(Limerick East): Have the amendments circulated in the name of Deputy Taylor been ruled out of order?
Private Members' Business - Industrial Credit (Amendment) Bill, 1990: Committee and Final Stages.
Both amendments have been ruled out of order because they extended beyond the scope of the Bill as introduced on Second Stage. I think Deputy Taylor will, inter alia, appreciate that if we were to amend that which has not been provided for on Second Stage we would be opening up all the legislation to amendments which are not provided for in the intent of the Bill, which is to increase the borrowing ceiling allowed to the company, enable the Minister for Finance to guarantee these increased borrowings and empower the company to alter their articles of association in consequence of the above provisions.
The purport of my amendment was to qualify that position, which is the very purpose and intent of any amendment, by providing that if the House agreed to allow this increase in the taxpayers' exposure for this company, the Minister could not avail of his powers of sale to privatise the shares in this company. My amendment would be a qualification of the House agreeing to extend the guarantee by the State, Minister or taxpayer by providing at the same time that the Minister could not, while that guarantee is there, sell the shares. Those two points are interconnected and one is a qualification of the other.
I was amazed when I got the communication from your office, a Leas-Cheann Comhairle, saying that my amendments were disallowed. I was flabbergasted because one is a clear quallification of that position — we agree to the extension and the guarantee but put in a condition in agreeing to it, which is where my amendment comes in. If that is not what an amendment is I do not know what it is.
Deputy Taylor appreciates that the Minister's Second Stage speech referred to specific provisions. It did not refer to the opening up of all the code governing the Industrial Credit Corporation. The House must confine itself to that which is provided for in the proposed legislation as introduced by the Minister on Second Stage.
With respect, I beg leave to correct you in part. You are correct in saying that one must look at the text of the Bill as introduced but to say that the Minister's Second Stage speech has any relevance to the content of amendments which may be tabled on Committee Stage is not, I submit, tenable. The text of the Bill is tenable and that is the only thing which is appropriate for the Ceann Comhairle to look at.
This is a very simple Bill which seeks the approval of the House to extend the exposure of the taxpayer in connection with this company by £200 million. My amendments said that we agree to that, albeit with reluctance, but subject to the qualification that while that is there the Minister may not exercise the power of sale, which he has. It is a qualification of the power the Minister seeks. That is what an amendment is for. How can I bring in that qualification in any other way?
As I have indicated to the Deputy, the Bill before us provides for an increase in the borrowing ceiling allowed to the company. The Deputy agrees with that. It will also enable the Minister to guarantee these increased borrowings and empower the company to alter their articles of association in consequence of those two measures. That is what the Bill is about.
That, I suggest, especially bearing in mind the time limit on us, is what we must apply ourselves to here on Committee Stage. I ask Deputy Taylor to accept that that is the position which exists. I think that on reflection Deputy Taylor will realise that if he were to depart from that he would be moving into another area for which another Bill would be necessary.
(Limerick East): With respect, a Leas-Cheann Comhairle, an amendment like this is usually in order when it is within the Long Title of the Bill. The Long Title of the Bill includes the phrase “extend the Industrial Credit Acts, 1933 to 1983”. I do not understand why Deputy Taylor's amendment is not in order within the Long Title of the Bill.
The title "Industrial Credit (Amendment) Bill, 1990," is specific to the three provisions to which I have just referred.
(Limerick East): That is not what the Long Title says.
What is in the Bill are the provisions of the Bill. I am sure Deputy Noonan will agree with that. As I have indicated, the three provisions of the Bill are to empower the company to increase their borrowings, empower the Minister to guarantee those and empower the company to make alterations required by those two provisions. That is what is provided for.
(Limerick East): I accept that, but to confine amendments to what is within the Bill is to rule out all amendments because an amendment, by definition, is an attempt to change the contents of the Bill. To base your ruling on a definition which says the amendment is out of order because it is not within the provisions of the Bill does not stand up. Obviously an amendment can add or subtract to the contents of the Bill; it can either take from it or add to it. What the Chair has to decide is the extent to which an amendment can add to the Bill. I understand the normal rule is that if an amendment could be construed to fall within the Long Title it is an appropriate amendment.
