With the permission of the Chair I wish to share my time with Deputies Hogan, McGinley and Eric Byrne.
Private Members' Business. - ESB Restructuring: Motion (Resumed).
The following motion was moved by Deputy Séamus Brennan on Tuesday, 28 March 1995:
That Dáil Éireann condemns the handling of the ESB situation by the Minister for Transport, Energy and Communications and, while agreeing that progress must be made in positioning the company for the future, calls on the Government to honour the commitment to finalise negotiations consistent with the principles of social partnership set out by the previous Government.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann endorses the approach of the Minister for Transport, Energy and Communications in encouraging and facilitating the achievement of efficiency and effectiveness and future employment in the ESB as part of the Government's strategy to revitalise State enterprises, to promote the interest of business and domestic consumers and to foster the spirit of social partnership."
—(Minister for Transport, Energy and Communications.)
Acting Chairman
Is that agreed? Agreed.
Last night I complimented the Minister, Deputy Lowry, for getting a commitment from the EU that grant-aid of £21 million would be available for a peat-fired generating station in the midlands. I realise that this will be put out to public tender and I would like to impress on the Minister the advantages of using the existing power station located at Rhode, County Offaly, as the site for any new peat-fired station. I do so for the following reasons. First, the tremendous need to retain jobs in both Bord na Móna and the ESB in the Westmeath-Offaly region, an area where the number of jobs in these industries fell by 1,500 in the past ten years. In 1984 there were approximately 2,100 people employed by the ESB and Bord na Móna in that region. In 1994 there were 500 people employed by those two companies.
The second reason is the central location of the station with 35 million tonnes of peat available to be delivered by the existing rail network to the power station. The third reason is the availability of a suitable site of 110 acres with infrastructure of cooling towers, workshops, boiler rooms, toilet and shower facilities, etc. It would be a shame if those excellent facilities were bulldozed. The fourth reason is that there are power lines capable of transmitting the power generated to the user without any need for planning permission, compulsory purchase or any of the other difficulties associated with erecting new power lines. All those are already in place serving the Rhode power station and should be utilised in any new development in that area.
The fifth reason is that there is an adequate water supply to the site. Members will be aware that to generate power water is needed for cooling purposes and such a supply may not be available to any other site. The sixth reason is that there is a trained staff available who have given commitments of revised staffing levels for a refurbished and extended plant at Rhode. That valuable asset should not be overlooked. The seventh reason is that there is a site where planning permission would be more likely to succeed in a reasonable timeframe than going for a green field site. We are all aware of the difficulties associated with any major development in a green field site, particularly a power station. Planning permission to extend the existing power station at Rhode would be provided in a much shorter timespan than for a green field site.
The cash bonus of using the site of the existing power station at Rhode could be up to £30 million less than using a green field site. At this time when the viability of the plant is in question surely it makes sense that any savings that can be made should be utilised to the full. By using the existing site we have the potential to save £30 million to the Exchequer and it should be considered. I ask the Minister, and the Minister of State, to bear those poins in mind when the tenders for the plant are considered in the not too distant future.
The decision by Fianna Fáil to propose a Private Members' Motion to Dáil Éireann in respect of the Government's handling of ESB negotiations is nothing short of disgraceful. Not since the time of the late Seán Lemass has there been any serious attempt to address the issue of what the State sector is all about. The consumers of State services and State sector employees have a common interest in ensuring quality and service for all our public services.
An analysis of the sector highlights numerous similarities in the problems affecting semi-State companies such as large debts, high costs and, above all, a lack of clear guidance over the years from the shareholder, namely, the State as to the primary purpose of the business. It is critical that at a time of great transition and change, right across the European Union, that clear leadership and guidance be given to the future direction of State companies.
In just three months since assuming office the Minister for Transport, Energy and Communications, Deputy Lowry, has decided to make our semi-State companies competitive, efficient and with the ability to hold their share of consumer support in the years ahead. He is a competent and decisive individual, not a hard man as portrayed by Fianna Fáil, who understands the need to take a business-like approach to ensure the core business of the ESB is put on a firm financial footing. This is in sharp contrast to Fianna Fáil-led Governments who adopted a policy characterised by political patronage. Fianna Fáil has always been more concerned about who was a member or a director of the board as a means of rewarding political allegiance rather than with the proper well-being of the company.
The Government appointed Eoghan Harris two days ago to a state board.
It is worth recalling that Deputy Séamus Brennan, who moved this motion, as Minister responsible for transport from 1987-89 presided over ESB accumulated borrowings when a profitable company turned into another loss maker in the State sector. Not to be outdone, his successors, Minister Geoghegan-Quinn and Minister Brian Cowen, adopted the same policy by doing nothing.
I was never Minister for Energy.
As Minister responsible for transport the Deputy did everything possible to allow the State sector fall into financial ruin by his indecisiveness.
Nonsense.
The Deputy is now engaging in wholesale political hypocrisy by criticising the Minister, Deputy Lowry, for being decisive while the Deputy some years ago presided as an inept and indecisive Government Minister——
Not so.
——who was a political coward in the manner in which he failed to face up to his ministerial responsibilities on behalf of the taxpayer and the consumer of our public services. Aer Lingus is just one example of where the Deputy failed miserably to take the necessary decisions to bring that company into profitability.
That is cheap personalised politics.
It is regrettable that Deputy Brennan and Fianna Fáil have not learned any political lessons in recent times particularly when one considers they had decided to oppose this Government on every policy issue for the sake of opposition as if it was never in Government itself. It is time Fianna Fáil woke up to commercial reality in the market place. I am surprised that Deputy Brennan, a former Minister of State at the Department of Industry and Commerce, would not understand that reality. The Government and the Minister, Deputy Lowry, are dealing with a difficult situation which they have inherited from successive Fianna Fáil Ministers who talked about the problems of the semi-State sector but have achieved little to bring them into line with our EU competitors.
I am sure the House would not want the ESB, or any other State company, to engage in the traumatic experience which Aer Lingus had to endure. I call on management and unions of the ESB to continue to adopt a common sense approach such as that of the Minister to resolve the problems by mutual agreement in order that the maximum employment can be protected and the consumer can purchase electricity at the cheapest possible rate.
I wish to share the remainder of the time with Deputy Eric Byrne.
Acting Chairman
That has been agreed.
Of all the essential services there is none that the present-day average family is more dependent on than the ESB which has responsibility for delivering power and energy to the homes of almost every family in the country. We have learned from past experience that if there is any disruption in the supply of electricity, the entire country can be thrown into chaos. Fortunately for a number of years we have had few disruptions and we have become used to a constant supply of electricity for industrial, commercial and domestic use.
It must be the policy of every responsible Government and Minister to deliver a high quality service at the lowest price possible for the benefit of the consumer. Low cost energy is absolutely essential if industry and business is to compete and survive; it is of tremendous advantage to the economy.
Electricity prices have been stable for a number of years and this has been due mainly to the stabilisation of fuel prices on the international market and the strong demand for electricity. This has been appreciated by consumers and families as any increase in the price of electricity impacts directly on their spending power. It is disturbing, to say the least, to hear the main Opposition party advocating an increase in the price of electricity to consumers. Does it not realise that such a price increase is a burden on families and, in particular, on the old and infirm who use more electricity and need more heat than the average person?
