I move amendment No. 1:
In page 6, line 29, to delete "airport." and substitute "airport,".
This is a drafting amendment substituting a comma for a full stop.
Air Navigation Air Transport (Amendment) Bill, 1997: Report Stage.
Amendment agreed to.
I move amendment No. 2:
In page 8, line 7, after "in the State" to insert "that, on or after the vesting day, is".
This amendment deals with State airports. The parliamentary draftsman suggested this amendment to ensure Dublin, Cork and Shannon airports will only become State owned airports under this Bill when those three airports have been vested in Aer Rianta on vesting day. It is to ensure there will be no overlap in the appointment of authorised officers. After vesting day they will be appointed by the company.
Amendment agreed to.
I move amendment No. 3:
In page 10, after line 51, to insert the following:
"(3) the company may, subject to subsection (4), issue shares from time to time as part of one or more employee profit sharing schemes subject to such terms and conditions as may be approved by the Minister with the consent of the Minister for Finance.
(4) the aggregate amount of shares of the company standing issued at any one time as part of one or more profit sharing schemes shall not exceed 15 per cent of the total issued share capital of the company.".
This amendment adds two subsections to section 9 and provides for an employee share ownership or shareholding option. The Minister indicated she would examine this matter between Committee Stage and Report Stage. It is in line with current thinking and it does not place any compulsion on the Minister or the shareholder, but provides for the possibility of a shareholding option in the company in legislative form.
I support the amendment. We discussed this matter on Committee Stage and the Minister was in favour of it in principle. Deputy Stagg made the point that if there was no legal provision for it, even though the Minister might favour it, it would require separate legislation. The Minister said it was provided for somewhere else. In view of the Telecom Éireann experience and international experience, this proposal should be supported. The amendment provides for profit sharing schemes of up to 15 per cent, but it could be a smaller amount. The net point that needs to be clarified is that if this matter is not agreed now, the Minister must tell us where else in the legislation this can be provided for.
Acting Chairman
I wish to advise Members there has been a modification to Standing Orders to allow Members to make a two minute intervention on Report and Final Stages.
Does it permit one intervention or two interventions of one minute?
Acting Chairman
It provides for one intervention of two minutes per Member.
Members have two bites of the cherry. How many bites of the cherry do I have?
Acting Chairman
Two also.
I thank Deputy Stagg for tabling this amendment and Deputy Yates for supporting it. I said on Committee Stage I was very much in favour of ESOP. I heard Deputy Stagg say I was a great one for great plans but I do not put a timeframe on them.
I was talking about Luas.
I could not help but think about what has happened in regard to ESOP. The Labour Party did its best in that regard, but faltered at the last hurdle.
We nearly had it ready for the Minister.
Does the Minister blame Deputy Dukes for that?
I do. Greg Sparks wrote eloquently about that in the Irish Independent last Friday and there will be a further chapter from Deputy Dukes next Friday, which will be interesting. I fully agree with ESOP, employee share ownership, but I cannot include it in this Bill. As I said on Committee Stage, this is not the vehicle for it and I still hold that view. Deputy Yates asked if it cannot be included in this Bill when and where will it be provided for. An Aer Lingus ESOP and a Telecom ESOP could be provided by way of amending legislation. That is what happened in regard to Telecom. ESOP was included as a principle in the 1996 Bill introduced by the Labour Party and it could be provided for in legislation on Aer Lingus.
This Bill is to convert Aer Rianta from its present status to PLC status. I give a firm commitment that the Government is in favour of ESOP. I am sure other Governments will also favour it because it is seen as a most useful conduit for modernisation and participation in the fullest sense. I suggest the compact for constructive partnership, which has facilitated significant changes and harmonious work, could be the setting or the ambience against which talks could begin in that regard. I repeat the commitment I gave to the trade union and which I followed up by correspondence. The Government and I are committed to ESOP. We look forward to the dialogue I hope will ensue in the company under the compact for constructive participation and to bringing forward this matter. I hope I will be Minister in charge when that happens.