I want to go closer than that. I am only seeking to qualify one of the sections.
I think Deputy Noonan is practising for another place. The amendment must be relevant to the provision provided for in the legislation.
(Limerick East): This attempts to put a quid pro quo on section 2. What could be more relevant?
It is providing a qualification.
The Bill is entitled an Act to amend and extend the Industrial Credit Acts, 1933 to 1983. Surely Deputy Noonan is not indicating that in respect of the Bill a Deputy would be at liberty to introduce an amendment which would refer to any of those Acts.
(Limerick East): If the Minister introduces amendments to the Industrial Credit Acts, 1933 to 1983 it is relevant to seek to amend the primary Acts once they are related to the contents of the Bill. The amendment directly relates to section 2.
I submit that we have had several recent examples of this occurring.Deputy Noonan referred to the Industrial Relations Act and it is a very good example. Only recently the House amended the Industrial Relations Act, 1946, and several amendments to that related to amending the Trade Union Act, 1975. They were accepted and debated. One does not need to look back further than the Broadcasting Bill which was debated today. The Minister introduced amendments which were completely beyond the scope of the Bill originally introduced. The Title of the Bill is an Act to amend and extend the Industrial Credit Acts of 1933 to 1983.
The Deputy is confusing the Title with the provisions of the Bill. I do not have copies of the legislation to which he referred but I am sure that on examination he will discover that all the amendments accepted, whether from Ministers or Deputies, were relevant to the provisions of the Bill before the House. If the Deputy looks at sections 1 to 4 of the Bill he will see what is provided for. We can only have amendments relevant to those provisions and there is no point in pursuing this.
The Industrial Relations Bill revamps the entire basis of industrial relations law here. The amendment introduced to the 1975 Act related to the disbursement of public moneys to unions contemplating amalgamation. It was a seperate issue entirely and it was debated on the floor of the House, as it should be. There are several precedents along the lines I have suggested. If the Chair was to interpret all the amendments in the manner suggested he would be making our job impossible.
It would be a very serious cut up on the rights of a Deputy to amend a Bill.
Deputies will appreciate that the Chair does not give expression to what strikes him at a particular moment. All decisions are made in accordance with long standing and established principles in the House under all Governments. They are contained in books. I should like to quote from those books. Amendments to an amending Bill must be relevant to some provision in the Bill as read a Second Time and questions as to admissibility have frequently to be decided on finely drawn lines of distinction. The House may not amend an Act referred to in the Bill not contemplated in the Bill. There were eight decisions interpreting the Standing Order relevant to this and there is no precedent for what the Deputy would like to have included.
Deputy Taylor is not seeking to introduce new matter. He is seeking to qualify the application of a particular section.
That is not so.
It is so.
Deputy Taylor's amendment does not refer to a specific provision in the Bill.
It is an amendment in the context of the extension of the guarantee being given by the Minister. It states that the House is prepared to agree to an amendment to the earlier Act, subject to a proviso. We do not want to give a blank; there is a price to pay. We want to amend the blanket provision. An amendment is something that accepts what is in the Bill but seeks to vary it. The Minister is looking for an extra £200 million and we are saying we will give it to him subject to a qualification and that is where the amendment comes in. We are giving the Minister the money subject to a qualification.We are not seeking to amend some extraneous matter but to amend what the Minister is seeking to do in the Bill. This is an important point as far as an Opposition Deputy is concerned.
The Deputy will appreciate that the Opposition today is invariably the Government of tomorrow but Standing Orders do not change under one Government or another. I am indicating to the Deputy for the last time that amendments are acceptable if they are relevant to the provisions of the Bill. Deputy Taylor's amendment which may be attractive and necessary in the overall if there was a total revision of the legislation, cannot be accepted. There are three provisions in the Bill, increase the borrowing, guarantee it by the Minister and make the necessary changes following that and only amendments to those provisions can be accepted. We have given a good amount of our limited time to a discussion on this matter and I ask the Deputies to accept my ruling. It is no different from that articulated in the House on every such question in the past.