The Minister is to be complimented on the responsible way in which he addressed the implementation of the proposal of the Cost and Competitiveness Review. I am particularly grateful to him for the interest he has shown in the turf generating station in Gweedore. Last November the previous Minister, Deputy Cowen, decided that 1995 would be the station's last year of operation. Naturally this came as a shock to the employees and the 140 families who have supplied turf to the station for the past 35 years. A few weeks ago I was deeply disappointed to see an ESB advertisement in the local paper which stated that only 4,000 tonnes of turf would be accepted in the Gweedore station during the 1995 season. This was totally against the spirit of the 1994 decision to keep the station open during the 1995 season. I brought this advertisement to the attention of the Minister and it was subsequently withdrawn. The least the families who have supplied turf for the past 35 years should expect during the station's last year of production is to be treated in the exact same manner as they were treated previously. I ask the Minister and the ESB to treat the turf producers in Gweedore in the same way as they have in previous years. In the past number of years approximately 9,000-10,000 tonnes of turf were accepted by the ESB for the generating station and the same amount should be accepted this year.
Having discussed the matter with the Minister today, I am happy that there will be no forced redundancies in the station. He informed me that he is confident the workforce can be reduced through early retirement and voluntary redundancies. Some of the staff in the station are nearing retirement age but there are also young and middle aged staff who have financial responsibilities, mortgages and families and it would not be acceptable if they were forced to take redundancy.
The Minister is aware of the contribution made by the ESB to the local economy of Gweedore and is conscious of the effect of the closure of the station on the economy. I compliment him on suggesting to the ESB that a task force should be established with representatives of various interests and perhaps Údarás na Gaeltachta with the intention of supporting local development with the aid of a financial contribution of approximately £0.5 million from the ESB. The Minister has informed me that he hopes a scheme will be devised to compensate local turf producers who have depended on the ESB for their livelihoods for the past 35 years. These producers do not participate in a redundancy scheme and a compensation scheme should be set up to look after their interests in the years ahead. Many of these people are middle aged and older and they will find it very difficult to obtain alternative employment. I urge the Minister and the ESB to deal generously with these people under any compensation scheme.
Mar fhocal scoir, sílim go bhfuil an tAire ag déanamh obair an-mhaith ó chuaigh sé i mbun a dhualgaisí. Chomh fada agus a bhaineann sé leis an Bord Soláthair Leictreachais agus mar a fhéadaíonn sé costas an leictreachais a choinneáil íseal sa tír seo, rachaidh sé chun tairbhe go mór, ní amháin do eacnamaíocht na tíre, ach do gach teaghlach sa tír atá ag úsáid agus ag brath ar aibhléis.
Our public enterprises are vital to the State's economic development and prosperity. The entry into force of the EU deregulation legislation means that we stand at a cross-roads. We can move towards wholesale privatisation — the road travelled by many Fianna Fáil Deputies — or revitalise our public enterprises so as to prepare them for competition. Alternatively, we can maintain the status quo and hope for the best. If I recall correctly, this is the Fianna Fáil way. Democratic Left is not in the business of status quo politics. We recognise the vital role played by public enterprises and that the role is changing. Our view goes far beyond the simplistic approach adopted by Fianna Fáil.
Public utilities are not simply service providers; they have a wider role to play as engines of technological and organisational innovation. They are also the appropriate vehicles for necessary State intervention in the economy. This is why Democratic Left remains fundamentally opposed to any dilution of the role played by public enterprises. The State has an obligation to support and, as far as possible, to protect the position of public enterprise. However, public enterprises also have an obligation to the State and, through it, to its citizens.
For too long one social partner has been omitted from the equation, that is the consumer. The Government is committed to the introduction of a Bill of rights for consumers to guarantee standards of service from semi-State companies. By anybody's standards, such a Bill is long overdue. After all, it is the consumer, who has been ill served in the past, who will eventually decide the fate of our public enterprises. Given Fianna Fáil's track record in protecting consumer interests — for example, the Telecom price increases — it is little wonder that Deputy Brennan should propose to solve the ESB's problems through the quick fix of a price hike. Will that be fine for the workers and, if so, which workers has he in mind? Has Fianna Fáil not yet realised that workers and consumers are the same?
Public utility consumers are ordinary people — social welfare recipients, PAYE workers and small businessmen. Fianna Fáil in Government put the squeeze on these consumers for many years. Democratic Left, together with its partners in Government, intends to ensure that public enterprises are consumer friendly. It is ironic that Deputy Seamus Brennan should pay homage to the concept of social partnership while at the same time ignoring one social partner — the consumer — and attempting to sow dissent between the others.
The reality is rather different from the picture painted by the Deputy. The social partners have been fully involved at every stage of the ongoing discussions and will continue to be involved. The Government has a dual role. As the major shareholder in the ESB, it has an obligation to represent the interests of taxpayers and consumers. It also has an obligation to act as a facilitator, a role which has been demonstrated by the Government. The ESB must be prepared for competition, which necessarily involves cost cutting and reorganisation, or we can stand by and watch as it is sacrificed to the pressure of market forces. It is undoubtedly easier to preserve the status quo, to await rather than anticipate change. In deciding to pursue a proactive course and to prepare the ESB for inevitable competition, the Government took a courageous decision which will bear fruit in the years ahead.
Does Deputy Brennan seriously believe the ESB's problems, identified by independent consultants, can be resolved by a price hike? I would be interested to see Deputy Brennan's calculations. How does he propose addressing excess costs estimated at £120 million per annum? The Deputy's motion seeks to have it both ways. He agrees the company must be positioned for the future, but condemns the Minister, Deputy Lowry, attempting to do so. To use a term familiar to psychotherapists, Fianna Fáil is "in denial stage".
Deputy Byrne is in the "daft stage".
It cannot have it both ways.
Deputy Byrne has had it both ways all his life.
The chickens are coming home to roost, Fianna Fáil is now where it rightly belongs, on the Opposition benches. It should sit back, suffer and allow the Government get on with serious work.
The Deputy's party ravaged the banks for years, now it is making up for that.
Deputy Byrne has gone very left wing.
Does the Deputy seriously believe the ESB would survive in a deregulated market if an inflated cost base is added to the inherent structural problems with which the ESB has to cope?
The Deputy sounds like a Fine Gael speaker.
Of the worst kind.
The Irish market is small by European Union standards. Generation currently accounts for approximately half the ESB's costs and in this area the ESB is vulnerable to international competition following deregulation.
I will turn now to the question of time, something which Fianna Fáil appears to believe is in ample supply. I have news for the Deputies opposite. European Union deregulation waits for no company or Government. In seeking to focus the attention of all concerned on achieving most of the proposed rationalisation within two years, the Government has anticipated the position that lies ahead. We all know the cost will be high, but postponing the moment of reckoning will favour neither workers nor consumers.
In confronting the challenges of deregulation the Government recognises that the ESB cannot be viewed in isolation from potential competitors. Unless a competitive framework is established the ESB will simply disappear in the ensuing free-for-all which in the short term, would mean devastating job losses. In the medium term, it will mean higher prices for the consumer since the law of the economic jungle will inevitably result in a new monopoly. In the long term, it will mean higher prices and lower standards of service for business.
The Deputy has a hard neck.
He is like Genghis Khan.
In this regard, I welcome the Government's commitment to the introduction of a regulatory framework in line with the commitment in the Government's programme. IBEC has already highlighted the need for a secure and competitively priced energy supply.
The Chair should ask him to read that speech at his party's weekend conference.