I am very disappointed with the Minister's response because during the debate on Committee Stage amendments I felt she would propose her own amendment. The Bill is suitable for the inclusion of such a measure. It does everything else, including setting up the board. Perhaps the Minister will explain why it is not suitable and why it cannot be done in the Bill. Paying lip service to ESOPs—
I have not paid lip service.
This is a good opportunity for the Minister to follow through on that. The ESOP in Telecom Éireann, which the Minister continues to speak about and which I congratulate her on completing, was practically a fait accompli when she began dealing with it. It was a matter of tidying up the loose ends.
The Minister has an opportunity to do something new in a different area in the context of ESOPs and I am very disappointed she is saying this is not a suitable vehicle in which to do something. Will the Minister explain why it is not suitable?
Acting Chairman
The Deputy has moved the amendment and therefore has a right of reply in addition to the two interjections.
Therefore the person who moves the amendment has the right to speak again. That is great news.
Acting Chairman
Yes.
I did not find the Minister's reply convincing. There is difficulty with the schedule of business and to have separate legislation for an ESOP, to which she is committed, seems to be missing a golden opportunity which could be availed of in this legislation.
The talks on this have not begun. I hope they will begin and I give full support to their commencement and the ongoing management of the Compact Talks for Constructive Participation. I feel strongly that the way ahead for semi-State companies is through ESOP as part of an overall examination of semi-State companies. Regarding what Deputy Stagg said, nothing had been concluded on ESOP. He spoke about it being tidied up, but in fact it had faltered. There is no point in discussing the matter as the freedom of information legislation will show exactly the stage it was at and the ideological hump that developed from which there was to be no movement. Things did not work out, even during the last desperate hours in Kerry when Deputy Spring sought to intervene with Deputy Dukes. That is the nature of politics and I am not complaining about it.
The Deputy's point is that Fianna Fáil promised it in its election manifesto.
Acting Chairman
The Deputy is taking liberties with the new arrangements.
The Deputy has spoken twice. He is correct when he says a commitment was given, but working out that commitment proved a significant task. We ran into exactly the same difficulties as the previous Government except that we flexed up. Talks between management and employees have not yet begun on the matter, but when they do and reach a certain stage they will come to me for further discussions. I am sure this is the way forward. They will find an open house and a flaithiúil welcome when they come to me.
The Minister's statements lead me to believe she will avail of the opportunity to give workers in Aer Rianta the same rights as those elsewhere, namely, the opportunity, enshrined in legislation, of a worker shareholding in the company. The Minister could be the persuader or enhancer of the possibility——
The Deputy should not get so finicky.
——and not simply say that when agreement is reached regarding the level of it, the parties can come to her and the issue of legislation will then be examined. That process will take years. The Minister has the possibility of assisting the process by including in the Bill a framework which will make the process legislatively possible. The amendment is of such value to the workers in Aer Rianta that I will press it to a division.
Amendment put.
The Dáil divided: Tá, 56; Níl, 64.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Bell, Michael.
- Belton, Louis.
- Boylan, Andrew.
- Bradford, Paul.
- Broughan, Thomas.
- Bruton, John.
- Bruton, Richard.
- Burke, Ulick.
- Carey, Donal.
- Clune, Deirdre.
- Connaughton, Paul.
- Cosgrave, Michael.
- Crawford, Seymour.
- Creed, Michael.
- Currie, Austin.
- D'Arcy, Michael.
- Deenihan, Jimmy.
- Dukes, Alan.
- Durkan, Bernard.
- Farrelly, John.
- Finucane, Michael.
- Flanagan, Charles.
- Gilmore, Éamon.
- Gormley, John.
- Higgins, Michael.
- Kenny, Enda.
- McCormack, Pádraic.
- McDowell, Derek.
- McGahon, Brendan.
- McGinley, Dinny.
- Mitchell, Jim.
- Mitchell, Olivia.
- Moynihan-Cronin, Breeda.
- Naughten, Denis.
- Noonan, Michael.