(Limerick East): Some time ago the Minister issued a press statement in the course of which he stated he had invited proposals from a number of financial advisory bodies on the terms on which they would advise him in relation to the future development and capital requirements of the ICC. I presume the Minister would not be reluctant to accept advice from Members of the House and that he will not confine his invitation to the financial institutions of this city. If the Minister is contemplating more radical reform of the Industrial Credit Corporation this section, and section 2, are leading in the wrong direction. I cannot see why the Minister should continue to seek to extend this ceiling on the ICC from £800 million to £1 billion. Why does the Minister not allow the ICC to trade as a commercial bank and extend their lending and borrowing as would be prudent on the back of their own assets? Why, when the ICC have been very successful and have grown as much in the last decade as they did between the time of their foundation in the thirties and 1980, is the Minister not proposing a more extensive change? Is it not time for measures such as this to cease and allow the ICC to trade as any other bank?
It follows from that, and section 2, that the Minister should not guarantee the borrowing. Every time the Minister for Finance intervenes to guarantee borrowings on a company an extra liability is incurred by the State. It is not necessary to proceed like this. It is a pity that Deputy Taylor's amendment was ruled out of order because it is probably not necessary any longer for the Minister for Finance to hold 99 per cent of the shareholding in ICC. I do not see why decisions in the thirties, made in different circumstances, to set up an agency to carry out particular functions, should suffer from bureaucratic inertia which keeps them in place with the same shareholding on them for ever.
There is a case to be made for the disposal of shares in ICC and the use of those shares for the benefit of the public as the Minister, the Government and this House see fit. That might reduce the national debt, and, consequently, its servicing and the burden of taxation on the taxpayers. On the other hand, it might mean investing to expand the State sector in another direction. Quite recently some borrowing was engaged in to speed up the process of reafforestation. Instead up extending State borrowing further, would it not be better to cash in some of the shares which the Minister holds in successful companies and to use the proceeds to finance further State requirements?
There is hardly a parliament which does not extend, in one way or another, the role of the State. I think I was the Minister who put the National Development Corporation legislation through the House although the memorandum was carried to Government by Deputy John Bruton in the first instance. There again the State was put in the position of authorising and underwriting borrowings. I wonder if the Minister has taken a longer view of this legislation. It is the kind of thing that is discussed every year when a particular ceiling is reached but, in the context of the Minister inviting proposals from a number of financial advisory bodies whom he does not name, might it not be better for him to take the initiative and to put the ICC on a different footing? Maybe it is time he told them to run their business like any other bank, to borrow and lend as they see fit and carry the risk on their own assets. There will then be the subsequent consideration of whether the Minister should hold such a large number of shares or if he should dispose of them.
While I am grateful to Deputy Noonan for the support he gave in seeking the validation of my amendment, I do not agree with him, as a matter of principle, on the question of the privatisation of the ICC. We have diametrically opposing viewpoints as far as that issue is concerned. I take the view that the Industrial Credit Corporation is a very valuable State asset. They are doing extremely well and the Minister pointed out in his opening speech that the outlook for the company was very positive. He mentioned that the company had shown a profit in every year since their establishment in 1933 and that they had paid dividends to their shareholders in most years, including every year since 1969. That is a very happy and proud record for a semi-State corporation, a sector that, from time to time, has come in for abuse by private enterprise, indeed by many of the organisations which are not averse to taking handouts and concessions in taxes, grants and in any other way in which they can benefit.
