review of the B & I as they were reviewed in most minute detail over the last few years. They have also been reviewed in the new competitive environment, very specifically in relation to the impact of air fares deregulation for surface travel.

One of the consultants, Mr. Alex Spain, whom the Minister might have brought in to carry out such a review was brought in almost full-time to have a "hands on" analysis and review of the company a few years ago. The plan we are talking about is the result of that involvement; it had — and has — the full support of the trade unions and is being imaginatively implemented by the present leadership of the management team in B & I. I am not convinced that a review is now timely; I presume the Minister's words refer to the situation mentioned in the newspapers.

My colleague will be dealing with tourism and other aspects of this and I do not want to go into that whole area. I am very pleased that the company are performing ahead of their targets in all areas and that they have achieved very significant market shares in all areas of their operation. For example, they have 43 per cent of ro-ro freight, 32 per cent of tourism cars, 32 per cent of foot passengers and 21 per cent of European ro-ro freight. I also understand that over the last trading years cars are up by some 30 per cent and freight by 40 per cent. After a bleak, brief industrial period, when there were bad trade disputes, the B & I have now recovered and are experiencing industrial calm. The peace clause, which is virtually unprecedented has worked and secured the commitment of the unions and the workforce to make it work. It has made its contribution because the return of certainty to the company is critical. A company like this cannot run the risk of having their schedules disrupted or threatened. There was a brief period when that happened but, in the context of B & I since 1965, it was a very brief period although it diminished the company's prospects and damaged business confidence in the company. However, their performance over the last three years has shown that they have regained their former position of prestige in the marketplace. They are performing ahead of target and are projected as being likely to continue to do so. They would obviously be returning trading profits except for the burden of historic debt. The injection today is the minimum required in the present circumstances and my party will be supporting the Bill.

Mr. Allen

I still feel some residual bitterness at the manner in which B & I treated my city — Cork — when they pulled out of it and abandoned the whole south-west region, a major tourist area. They left us without a ferry link to Britain for the first time in over a century. However, even if this is not a rescue package it is still an investment of £6 million by the Government in B & I.

I congratulate B & I on their climb back to recovery even though it was at a terrible cost to my city and to the workforce who were thrown on the unemployment heap. The State has supported B & I well, in sharp contrast with the way in which it supported ferry links out of Cork in the past. I will deal with that briefly before I get back to the main thrust of the Bill.

As Lord Mayor of Cork last year, I was a director of the Swansea-Cork car ferry. Cork did not have a ferry link because the Government were reluctant to make any investment in the Swansea-Cork link. The investment was finally made as a result of nudging, pushing and pressuring, but it was so late that the company found it impossible to charter a ship and they were without a link to Britain for a full year.

This year, in January, after much huffing and puffing and asking Irish Continental Ferries to come in, the Government eventually conceded to political pressure and gave a loan of £500,000 and a grant of £500,000. I was in Nicaragua as a member of a parliamentary delegation but, in my absence, the Minister of State came into the House in a triumphalist way, lauded the Government's action and criticised Opposition Deputies very personally for their attitude to the Government because of their failure to deliver in relation to Cork. I was at the centre of things as a director of Swansea-Cork and I saw the ineptitude of the Minister of State who had the political muscle of a political dwarf. He did very little to deliver the goods for Cork last year in relation to a ferry.

How does he expect Opposition Deputies to do anything other than criticise in relation to Cork and the whole south-west region and the tourism prospects there? Thankfully, despite the indecisions this year, the Swansea-Cork ferry is operating and despite the delays, it is proving worth while. On the morning the office opened there were queues outside the door. This is a viable proposition and I am glad the local authorities in the south-west region have acted as a catalyst in putting up the financial guarantees and providing staff. Now it is up to the tourism interests and the people of the south-west to support the ferry.

I would like to comment briefly on the reference in the Minister's speech to the consultants' report by Stokes, Kennedy, Crowley on the development of the transport infrastructure. As the only island nation, ferries are our lifeline and must not be looked at by the European Community as just ferry companies. They are like bridges; they are a direct link to Britain and to the European mainland. We need a build-up of the infrastructure around our ports. A case could and should be made to Europe that, ferries provide a social service for the people of this country who require access to Britain and Europe and should be looked upon as such.

Reference was made in the media to the Stokes Kennedy Crowley report. The Rosslare link to Dublin and the links along the east coast were mentioned. Whether it was by omission or a policy decision by the Minister, the south-west region was never mentioned. No mention was made in press reports to the need for a build-up of the infrastructure around the Ringaskiddy ferry port and the need for the setting up of the downstream crossing to link the Dublin national route to Ringaskiddy. I would ask the Minister, in reply to the Second Stage debate, to respond to these points. Is Ringaskiddy included in the Stokes Kennedy Crowley report? What views has the Minister in relation to this area?

