Sugar Bill, 1990: Second Stage.

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

The purpose of the Bill is to provide for certain matters relating to the restructuring of Siúicre Éireann CPT. The primary function of this legislation is to provide for a restructuring which will enable the company to pass from State to a more widely diffused ownership in partial privatisation.

Before discussing the Bill I would like to set out in general terms the process which has now culminated in the Bill being placed before the House. Because of their concern for the future of the Sugar Company, in early 1989 the Government commissioned a study on the affairs of Siúicre Éireann and on their future development. Consultants were appointed and given the following terms of reference: (1) to review the operations of Irish Sugar; (2) to report on any restructuring or other developments considered necessary to ensure their long term commercial viability and growth; (3) to assess the economic and financial implications of any recommendations; and (4) to complete the review and submit a report by the end of March 1989.

The consultants reported in May 1989 and, in evaluating the options for the future of Siúicre Éireann, concluded that the company could not remain static if their long-term commercial viability and growth were to be ensured. In September 1989 the Government having considered the report decided that further analysis of the future options for the company was required. Accordingly a smallad hoc group were set up representative of my Department, the Department of Finance, the Industrial Development Authority and Siúicre Éireann, to prepare a report on all the options for the company's future, including diversification, with a minimum of financial risk.

The group examined three basic options for the future of Siúicre Éireann. These were: (1) the continuation of the present activities and structure; (2) total privatisation; (3) partial privatisation and commercial development of the company while retaining a degree of State control over their sugar operations and the sugar quota.

Before commenting on the various options for the future of the company I would like to sketch out briefly some facts about Siúicre Éireann.

Siúicre Éireann are, as of now, a public limited company with an issued share capital of £66 million comprising 65.5 million ordinary shares of £1 each and 0.5 million 6 per cent cumulative preference shares of £1 each. The Minister for Finance holds all the ordinary shares save a small number of qualifying shares held by directors. The 0.5 million preference shares are held by various investors.

The main activity of the company is the processing and distribution of sugar. They have almost 100 per cent of the market for sugar in the State and 70 per cent of the market in Northern Ireland and a small market for industrial sugar in Great Britain. The company are also involved in the food sector and in the recent past have made a number of acquisitions in this area, the most significant of which was a 50 per cent share in Odlums Ltd. with options on the purchase of the remaining 50 per cent. Agri-trading is the principal other activity of the company who are also involved in recently commenced joint ventures with private companies, notably in Thurles.

The company have reported net profits on ordinary activities since 1986 and had a record after tax net profit on ordinary activities of £15.353 million in the year ending 30 September 1989 compared with £11.886 million in 1988. During the period of recovery, profits were applied in reduction of borrowings and large accumulated losses which had been incurred prior to 1986.

Turnover in the year ending September 1989 was £216 million made up as follows: sugar division, £125 million; food division, £34 million; and agri-trading division, £57 million.

The turnover consists largely of Irish sales with only £36 million accounted for by sales outside the State.

The financial results of the company for year ending September 1990 are due to be published shortly, and it is expected that they will show an increase in profits over last year's figures.

In the year to 30 September 1990 the company employed 1,757 people compared with 1,556 the previous year. This increase, the first in many years, was essentially as a result of acquisitions during the year. I am happy to report that at the end of 1990, 187 new jobs had been created in the joint venture replacement industries in Thurles and the target of 384 for the end of 1992 is very clearly realisable. I am glad to say also that, as regards the old Tuam sugar factory site, planning permission has been sought for the building of a 20,000 sq. ft. advance IDA factory which will bring a new industry to the area. The Sugar Company will contribute to the cost of this factory, in the context of their commitment to the establishment of new industries in the area following the closure of the sugar factory there.

The company have undoubtedly made substantial financial progress in recent years and have rigorously pursued a programme of cost competitiveness. This programme was a difficult one and tough decisions were taken. The results of these decisions can now be seen in the performance of the company and in their improved financial position. However, apart from the excellent work of the board, management and staff a major factor in turning the company around was the significant capital investment by the Exchequer. The Exchequer contributed £30 million equity in 1982, £20 million in 1983 and £9 million in 1987. This was a major injection which brought the total Exchequer equity up to £65.5 million. There has been and continues to be a considerable cost to the State arising from the provision and servicing of these funds. As mentioned earlier, no dividend has been paid because of the legal ban on any such payment until accumulated losses have been cleared. In addition, because of protracted loss-making, the company have paid little corporation tax.

The proposed legislation, when enacted, will at last enable the State to get some return for its investment. This will be achieved both through the sale of shares and the payment of dividends on the residual Exchequer shareholding following the proposed flotation which I shall refer to shortly.

I would now like to turn to the different options considered by thead-hoc group to which I have referred. I will refer first to the option of continuing the present activities and present structures of the company.

On the basis of the company's excellent performance in recent years they are expected to continue to operate profitably in the medium term. The company could therefore continue with the present range of activities and concentrate on further rationalisation as necessary. On that basis the shareholder could expect a reasonable dividend this year and for some period thereafter. However, this approach would be appropriate only if the company were prepared in the longer term to remain in a static rather than a dynamic position. They are not prepared to do that and in any event the environment in which they are likely to have to operate would not allow them to do so. Possible changes in the Community sugar regime, the outcome of GATT negotiations and the fact that in European terms the company is a moderately sized player in a market tending to be dominated by the large, all point to the need to diversify and expand their base. The future success of the company in their existing activities will thus be dependent on their ability to adapt continually to changes in their business environment.