This is a proud record and the shareholder — the Minister in the name of the people of Ireland — is doing very well from it. Dividends are being paid and the indications are that they will increase. Why sell the company? I am afraid that the likelihood of a sell-off is very real and that is why I am concerned about the Bill and the section. In case anybody thinks that the question of privatisation in the context of the Industrial Credit Corporation is a vague figment of my imagination, that I am paranoid on the subject and that that is my view in the context of any semi-State company, that is not so because a clear indicator has emanated from the most senior official of the company that the question of privatisation is a very real possibility. I should like to quote from a report in The Irish Times of 7 March 1990 which referred to the annual general meeting of the Industrial Credit Corporation. The report stated:
After the meeting the Industrial Credit Corporation managing director, Mr. Frank Casey, said that the company would be aiming to increase its return on shareholders' funds to about 15 per cent over the next two years in preparation for possible privatisation.
There it is, from no less a personage than the managing director of the company. I doubt that he would make such a statement or posit such a position if he had not already had a discussion or perhaps putative backing from the Minister who controls the company. The Minister should stop the rumours by telling us whether it is on the agenda. Members of the House are entitled to know whether the Minister had any part or parcel in this quote by the managing director of the Industrial Credit Corporation. After all, we represent the majority shareholder in the ICC, namely, the people of Ireland.
The Irish Congress of Trade Unions are also entitled to know the position in that regard in the run-up to possible discussions on a further national agreement.The employees of the Industrial Credit Corporation should also know what is going on. This nod and wink business should cease once and for all. Let the Minister tell us whether this is on the agenda. The chairman of the company, Mr. James Barton, reported that there was an effective 60 per cent increase in pre-tax profits by the ICC last year to £5.2 million. This is when the powers that be start looking at ways of getting their hands on a very valuable publicly owned company which, obviously, can go from strength to strength. The people carried the risk on the corporation through good times and bad; when subscriptions for the company were sought years ago from private enterprise they spurned it because they thought it would not make the grade. Now, when the company are a major success story, they want to get their greasy hands on it. Now is the time for the Minister to come clean in this regard and I will be interested to hear his comment on the statement from the managing director.
Any comment about section 1 or the purpose of the Bill in increasing the borrowing limit from £800 million to £1 billion is not a matter of great moment one way or the other. That is really the comment to be made on the Bill — that it is so limiting, restrictive and narrow within the context of the aspect of economic policy with which it proposes to deal. The manner in which Deputy Taylor's amendment has been ruled out of order highlights the limitations of the Bill.
In the context of the urgency of a total review of our approach to industrial policy we continue this ad hoc approach, a number of instances of which we had on the Finance Bill and now in this Bill to amend the Industrial Credit Acts, 1933 to 1983. I regret those limitations. It is very hard to generate any excitement about whether the limitation should be £800 million or £1 billion.
I share Deputy Taylor's remarks concerning privatisation. Certainly it would clear the air if we could have unequivocal assurances from the Minister but they appear to be very difficult to secure. We heard similar remarks in respect of the decision — which we all welcome in the national interest — in relation to the strategic acquisition by An Bord Telecom of Cablelink. But, when one seeks to establish whether it is for the purpose of fattening-up Telecom for disposal, one cannot get any assurance from the Government that there is no question of disposing of Telecom Éireann. Similarly, we cannot get the Minister to answer unequivocally questions put to him. Personally I would not be adverse to examining whether, for example, there would be some merit in rationalisation of some of the agencies that provide a service not entirely dissimilar or that do not have some affinity with the Industrial Credit Corporation. Again, it is not something in respect of which we have managed to get any reply from the Minister.
Deputy Noonan referred to his having piloted the legislation in respect of NADCORP through the House. My view is that there is an affinity between the role of NADCORP and that of the Industrial Credit Corporation. Indeed, NADCORP are being greatly and deliberately restricted in terms of their purpose and objectives in the manner in which they function.
Similarly I question whether it is absolutely essential to continue to divorce the resources of the Agricultural Credit Corporation from the Industrial Credit Corporation.I heard a Fine Gael Deputy — during the discussion on the last occasion — raise the question of whether there is not a need to examine the role provided by the Industrial Development Authority vis-á-vis the particular facility about which we are speaking here.
