I move:
That the Bill now be read a Second time.
This Bill, which comprises 102 sections and six Schedules, is the first major revision of commercial harbours legislation since 1946. The purpose of the legislation is to restructure the management framework of port authorities by establishing State commercial companies to manage the 12 bigger ports. Before outlining in detail the main provisions of the new legislation I would like to talk briefly about the existing legislation, the Harbours Act, 1946.
The 1946 Act had its genesis in 1926 when, by a resolution of both Houses of the Oireachtas, the Ports and Harbours Tribunal was established to inquire into the position of the several ports and harbours in the State. The tribunal reported in 1930. Its two main recommendations were that the provisions of the various general Acts relating to harbours should be replaced by a general consolidating Act and, second, that the Department of Industry and Commerce be given the general oversight of harbour administration and placed as regards harbours in much the same position as the Department of Local Government and Public Health occupied in relation to local authorities. The Bill to implement the tribunal's recommendations was ready for introduction in 1940.
However, owing to the abnormal circumstances affecting our ports and harbours which then existed, its introduction was postponed. The Second Stage of the Harbours Bill, 1945, was taken in Dáil Éireann on Wednesday, 28 November 1945. The Bill was introduced by the then Minister for Industry and Commerce, Mr. Seán Lemass, and contributors to the debate included such well-known figures as General Mulcahy, John A. Costello and Maurice Dockrell. That legislation came into effect in 1946 and still remains the main body of legislation governing commercial seaports.
In the interim years techniques in shipping and cargo handling have changed dramatically. On the one hand there has been the growth of large bulk shipments, on the other the almost universal use of unitised systems, either lift-on/lift-off or roll-on/roll-off. These changes have provided ports across the world with new challenges. The international response has tended towards the greater "commercialisation" of ports. Ireland's ports have been severely constrained in their ability to respond commercially because of the restricted legislation under which they operate.
For this reason the then Minister for the Marine, Mr. John Wilson, established the Commercial Harbours Review Group in October 1990 whose task was to identify those aspects of existing legislation which constrained a modern port; the structure of harbour boards needed to be examined as did the extent of ministerial and departmental control on day-to-day activities of ports. The review group included a broad representation of interests associated with ports — the Irish Port Authorities' Association, IBEC, a transport economist, a port user, a local authorities' representative, a SIPTU representative and a representative from the Department of the Marine. The group presented its report and recommendations in July 1992.
I summarise the major findings of the review group as follows: Ireland, of all countries in the EC, was probably the most heavily dependent on external trade for its future prosperity; the crucial importance of seaports to the economy was highlighted by the fact that in 1990, 80 per cent by volume and almost 55 per cent by value of the total external trade of the State passed through seaports; having regard to Ireland's remoteness from the main European and world markets, there was an urgent need to bring the overall performance of Irish seaports up to a level at least on a par with the best international standards; cargo handling and shipping techniques had changed dramatically in recent years with the advent of unitisation and large bulk shipments; the pace of change had outstripped the ability of seaports in Ireland and elsewhere to cope effectively with the challenges arising from it; current legislation i.e., the Harbours Act, 1946, was outdated to present day requirements being unduly restrictive with ministerial controls more in keeping with procedures in local authorities; a survey of international trends indicated that seaports were being restructured and commercialised in many countries and cargo handling — stevedoring — activity was identified as a serious disability in many ports.
The key recommendation of the review group was that, to facilitate commercialisation, commercial State companies should be set up to manage certain ports. The group also recommended that the commercial mandate under which the new port companies would operate should give them flexibility to operate as truly commercial enterprises.
The Bill now before the House is based on the main recommendations of the review group. The Bill provides for: (a) the setting up of commercial State companies to manage and operate the ports of Arklow, Cork, Drogheda, Dublin Dundalk, Foynes, Galway, New Ross, Shannon, Waterford and Wicklow — these ports are at present managed by harbour authorities in accordance with the Harbours Act, 1946; (b) the setting up of a State commercial company to manage and operate Dún Laoghaire Harbour which is at present managed and operated by the Department of the Marine; (c) the functions of the companies so established; and (d) a revision of the law relating to pilotage.
I do not think it necessary at this stage to deal at any length with the details of the provisions of the Bill. However, I would like to briefly described its main provisions. The new companies will be formed and registered under the Companies Acts and the State will be the sole shareholder in each company. It is essential of course that thorough preparations will need to be undertaken before the companies are established. Such preparations include the installation of modern accounting systems; the preparation of commercial accounts, including up-to-date balance sheets; an assessment of pension assets and liabilities; a review of each harbour's trading performance and medium projections of same; a forecast of capital expenditure needs and of how these would be financed and an examination of staffing levels.
Existing harbour authority boards range in number from nine members to 29 and comprise representatives of local authorities, chambers of commerce, trade union interests, IBEC, the livestock trade, shipping and ministerial nominees.