Unless Ireland can provide such a supply, indigenous companies will be unable to compete internationally and Ireland will quickly lose its attractiveness as a location for foreign investors.
Last night Fianna Fáil demanded to know where the Government stands on public enterprises in the wake of deregulation. The Government's position is perfectly clear. It is spelled out in the programme negotiated between Democratic Left, the Labour Party and our other partners.
He cannot even call them by their name.
That programme states:
The twin drivers of technological change and EU competition rules will significantly affect what were once "natural monopolies" in the State sector. Our approach to these inevitable forces will be managed in the best interests of employees, taxpayers and consumers.
Implicit in that statement is the concept of social partnership, a concept to which the Government has adhered and to which we will adhere in the years ahead.
I wish to share my time with Deputy Noel Treacy.
Acting Chairman
Is that agreed? Agreed.
I thought I had heard the bizarre and unexpected in this House, but Deputy Byrne is to the right of Genghis Khan. In all his flowery rhetoric he forgot to mention that we are talking about 2,900 redundancies. With a stiff upper lip and cloaked in far right wing economic jargon Deputy Byrne stated what we have to do.
Unfortunately the jargon is now coming from the benches opposite.
I want to make the position clear. In his negotiations Deputy Cowen had reached an agreement on a time limit of four to five years in which the report's recommendations would be implemented. We all accept that difficult decisions must be made, but Deputy Byrne kaleidoscoped and encapsulated that time into two years. In the week of his party's conference, he is blithely throwing 2,900 jobs to the wolves claiming it is for Europe and competitiveness. There is no doubt we all agree that change is necessary at the ESB. It must be positioned for the future and work practices must be brought into line with procedures elsewhere in the electricity industry. That is why we support in the proper timeframe the cost and competitiveness review. However, I question the logic of the proposal to shed 2,900 jobs from the ESB.
Would the Deputy prefer to leave it to market forces?
Deputy Byrne did not mention the 2,900 jobs. He would prefer to push them to the back of his mind and pretend they do not matter. He is just not interested. I never thought I would hear a Democratic Left Deputy favour market forces over jobs.
Does the Deputy want to leave it to market forces?
It is similar to a Frederick Forsyth novel. If it was formulated and put into print, the Deputy would not believe what he said. At a time of very high unemployment, it does not make sense to shed jobs in commercial semi-State bodies. Under current plans it is proposed that, with the 2,900 jobs in the ESB, Telecom Éireann should shed up to 3,000 jobs while Aer Lingus, Bord na Móna and An Post have all shed large numbers of workers. In all, the semi-State sector has eliminated 15,000 jobs. It is time we had a public debate in this House about the rationale of job shedding in the commercial semi-State sector.
Over the last 70 years the ESB has developed and expanded and has shown great skill and expertise. It has the capacity and desire to make an enormous contribution. It should be unambiguously challenged to maintain and create new self-sustaining employment. It is morally, socially and economically foolish to wantonly destroy jobs if at the same time we maintain that we want to address the serious unemployment crisis and maximise employment in the short and medium term — the unemployment problem is primarily a medium term one. Since 1980 there has been a one third fall in the number of births. Our annual increase in the labour force, if this trend continues, will not be sufficient in ten years to meet the expansion in demand for labour. Therefore, within a decade immigration is likely to replace emigration. Given those demographics, destroying jobs now for a return in the next century is hardly compatible with stated intentions to increase action on unemployment.
The Oireachtas has also to debate plans for public utilities. Privatisation has not proved successful in Britain. Daily we read, hear and see reports about what they have got out of privatisation in the UK. They have bad delivery of service, huge wage increases for those in charge of public utilities, massive unemployment in them and a decreased level of consumer services. That is the course Deputy Eric Byrne of the Democratic Left advocated this evening, blithely talking about market forces and competitiveness, the buzz words, when what we need is a balanced approach.
It is interesting that there is a political dimension to this. The ESB group of unions met the Minister of State, Deputy Emmet Stagg the day they met the Minister Deputy Michael Lowry — one does not know what to look for from him because he changes his tune according to the script supplied to him. It is interesting that the Labour Party decided to put down a marker. Let us add our marker to that of the Labour Party, or perhaps they could join with our caveats and worries about this matter. It is morally and socially wrong to shed 2,900 jobs and pay massive amounts of money to "get rid of people". In five, six and seven years time the same ESB and a different political master or, dare I say, mistress — it has the wrong connotation — will be demanding extra productivity and extra energy and re-employing, on contract or otherwise, many of the people whom it cost this State massive amounts of money to pay off. We are taking the wrong route in many of the commercial semi-State companies if we choose massive unemployment without looking at the long term consequences of it. It is time for a public debate about matters such as this in order to map out clearly where we are going.
My colleague from Laoighis-Offaly, Deputy Pat Gallagher, also represents a constituency to which matters such as this are of grave importance. The Democratic Left are now a case that cannot be recovered from when Deputy Pat Rabbitte is the banker's friend and Deputy Eric Byrne is the friend of big business and of Europe advocates shedding jobs and has no care for the ordinary person. There is only one party with which we can throw in out lot on this issue. I say to the Minister of State, Deputy Emmet Stagg, to Deputy Pat Gallagher and many others that this is foolish nonsense, upsetting a well thought out, well researched and well prepared agreement already in train under a previous administration. We walked up the aisle with the Labour Party and the nuptials were not performed, but when we were negotiating together we discussed the position of the commercial semi-State bodies, and never did we envisage dropping the four to five year plan and shedding jobs within two years like confetti after a wedding.
I strongly support our spokesperson whose case is well researched and well founded. We have, as one might say in country language, a clean pair of heels on this issue. The previous incumbent of the Department of Transport, Energy and Communications had a clear plan agreed with Labour. When I, with Deputy seuamus Brennan and others of my party, talked with the Labour Party's three members, Deputies Quinn, Taylor and Howlin, our line on this was agreed. Our line is not the line now being peddled by the Minister, Deputy Lowry.
The ESB is one of Ireland's premier semi-State organisations. It has given unrivalled service to the people for almost 70 years. It fulfils its statutory obligation by supplying 1.3 million customers in all parts of the country over a distribution network of almost 200,000 kilometres, with almost 10,000 staff. Its annual gross income is close to £1 billion. By any standards, these are phenomenal figures that put the ESB in the top league of Irish companies. The ESB has never received a State subsidy and is required by obligation to break even on its annual financial accounts. It constantly does this and runs one of the most powerful corporate entities in this country. The ESB has always been innovative and has often blazed the trail, both nationally and internationally, for other Irish companies.
Despite the financial obligation on the company to break even, Ireland consistently has the lowest electricity prices in Europe, much better than the European average. This is surely an excellent statement on Irish energy policy over the years and confirms the key role played by the ESB in sustaining this policy. The demand for energy and electricity supply is a barometer of economic growth. This demand has levelled off from a high of almost 10 per cent in the 1970s to an average growth of 5 per cent per annum in the 1990s.
The ESB is a 100 per cent State-owned company and has a monopoly on the supply and distribution of electricity. This, obviously, gives it a very protected environment in which to operate. Consequently, in the world of competition and the necessity to ensure that goods and services produced and delivered in Ireland are internationally competitive for economic growth and job creation, it is vital that the ESB should at all times recognise that it has a fundamental duty to be extremely competitive. It must, therefore, run a very efficient company. For the past five years it has been working on and encouraging energy efficiency within the organisation and has been supported in this by successive Ministers and the Department of Transport, Energy and Communications.