I should like to have had an opportunity to discuss these matters on this Bill because they are critical at our present stage in industrial policy. It really is very difficult to expect anybody on this side of the House to generate a head of steam on the provisions of the Bill as it stands.
Finally, I would again raise the question of the proportion of resources devoted to talking a stakeholding in particular appropriate companies as distinct from moneys advanced by loan. Notwithstanding what the Minister of State had to say on the last occasion, that it was seen as a very important dimension of the purpose of founding the Industrial Credit Company in 1933, it remains my view that it would, in appropriate companies considered to have potential, take stakeholdings in return for advancing capitalisation. I would approve of that dimension of the company being expanded. But, from the content of this Bill, I do not interpret that to be the intention in any way.
When replaying to the discussion on this section I should be obliged if the Minister would address himself to a proposal to phase out the exchange rate guarantees, or some, that exist at present. If my memory serves me correctly — and I do not have the reference — in answer to a parliamentary question I had tabled there was a commitment to doing that in the not too distant future.
Like other Members on this side of the House I am disappointed and surprised that this amendment has been ruled out of order. I suppose we must accept that.
I would disagree profoundly with what Deputy Noonan had to say regarding privatisation. The Green Party, Comhaontas Glas, do believe in rolling back the power of the State in many areas. But we feel that the whole of the banking sphere needs to be examined in great depth to ascertain what can be done to make it more accountable. Until that review of the banking system is undertaken — if it is ever undertaken — we would strongly oppose any privatisation of any of the State banks, which would include the Industrial Credit Corporation.
I do not think I need respond to Deputy Garland. If I heard him correctly, his statement appeared to me to be totally contradictory, in that, on the one hand, he wanted to roll back the heavy hand of the State and, on the other hand, is opposed to getting rid of any part of it.
(Limerick East): The Deputy has two hands.
They appear to be full. Taking up the point made by Deputy Rabbitte in relation to the phasing out of the exchange rate guarantee schemes for small businesses these have been in existence since the eighties. These were introduced at a time of high interest rates, with no loss to the Industrial Credit Corporation, to be administered on behalf of the State, the State carrying the exchange rate risk. I should say they are being phased out and will be phased out altogether by 1992.
I understand from my colleague, the Minister of State, Deputy Smith, that there was a wide-ranging debate on Second Stage which continued for approximately five hours on various aspects on the Industrial Credit Corporation.The Industrial Credit Corporation do have equities in companies standing somewhere in the region of £22 million today.
The whole question that gave rise to the introduction of this Bill is simply and solely that the level of borrowing of the Industrial Credit Corporation stands at £785 million, whereas the maximum allowable under legislation is £800 million.The House will appreciate it does not take long to move from a figure of £785 million to one of £800 million, especially when one is talking about movements in exchange rates, when, in a day, the maximum allowable could be exceeded. That was the urgency for the introduction of the Bill. Indeed it was called for in the annual report of the company from which I might quote:
The board and management have made considerable progress in successfully repositioning ICC for the 1990s. Continued growth is, however, significantly dependent on our ability to gain access to additional share capital and increased borrowing powers.
Nobody here has said how they would perceive the Industrial Credit Corporation getting additional share capital. I take it from what Deputies Taylor and Rabbitte said that they would expect the State to put in the additional share capital.At the same time, here we are endeavouring not alone to stop borrowing but attempting to reduce it. This Government have clearly enunciated their policy, demonstrating that we are not in the business of putting in more share capital. There is not even a good return on share capital. It is a commercial banking area which has done very well.
Fifteen per cent.
To get to 15 per cent.
No, Mr. Casey says——
I would respectfully suggest to Deputy Taylor that it is not at 15 per cent at present. Wherever the Deputy got the other quote from Mr. Frank Casey, the chief executive, he can divorce me from it — that was a quote some time in March last.
In regard to where the future of ICC lies — which is what this is all about — in my announcement of 17 May last, when I invited proposals from a number of financial advisory bodies on the terms on which they would advise me in relation to the future development and capital requirements of ICC — I should say this exercise is designed to do no more than have the various options available in regard to the future of the company examined by outside, independent consultants and have recommendations made.