The view taken by the review group was that structures of this nature — large representative authorities comprising up to 29 members — were no longer attuned to the competitive requirements of a modern port and were not the most efficient way of managing ports. The group recommended that the board of directors of the new port companies should have seven members, including employee representation, the chairman and chief executive. It further recommended that the non-executive directors should be appointed by the Minister with a five year term of office, should be drawn from the commercial sector of the economy and that persons with a vested business interest in the affairs of a port should not be given board representation. However, following publication of the review group's report there were numerous requests for a continuation of the existing representation. Having considered the matter the Government decided that the number of directors of each company should be not more than 12 and that three local authority directors should be appointed to each port company.
The Bill, as now presented, provides that the number of directors of each company will not be more than 12. The directors, with the exception of the chief executive, the worker and local authority directors, will be appointed and may be removed from office by the Minister with the consent of the Minister for Finance. Each director, except the chief executive, will be appointed for five years and will be eligible for reappointment.
In relation to worker directors, the norm in public sector bodies such as Aer Lingus, Aer Rianta, An Post, etc, is that worker directors made up one-third of the board's full membership. However, the numbers employed by the harbour authorities — and to be employed by the new port companies — are small compared to other semi-State bodies such as An Post and one-third worker representation on the new port boards could be viewed as over-representation.
Accordingly, the strategy developed is that the staff of companies whose employees exceed 50 in number will elect two worker directors; the staff of companies whose employees are more than 30 but not more than 50 in number will elect one worker director. Where the staff of a company is fewer than 30 in number, the Minister will, following consultation with recognised trade unions, appoint a person as the representative of the interests of the employees of that company.
There was a strong demand for continued representation of local authorities on the new port companies as such representation would maintain the close relationship between city, town and port. It was argued that local ports play a key role in the economic life of the town or city associated with the port and that there must be close day-to-day interaction between the port and the local authority. It was suggested that local authority representation on the port authority provided a long established and effective means of ensuring full co-operation between both bodies which the Government agreed was essential and considered that the inclusion of local authority representation was merited on those grounds. Accordingly, the Minister will appoint three persons, nominated in the prescribed manner by a prescribed local authority, to be each a director of a company. Regulations prescribing the manner in which such persons are to be nominated will be made by the Minister. The chief executive of each port company shall, by reason of his office, be a director of the company. The remaining directors will be appointed by the Minister for the Marine with the consent of the Minister for Finance and will, in general, be drawn from the professional and business community. TDs, Senators and MEPs will be disqualified from becoming directors of port companies.
I will outline the powers and duties of the new port companies. The principal objects of each company will be to: (a) take all proper measures for the management, control, operation and development of its harbour and the approach channels thereto and provide reasonable facilities, services and accommodation in the harbour for vessels, goods and passengers; (b) promote investment in its harbour; (c) engage in any business activity, either alone or in conjunction with other persons, that it considers to be advantageous to the development of its harbour and (d) utilise and manage the resources available to it in a manner consistent with the foregoing objects.
In addition, each company will be empowered to: (i) take such steps either alone or in conjunction with other persons as are necessary for the efficient operation and management of its harbour; (ii) appropriate any part of its harbour to the exclusive use of any person; (iii) engage in activities outside the State, related to functions in respect of its harbour, which will promote the interests of trade and tourism in the State; (iv) charge rates in respect of vessels using the harbour, goods shipped, transhipped, unshipped or stored within the harbour and any service provided by the company; (v) lease, acquire and dispose of property; (vi) make by-laws for the use of the harbour, safety of navigation within the harbour and generally for the regulation of the harbour.
Each company will be required to submit annually to the Minister a copy of its annual accounts and the auditor's report on the accounts. Accounts will be audited by commercial auditors.
Each port company will be empowered to borrow, with ministerial consent, up to a limit of 50 per cent of the company's fixed assets.
The Minister for Finance may, in certain circumstances, guarantee borrowings by port companies.
Persons who immediately before vesting day were employees of a harbour authority or of the Department of the Marine in the case of Dún Laoghaire Harbour will not, while in the service of the port company, be brought to less beneficial conditions of service or of remuneration to which they were subject immediately before vesting day. Each port company will be required to establish and maintain a superannuation fund.
The Government, in the context of the new Harbours Bill, was conscious of the need to address long-standing pension difficulties in certain ports which arose because many harbour authorities operated a "pay as you go" system for pensions, instead of a specific pensions fund. This system no longer accords with acceptable standards and I have now initiated action to tackle the issue.
As I already stated, it is essential that thorough preparations will need to be undertaken before the new port companies are established. In this context I have employed Davy Kelleher McCarthy, economic consultants, to undertake a comprehensive study of the financial status of the harbour authorities. I expect a report from DKM in September with recommendations on long-term funding needs for the harbours. I will then consider, in consultation with the Minister for Finance and the harbour authorities, how to ensure that the harbours can meet their pensions schemes requirements. I have written to the Pensions Board advising it of the measures I am taking to ensure that harbour authority pension schemes are secure.
The Bill contains a provision whereby port companies may apply to the Minister for amalgamation and the Minister, if of the opinion that, for sound business reasons, the ports concerned should be amalgamated, may by order provide for such amalgamation provided the companies concerned are agreeable. An amalgamation order will have to be confirmed by a resolution of both Houses of the Oireachtas.