While a continual reliance on the core business of the company would yield a return to the Exchequer in the form of receipts from dividends in the short to medium term, such a policy would not provide a basis for the growth and development of the company. Acceptance of this option, even for a limited number of years, would place the company on an irreversible course from which they could not generate the resources to recover.

There is also the consideration that the disposal of shares by the State at a later stage, if in the meantime the company were to continue only with existing activities, would fail to maximise the return on the State investment.

The business environment changes affecting Siúicre Éireann make it imperative for the company to embark on a policy of carefully planned expansion away from its existing core business into areas that are complementary and in which their operational, technical and managerial expertise can be applied to good advantage. Indeed the programme of rationalisation that had been undertaken by the company in recent years must be viewed as the first but significant step to ensuring this future prosperity. Continued reliance on the core activities is unrealistic as it offers limited prospects for the long-term future of the company and their employees or an acceptable return to the State on its investment.

The second option — total privatisation of the company — was not considered as suitable. Such a course now could ensure that the Government would realise a short-term Exchequer benefit on its investment in Siúicre Éireann. However, the company would be particularly attractive to other EC companies which would anticipate maximising economies of scale and-or rationalisation. A sale on that basis could have particularly negative effects on employment and on the future of beet growing in Ireland. In addition, there would be no guarantee that any of the profits from future sugar operations would be invested in Ireland.

The restructuring of the company on the basis of partial privatisation and commercial development while retaining a degree of control over their sugar operations and the sugar quota was the final option examined by the group. This was examined in the context of what the group saw then as the future requirements of the company.

They considered various possibilities for the commercial development of the company and concluded that they need to diversify and broaden their commercial base. They took the view that such commercial development should be undertaken largely by means of acquisition and-or joint venture so as to minimise the risk for Siúicre Éireann. However, they recognised that while the development of the company cannot be financed solely from internal resources or by borrowing, the Exchequer should not be required to provide additional equity capital for development purposes. They concluded that funding for development purposes would have to be partially obtained by way of additional equity and that this equity should be raised by the issue of new shares on the stock market following flotation of the company.

The group's recommendation, subsequently accepted by the Government, was to pursue the option of partial privatisation provided that it would be carried out in such a way as to afford reasonable safeguards for the Irish sugar industry, yield a reasonable return to the Exchequer and ensure as far as possible the future viability of the company.

In reaching their decision the Government were mindful that partial privatisation would represent a fundamental change in the status of the company. However, they considered that the conditions which originally existed and justified exclusive State control no longer apply. As indicated, the future success of Siúicre Éireann is dependent on their developing a dynamic and fully commercial approach to the conduct of the business in which they are engaged.

Further commercial development of the company is unavoidable. It is essential that they be in a position to avail of opportunities for growth and expansion that may emerge and be able to explore commercial sources of finance for such purposes. It would not be either appropriate or practicable that the company should be dependent on the State for approval or finance. Therefore, it is desirable to give the company access to equity from the capital markets by way of a flotation on the Stock Exchange. In view of the size and profitability of the company and the potential for further improvements I am confident investors will welcome the opportunity to become involved with them, thereby contributing to their successful launch on the Stock Exchange.

I should stress — and the House will be aware — that the capital markets are a demanding taskmaster and investors demand high standards of performance from publicly quoted companies. A track record of returns by way of dividend and capital appreciation of share values is essential if a company is to expect investors to put up funds for acquisitions and development. Accordingly, once Siúicre Éireann, or to be more correct their proposed holding company, Greenvale plc, is set up and floated on the Stock Exchange, they can expect to be subjected on a continual basis to detailed analysis by investing institutions and individuals. Investors will continue to support the company and meet demands for injections of additional equity as long as they are delivering a satisfactory return on their investment.

Already Siúicre Éireann are in the top flight of agri-business entities operating within the State with higher profits than any other company in the sector. Furthermore, I am satisfied that they have the requisite ability to meet the demands of investors and, as a result of access to market funding, will develop in time into a very substantial food company.

I am mindful of the fact that the employees and the suppliers of raw materials to the company, in particular beet growers, will be anxious to ascertain if the flotation will have significant implications for them.

Neither workers nor suppliers have anything to fear from the flotation. On the contrary, the overall strengthening of the financial base of the company arising from the flotation can be to their advantage only. Beet growers and employees of course, will approach certain individual issues from a different perspective to that of the company. There will always be negotiations on matters such as prices and wages. However, in a growing and profitable company — such as I expect Greenvale to be — these matters should continue to be capable of resolution without particular difficulty.

It is the Government intention that beet growers and employees will be asked to subscribe for shares in Greenvale. I believe this is an important development. These groups, as shareholders, will have an active interest in the company and benefit from its development by way of dividends and the capital appreciation of their holdings. The terms on which shares will be made available to beet growers and employees will be discussed with the two parties involved.

One point on which concern has been expressed since the publication of the Bill is that of the rights of employees following flotation. The position is that workers' interests are already protected under the European Communities — safeguarding of employees' rights on transfer of undertaking — Regulations, 1980. However, in order to reassure workers on this point I intend moving, on Committee Stage, an amendment underlining the rights of employees. This will provide specifically that the rights which employees of Siúicre Éireann or its subsidiaries hold before the date on which the Minister for Finance transfers his shares in Siúicre Éireann to the new holding company will continue to be held by them on and from that transfer date. Provision will also be made to ensure that employees will not suffer any less favourable terms under their pension or superannuation schemes after that transfer date.