In the past we had both the Culliton and Moriarty Task Forces which gave clear pointers when reviewing our industrial policy that it was critical to have a competitive economic environment in order to sustain job creation and underpin economic growth. Consequently, there is no room for complacency within the ESB, within the Department of Transport, Energy and Communications, or within Government. Neither is there an opportunity within Government to have a three party approach to managing either the country or energy matters. We must live in the real commercial world.
While we must discharge our public service obligations there is a clear onus on the Government, the Department of Transport, Energy and Communications and the ESB to operate in a competitive commercial environment. Commercial enterprise will be the hallmark of future development. We have to take cognisance of the situation in Europe where markets are being liberalised and where competition is being forced, through rapidly changing technology, at an alarming pace.
In order to ensure that the ESB would be a competitive organisation the previous Government, of which I was proud to be a member, pioneered a cost competitive review involving the ESB management, the ESB unions and the energy division of the Department of Transport, Energy and Communications. The purpose in adopting this tripartite approach was to take full cognisance of the Culliton and Moriarty reports but, more particularly, the McKinsey report which pinpointed the need for the company to live in the real world and to reduce its cost base accordingly. McKinsey recommended a reduction in the workforce of up to 2,900 people.
The Deputy should tell Deputy O'Rourke that.
It is against this background that the Government must deal with the matter, not by adopting a tripartite approach but in a single-minded fashion to achieve the necessary cost reductions while ensuring that the ESB remains a major flagship corporate entity delivering to the consumer a continuous, sustainable energy supply at the cheapest possible rate.
It is obvious that the Government is not at one on how targets should be reached and the ESB should be treated. The structure for tripartite negotiations which was so efficiently put in place by the former Minister, Deputy Cowen, seems to have been destabilised by the Government. On the one hand the Minister, Deputy Lowry, has made a robust statement that targets in terms of reductions in staff must be met over two years while on the other there are tensions within Government with different views being expressed by both the Labour Party and Democratic Left.
The ESB unions attended separate meetings on the same day in the Department with the Minister of State, Deputy Stagg, and the Minister. Over a period of eight years I had the privilege to serve in six Government Departments and during that time there was never an occasion when deputations met a Minister and his Minister of State separately. Either the Minister and Minister of State met them individually with departmental officials or, alternatively, they met them together. This is the only way business can be done.
The Deputy was kept in his place.
We cannot have parties in Government, Ministers and Ministers of State second guessing one another and impeding progress in dealing with any matter. This is both ludicrous and ridiculous because it creates confusion for those involved in negotiations. It seems that the Minister came out of his corner rearing to go and looking for the boxing gloves but when he turned around the Minister of State was already wearing them and shadow boxing with the other side. This is not the way to do business and it sends a poor signal to the semi-State sector and the public at large from this three faction Government.
A partnership approach must be adopted in dealing with these crucial industrial and other issues within the ESB. The failure to identify common interests will not serve the interests of either the company or the consumer. When in Government in 1987 Fianna Fáil established a social partnership and despite the best efforts of Fine Gael and others this social partnership has been sustained over the years. The Programme for Competitiveness and Work which was negotiated by Fianna Fáil pinpointed the need to introduce the concept of social partnership at plant and enterprise level and to create an ethos to ensure that the Government, employers and employees would confront the challenges of the future and that no one would have a veto on the question of change as otherwise stagnation would be inevitable in our economic development.
The Minister and Minister of State are privileged to serve in a Department which has responsibility for so many State agencies which can make a key contribution in achieving economic growth and commercial co-operation on all parts of the island. The ESB has a key role to play in this regard. The time has come, particularly since the peace initiative was undertaken in August last year, for greater collaboration and co-operation with the various public utilities in the North of Ireland, in particular the Northern Ireland Electricity Board. The interconnector with Northern Ireland should be restored to deliver supplies from Northern Ireland to the north west. The European Union has a duty and responsibility to underpin this type of operation and collaboration to ensure equality of opportunity on the island of Ireland, in terms of industrial development and job creation. The ESB has a key role to play and the Department should act as a catalyst in ensuring that it fulfils this role.
When in Government Fianna Fáil sowed the seeds for this co-operation and, under the leadership of the former Taoiseach, Deputy Albert Reynolds, created the climate and the environment for peace. Many of the plans laid while Fianna Fáil was in Government should now be brought to fulfilment. As far as Fianna Fáil is concerned, the ESB is an excellent organisation which has played a key role in our economic affairs. It has a fundamental duty to be cost competitive in the delivery of an energy and electricity supply to the people. It must reduce its cost base and be maintained as a major flagship industry. The principle of social partnership which Fianna Fáil has cultivated since 1987 must be allowed to permeate the crucial negotiations currently taking place within the ESB so that the organisation, its management and staff, in co-operation with the Department of Transport, Energy and Communications, can create the structures that are so vital for the supply of energy into the next millennium.
Fáiltím roimh an díospóireacht seo a bhaineann le Bord Soláthair an Leictreachais, cad tá in ann dó agus cad a tharlóidh ó thaobh phraghas na haibhléise sa tír seo.
This is a timely and important debate. Neither the Fianna Fáil motion nor the Government amendment goes to the heart of the matter that must now be tackled and resolved in the interests of domestic, industrial and commercial users of electricity. That is the reason the Progressive Democrats has tabled its amendment which cuts through the waffle in both the Government amendment and the Fianna Fáil motion and which calls on the Government to introduce genuine competition in electricity generation and supply and to accelerate the restructuring of the ESB to achieve cost efficiencies and in the meantime to withhold approval for any electricity price increase.
There has been far too much foot dragging in the adoption of the essential rationalisation of the ESB's operations with their consequent cost penalty for both household, industrial and commercial electricity users. After all, it is an ESB consultant's study, McKinsey, which has pointed out that the State owned electricity generation and distribution monopoly is carrying excessive costs of £10 million per month. This places a major burden on all electricity users and underlines the scope for greater competitiveness in industry leading to greater job creation on the one hand and reduced electricity bills for household consumers on the other.
Whereas the Minister, Deputy Lowry, talked tough recently on the urgency attaching to the implementation of the rationalisation plan that is necessary to guarantee that these excessive costs will be tackled, within the past week it is obvious that he has effectively conceded ground to the ESB and his stated intention to see the rationalisation programme implemented within two years is unlikely to be realised. Instead of giving such a definite commitment the Minister told the House last night that he wanted to achieve most of the savings required within a two year time frame. That is a recipe for drift which will allow the excessive costs to persist beyond the two year timeframe. This matter is of far too great an importance to the competitiveness of industry, the security of jobs in export companies and the financial welfare of every household to be allowed to drag on in this way.
The Progressive Democrats Party is extremely concerned that behind all the pious platitudes uttered by the Minister about achieving economies, deregulation in electricity generation and the new deal for electricity consumers his party, Fine Gael, has effectively thrown in the towel at a political level to its partners in Government, the Labour Party. The details of such an arrangement were spelled out clearly by me a week ago when I highlighted the extraordinary preconditions the Labour Party sought to set down in regard to the ESB when it held tentative negotiations with the Progressive Democrats in the run-up to the formation of the Government last December.