In respect of each port company the Minister will be empowered to: issue directions to the company relating to safety, the levels of harbour charges, the development of harbours and any other matters; stipulate, in consultation with the company, financial or other targets, including the payment of dividends in respect of shares in the company, to be achieved by the company.
Each port company will be required to organise pilotage in either of two ways: (i) by employing pilots directly or (ii) by licensing self-employed pilots to undertake pilotage operations. Each port company will be empowered to make by-laws for the operation and organisation of pilotage services, qualifications for pilots, the grant of pilotage exemption certificates and for other matters related to pilotage.
The new legislation is designed to ensure that the ports will be able to operate as truly commercial and self-sufficient enterprises free from undue control by the State. The re-organisation of the commercial seaports together with a continuation of EU aid for port development will give the ports the flexibility they need to operate as truly commercial enterprises and will greatly improve their efficiency and effectiveness to the benefit of exporters, the agricultural and industrial sectors of the economy and our tourist trade. The main thrust of the new legislation will be to relax ministerial control while increasing accountability for operational and financial performance.
In tandem with the new legislation, a port development policy is also in place and significant investment in portal development will take place between now and 1999. The objectives of this investment are to facilitate the expansion of industry and agriculture; to facilitate the expansion of tourism, and to facilitate regional development.
In line with these objectives the need for more intensive competition; inadequate frequency of services; poor quality-outdated infrastructure leading to inefficiencies; some selective capacity deficiencies; inadequate port handling equipment; capital dredging; and repair of structural faults are being addressed.
The investment programme of £135 million is designed to achieve the elimination of bottlenecks; and expansion of port throughput by end 2000 of 46 per cent in the case of unitised freight and 40 per cent for bulk freight; a 15 per cent real reduction in combined port and shipping costs and the stimulation of a reduction in shipping charges which will have a significant impact on the productive sectors of the economy.
The port development programme together with the reorganisation of the commercial seaports will gear the ports to meet the challenges of the 21st century.
The review group recommended that responsibility for harbours of lesser commercial significance, 13 in all, be transferred to local authorities. The harbours involved are Annagassan, Bantry Bay, Ballyshannon, Baltimore and Skibbereen, Buncrana, Cappa Pier in Kilrush, Kinsale, River Moy in Ballina, Sligo, Tralee and Fenit, Westport, Wexford and Youghal.
This proposal was discussed in detail with the majority of the harbour authorities concerned and the City and County Managers Association and did not attract general support. The Government, having considered the matter, agreed to the proposal that rather than providing for automatic transfer the Bill should contain a framework which would allow these small harbours to continue to operate under the Harbours Act, 1946, (to be set up as commercial State companies or to be transferred to local authorities.
The Bill, as now drafted, contains these empowering provisions. The position to be adopted in this regard will be considered on its merits on a port by port basis once the new legislation is in place. Decisions will be taken based on the present and anticipated level of commercial traffic at the ports concerned and the present and anticipated financial position of the ports concerned. Proposals to transfer responsibility for any of the smaller harbours to the relevant local authority will be subject to the consent of the Minister for the Environment. Likewise, any proposal to establish a State commercial company in respect of any of the harbours concerned will have to be confirmed by a resolution of both Houses of the Oireachtas.
The Bill contains an enabling provision which empowers the Minister to designate Dingle Harbour as a fishery harbour centre once the new legislation is in place. This means that responsibility for the harbour would be transferred to the Department of the Marine which already manages and operates five fishery harbour centres. However, the general question of the management of fishery harbours falls for review in the context of a major review, announced by my predecessor on 1 March 1995, of the organisation and management structures of the fishery services including the fishery harbour centres. I will assess the future management plans for Dingle Harbour and other major fishery harbours in the light of the outcome of that review which it is intended to have completed later this year.
In the course of preparation of the legislation a comprehensive consultation process on the purposes and content of the Bill has taken place with interested parties — mainly the harbour authorities concerned and the Social Partners — and, in so far as was possible, their views have been taken on board. I am confident that the principles of the Bill will be generally acceptable; I accept, however, that differences of opinion may arise on its detail. Further submissions on the legislation and, in particular, amendments which would make it more effective, will be considered and any amendments considered justified will be brought forward on Committee Stage.
Throughput at the commercial ports in 1980 amounted to 19.4 million tonnes; the corresponding figure for 1993 was 28.4 million tonnes — an increase of 46 per cent. The importance of our ports to the Irish economy cannot be over-emphasised. The measures outlined here today, namely, restructuring of the management framework of port authorities through the early introduction of commercial semi-State enterprises; an emphasis on investment in strategic corridors to increase frequency of service and benefit of economies of scale; the taking of appropriate steps to ensure adequate competition within and between ports and in shipping services; and a major programme of investment, supported by community funds, in-port infrastructure and facilities are designed to ensure adequate and internationally competitive capacity.
For all those reasons I commend the Bill to the House.