I welcome the investment of £6 million in B & I. That company are now coming out of their winter of discontent and trouble. They are a national ferry line and I hope decisions made by the Minister will not jeopardise our autonomy and independence as regards access to Britain and Europe. I would like the Minister to respond to some of the points I have raised.

Minister for Tourism and Transport (Mr. S. Brennan)

I will start by thanking Deputies for their general welcome for the Bill and their comments on it. They, like myself, want to see a bright future for the B & I line and I am very pleased with the spirit with which they approached the matter this morning. I will briefly take up some of the points raised and I do not propose to delay the House very long.

Deputy Mitchell had ideas in regard to Holyhead, northern European routes and Scandinavia. I would welcome any ideas from the board of the company as to how they might wish to expand these routes. Any such ideas will be very positively responded to by me. I agree with Deputy Mitchell that competition on the Irish Sea is critical and very important. However we will have to keep that clearly in mind in our approach to the future of B & I and the ferry services generally. The Deputy is right in his pragmatic view of the future ownership of State companies, including this company. That is a very practical approach rather than to lock yourself into a particular philosophy irrespective of the market trends of the time. That is a sensible approach and I have no difficulty with it.

Otherwise, I very much welcome the Deputy's support.

Deputy Moynihan pointed out that he is opposed to a disposal of the company on principle. I understand that is a principle of his party and I respect his philosophy in that regard. He also talked about the Cork-Swansea ferry and I will deal with that when I am talking about Deputy Allen's comments. I know of the Deputy's interest in tourism. Many times he has been very helpful in this House with positive suggestions. This morning he suggested petrol vouchers but he will appreciate that I will not respond to that off the top of my head. It is an old idea and one that has run into many practical problems, but I appreciate the Deputy's determination to help us build tourism targets. I can tell the Deputy we are meeting a very demanding target of doubling the number of tourists in the four year period between 1987 and 1991, and we are heading into the most difficult half of that period. It will not be as easy to meet our tourism targets this year as it was last year. The first two years are behind us and we have met the targets but we are getting into compound figures now and the going is getting very tough. It will take a massive effort by all of us, supported by Members of this House, to make sure we can meet those targets. If Irish tourism does well, south-west tourism does well also.

Deputy Rabbitte asked about my consultation with the board of B & I. I had a formal meeting with the board and management about six or eight weeks ago at which we had a general discussion about the future of the company. I got a briefing from them as to where they stood and I told them the Government's views on the company generally. I explained that I had on my desk an unsolicited expression of interest from a particular privately-owned ferry company. In response to a request from B & I—a response I had no difficulty in giving because it was my intention to do so anyway — I left that expression of interest aside and asked B & I, before the end of this month if that deadline suits them, to let me have their thoughts as to where they will go from here.

The delay last year affected the service.

Acting Chairman (Mr. Wyse)

The Minister is replying and I would ask the Deputy not to interrupt him.

Mr. S. Brennan

I want to make it clear that the alternative to not delaying on the matter was not to go ahead with the service at all. I know the Deputy would prefer that I would be a few weeks late rather than not do it at all. I was faced with very strong evidence that it would not work, but I am saying this morning and I share the Deputy's view, that I have faith in the business and the tourist interests of the south-west, and leaving aside consultants' reports and the views of other ferry companies, I feel, from the level of investment, this will work. However, I call on the people of the south-west to support the ferry service and make it work, because at the end of the day the future of the service will not be guaranteed by State funding but by the support they get from the people of the south-west. I would like that message to go out very clearly, if there is support for the service the ferry service will continue but if there is not it will not continue.

With regard to the regional study, the SKC study is a national study and will take into account all regions of the country. I thank the Deputies for their very positive contributions this morning and I join with them in thanking the board of B & I and the workforce of B & I for having the courage to go through this very difficult time. I invite all sides of the House to keep an open mind on what we can do to ensure their future is secure in a very competitive business. Let us keep an open mind on how we can do that and not be steamrolled by newspaper comments or consultancy comments. Let us keep a steady head and talk to the board and the workforce and together work out the best direction for the future of B & I. It is strategically important to us and it is important that we develop the company in the years ahead.

Question put and agreed to.

Dáil Éireann debate - Wednesday, 14 Mar 1990

B & I Line Bill, 1990: Second Stage.

Dáil Éireann debate -
Wednesday, 14 Mar 1990