The management and staff generally should be aware that only when the consultants' report has been received and considered will the Minister be in any position to put proposals to his Cabinet colleagues for consideration and decision. There is no point now in bringing in consultants to examine the various options as to how best to approach the future and where the company should be positioned for the nineties because we must bear in mind that we will be in a different climate, a different marketplace in 1992 for small banks such as this. It is as well to address this matter in time and not be waiting until the marketplace changes and then find they have no place in it. It is precisely to address those problems and to advise on all the options that I am taking this course. I have no intention of giving a view as to the future of ICC or what is the best future for them. If I had such a view, there would be no point in employing consultants to consider all the options. It is not a question of "coming clean". There are two issues to be addressed in regard to ICC: firstly, to increase the borrowings, which are at £785 million while the ceiling is £800 million and, secondly, to consider the future capital requirements of ICC to enable them to keep expanding their business. I have a totally open mind as to the future of ICC. When I am informed think I have responded to all the questions that have been raised.
(Limerick East): I can appreciate the Minister raising the borrowing ceiling from £800 million to £1 billion because, as he has said, ICC are already very near their existing ceiling, but why does he consider it necessary for the State to guarantee the increase? It seems the ICC have become so strong that they can carry the extra borrowing without the State incurring a further contingent liability of £200 million. Not only should we be curtailing borrowing and reducing the borrowing requirement but we should also be reducing the level of guarantees provided by the State.
I am in favour of a very strong public sector and very strong, vital, relevant semi-State organisations, but we have to examine the activity of each State organisation in the context in which we find them. ICC were set up in 1933 to provide share capital in industry, which we were trying to develop behind tariff walls in a very protected economy. It was more or less an after-thought which permitted the ICC to be involved in lending and borrowing.The primary purpose of the ICC was not as a lending agency but as a State vehicle to take share capital in companies and to build up the private industrial sector in a protected economy, because there did not seem to be adequate private resources at the time to do so.
The role and function of the ICC has changed enormously since the foundation of the company in 1933, and it is time to look at it again. I accept what the Minister is saying, that there is no point in forward-guessing the consultants. I am not being categoric about this but I cannot see why we would continue to extend the guarantee just because the ceiling is going up. If the health of the ICC justifies the extension of their borrowing to £1 billion — and I believe it does — I do not think it follows that the State has to guarantee the further £200 million. That extension in borrowing is justified on the back of the assets of the ICC. That should be the first departure and I do not think we need section 2.
The Minister throws red herrings into this debate when he starts talking about where the ICC will raise their capital. Anybody would think, when listening to the Minister, that the ICC have been held back over the years, or are being held now as a result of an inability to raise capital. If one looks at the history of the expansion of the ICC, one can see quite clearly that that is not so. For example, in 1958 the maximum figure provided for the ICC for borrowing, of which the equivalent is now £1 billion, was £5 million. I know things have changed very considerably since 1958 but, even allowing for inflation, it is not bad going to increase the figure from £5 million to £1 billion. The company have not exactly had problems in capitalising themselves through borrowing sources. Of course the guarantee given by the State has helped them along their path, and there is nothing wrong with that. I support it as long as the company remain in public ownership, but when we consider that the people of Ireland have put so much into the company to enable them to build up their capitalisation from £5 million to £1 billion and, having backed a winner all along, the company then should be dissipated to other companies in the private sector to increase their multi-millions, that is a different story.
That is one red herring thrown in by the Minister but there is another. The idea has been thrown around that if privatisation is to take place and the Minister is to sell all or some of his shares, in csome way that capitalises the company, but that is not so. If the Minister put the money back into the company it would capitalise them, but that is not what the pro-privatisation lobby advocate. They advocate the use of the money for some other State purpose. The fact that somebody sells shares in a company per se does not increase the capital within the company by one penny, and any suggestion that it does is a complete and utter red herring.