In addition, I should add that Siúicre Éireann has indicated to ICTU a willingness to confirm formally a number of commitments, in writing, relating to employees' conditions subsequent to the restructuring of the company. These commitments are as follows: no interruption in continuity of employment; current rates of pay and conditions of employment will continue to apply; continued recognition of existing trade unions; and existing procedures for determining rates of pay and conditions of employment, including redundancy terms, will continue to apply. The company are willing to register these commitments in the Labour Court and with the new Labour Relations Commission.

I would now like to make some comments on the food industry. While Siúicre Éireann, with a turnover of £271 million in the year to September 1990 and over 1,700 employees, is a substantial company in Irish terms, it is quite small by international standards. It is generally accepted that for companies to be viable and internationally competitive in the agri-food business in the long term, they must be of a size which is somewhat greater than Siúicre Éireann as presently constituted.

Given my responsibility for the food industry and its relevance to the future of Siúicre Éireann I would like to take the opportunity to speak in particular about the challenges posed by 1992 for Irish food companies. The future offers the prospect of a general restructuring of the food industry in Europe. There are likely to be an increased number of mergers and acquisitions which in turn should result in lower costs and greatly increased competition. In considering the size of the resultant big EC companies one must remember that they in turn will be smaller than some of their competitors on the world food stage.

Irish food companies will never be as big as the giant European and US companies. However, that does not mean that they cannot succeed in the Europe of the future. There will be plenty of room for relatively small companies, even though they will have to be large in Irish terms as presently understood. The companies that succeed will be those that recognise that the different elements of the European market will no longer be self contained but will be interacting with each other. It can be expected that customer tastes and preference will begin to overflow country boundaries while prices will be increasingly affected by European rather than local considerations.

While the small scale of Irish food companies is a disadvantage, their ability to source high quality raw materials at a relatively low cost is a major advantage. Siúicre Éireann have in recent years displayed abilities which should stand them well in their drive to become a successful food company in the nineties. They have been successful with branded sugar products in Ireland while Odlums is a household name. Developing international brands is an expensive and difficult process. The larger Irish food companies are conscious that apart from the brand route which can be so difficult there are substantial opportunities in Europe for trading directly with other companies.

Sale to other manufacturers, own-label production, joint ventures and supplying the catering industry are but a few examples of the opportunities that exist. Siúicre Éireann have developed markets with other manufacturers for sugar with some considerable skill and are well placed to use this experience in pursuing new developments in Europe over the coming years.

I now turn to the particular provisions of the Bill. Section 1 is the standard definitions section and requires no specific comment.

Section 2 allows the Minister for Finance to exchange his shares in Siúicre Éireann for shares in the new holding company which as I mentioned earlier, is to be called Greenvale plc. It also enables the Minister for Finance to acquire further shares in the holding company with the required funds being advanced from the Central Fund. He may also, following consultation with the Minister for Agriculture and Food sell or dispose of shares in the holding company as he sees fit. Funds received in respect of share sales and dividends must be paid into or disposed of for the benefit of the Exchequer.

This section also allows the Minister for Agriculture and Food to acquire a special share in the holding company. This share is analogous to the "Golden Share" issued in privatisations in other European countries in recent years, notably in the UK and France. The purpose of the special share is to ensure that the State can effectively exercise certain specified control over the sugar operations of the company while reducing its own shareholding below 50 per cent.

The special share is designed principally to ensure that none of the following events can arise without the prior consent in writing of the special shareholder: any change in certain specified articles in the Articles of Association of the company; the winding up of the company; the sale of more than 49 per cent of Siúicre Éireann which, following the Stock Exchange flotation, will be a subsidiary company of Greenvale plc; the disposal of specified sugar assets including the Irish sugar quota held by Siúicre Éireann; the creation of a new class of shares in the company; and the building up by one shareholder or a consortium of shareholders, other than the Minister for Finance, of more than a 15 per cent shareholding in the company after flotation. The above points are dealt with in some detail in the Articles of Association of Greenvale.

I should mention at this stage that it is the intention of the Government that the Minister for Finance will only dispose of sufficient shares on flotation to bring his holding down to 45 per cent.

In conclusion on the special share, I could summarise it as being a device to prevent the disposal of the controlling interest in Siúicre Éireann or the sugar assets and to prevent a shareholder or group of shareholders acting together from gaining control of Greenvale.

A further provision in section 2, which I should mention, is that enabling the Minister for Finance following consultations with the Minister for Agriculture and Food to sell or dispose of his shares to such specified persons and on such terms and conditions as he may prescribe by regulation. The intention of this section is to facilitate the sale of shares to employees and beet growers.

It is as I indicated earlier, the intention of the Government to encourage the employees and beet growers to invest in Greenvale and to this end the Minister for Finance will dispose of some of his shareholding to these groups or alternatively new shares may be issued to them.

Section 3 provides that the two ministerial shareholders may exercise all their rights attaching to the shares in the holding company, which is Greenvale, including, where applicable, the exercise of those rights by attorney or proxy.

Section 4 deals with the allotment of shares and empowers the two ministerial shareholders to appoint nominees and to transfer shares to such nominees to act on their behalf. The section sets out the rights and duties of nominees and the power of the Minister to issue directions.

Section 5 grants relief from stamp duty on any agreement, transfer, conveyance, assignment or lease whereby any business, assets or liabilities of Siúicre Éireann, or shares held by them are transferred to the holding company. This relief is a common feature of group reconstructions.