- O'Keeffe, Jim.
- O'Shea, Brian.
- O'Sullivan, Jan.
- Owen, Nora.
- Perry, John.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ring, Michael.
- Ryan, Seán.
- Sargent, Trevor.
- Sheehan, Patrick.
- Shortall, Róisín.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Upton, Pat.
- Wall, Jack.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Ardagh, Seán.
- Blaney, Harry.
- Brady, Johnny.
- Brady, Martin.
- Brennan, Matt.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John (Wexford).
- Byrne, Hugh.
- Carey, Pat.
- Collins, Michael.
- Coughlan, Mary.
- Cowen, Brian.
- Cullen, Martin.
- Davern, Noel.
- de Valera, Síle.
- Dempsey, Noel.
- Dennehy, John.
- Doherty, Seán.
- Ellis, John.
- Fahey, Frank.
- Fleming, Seán.
- Foley, Denis.
- Fox, Mildred.
- Hanafin, Mary.
- Haughey, Seán.
- Healy-Rae, Jackie.
- Jacob, Joe.
- Keaveney, Cecilia.
- Kelleher, Billy.
- Kenneally, Brendan.
- Killeen, Tony.
- Kirk, Séamus.
- Kitt, Michael.
- Kitt, Tom.
- Lawlor, Liam.
- Lenihan, Brian.
- McDaid, James.
- Moffatt, Thomas.
- Molloy, Robert.
- Moloney, John.
- Moynihan, Donal.
- Moynihan, Michael.
- Ó Cuív, Éamon.
- O'Dea, Willie.
- O'Donnell, Liz.
- O'Flynn, Noel.
- O'Hanlon, Rory.
- O'Keeffe, Batt.
- O'Malley, Desmond.
- O'Rourke, Mary.
- Power, Seán.
- Roche, Dick.
- Ryan, Eoin.
- Smith, Michael.
- Treacy, Noel.
- Wade, Eddie.
- Wallace, Dan.
- Wallace, Mary.
- Woods, Michael.
Tellers: Tá, Deputies Stagg and Barrett; Níl, Deputies S. Brennan and Power.
Amendment declared lost.
I move amendment No. 4:
In page 11, lines 2 and 3, to delete "as soon as practicable following the commencement of this Act" and substitute "and which shall be the 1st day of September, 1998".
This amendment seeks to ensure a definite starting date for the commencement of the legislation. The purpose of the Bill is to change the financial and legal framework of Aer Rianta from being an agent of the Minister to being a private limited company.
It is most important that vesting day occurs before duty free sales are abolished. The Government's campaign on duty free sales has run into the sand following the ECOFIN meeting of 19 May. That is regrettable but the agency most affected by that decision will be Aer Rianta. A bad practice has developed of setting imprecise vesting dates for the commencement of legislation. However, the vesting day of this Bill is the date on which Aer Rianta will be hit by the triple whammy of paying rates and corporation tax, paying for the assets for which it has already borrowed and paid and paying a dividend, similar to what it has always paid, to the State. This will cost the company about £30 million extra, which is probably the real object of the legislation, and it is better that it should happen this year rather than next year when the fourth undercut — the abolition of duty free sales — occurs.
A vesting date of 1 September offers a reasonable period for the company to get its affairs in order and I ask the Minister to accept the amendment.
I second the amendment.
I also support the amendment.
The amendment is well grounded. I will accept the spirit of it with amendments Nos. 7, 8 and 11.
Those amendments were not put down by the Minister.
However, they relate to the triple whammy to which the Deputy referred.
One of them is in my name and I wish to speak on it.
I intend to include a vesting date in the remarks I will make on those amendments. I believe I have good news for the Deputies.
I can withdraw the amendment. Can the Minister tell us the date?
It is 1 January, 1999 and it is tied up with an amiable resolution of matters between the Minister for Finance and me which I will outline later.
Acting Chairman
Does the Deputy wish to withdraw the amendment?
The date mentioned by the Minister is somewhat later than I anticipated.