What I invited the Minister to tell the House — whatever other options for the development or expansion of the ICC may be considered or sought from consultants or anybody else — was that he would not countenance privatisation. He seemed to be saying that the statement by the managing director, Mr. Frank Casey, quoted in The Irish Times on 7 March was made without any authority from him or following any consultation with him on the subject. If that is what the Minister is telling the House, I accept it and I am glad to hear it, but I hope the Minister can go further and assure us that he will not contemplate privatisation for this company.
On section 2, has the Minister sought or obtained or does he intend to seek or obtain, either in respect of the increased guarantee sought in this Bill or of previous guarantees, security for the guarantee under section 3 (4) of the Industrial Credit (Amendment) Act, 1958, and, if so, what security has been obtained?
I have some reservations about the Minister trying to win us to the virtue of bringing in consultants and having them review this corporation, for the following reasons. Firstly I believe consultants tend to give you the answer they think you want. One presumes they must have been given some parameters when required to carry out a review of a company such as this. Secondly, I see the ICC as an instrument of industrial policy and I would be very unhappy if consultants were asked to look at the company in isolation and to take a piecemeal approach to examining the future options for the company as if they existed quite separate from the entire range of agencies and questions that have to be considered in the context of any review of industrial policy. You cannot separate the role of the ICC from their role in that integrated network of agencies that support industrial strategy in this country.
If the Minister for Industry and Commerce has embarked upon such a review, which he has done — and the Minister for Finance, when he was Minister for Industry and Commerce, sought a report on industrial performance which was concluded by Mr. Frank Roche at UCD — it is regrettable that we are taking these issues in a piecemeal, fragmented way rather than asking consultants to have a look at the effectiveness of our industrial strategy and whether the ICC can be integrated into some new approach in that context, rather than saying: "There is a State bank, the situation has changed beyond recognition since it was founded — and the purposes for which it was founded — and have a look at that State bank, as a stand-alone operation, in the context of banking in the nineties and whether there is any value for it being retained in public ownership and so on". It could be that one could arrive at a different answer as a result of looking at it in the context of industrial policy rather than looking at it in the context of Irish banking. That would be my only reservation about the path charted for them by the Minister.
I support the point made by Deputy Noonan. I do not believe there is a need to extend the guarantee. It is clear that ICC have a sufficiently good track record, they are well able to borrow money without necessarily having a guarantee for every pound from the State. They already have a guarantee for £800 million, they do not need a guarantee for a further £200 million.
In response to the points made by Deputy Noonan and Deputy Bruton about the guarantees and the borrowings, I would inform the House that ICC borrowings, including their deposits, are all State guaranteed at present, apart from a relatively small amount borrowed from the Exchequer. I am sure the Deputies agree that it would be invidious not to guarantee new borrowings and deposits over £800 million where the existing borrowings and deposits had the benefit of the guarantee. ICC is a bank and as such, it is important that all its depositors and lenders are treated the same.
I share the view that we should be getting away — and have been getting away as much as possible in recent times — from providing State guarantees but in this case it is clear we are dealing with a bank. When we see what the consultants suggest in relation to future options, that is a matter that will, no doubt, be taken into account. Deputy Taylor asked what would be the future of ICC. As I have already said I will not guess at what the options will be. We will look at all the options when they are on the table and take everything into account and I hope we will make the best decision for the future of ICC.
Deputy Taylor raised also the question of default. If the State guarantee was called upon the company would be liable for the amount to the Exchequer. That is the position. The share capital has been £12 million since 1986 against borrowings of almost £800 million. I do not think there is any great element of disagreement on what we are trying to achieve.Everybody recognises that at £785 million we must increase their borrowing limit beyond £800 million to allow them to continue to do business and at the same time look at what the best future is for ICC.
I would remind Deputy Rabbitte and others at this stage that all we have done is to seek tenders from the various consultancy and financial service houses. We have not set the terms of reference as yet.