Section 6 provides for the repeal of the Sugar Manufacture Acts while section 7 is a standard provision relating to any expenses arising under the Act. Section 8 is another standard provision and deals with the laying of orders before the Houses of the Oireachtas. This provides for the orders to apply immediately but states that they may be annulled by either House within 21 sitting days. Section 9 contains the usual citation and commencement provisions. The Act will come into operation on such day or days as the Minister for Finance may determine following consultation with the Minister for Agriculture and Food.

Deputies will understand that I felt obliged to speak at some length on the Bill. It is important legislation and it was necessary to explain the background and the need for changes in some detail. I am sure that Deputies will respond in a positive manner. I will deal with any specific points raised in my reply to the debate.

I commend the Bill to the House.

We will not be opposing or impeding this Bill, but we may question some aspects of it. We obviously welcome the general thrust of the Bill since it could be said that we initiated it. The Minister was not at all apologetic in the course of his statement. If the Bill had been brought before the House three years ago the Minister would have been duty bound to vote with The Workers' Party in opposing it. At that time he was vehement in his opposition to the rationalisation of the Sugar Company. The Workers' Party and Fianna Fáil are the two parties of humbug and hypocrisy, as a former colleague of mine might have said.

Sharing the same ideological aspirations.

If you want humbug you will get it in the midst of the two of them. The Minister probably would have had no option but to vote with The Workers' Party because he was hell bent on not allowing the Sugar Company to become a viable financial entity. With the passing of this Bill the company will have the opportunity to make a considerable amount of money for the State, allowing that money to be reinvested in other projects. I see setting up Greenvale plc as the start of something special in the processing facilities for Irish agriculture, particularly in regard to vegetables. It could be the springboard for fantastic developments of the type we have spoken about for many years but never achieved. With the money raised on the Stock Exchange we should be in a position to provide further processing of a whole range of vegetables. We should be able to broaden the base of the Sugar Company and increase its turnover from £250 million to £1 billion, with the foresight and imagination which is there at present.

The Minister in his election literature in 1987 made the point that if Fianna Fáil got back into office the board of the Sugar Company would be replaced. I am glad that the two mainstays of that board are still there, namely, the chairman, Mr. Cahill, and the chief executive, Mr. Comerford. They have called the shots and turned the company around. The Minister did not get his way. There were some minor changes in the membership of the board but the brainbox stayed where it was, the people with the backbone and the gumption to pursue forward-looking policies stayed at the helm.

Mr. Goodman would have had the company two years ago according to Deputy Deasy's policies.

This is an enterprising Bill. The Workers' Party are totally negative in everything they do. There is no point decrying this positive move forward.

Deputy Sherlock will get his opportunity. Meanwhile allow us to deal with the matter with a certain sweetness.

The Workers' Party, far from being the party who promote the welfare of workers, should be renamed the anti-workers' party. They seem intent on destroying companies which provide employment. I have seen it in my constituency and others and in the amendment put forward today by The Workers' Party. Their long-term aim is to destroy jobs, not to create them. One needs money to create jobs and by raising money through such a company as Greenvale there will be the wherewithal to invest and create new jobs. That does not appeal to The Workers' Party. They would like to think in terms of minimum numbers in employment in the Sugar Company and its subsidiary industries.

Some ten or 12 years ago employment in the Sugar Company was 2,400. When the necessary rationalisation took place the number fell to 1,200. Today it has risen to 1,700 and is increasing rapidly. With the public floating of the company and the injection of capital, not only will we see a turnover which will be a multiple of the £250 million obtained in 1989 but probably a similar multiple in the numbers employed. I look forward to an industry involving the processing of sugar beet and vegetables and grain milling, such as the Minch Norton operation, which would employ 5,000 or 6,000 people. The Minister in his reply might refer to that aspect in some detail. This is the best opportunity of achieving what we have been promising to do since the foundation of the State. Let us build on it. We have the right people at the top in the Sugar Company and I hope they will also be at the top in the new company, Greenvale plc. It is important to retain those people.

I must rebuke the Minister for what I can only call a typical exercise in gombeen politics, his personal manifesto to the people of Thurles in North Tipperary in 1987. I refer specifically to the document circulated on 9 February 1987 relating to the future of the Thurles sugar factory. This is the type of document which brings politics and politicians into serious disrepute. It is the type of document which, if implemented, would keep us in the dark ages in industrial terms.

The document states that where the Government talk of closing Thurles, Fianna Fáil plan for development. It goes on to state that the Coalition Government and the present board of the CSE talk of closing down the Thurles sugar factory. It urges people to change the Government so that Fianna Fáil can change the board. In the meantime, the document states, Fianna Fáil will insist that the present board review their so-called two factory plan. It is a good job the Minister did not get his way and that the board did not reconsider the two factory plan. The two factory plan has brought the sugar factory into profitability.

In fairness to the Taoiseach, I do not know if he has a ruler in the Cabinet, but he rapped the Minister for Agriculture and Food on the knuckles and told him to forget about his three factory plan because it was going to be a two factory operation. Perhaps it is a bit rough on the Minister but he invited it. He chided the record of the Coalition Government for closing various elements of the Sugar Company, including Tuam. We grasped the nettle and we attracted political odium for doing so. It seemed that the whole west of Ireland would go against us but nevertheless we did it, and it did a lot of good for the Sugar Company. If the Minister had been a little more forthcoming in agreeing to a quick closure of the Thurles factory we could have had Greenvale plc floated two years ago and we would have been on the way to establishing and sustaining a huge vegetable processing industry here. Because of the Minister's opposition we are probably two years behind the times in doing this and in the process have probably lost about £100 million.