It is for a purpose.
The Minister is trying to sell a deferred date on the basis that it might resolve other problems. Given that there has just been a vote, I will withdraw the amendment.
Amendment, by leave, withdrawn.
Acting Chairman
Amendment No. 6 is related to amendment No. 5. Amendments Nos. 5 and 6 can be discussed together. Is that agreed? Agreed.
I move amendment No. 5:
In page 11, between lines 22 and 23, to insert the following:
"(4) Save as authorised by the following subsection, the Minister shall not transfer or alienate any of his or her shares in the company.".
The Minister should not have the right to transfer or alienate his or her shares in the company without legislative authority. When this issue was discussed on Committee Stage, the Minister said the authority already existed in the Bill. She and I had an argument about this because she would not point out where it was included in the Bill. I have failed to find it and others whom I asked to examine the Bill also failed to find it. There is nothing specific in the legislation. If there is, I will be happy to withdraw the amendment. If not, it is an important issue that should be addressed in a legislative manner. Perhaps the Minister will expand on her remarks on Committee Stage.
I said on Committee Stage that the nature of the controls imposed on Aer Rianta in the Bill meant that any future plan to sell shares would have to be brought before the Houses of the Oireachtas. I also gave a commitment to give further clarification of the matter on Report Stage.
The advice I received confirms my remarks on Committee Stage. The key point is that the level of State control acts as a deterrent to the sale of shares. The Bill is silent on the express issue of the sale of shares in Aer Rianta by the Minister for Finance or on the company issuing shares to a third party. However, as was found to be the case with regard to Telecom Éireann, it would be impossible for the Minister for Finance to sell shares in Aer Rianta without first adopting amending legislation with regard to the extensive range of ministerial controls on the company. Nobody with an interest in acquiring shares in Aer Rianta would purchase such shares while existing legislation provided for the level of ministerial control contained in the Bill.
The Deputy will recall that, as Minister of State, he introduced amending legislation in 1996 with regard to Telecom Éireann. That legislation permitted the acquisition of a strategic partner, changed the composition of the board with regard to worker directors and facilitated the ESOP arrangement. I am assured that a proposed sale of shares in Aer Rianta would have to be brought before the Houses. It could not happen otherwise because existing legislation would not permit it. Nobody could acquire the shares while they are held by the Minister for Finance on behalf of the State.
The Minister is still non-specific about where there are powers to prevent the sale of the shares without reference to the House. The legislation permits the establishment of subsidiary companies by Aer Rianta. Subsidiary companies could be set up to run Cork, Dublin and Shannon Airports and it is possible to sell such subsidiaries, as was seen in the case of TEAM Aer Lingus and Cablelink, without reference to the House. They can simply be put on the market and sold.
I wish to ensure that if there is a decision to sell Dublin Airport to a private operator in the future, the Minister will have to seek the approval of the House for that decision. If the House so decides, that will be the expression of the will of the people. At present the Minister could put the various sectors, including the core activities of the company, into subsidiaries and subsequently sell the subsidiaries. I am not suggesting that is the Minister's intention, but I want to ensure some malign Minister in the future——
Such as the Deputy who made the suggestion.
——would not do that. I assure the Minister I suggested no such thing. If the Minister cannot point out where the powers are to prevent the sale, will she accept these amendments to ensure such a sale cannot take place?
The Deputy raised two issues, Aer Rianta and the subsidiaries. In regard to Cablelink, movement towards the sale of that company by Telecom Éireann was started by Deputy Dukes and we picked up on that. He had encouraged Telecom to either invest or divest, neither of which it did, but that is being done now. On Aer Rianta, the power of control vested in Aer Rianta legislation would not allow shares to be sold.
Where is that power?
Acting Chairman
I do not wish to encourage too many interruptions.
The level of State control acts as a deterrent. Who could buy shares when they are held by the Minister for Finance?
If the Minister put them up for sale anybody could buy them.
It could not be done.
Deputy Stagg's point is that the matter should come back to the Dáil rather than to the Minister.