A question was raised earlier in relation to ACC. The ACC will have to be looked at and will have to be legislated for, I hope between now and the end of the year. The market in which they are expected to operate has changed drastically from what it was when they were set up; ICC are in a somewhat similar position. The ACC will be examined in preparation for the nineties. That is the position as it stands. I think I have responded to the various points raised by the Deputies.
The Minister did not reply to my question whether the Minister has or will obtain security as provided for in section 3 of the 1958 Act.
In effect ICC is security itself. It is a State guarantee.
I am talking about security from the company. There is a specific subsection which provides that the Minister may require the company to give the Minister back security for the guarantee which the Minister has given to those who advanced the money to the company. Has the Minister availed of that special power that was given to him in the 1958 Act and, if so, to what extent and if not, why not?
The State owns the company, so the company will give back to the State.
The Minister would appear to be saying that those who drafted the 1958 Act and went to the trouble of putting in that section, giving that specific power to the Minister, were just dreaming——
It is the same security.
——and that they were putting in there something which was not necessary. That is not so. Theoretically, this could be a very important matter. If, for argument's sake, something went seriously wrong with ICC — I do not suggest for one moment that it has or will, but some insurance companies and banks have fallen by the wayside — where there were substantial creditors the Minister would have to pay up to the company. If a question arose as to who would have priority for the remaining funds and if the Minister had security for his guarantee — the 1958 Act put in a provision specially to invite him to do so — the Minister, that is the taxpayer, would have a priority position in having recourse to the assets in that company. If he did not bother to avail of the power given to him in section 3 of the 1958 Act the taxpayer could be at a serious loss. Has the Minister availed of the power given to him to secure the taxpayer?
I have the first charge on the company.
That is the answer to the question. I do not know why he did not say that in the first place. Does the first charge cover the entirety of the guarantee given by the Minister or only part of it?
It recovers all of it.
That is all I want to know.
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John (Wexford).
- Burke, Raphael P.
- Calleary, Seán.
- Callely, Ivor.
- Clohessy, Peadar.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Cullimore, Séamus.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- Dennehy, John.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fahey, Jackie.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Flynn, Pádraig.
- Gallagher, Pat the Cope.
- Garland, Roger.
- Harney, Mary.
- Hillery, Brian.
- Hilliard, Colm.
- Hyland, Liam.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Leonard, Jimmy.
- Lyons, Denis.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P. J.
- Nolan, M. J.
- Noonan, Michael J. (Limerick West).
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Reynolds, Albert.
- Roche, Dick.
- Smith, Michael.
- Stafford, John.
- Tunney, Jim.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Joe.
- Woods, Michael.
- Wyse, Pearse.
- Ahearn, Therese.
- Barrett, Seán.
- Barry, Peter.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Bruton, Richard.
- Carey, Donal.
- Connaughton, Paul.
- Connor, John.
- Cotter, Bill.
- Creed, Michael.
- Crowley, Frank.
- Currie, Austin.
- D'Arcy, Michael.
- Deasy, Austin.
- Deenihan, Jimmy.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard.
- Fennell, Nuala.
- Finucane, Michael.
- Flaherty, Mary.
- Belton, Louis J.
- Boylan, Andrew.
- Bradford, Paul.
- Flanagan, Charles.
- Harte, Paddy.
- Higgins, Jim.
- Hogan, Philip.
- Kenny, Enda.
- McCormack, Pádraic.
- McGahon, Brendan.
- McGinley, Dinny.
- McGrath, Paul.
- Nealon, Ted.
- Noonan, Michael. (Limerick East).
- O'Keeffe, Jim.
- Owen, Nora.
- Shatter, Alan.
- Sheehan, Patrick J.
- Taylor-Quinn, Madeleine.
- Timmins, Godfrey.
- Yates, Ivan.
In respect of the Industrial Credit (Amendment) Bill, 1990 I am now required, in accordance with the order of the Dáil this day, to put the following question: That sections 3 and 4 and the Title are hereby agreed to in Committee, that the Bill is hereby reported to the House without amendment, that Fourth Stage is hereby completed and that the Bill is hereby passed.