Dáil Éireann debate -
Thursday, 13 May 1999

Vol. 504 No. 6

Telecom Éireann ESOP-IPO: Motion.

Minister for Public Enterprise (Mrs. O'Rourke)

I move:

"That pursuant to section 8(2) of the Telecommunications (Miscellaneous Provisions) Act,1996, as amended by section 2 of the Postal and Telecommunications Services (Amendment) Act, 1999, Dáil Éireann approves the general principles of: (a) the Telecom Éireann Employee Share Ownership Plan, to be established pursuant to section 8(3(b) of the Telecommunications (Miscellaneous Provisions) Act, 1996; and (b) the Initial Public Offering of Shares in Telecom Éireann, to be carried out pursuant to sections 8 and 9 of the Telecommunications (Miscellaneous Provisions) Act, 1996, as amended by sections 2 and 9 of the Postal and Telecommunications Services (Amendment) Act, 1999; copies of which principles were laid before Dáil Éireann on 21 April 1999 and on 7 May 1999 respectively.

This motion seeks the approval of the House for the general principles pertaining to two separate disposals of State owned shares in Telecom Éireann, namely, the sale and transfer of a 14.9 per cent shareholding under the employee share ownership plan and the sale of a further tranche of shares in the forthcoming initial public offering of the company.

I am pleased to tell the House that Telecom Éireann will announce cuts of £145 million in telephone bills this afternoon. These cuts involve significant reductions in call costs to the US and the UK and is part of the continuing downward pressure on prices in the telecommunications sector which has seen business and the consumer winning out. Further cuts will also be announced.

The broad terms of the ESOP have been common knowledge for the past year since agreement was reached with the union coalition representing employees in the company in March 1998. As the House is aware, the Telecom Éireann ESOP provides that employees will pay £190 million for 9.9 per cent of the company with an additional 5 per cent acquired in return for company transformation. I note many right wing economic commentators say 14.9 per cent of shares in the company are being given to employees of Telecom Éireann. It appears to be left to the union and me to explain that the employees will pay for the shares. It is necessary to say this very clearly because one cannot issue a correction every time an incorrect comment is made.

The employees are to receive a shareholding of 14.9 per cent in the company which will be transferred to an employee share ownership trust. A total of 9.9 per cent of the State's shares in the company will be transferred to the ESOT from the outset on payment to the Exchequer of the agreed price. The sale of the 9.9 per cent shareholding is a commercial transaction and the agreed price was based on a valuation of the company which was carried out by expert financial consultants engaged by my Department at the time. An additional 5 per cent will be transferred to the employees in stages on the basis of progress in achieving efficiencies in work practices and cost savings under the Telecom Éireann partnership agreed in 1997 between management and unions in the company.

The price of the 9.9 per cent will be £190 million payable to the Exchequer by the ESOT. The ESOT will source its funds in the following manner. The company has agreed to make a contribution of £100 million to the ESOT which the company is satisfied represents fair value for employees agreeing to contribute to their pension scheme and waiving their right to certain bonus payments – a concession by employees which is rarely referred to by commentators. As part of their contribution to the agreement, the employees are paying 5.3 per cent of salary as an employee contribution to the pension fund. Heretofore, the company made the full contribution. A total of £60 million will be raised by the ESOT by way of commercial loan. This loan will be secured against shares held by the ESOT and will be repaid out of dividends received by the ESOT on its shareholding. The ESOT will make a final payment of £30 million, conditional on a company valuation of at least £2 billion, on a basis which will be without recourse to the company or the State and will take place one year after the date of the initial public offering.

Final payment will be secured against an appropriate percentage of the shares held by the ESOT and the ESOT loan will provide flexibility to increase its borrowings to facilitate the making of the final payment. The ESOT will receive dividends on its shareholding from the closing of the ESOP transaction.

The phasing of the transfer of the 5 per cent stake is linked to progress in implementing the Telecom Éireann partnership which was agreed between the company and its unions in 1997. The broad terms of the ESOP which were agreed in March of last year provided that one third of the 5 per cent stage would be transferred to the ESOT from the outset, with the remaining two thirds being transferred in March and December of this year, subject to verification by the company's chief executive that transformation continues to be implemented satisfactorily. At the time, it was envisaged that the ESOP transaction would be concluded by the end of 1998.