During those discussions the Labour Party negotiators, who included the Minister for Finance, made it clear that the unions within the ESB would be allowed to dictate the agenda relating to the implementation of the rationalisation programme and that the political price to be paid for the eventual adoption of that programme and the necessity to shed in excess of 2,000 jobs in the process would be that the ESB would be allowed to continue to enjoy a virtual monopoly in electricity generation notwithstanding the requirements of European Union competition law.
In particular I drew attention to the Labour Party assertion that the ESB unions had been given assurances that the two new power stations would be built by the ESB at Ringsend as part of the trade-off for those unions accepting the rationalisation proposal set out in the cost and competitiveness review.
What is quite extraordinary since I issued that statement is that there has been no denial whatsoever of its contents from either the Minister, Deputy Lowry, the Labour Ministers or from the ESB trade unions. It is clear from the Minister's speech last night that there has been a total cop-out by him in terms of indicating whether this situation will actually prevail. Indeed, when seeking to deal with the issue in the final part of his speech it is quite clear that the Minister and his advisers resorted to a scissors and paste approach because there are gaps which clearly indicate that certain paragraphs from the intended script were removed at the last minute.
The Minister is not saying if that is true.
The Minister makes the ridiculous statement that what he has to consider is whether the ESB should be allowed build these two extra power stations at Poolbeg and whether they will be able to operate them as cheaply as a competitor.
The Progressive Democrats strongly believe that what the Minister should do in this context is refuse to give the ESB the go ahead for the two new power staions at Poolbeg and set in train the procedures to have an open competition for the provision of extra electricity generation and supply on a green field site. Extensions to Poolbeg can be made in later years after the electricity market has established private power producers supplying the national grid.
After it has been taken over by foreigners.
The Minister chose to ignore the very serious allegations which I made in regard to this matter a week ago. I repeat that if it transpires that the price of implementing the rationalisation deal and the removal of the current cost penalty of £10 million per month for Irish electricity consumers by the ESB is the complete subversion of European Union competition policy in Ireland, then undoubtedly there will be serious repercussions for both the Government and the ESB in terms of European Union competition law. The EU is already flexing its muscles in this regard. In his contribution last night the Minister stated:
In parallel with pressing for liberalisation by means of the draft directive, the Commission has also initiated legal proceedings alleging that existing legislation in Ireland and four other member states confers exclusive rights for importing and exporting electricity contrary to the requirements of the Treaty of Rome. Ireland is defending the Commission action on the grounds that it is based on a mistaken interpretation of existing statutory provisions and that the relevant provisions in the ESB legislation do not infringe Treaty obligations.
Where will we stand in the eyes of the Commission with regard to our obligations under the Internal Market if the Minister does not proceed with the requirements to open the electricity industry to competition?
What about France?
Given that there is scope within the existing ESB operations for cost savings totalling £120 million per year, it would be highly imprudent of the Government to accede to the demand by ESB management and unions for a price increase in electricity. I welcome the Minister's statement to the House last night that there is no question of conceding a price increase to the ESB at this stage. Given that there is a deadline of 31 May for completion of the negotiations on the implementation of the rationalisation plan set out by the Cost and Competitiveness Review, I would also like the Government to spell out its intentions in relation to pricing policy by the ESB in the wake of such an agreement being reached.
In my time as Minister for Energy, I made it known that I saw considerable merit in private sector construction, ownership and operation of new large and small generators. Under the scheme I was considering, it would be open to any company to offer to sell power to the ESB in competition with the ESB's own generating company. I thought it might be necessary to separate the ESB generating section from the transmission and distribution section but no decisions were made in regard to that matter. In my view, the arbitrator would need to be a regulatory body, completely independent of the ESB.
I am concerned at the Minister's reference to the power procurer function operating at clear arms-length from the rest of the ESB. This is an extraordinary proposal that emanates from the ESB itself and is contained in its own consultant's report. What private power company would go to the expense of preparing a tender if the adjudicator was attached to the State's own generating company with whom they would be in competition, a State company that had a monopoly in generation and supply since the foundation of the State and which would continue as the State monopoly transmission and distribution company?
I am amazed that the ESB is setting this agenda. It has a weak Minister in a rainbow coalition which depends on two left-wing parties to prop it up——
There is nothing wrong with that.
——parties which regard representing the trade union interest a priority.
A Deputy
The Deputy's party tried hard to get into it.
The Minister is very pliable in this compromised position and, unfortunately, it will be a long day before we see genuine competition in the operation of the electricity industry in Ireland. It certainly will not happen in the lifetime of this Government, excluding the peat power proposal which is separate and a once-off.
The Deputy is stealing my time.
I forecast that the Minister, Deputy Lowry, will give the go ahead for a new power station at Poolbeg without genuine competition and independent assessment. Those who know the inside story are aware that the pass was sold by Minister Cowen in the previous Government in giving permission for Poolbeg I. That decision set the scene which will deprive Irish electricity consumers at domestic, industrial and commercial level of the benefits of genuine competition for at least five years. I may be proved wrong but from what I see and know, I doubt it.
In all fairness to the previous Minister, Deputy Cowen, the Deputy can never say he sold a pass.
I wish to share my time with Deputy Pat Gallagher and Deputy Broughan.
Acting Chairman
Is that agreed? Agreed.
I wish to inform the House that Deputy Molloy is wrong. The unions rebutted his wild story about negotiations and a deal.
Time will tell. If Poolbeg goes out to competition, I am wrong. If it does not, I am right.
The Labour Party issued a statement clarifying the matter also.
I welcome the opportunity to support the Government amendment to the motion tabled by Deputy Brennan. The amended motion captures the Government's agreed philosophy on State enterprises, employment policy and the interest of the consumer. Despite the best efforts of the Opposition, the Government is united in its response to the ill-advised attacks on our policy towards the ESB. One of the speakers on the opposite side of the House seems to be about to join the Labour Party judging by her contribution and the contribution of another Deputy is very much in line with the agreed policy of the Government. I am glad they are both close to me on that matter.
In the time available to me I will reply on behalf of the Government to the key criticism made by the Opposition. I would identify four main themes running through the Opposition attacks. The Government is condemned for damaging the CCR and for allegedly climbing down on its direct and frank communications with the ESB. We have also been accused of a lack of clarity and muddle in our State enterprises policies with specific examples cited in relation to the ESB. Furthermore, the Opposition portrays the Government as riven by ideological differences. Finally, doubts have been expressed about the timescale for the CCR savings and the job losses identified as necessary by McKinsey and Company. The summary I have given of the Opposition case against the Government does more than justice to what was, at times, a contradictory and confused attack.
The Minister, with the full support of the Government, has already set out in detail his thinking about his duty to communicate with the chairman of the ESB on matters of public policy and when the interest of the consumer is at stake. This initiative has resulted in an accelerated clarification process of the issues involved but this beneficial sequence of events could not be described in any way as leading to the disruption of the social partnership in the ESB. Negotiations have already resumed and my Department will be participating in forthcoming meetings of the steering group. The Government looks forward to a positive and successful outcome to these negotiations.
The Opposition has tried to depict the Government as having no coherent strategy and showing a lack of direction in its handling of the semi-State bodies under the aegis of the Department. These criticisms are difficult to fathom, since many of the problems that have been identified precede the creation of the present Government. The policy agreement between the three parties in Government recognises that the management of change in our State enterprises represents a formidable challenge. The prize for the Government, if these challenges are met firmly and successfully, is that the State enterprises will be revitalised. They will be more responsive to customer needs and the increased effectiveness in their performance will benefit the economy as a whole.