One of the things I am aggrieved about is that I read more about this Bill in last Sunday'sSunday Business Post than I did in the Bill itself or in the explanatory memorandum. We are used to getting very enlightening memoranda. The parliamentary draftsmen draw up legalistic Bills which are difficult for the layman to understand. Here, however, the memorandum is not a whole lot better. The type of information one would expect in a memorandum was not in the memorandum. It was in the Sunday Business Post. They point out a fact of life which is rather unfortunate. They say that because of the economic climate at the moment, because of the weakness on the Stock Exchange, the value of the Sugar Company now, instead of being £200 million is only approximately £140 million and that cannot be helped; that one always imagines one is in the very worst situation but that, however, might not be the case and the market might get even worse. If that commentary on the value of the Sugar Company is correct, it is unfortunate that the placement was not made two years ago when the market was so buoyant. It was not made because of the Minister's resistence and his determination to defend the indefensible.

There is something that is somewhat puzzling about the Bill. The Sugar Company, as we know it, is at present owned by the Minister for Finance who is the main shareholder. As well as that the Minister for Finance will be a 45 per cent shareholder in the new holding company, Greenvale. He can sell those shares off as time goes on if the company are operating as we anticipate. Why does the Minister for Finance have to own the Sugar Company as he did in the past? Why does he have to own 45 per cent of the shares in the new company, Greenvale, when really it is the responsibility of the Minister and the Department of Agriculture? The Minister for Agriculture appoints the chairman and the members of the board. When there are problems in the Sugar Company the Minister for Agriculture is the person to whom the board refer. I cannot understand why the shares have to be vested in the Minister for Finance. My advice to the Minister — I have probably given him this advice before in regard to other aspects of the Department of Agriculture — is to wean away the property which rightly belongs to the Department of Agriculture from the Department of Finance as quickly as he can because they are about the most inhibiting force I know in this State when it comes to development. They will chop the Minister right, left and centre and if this company have the good fortune to make a lot of money or more money than is anticipated, they will grab it and it will not go for the betterment of the new company, agriculture, farmers or the workers involved in the company in Ireland. The Minister will have to fight tooth and nail. It is about time a marker was put down, that Ministers got a lobby going in the Cabinet to see that something that was within their portfolio is controlled by them and not by the Department of Finance. As a former Minister for Finance, the Minister for Agriculture should be well able to untangle that particular web.

I was the Minister for Finance who transferred the responsibility for the Sugar Company from the Department of Finance to the Department of Agriculture in 1980.

The Minister for Finance is still the main shareholder.

He has political responsibility.

He is still the main shareholder, which means he calls the tune. It is all about money. I would not say the Minister was converted on the road to Damascus. I would say he had to be hauled up that road from Thurles to Saint Stephen's Green bawling and shouting the whole way. I would not say the Minister was actually spread all over the Cabinet table but I would say the threat was there.

The Minister referred to cost competitiveness and tough decisions. Those decisions were taken back in 1983, 1984 and 1985. I am glad to see that the present Government had the bigness of mind, the courage and the wisdom to reappoint Mr. Cahill as the chairman of the company because he showed that he could get things done and that is essential. He had the courage and the backbone more than anything else, and ability is inherent in people like that. He had the right ingredients and I am glad to see that he was reappointed.

There was a major part for Minister Kirk to play in this new board because it is a springboard for what he has been trying so hard and so fruitlessly to do for the past four years, if he will excuse the pun, that is, to start up a viable vegetable processing industry in this country not just to grow vegetables but to process and have them available for 12 months of the year so that we would not have to depend for our vegetables in the first six months of the year on the British, on Northern Ireland producers, on the Danes and particularly on the Dutch. If the home grown produce cannot be retained fresh it should be processed so that we can avail of them.

I note that the Sugar Company have acquired not just 50 per cent of Odlums and have an option on the remaining 50 per cent but have also acquired companies such as Grassland and Swiss Co and that they have a certain interest, although it is only academic at the moment, in companies like Minch Norton. The Sugar Company must expand their activities and that will probably mean doing what the major co-operatives in this country, such as Avonmore and Waterford, have already done, that is, acquire complementary industries in Britain and America and probably on mainland Europe because the processing of 200,000 tonnes of sugar is in itself a very restricted activity. While it may now be a profitable activity, that may not always be the case. Take, for instance, the GATT negotiations presently drawing to a conclusion with, we hope, not too hurtful a result for this country.

It is quite likely that, if not immediately then with the passing of time, Third World countries will produce enough cane sugar to seriously erode the price structure of sugar extracted from sugar beet in this country. It may well happen that there will be a free world market and prices will be held at a reasonably high level as far as Third World countries are concerned, but not as far as we are concerned and there could be a serious undermining of our position as a result of the sale price of sugar. That is what may happen in the years ahead, although it may not be too many years ahead. Perhaps the World Bank will invest on a massive scale in the Caribbean and Pacific islands which will allow them to produce significant quantities of relatively cheap sugar which we will not be able to keep out of our market.

The protectionist system in which the EC has wallowed for the past 25 years is beginning to crumble. However, we would hope that we could get derogations and exemptions from the effects of a dilution of the protectionist system. In the event that we would not be as successful as we would hope, it is imperative that we would have fall-back positions. The Sugar Company must diversify and, most likely, diversification will not be limited to Ireland; it should involve Britain, the United States and western Europe and there should be a wide range of food industries so that we have other methods of raising profits that are vitally necessary for survival.