However, as the House knows, the Postal and Telecommunications Services (Amendment) Act, 1999, which contains a technical provision to facilitate the ESOP, was signed into law only last month. In addition, the definitive legal documentation to give effect to the ESOP took longer to finalise than had been expected by all the parties involved. We have, therefore, passed the date by which the second tranche of the 5 per cent stage was scheduled to be transferred to the ESOT and on the basis of progress to date in implementing the Telecom Éireann partnership, two thirds of the 5 per cent shareholding will be transferred to the ESOT at the closing of the ESOP transaction.

The ESOT is also entitled to nominate a director for appointment to the board of Telecom Éireann. The unions in Telecom Éireann, through the ESOT, will be nominating Deputy Spring, for appointment on the board of the company as ESOP director. I have already said, here and in the Seanad, how pleased I am with the unions' choice in this regard. Deputy Spring is a highly competent and professional person, and I have no doubt he will be seen as such by the investment community. As I said on previous occasions, this ESOP is an important and innovative agreement, fully in line with the spirit of Partnership 2000 and in accordance with the Government's An Action Programme for the Millennium.

Last July, the unions in Telecom Éireann conducted ballots of their members on the agreed principles of the ESOP, all of which resulted in overwhelming votes in favour of the agreement. Since then, detailed work on the drafting of the definitive legal documentation to give effect to the ESOP has been ongoing and these are now in place, ready for signing by the parties. The trust deed incorporating the rules and conditions governing ESOP has also been finalised and approved by the Revenue Commissioners.

The ESOT has also negotiated a loan agreement to part finance the purchase of the 9.9 per cent shareholding. This is a commercial loan and is without recourse to the company or the State. The ultimate objective of the ESOP is to transform Telecom Éireann into a world class telecommunications business through cost reduction, more flexible working arrangements and improved delivery of service to customers.

Before I refer to the wider context in which the Telecom Éireann ESOP and the forthcoming initial public offering are being undertaken, I wish to address the general principles of the IPO. Deputies will recall that during the debate in this House on the Postal and Telecommunications Services (Amendment) Bill I accepted an amendment which gives rise to the motion now before the House and which provided for the approval of Dáil Éireann to be obtained before the State disposes of shares in Telecom Éireann. The text of that amendment was subject to some discussion at the time and I made it clear that for practical and legal reasons and for reasons of commercial confidentiality I would not, and cannot, discuss the terms, that is the specific details, of the IPO. I do not know them yet. I trust Deputies will appreciate that this remains the position. Accordingly, as required by the Act, I seek approval of the House for the "general principles" of the sale.

As a practical matter in flotations of this nature, many of the details involved will not be decided upon until much closer to the IPO date and some issues, such as the definitive offer price and the ultimate split between the retail and institutional offerings, will not be decided upon until immediately prior to the flotation on the various stock exchanges. I have, however, made clear in the general principles which were laid before the House that a minimum of 20 per cent of the shares of Telecom Éireann will be sold in the IPO. Clearly more than 20 per cent will be sold; it is required to indicate a minimum figure. Market conditions and the level of demand for the shares will be critical factors in the determination of these issues.

While I cannot give an exact timetable as to precise dates because they have yet to be decided, I am able to indicate a broad outline of the planned schedule. The publication of the final prospectus will take place in the middle of June, together with the launch of the application phase of the retail offer and the mini prospectus. Application forms will be issued to all who have registered an interest. In addition, there will be the launch of the institutional offer and the management roadshow commences. By the end of June/early July the retail offer closes, the institutional offer closes, the Government will decide on the final share price and will announce the allocation to retail investors and trading commences on the stock exchanges.