In the ESB's case, the Government has a clear and coherent strategy. We wish the ESB to be more efficient and effective by reference to the lessons to be learned from best practice performance in other utilities. We envisage that our strong commitment to social partnership, as exemplified by our support of the CCR process, will facilitate and encourage the efforts of management and employees to strengthen the ESB, preparing it for the challenges which are bound to come from the development of a Single Market in electricity. My Department is represented on the steering group of the CCR; it will continue to play a role calculated to assist the progress of negotiations in a positive fashion. However, the responsibility for the detailed negotiation and implementation of change in the ESB rests, quite properly, with the management and unions. My Department will continue to monitor progress and give policy guidelines appropriate to the facilitation of current phases of the CCR.
As the Minister has stated, the immediate short term gains for the electricity consumer and the taxpayer are expected to flow from the CCR. However, the other main plank of Government policy is our intention to modernise the electricity sector, in keeping with the best strategies on offer from other OECD countries. We believe that the ESB should remain in public ownership, but that it should be equipped to face the challenges of competition in the new EU Internal Market in electricity.
The proposals on restructuring of the electricity sector are being developed in light of the emerging position in the EU Council of Ministers. The highly interconnected continental electricity system has particular features and problems which has led to the Commission pressing ahead with the liberalisation of the electricity market. We believe that small isolated systems such as Ireland's require special provisions and, on that basis, we continue to press Ireland's case within the Council of Ministers. We are also defending Commission proceedings against us regarding exclusive rights on the importing and exporting of electricity.
While small isolated systems such as Ireland's have special problems which we hope will be accorded unique treatment in the proposed electricity directive, there can be no avoiding the prospect of competition in power generation. For this reason the Minister has outlined proposals on creating a new power procurement function which would be charged with purchasing all power generated. We are hopeful that our approach will allay the concerns expressed by the IEA and others about the impartiality and independence of power procurement responsibility.
There is no confusion in the Government's mind about the ESB's internal structure. We are not departing from the previous Government's decision of May 1993 on the internal structure of the board. The ESB will remain a vertically integrated utility with essentially a business unit structure designed to stimulate more efficient performance, to ensure cost transparency and to respond to the wide range of consumer needs. This structure, however, has to be adjusted to take account of concerns that the power procurement function must operate equitably and impartially in the new market place.
The Opposition has tried to create the impression of ideological differences in the Government's ranks. I assure the Deputies opposite that there is solidarity in the Government on our approach to the ESB and State enterprises generally. The three parties took great care to reconcile their diverse philosophies in the Programme for Government which stresses the need to revitalise State enterprises within the framework of managed change. All our policy initiatives in relation to the ESB since taking office are consistent with that programme.
I would now like to turn to doubts expressed by the Opposition about a speedy timescale for the implementation of the CCR savings, and questions raised by Deputy Brennan about the underlying economics of such savings. Now that the potential for savings has been identified by McKinsey, the Government believes that no time should be lost in negotiating required changes in the ESB to accommodate the efficiencies possible. While we recognise that negotiations are bound to be difficult, we consider that the progress made in the ESB under the umbrella of social partnership will facilitate a positive outcome.
As to the economics of achieving savings in the ESB and the anxieties about job losses, there is no doubt that there are painful choices to be made. However, if the ESB can be made more efficient in a short timeframe, the payback for its internal finances will be a speedy one. The Government also believes that the savings achieved in the ESB will result in benefits to the wider economy, which, as a recent ESRI study suggested, should manifest themselves in increased long term employment.
I suspect that Deputy Brennan is uncomfortable with some of his arguments regarding the achievement of savings in the ESB. Is the Deputy suggesting that the price of electricity should be allowed to rise with the attendant adverse effect on householders, social welfare recipients and the business community?
I never said that.
Would any sensible politician not side with those intent on bringing about managed change in the ESB which will result in gains for the consumer and the wider economy and strengthen the medium and long term prospects for the company? I am sure that consumer interests find it difficult to understand Deputy Brennan's doubts about the economics of cost savings in the ESB when the consequences of a failure to act firmly and quickly could push up the price of electricity. It is Deputy Brennan who needs to re-examine his economic philosophy.
Deputy Brennan's motion has failed to dent the Government's solidarity. In this Government, partners are treated as equals. The Minister, Deputy Lowry, and I work as a team in our Department and will continue to do so. We face difficult challenges in the ESB and elsewhere but we have the determination and policies to surmount them. The Government's amendment reflects a commitment to the interest of consumers and sustainable employment within the ESB. Moreover, we believe that a revitalised ESB will be a key player in a modern electricity market, characterised by keenly priced electricity and a high quality service to the consumer.
I congratulate the unions and management of the ESB for the positive way they are facing the challenge of the inevitable changes ahead. I commend the Government's amendment to the House.
(Laoighis-Offaly): The motion before the House asks us to condemn the actions of the Minister for Transport, Energy and Communications. That is playing politics with a very difficult and vital issue which was tackled by the last Government and is continuing to be tackled by this Government. The Minister, Deputy Lowry, and Minister of State, Deputy Stagg, inherited this problem and both Ministers have worked well to get to grips with it. Far from condemning the Minister, he deserves our compliments and appreciation for coming to terms so quickly with such a difficult brief. Through his meeting last week and the meetings between the Minister of State and representatives of the ESB unions, we are moving closer to a resolution of the problem. That was evident this week with the recommencement of the CCR negotiating process. I understand that both sides were happy with the outcome of last week's discussions. Such intervention is in the interest of the management, workforce and consumers.
The amendment in the name of Deputy Molloy reflects the philosophy of the apostles of unbridled competition and deregulation in our neighbouring island. In Britain the unfettered deregulation of public utilities worked against the interest of consumers and the national interest and hence there is less accountability, costs are dearer and there is lack of uniformity. In many utilities massive numbers of jobs are being shed at workforce level while the managers of these companies award themselves huge increases. We do not want to see that happening in this country. I am delighted to support the Government amendment which endorses the approach of the Minister in encouraging and facilitating the achievement of efficiency, effectiveness and future employment in the ESB. Those aims were well addressed by the Minister and Minister of State in their contributions.
The CCR process is a difficult one and I compliment everybody who had the courage to get involved in it. I hope by May it will lead to a position whereby we will have a clearer idea of the future strategy for the ESB and electricity generation. I sincerely hope that peat generation will continue to play a very important part in the proposed plan. It has been the policy of successive Governments that peat should form part of the fuel mix for electricity generation. I and people in my constituency know better than most that this policy, which was enunciated by successive Governments, has been applied with reluctance for decades by ESB management. They have neglected over a long period of years to strive for efficiency, new technology and investment in peat generation. As a result we have seen the run-down of peat stations in the midlands. Under successive Governments representatives from my constituency have had to plead with Ministers for Energy to save particular stations. The ESB should not have allowed the position to deteriorate to such an extent. It should have invested in technology and kept the operation up-to-date. We cannot change the past but we can look to the future.
As a nation we developed peat technology and gave it to countries such as Finland. With the assistance of Bord na Móna we then had to go back to those countries for the most up-to-date technology in the peat generation area. In 1993 Bord na Móna submitted its proposal to the Government for the new 120 megawatt peat powered fire station in the midlands. I was delighted that proposal submitted last autumn was included in the National Development Plan and that a sum of £21 million in Structural Funds under the energy sub-programme of the Community Support Framework was made available subject to the satisfactory outcome of the cost benefit analysis and socio-economic issues. I understand it is being given very favourable consideration by the European Commission. The Minister recently met Commissioner Wulf-Mathies to discuss a number of outstanding concerns and I look forward to a positive outcome to the negotiations in the near future.