The base is too narrow at present, although I compliment the present board and management of the Sugar Company for having broadened that base and, in particular, for having the courage to close down the unprofitable elements of their business and having bought in profitable elements. I think the Minister has not given them credit where credit is due. This is the first opportunity we have had to say that in this House. We should not be afraid to take on people who have nothing better to suggest than dead end, useless solutions — they are not solutions, that is the wrong word; they should be called "ideologies". These are idiotic ideologies suggested by people who have nothing better to say. Let us give credit where credit is due. Let us support the people who have shown the inventiveness and innovation which are so badly needed in this country. Let us hope that this trend grows and spreads. Let us hope that the Minister is appreciative of their efforts and that the Minister of State, Deputy Kirk, is fully occupied in drawing up plans with the Sugar Company to develop the home industry while the Sugar Company concern themselves with acquiring industries at home and abroad.

I am glad to see in the Minister's statement that the unions are quite happy that the employment of the present employees is being safeguarded.

Deputy, you must be joking.

In his statement, the Minister says that written commitments are being given to the ICTU, and that seems to be a reasonable accommodation. I could not see why the unions would be objecting when job opportunities have been expanded and are due to be expanded further. If the company benefit to the tune of £40 to £50 million from the flotation of their company shares on the Stock Exchange, that will mean more jobs. How could any trade unionist in his right mind object to that? The essence of what employment is all about is job expansion and job creation. I hope the safeguards referred to in the Minister's statement are acceptable. In my day I dealt with people in the unions representing the food industry who were extremely reasonable, particularly those involved with the Sugar Company and the food industry generally.

I note that the Minister is retaining a special share, "a golden share for a golden boy".

I will note that.

Sometimes we are nice, but not always. It is nice to be nice. I believe it is called a golden share in England and France, however I am not convinced — in fact, nobody can be convinced — in these days of High Court and Supreme Court challenges and challenges in the European Court that the validity of the "golden" or special share will survive forever. This is worrying. It is a supposed right of a government to stop industry from another country buying an industry within the State, and that the industry can be safeguarded by this golden or special share. I think that in time to come senior counsels in Ireland and elsewhere will have a field day arguing that case in the European Court. I hope that will not happen, but it is a worrying aspect. With the advent of 1992 and the open market, that concept could be challenged and it would be very worrying if it was challenged.

The thought of any part of our 200,000 tonne sugar quota moving out of the country is too dreadful to entertain. We have already seen our tillage farmers in the grain sector threatened with annihilation if the proposals put forward by Commissioner MacSharry last week come to fruition; there will be no place for tillage farmers in this country if they are expected to grow grain for £75 a tonne. It just cannot be done. If we cannot quote a national vital interest in a case like this, that section of our agricultural industry will go to the four winds and it will be destroyed. We must be very careful that our sugar quota is maintained. I am not a senior counsel, however I think the Minister is a junior counsel and knows the vagaries of the law, but one can never be quite sure how a decision will go.

At present we have 5,000 farmers farming 82,000 acres who primarily depend on sugar beet for a living. It is a reasonably well paying activity, particularly in comparison with grain growing. For tillage farmers who are involved in both — and most tillage farmers are — sugar beet growing is the mainstay of their enterprise. It will certainly be the mainstay of the enterprise if Commissioner MacSharry's proposals come to fruition even in a diluted form.

Farmers have indicated to me that they are worried about the manner in which they are being paid for their sugar beet. They feel they should be getting more, not just a price increase because of the improved extraction of sugar from the sugar beet crop due to new improved technology in recent years which increases the value of the sugar beet crop by something in the order of £6.5 million. Basically the methods have improved so much that more sugar can be extracted from the sugar beet and not only the sugar beet but what was traditionally referred to as the crown, the part that is snagged off by hand.

Nowadays sugar can be extracted from the crown area which was not extractable in years gone by. Because of the improved method of extracting sugar from the main body of the sugar beet and the sugar which is extracted from the crown — which previously was disposed of — the value of the sugar from both those extra extraction methods is worth £6.5 million to the industry in this country. The 5,000 farmers who are supplying the sugar beet company are asking that they be given some of this money, not all of it. I think Deputy Sherlock has a much better working knowledge of this aspect, although in our younger days many of us weeded, thinned, snagged and piped beet, not a very pleasant task in freezing wet miserable winter days. The improved extraction methods mean that £6.5 million extra is now being made available.

In five or six years time there will be no such thing as beet growing in this country. The Deputy knows that but he is not prepared to admit it.

I do not know from what source the Deputy gets his information. We will safeguard that 200,000 tonnes of sugar whether in government or out of government.

The Deputy did not do much to increase it when he was in power.

We will maintain it or we will support the Government to maintain it. If the Deputy had his way there would be no sugar company because it would be bankrupt; they were so much in debt as a result of his methods. The growers are merely asking for £2.5 million of that £6.5 million. We will go back to the big villain of the piece — the Department of Finance and not the Department of Agriculture and Food. They are insisting that all the extra moneys which are being obtained by the improved methods of extraction be retained by the Sugar Company. I believe the Minister and the Department of Agriculture and Food might be easier to deal with if they were allowed to carry out the negotiations with the beet growers. I believe we are seeing the hand of the Department of Finance in this instance.

It is not unreasonable for the growers to request a portion of the £6.5 million which has come about as a result of improved technology. That is the point I am making. I ask the Minister to give us his views on that element when replying because it is a burning issue and I feel the growers have a point. They are seeking only a proportion of the extra moneys being made available.