As in the case of all semi-State bodies, it would have to come back to the Dáil. It is the subsidiaries that are in question. Amendment No. 6 seeks to ensure that shares of a subsidiary — the Deputy referred to Cablelink and TEAM — carrying on a principal object of the company shall not be sold. Aer Rianta carries on its principal objectives, the management of State airports. Ministerial approval would be needed to establish a subsidiary and transfer a principal function of the company to that subsidiary. The company, therefore, cannot dispose of its airports, as suggested by the Deputy. If Aer Rianta, through its subsidiary, Aer Rianta International, purchased and managed an airport at Dusseldorf, Birmingham or elsewhere, the Deputy's amendment would have the effect of preventing the company from disposing of that investment, which is an overseas investment. Aer Rianta would become a company that could accommodate airports abroad but could not dispose of them.
The Minister has proven my point.
Acting Chairman
I advise Deputy Stagg this is his final intervention.
The Minister said that subsidiaries may be set up and that any part of the core activity or otherwise of the company may be transferred to that subsidiary. Without reference to the Dáil and without legislative requirement, the Minister could sell that company. I want to ensure that is not possible, that legislation will be required before Shannon, Cork or Dublin airports could be sold. In the case of TEAM, it had to go through all the channels, but legislation was not brought before the House to sell either TEAM or Cablelink. I want to ensure legislation would be required and the proposal would be dealt with in detail before the Dáil if Dublin, Shannon or Cork airports were put up for sale. In regard to TEAM, while the Minister was forthcoming in recent days on the issue, I would like to have had a debate on the desirability of the sale and legislation should have been passed to enable it to take place. I intend to press the amendments on foot of what the Minister has said.
May I reply to the Deputy's comments?
Acting Chairman
Unfortunately, the Minister does not have the right to reply. I will, however, allow a very brief intervention.
Aer Rianta carries out its main objectives, managing State airports, and if it wished to divest itself of that objective legislation would have to be introduced.
We are putting——
Acting Chairman
We are breaking ranks now.
Only slightly. We are putting in place legislation that will allow Aer Rianta to be broken up into subsidiaries which would carry on its core activity.
That is not so.
Under this legislation a subsidiary of Aer Rianta may be set up and the Minister could give that subsidiary the task of running Shannon airport. At some stage in the future that subsidiary could approach the Minister with a view to selling Shannon airport to the private sector and there would be nothing to prevent the Minister from agreeing to that.
The Bord na Móna Bill is completely different.
I am aware of that. Amendment put and declared lost.
I move amendment No. 6:
In page 11, between lines 38 and 39, to insert the following:
12. ——The company shall not alienate a share in a subsidiary carrying on a principal object of the company within the meaning of section 23.
Amendment put and declared lost.
Acting Chairman
Amendments Nos. 7, 8 and 11 are related and it is suggested that they be taken together, by agreement.
I move amendment No. 7:
In page 11, after line 49, to insert the following:
"(3) In the first financial year the dividend shall not exceed the value of the assets transferred under section 14 of this Act.".
This issue, which was debated on Committee Stage, is the most important financial aspect of the legislation from Aer Rianta's perspective. I wish to ensure that in the first year compromise is reached on the dividend which would take into account that Aer Rianta would be asked to pay for its assets, for which it has already paid through borrowings, repayments and depreciation. Essentially this legislation was designed not to bring a financial windfall to the Exchequer, which would happen, but rather to change the corporate legal structure of the company. To avoid that happening, leaving aside that the company would be liable for rates to local authorities and corporation tax, to which it was not previously liable, the first year concession should be made.
Given the debacle about duty free and the failure of the Minister, Deputy McCreevy, to even get a study not to speak of a derogation, which is bitterly disappointing and has negative ramifications for the company, I ask that this amendment be accepted. The effect of amendments Nos. 7 and 8 would be to combine the dividend and asset requirement into one payment which would not exceed £14 million, the annual payment made in recent years.
In the first financial year.
Yes.
Debate adjourned.