As I wish to share my time with Deputy Broughan I will conclude on the following point. A communication I received from a member of the ESB workforce who was very active in trying to secure the future of the company stated:
The present exercise involving the Department of Energy, the ESB and the Trade Unions is unique in the history of industrial relations in Ireland. It is a new appraoch to the whole area of dealing with the rationalisation of a company the size of the ESB.
The joint approach arose from a Review of Relationships conducted under the chairmanship of Peter Cassells following the strike in 1991. The concept requires the support of all to ensure its success. It is an opportunity for the Government, the Trade Unions and the employers to show that participation is the best way forward.
That type of positive attitude is what we need to ensure the success of the ESB not the political point scoring evidenced in Deputy Brennan's motion.
I echo the comments made by Deputy Treacy on the ESB's fine service over 70 years in this nation. It transformed the nation perhaps more than any other organisation between 1930 and 1955. I welcome the efforts of the Minister for Transport, Energy and Communications, Deputy Lowry, and his Minister of State, Deputy Stagg, to reposition the ESB and make it more cost effective and efficient in an era of new technology and deregulation. Obviously, the Ministers have a clear duty as representatives of the shareholder to position the organisation in such a way that it can take maximum advantage of the new competition.
As my colleague said, it is unfortunate that Deputy Brennan has played politics with the future of this vital public sector industry. I hope he does not share Deputy Molloy's outlook where EU deregulation is used as a stalking horse to try to create conditions where the public sector can be smashed and privatised and the massive economies of scale resulting from takeovers by foreign companies will ensure there will be very little competition here and we will be at the beck and call of the multinational utility.
I welcome, in particular, the reassurance given the Minister of State, Deputy Stagg, on transmission and distribution in the future. The Labour Party's view is clear. We support the efforts of the Minister in partnership through the CCR to negotiate the repositioning of the ESB to meet the challenges ahead. It is clear from the consultants' report that there are excess costs and whether the figure of £120 million is correct remains to be seen.
Clearly, energy costs have a fundamental role in our industrial base. To make progress we have to embark on a policy of repositioning the organisation. I welcome the Minister's comments on the central power procurer and also on the transmission network.
The ESB's network of shops enables people to easily buy electrical appliances cheaply on hire purchase and I caution the Minister about dismantling that network. I commend the Minister's amendment.
May I share my time with Deputy Brennan?
Is that satisfactory? Agreed.
The Minister for Transport, Energy and Communications, Deputy Lowry said "There is no way in the world I will allow an increase to the ESB". That is inflammatory language typical I suppose of the Tipperary slasher, hurling everything in sight with no cognisance of the consequences.
That is a racist comment.
The Minister should reflect on his tactics. If his objective was to accelerate the rationalisation programme, clearly he has failed. Both sides had been making steady progress in their discussions, and had accepted the unanswerable case for a thorough change in the ESB as it prepares itself for the increased competition that will come with the Single Market. If the Minister wanted to give a message to the ESB and the workers, there was a far more sensitive way to make the changes he hoped to make rather than through outright confrontation and megaphone diplomacy across the airwaves.
Obviously, the Minister was not in tandem with the spirit of the social partnership which was well known to the previous Minister, Deputy Cowen, who was also Minister for Labour. In this instance the Minister treated the ESB with great disdain and it is to the credit of the ESB workers that they acted responsibly in the face of extreme provocation. They were subjected in a terrible way to a lecture from the Minister. Is it any wonder, therefore, that the Tánaiste and Minister for Foreign Affairs, Deputy Spring, should have put the Minister on a leash with Deputy Stagg wagging his tail? To shed 2,000 jobs within two years is a daft aspiration. Massive social consequences would follow. This demand was made in an uncaring way, without thinking of natural wastage or waiting for the ESB workers to place their offer on the table and without taking account of the positive proposals emanating from the discussions. In short, the Minister's intervention was a monumental cock-up.
We live in a competitive environment and must be prepared to look at change as a challenge rather than as a threat. To achieve this there must be Government leadership, the semi-State sector must follow a strategic management initiative and there must be a commercial mission statement for all of these companies including the ESB.
Competition is the principal agent of change in the electricity industry worldwide. Although the ESB is a fully integrated electricity business, it still enjoys a monopoly. Industrial growth, particularly multinational investment, has been very significant in the last decade. Other countries compete with us for these investments and we must always realise that the price of electricity is one of the competitive factors in attracting industry here. The ESB must consolidate its position as a truly international player in the electricity business. In fairness to the ESB, it has taken a very commercial approach to cost reduction and containment in the last few years, using strict budgetary controls and cost and price targets. Over the years, the ESB has targeted all the main cost factors in its business from the cost of money, to the cost of fuel and in particular the cost of labour. It has reduced these costs significantly and it is almost ten years since it had a price increase. During this period, the price of electricity has been reduced on no fewer than three occasions. The price of electricity in Ireland is now 35 per cent in real terms below what it was in 1985.
Competitiveness is a long term stratey and the long term financial viability of the ESB must be preserved. The company has no equity capital from Government or other sources and consequently the financial strength of the company is essential in order to enable development funds to be borrowed competitively in world markets.
Investment in modern generating stations and distribution systems should be commensurate with this cost reduction and with efficiency in the ESB. Ireland is a peripheral nation. We are far removed from the markets of Europe and this creates major impediments for our competitiveness. We must get all other elements right if we are to compete internationally and serve the huge European market of 320 million people. I urge the Minister to tread warily.
I thank those who took part in the debate. Despite what some speakers said, it was a serious debate and one well worth having considering the scale of change involved. The Minister, Deputy Lowry, is very upset with me. In his angry reaction to my few words last night he was obviously upset at having to dance to the Labour tune on the ESB talks. His very angry speech showed the depth of his hurt at having to back down and adopt a social partnership approach to the negotiations.
He accused me of being an ineffectual member of the Government during my term of office at the Department of Tourism, Transport and Communications as it was then. That is simply political rhetoric. During my term I was one of the first Ministers to address the emerging difficulties at Aer Lingus. I took substantial action on an array of other semi-State companies, including CIE, An Post, Telecom Éireann. RTE and others. My record of action stands. I recall disposing of the B & I ferry company successfully, establishing the Irish aviation authority and taking dozens of other initiatives. At the end of the Minister's term of office I will be quite happy to compare his list of action taken with my record.
The Minister has accused me of playing politics with the ESB. He needs to be reminded that it was not I who interfered with the ESB but it was his undue interference with that letter, as he sped off to the United States, which led to the unions withdrawing from the talks. To accuse me of playing politics is totally contradictory. The Labour Party rowed in and further politicised the talks. The Minister was forced to back down from the position he took in his letter to the ESB chairman which, in unambiguous terms, stated that the £120 million cost savings were to be achieved over two years. After the Labour Party dictated policy the Minister had to water down his unrealistic demands but in the process he created a dangerous misunderstanding at the ESB as he appears to have told the unions one thing when he met them, accompanied by the Labour Minister of State, Deputy Stagg and gave the ESB management a slightly different version, or so I understand from briefings I have had.