There are some nice nicknames in this new legislation. The golden share is referred to as ghost beet in the industry. It was not there previously — now you see it, now you do not — but it is there and it is worth £6.5 million. Perhaps the Minister would enlighten me as to why, at the most recent meeting of the Council of Ministers of Agriculture, the sugar regulation was renewed only for a two year period whereas traditionally that regulation was renewed for a five year period. Is there some peculiar reason why the regulation was renewed only for such a limited period when it was normally renewed for five years?

I would like if people in The Workers' Party, such as Deputy Sherlock and others, and some of the Independent Members who have objections to this Bill would bear in mind an interesting development. Five years ago when I was Minister the Sugar Company was in considerable disarray. From 1982 to 1987 — and Deputy Kavanagh will be aware of this — we gave equity to the Sugar Company of £59 million which effectively bailed them out——

Put it on its feet.

——on condition that the company became a viable entity, which it did. What was happening at that time was that the French sugar processors were moving into this country and underselling us on our own markets. They could do it because of the inefficiency of our sugar plants and our Sugar Company generally. Had we not acted in the early and mid-eighties there might not be a sugar industry in this country because under the laws of the EC we could not prevent that sugar from coming in. The only reason the Sugar Company has been maintained as a viable entity is that we are able to sell sugar as cheaply as anybody else within the EC.

The Deputy supported the closure of the Thurles company in June.

We were able to sell it because we got a board who were able to rationalise the Sugar Company with the aid of finance from the Government. That enabled our sugar to be as competitive as sugar in the EC. Do not let anybody forget that. You can have your stupid ideas and ideologies about over-manning and employing three times or four times as many people as are necessary but you cannot survive on a free market or an open market with that type of codology. It is about time the public of this country — and most do — recognised that you cannot operate with outdated systems.

As I stated at the outset, we support the Bill. We wish the new company good fortune because we believe it will be the beginning of something new and very good for the horticulture industry, the tillage farmers, the workers and the economy of this country. While I may have had some harsh words to say about the Minister's original reluctance to get the show on the road, he has come right in the end and we wish him the best of luck in putting this project through.

The first day of this session will be remembered for the debate on the budget and not for the debate on this Bill which deals with the privatisation of the Sugar Company. Those of us who are not as familiar with the agricultural industry as others must wonder why we are discussing this Bill at a time when there are serious problems in the agricultural industry but no proposals are being put forward to help those who are suffering.

It seems strange to me and I believe, to most farmers that, having experienced one of the worst winters ever, having heard the news from Brussels about the reformation of the CAP under an Irish Commissioner and the problems we face in the Uruguay Round of the GATT negotiations, we are dealing here with an industry which has produced excellent results over the past two or three years. I had hoped that the Government would provide time for an urgent debate on all the problems in the agricultural industry, The Minister could have come here today and given hope to the very important and essential group of people in that industry who are depressed and demoralised and believe the Government do not have any interest in their problems. Perhaps the Minister for Finance will show some concern for the people in this basic industry when he makes his budget speech today.

This Bill proposes to hand over a very large proportion of one of our most important and spectacular industries, the Sugar Company, to the private sector. I believe this proposal is a long way down the list of concerns of most people. I say that because I do not think he has responded to the problems being experienced by those in the agricultural sector in the past six months or so. As I said, the agricultural community are demoralised as a result of the bad weather, flooding and other problems to which I referred and I hoped the Minister would avail of this opportunity today to give hope to that community for the remainder of the year.

It is obvious from the remarks made by Deputy Deasy that this Bill will be given a Second Reading as both the Government and the main Opposition party support it. The Workers' Party tried to prevent the Second Reading of this Bill by calling for a vote on the Order for Second Stage. Because the Whips from all parties had agreed to the debate taking place today, the Labour Party could not support The Workers' Party gimmick which was done perhaps for publicity. We should use this debate to amplify our concerns——

Consistency is what the Deputy and his party are lacking.

We have been consistent in this House since the foundation of the State and we will be consistent for a long time to come. The most recent opinion poll indicated that we are gaining the support of more people, which will improve our electoral prospects in the future. The Workers' Party seem to have increased their level of support, but our support has been progressively increasing since the last general election. We should debate the merits of the Bill and give our opinions on it rather than try to stultify it at birth, so to speak. We could not support The Workers' Party proposal this morning as we would much prefer to hear the Minister's views on our concerns about the Bill.

We will be opposing the Second Reading of the Bill as we have very genuine concerns about the provisions in it. The Minister did not address these concerns in his speech but perhaps he will do so when he is concluding the debate. We cannot support the Bill as it stands at present as it will give rise to concern in three areas — our quota for sugar, the workers in the industry and the producers. I believe the consumers, who are the other element in this issue, are satisfied at the way in which the Sugar Company have done their job. During my contribution I want to point out to the Minister our genuine concerns about the provisions in the Bill in regard to these three areas.

The Sugar Company have a very proud history. They were, to use the operative word today, a jewel in the crown in the semi-State sector. General Costello, who has been given great credit for setting up the sugar industry to ensure that beet producers would have a viable industry, has rightly been listed as one of the managers who took over a semi-State company and made a great success of it. Perhaps the work done by him will be undone by this Bill. I know that times change and different business attitudes are adopted in every area. I am not saying everything that happened was right and that things should not change, but it is only right that we should consider the advantages and disadvantages which may result through a major change in one of the jewels in the crown of the semi-State sector.

The great asset of this company is its 200,000 tonne EC sugar quota. This has made the company attractive to other businesses both in Ireland and abroad. Companies have made attempts over the past two years to get their hands on this quota. Because this company is of such concern to us and because its importance to the economy generally, reference has been made to it in theProgramme for Economic and Social Progress. Even though it is only dealt with summarily in the programme — five lines — nevertheless it is referred to. The programme states:

The vesting in the Minister for Agriculture and Food of the special share in the holding company to be established for the Stock Exchange flotation will ensure,inter alia, that the retention of the sugar quota in Ireland is safeguarded.

The Government will undertake to agree terms with the Company to protect the present representational arrangements regarding quota distribution.

At least we know the priorities of the Government in this area. They, obviously, wish to sell off a large part of this company to the private sector. They hope the Bill will ensure that the quota is retained here and this special share, the golden share, is the method by which that will be achieved.

It is strange that in those five lines of that document there is no word about the concerns of the workers or the producers in this industry. The Minister adverted to this in his speech on Second Stage, but nevertheless, our party are concerned about the privatisation of the company. There seems to be an attitude here that everything that is operated by the public sector is wrong. A number of right wing economists seem to indicate that every company the State built up over many years should be sold to the private sector who can better operate them, but I do not agree. There are many valuable companies operating very well in the public sector that should not be privatised, but the Government have apparently, in more than one area, taken on the mantle of the Thatcher approach to the public sector and seized the opportunity to raise money by selling off the assets of public companies.

This is a far cry from the stated position of the Taoiseach when he was Leader of the Opposition only a few years ago. On 20 January 1987 — almost four years ago to the day — the Taoiseach wrote to Mr. Peter Cassells, then assistant secretary of the Irish Congress of Trade Unions who in various media contributions expressed his concern on behalf of workers for their continuation in the public sector and the likelihood of changes at that time. He sought the opinion of the Fianna Fáil Opposition who were a little ambivalent in this area. At that time Deputy Haughey wrote to Mr. Cassells — one can get the sense of his feeling at the time from this letter — stating he saw some comments in print about Fianna Fáil's position in regard to semi-State companies. He wished to point out that shortly prior to Christmas — this refers to 1987 when Fine Gael were in power on their own — a motion was put down in Dáil Éireann by Fianna Fáil which read:

That Dáil Éireann reaffirms its support for an efficient and effective semi-State sector as a major instrument of economic development and the provision of employment, and deplores recent Government statements to the contrary.

The letter went on to state:

As you will be well aware, the record of Fianna Fáil, whether in Government or Opposition, has been one of consistent support for our State bodies, most of which were created under Fianna Fáil Governments.

I have on many occasions made my views known on privatisation. For example, in the Adjournment debate of 14 December 1984 I stated: "To close down, sell off or devalue a State company seems to have been turned to by the economists and other spokesmen for the New Right as a demonstration of political virility.... If this process of dismantling the State sector is brought much further, the Government—

it was not a Fianna Fáil Government at the time

—will get to the point of dismantling the State itself". But I can assure you that Fianna Fáil has no intention of privatising established State bodies such as Aer Lingus, Bord na Mona, CIE or any other commercial semi-State body.

With best wishes,

Yours sincerely,

Charles J. Haughey, T.D.

I am sure the Taoiseach still has a very strong hold on his Coalition Government and would have a big influence in the policies they adopt. There is a question to be answered by the Taoiseach as to when he decided to change from his total support, as he said in 1987, for the continuation of the semi-State industries as public companies to his new way forward — that term was used in a document in the past — to privatise or sell off the family silver to get a few bob in the coffers.

This matter is relevant on budget day and it will be clearer to us as the hours go by. The Fianna Fáil Party did a U-turn and changed course in the past four years. They were in Opposition in 1987 but now that they are in Government the position is different. We all know that Fianna Fáil have changed course in other areas. In 1985 they won the local elections hands down by saying they were going to do away with service charges, but instead they were increased from something like £20 in in my constituency to £160 now. That U-turn seems to have been forgotten.

It never bothered Fianna Fáil to state their principles and then do a U-turn. In this debate we are dealing, as I said, with one of the companies that has been the jewel in the crown of semi-State companies. When we were in government with Fine Gael we encountered problems as regards the industry which was going through a very difficult patch. We had to face opposition inside and outside the House to the actions we took in order to put the company on their feet.

The rationalisation which took place involving the closure of the Tuam sugar factory was most unpopular within the trade union movement and with the people of the area. Indeed, the Fianna Fáil Opposition at the time made the most of it. As a result of those actions, and with the determined leadership in the Sugar Company — I do not doubt that they support what is in the Bill — the company have been making a profit for the past three years. In 1988 the company made £12 million and in 1990 they made £15 million. Yet we are told by the Minister that in order that the company may progress, expand and prosper they must be privatised, but I do not accept that.

I remember when in Government an industry based in my constituency — they also had a base in Cork — the old NET company, were experiencing serious difficulties because of the change in trade and the importation of cheap fertiliser. The solution on that occasion was not to sell off the company, because nobody was interested in them, they were not making a profit, but the Government looked for a joint venture operation which rescued the company. That option was still open to the Government and could have been used — as a fourth option — and put forward to the specialists who looked at this industry and made recommendations to the Government. I do not know why it was not submitted as a fourth option to be thoroughly investigated by specialists as is the case in regard to every problem which the Government face. If the recommendation was favourable it could have been accepted and if not it could have been buried in the file and the dust allowed to settle on it. It was a successful option in the case of some of our semi-State companies.

This Bill raises many queries which have not been answered in the Minister's speech.

Debate adjourned.