The Minister appears to be confused about the proposed price mechanism for the ESB. One day he appears to say it will be approved once cost savings are achieved. I have the references for that. Another day he says it will be approved when the cost savings are implemented. Which is it? This confusion is not helping the ESB but damaging its reputation. The Minister has presented the company as something of a burden, as if it is badly run. At one stage he talked about "turning around" the ESB as if it was a company in distress. He has presented it as a company that is falling apart. It is not. However, his speech last night shows him to be inconsistent. He decided to change his tune and decided it was a sound company financially when a few days before it needed "turning around". He claimed it would have no problem borrowing the £250 million necessary to fund the 2,900 redundancies proposed over two years. Which is it — a company that needs turning around or one that is so financially sound that it is able to borrow £250 million? We cannot have both stories. Which one represents the true position?
The ESB must find £650 million to refurbish its network. This high level of capital expenditure is not normal as the Minister claimed it was. It is deferred capital expenditure. The ESB already has large borrowings. The Minister presents borrowing money as the way to solve the problems. He knows better than I that that is financially irresponsible. He stated clearly that the £250 million will be found from some internal resources and through borrowing. He proposes to borrow the money to pay for the redundancies. It is unwise for the ESB to borrow this money and to try to do so over two years.
The scale of change proposed is enormous and to try to do it in two years would have been totally unrealistic. That is why I thank the Minister of State, Deputy Stagg, for hauling the Fine Gael monster off our backs. The Government must explain if it is sensible to axe 2,900 jobs at a cost of £250 million. If there is £250 million to spare, is that the best way to spend it at this time? Will some or all of these people be re-employed if there is an increase in electricity or if the ESB expands, as it proposes to do, into telecommunications, retailing, new contracts and general expansion work?
The Minister seems to be very confused about how the difficulties arose in the first place. At one stage he said that, following his intervention, the talks were back on course. The talks were on course until the Minister intervened and meddled in the process so he does not deserve our thanks for getting them back on course. He took them off course with his dangerous letter to the ESB chairman. It was a dangerous exercise. The Minister did not climb down but thankfully was hauled down by a rather sensible Labour Party on this occasion.
The Minister also claimed in his defensive comments last night that his Department has no direct role in the ESB talks about change. His Department is represented on a tripartite committee that monitors progress on the talks. What did he mean when he said he had no direct role in the changes taking place in the ESB? If he has no direct role, why did he write to the chairman? Is he suggesting that the talks are not a tripartite process but a matter for the Minister of the day because he reserves his right to intervene? The ESB talks should not have come off the rails and there is no doubt but that the Minister pushed them off single handedly. His undue interference has resulted in a politicisation of the ESB. It was not my motion which politicised it but the Minister's letter in which he suggested that unrealistic things should happen over a two years period.
The story is clear: the Minister was forced to climb down by his coalition colleagues. Last night I called on the Minister to tell the House why the Minister of State, Deputy Stagg, met the ESB unions before he did and why he was at the Minister's meeting with the ESB unions. What was the role of the Labour Party last week in the ESB negotiations? Is there any connection between the Minister of State, Deputy Stagg's replacement on Kildare County Council and the policy of the Labour Party in regard to the ESB at present? The House needs an answer to these questions.
That is an outrageous attack on someone who is not in the House to defend himself. I am surprised at the Deputy.
The person is a public representative and the director of a State company.
Perhaps it was a good remark that was made about him.
The reason I mention it is we need to know from where semi-State policy is coming. I reiterate my fears that the Minister appears to be set on a course of dismantling the ESB to which Fianna Fáil is opposed. Our policy is clear. We believe in the introduction of gradual competition in generation in keeping with EU requirements. The Minister needs to clarify if all his comments on the ESB represent a negotiating position. He should tell us if the Labour Party agrees with his timeframe. Has it been discussed at Cabinet or is it just the Minister's policy? Why is there deafening silence from Democratic Left who usually, at the prospect of 2,900 redundancies, would be apoplectic and up in arms? It is clear that there are serious ideological fault lines in the Government and the earthquake cannot be too far away.
Amendment put.
The Dáil divided: Tá, 68; Níl, 61.
Tá
- Ahearn, Theresa.
- Barrett, Seán.
- Barry, Peter.
- Bell, Michael.
- Bhamjee, Moosajee.
- Boylan, Andrew.
- Bradford, Paul.
- Bhreathnach, Niamh.
- Bree, Declan.
- Broughan, Tommy.
- Browne, John (Carlow-Kilkenny).
- Bruton, Richard.
- Burke, Liam.
- Byrne, Eric.
- Carey, Donal.
- Connaughton, Paul.
- Costello, Joe.
- Coveney, Hugh.
- Crawford, Seymour.
- Crowley, Frank.
- Currie, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Avril.
- Durkan, Bernard J.
- Finucane, Michael.
- Fitzgerald, Brian.
- Fitzgerald, Frances.
- Flaherty, Mary.
- Flanagan, Charles.
- Gallagher, Pat.
- Gilmore, Eamon.
- Harte, Paddy.
- Higgins, Jim.
- Hogan, Philip.
- Howlin, Brendan.
- Kavanagh, Liam.
- Kenny, Enda.
- Kenny, Seán.
- Lowry, Michael.
- Lynch, Kathleen.
- McCormack, Pádraic.
- McDowell, Michael.
- McGahon, Brendan.
- McGinley, Dinny.
- McGrath, Paul.
- McManus, Liz.
- Moynihan-Cronin, Breeda.
- Mulvihill, John.
- Nealon, Ted.
- Noonan, Michael. (Limerick East).
- O'Keeffe, Jim.
- O'Sullivan, Toddy.
- Pattison, Séamus.
- Penrose, William.
- Quinn, Ruairí.
- Ring, Michael.
- Ryan, John.
- Ryan, Seán.
- Shatter, Alan.
- Sheehan, P.J.
- Shortall, Róisín.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
- Timmins, Godfrey.
- Upton, Pat.
- Walsh, Eamon.
Níl
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Aylward, Liam.
- Brennan, Matt.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John (Wexford).
- Burke, Raphael P.
- Byrne, Hugh.
- Callely, Ivor.
- Clohessy, Peadar.
- Connolly, Ger.
- Cowen, Brian.
- Cullen, Martin.
- Davern, Noel.
- Dempsey, Noel.
- de Valera, Síle.
- Doherty, Seán.
- Ellis, John.
- Moynihan, Donal.
- Nolan, M.J.
- Noonan, Michael. (Limerick West).
- Ó Cuív, Éamon.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Batt.
- O'Keeffe, Ned.
- Flood, Chris.
- Foley, Denis.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Haughey, Seán.
- Haughes, Séamus.
- Kenneally, Brendan.
- Keogh, Helen.
- Killeen, Tony.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Leonard, Jimmy.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, James.
- McDowell, Michael.
- Moffatt, Tom.
- Molloy, Robert.
- Morley, P.J.
- O'Leary, John.
- O'Malley, Desmond J.
- O'Rourke, Mary.
- Ryan, Eoin.
- Sargent, Trevor.
- Smith, Brendan.
- Smith, Michael.
- Treacy, Noel.
- Wallace, Dan.
- Wallace, Mary.
- Woods, Michael.
Tellers: Tá, Deputies Barrett and B. Fitzgerald; Níl. Deputies D. Ahern and Callely.
Amendment declared carried.
Amendment No. 2 not moved.
Question, "That the motion as amended be agreed to" put and declared carried.