Shortly before the launch of the application phase for the retail offer and of the institutional offer, the Government, in conjunction with its advisers, will determine a price range for the shares. This price range will, of course, be without prejudice to the final share price to be determined by Government but it will serve as a guide to prospective retail and institutional investors and will be published in the prospectus which I anticipate will be issued in mid June. Once the prospectus with the share price range has been published, the sales forces from the syndicate of banks will market shares to institutional investors around the world. A process which is referred to as "bookbuilding" gets under way, that is, institutional investors indicate the volume of shares they are prepared to subscribe for at different prices and a book of orders is built up. This intensive marketing campaign is accompanied by presentations by the senior management of Telecom Éireann to institutional investors. The marketing campaign creates a healthy competitive process among the institutional investors stimulating demand for the shares in line with one of my objectives for the IPO to maximise the proceeds to be returned to the Exchequer from the sale.

The share price for the institutional offer will be determined having regard to the results of this bookbuilding exercise immediately after the institutional offer closes, which is expected in late June or early July. The retail offer will have closed some days earlier so that the level of retail demand can be included in the book of demand and to enable final work to commence on allocation policy. At that stage, when there is a clear picture of the level of demand for Telecom Éireann's shares from both retail and institutional investors, the Government in conjunction with its advisers will decide the exact proportions to be sold to the retail and institutional sectors and the price of the shares.

With regard to the retail offer, I am considering whether any incentives should be offered to retail investors and our advisers are looking at precedents in Ireland and elsewhere in this regard. Clearly, the question of whether there should be incentives and, if so, what type, cannot be considered in isolation, and the final decision in this regard will be made later when levels of interest become clearer.

With regard to the proportion of the shares to be offered to retail investors, one of the objectives of the IPO is to promote wider share ownership in this country. To this end I launched a share registration campaign last month. Members of the public are being offered the opportunity to register their interest in the retail share offer and those who register such an interest will receive priority in the allocation of shares over those who do not register in the event of excess demand for shares.

A major information programme was also initiated in conjunction with the registration cam paign. This included a mailshot to the 2.8 million adults on the electoral register and a major advertising campaign. The Telecom Éireann share information office, a special service to provide information and support to retail investors and to accept registrations, has also been opened.

As was pointed out in the debates in March on the IPO Bill both in this House and in the Seanad, we are not a shareholding nation. Indeed, the idea of investing in shares is foreign to many people. However, I wish to ensure that every citizen in the State is given a fair opportunity to participate in the Telecom Éireann IPO. They must, therefore, be made fully aware of the offer through the extensive media campaign now under way and be given the information and support they require to come to an informed decision on whether they should participate.

While the details of the retail offer have yet to be decided, I confirm that there will be a significant tranche of shares for retail investors. I would like to see a greater allocation to the Irish public than heretofore, but this will be decided by Government at the appropriate time. It would also be my intention to structure the retail offer with the small investor in mind. We want to get the best possible value and there must be an equitable balance between the retail institutions and offerings. Ultimately it is the market which will decide the value of the company. Institutional investors will, therefore, be invited to bid for shares.

The general principles of the IPO also state that there will be no golden share exercised by the Government post-IPO. The State will be no different from any other shareholder. Three further issues arise. Apart from the Irish Stock Exchange with a parallel listing on the London Stock Exchange, a full listing for Telecom Éireann shares will also be sought on the New York Stock Exchange. This will address aspects such as e-commerce, IT, the call centres and so on.

Under the strategic alliance agreement of 1996, KPN/Telia have an option to acquire a further 15 per cent shareholding in Telecom Éireann this year for £200 million. KPN/Telia already holds a 20 per cent shareholding in the company which it acquired in 1996 for an initial payment of £183 million. A further amount, representing 60 per cent of the rise in value of KPN/Telia's shareholding above a certain threshold, is also payable to the State. I believe KPN/Telia will exercise its 15 per cent option but the precise timing of such exercise is the subject of ongoing further discussions.

The price stabilisation mechanism is commonly used in the UK and elsewhere to support a more orderly after-market for new issues or offers of securities. It has the effect of increasing the confidence of investors and the vendor in a flotation. It is already permitted in London and New York and to make it available on the Irish Stock Exchange, the Companies (Amendment) (No. 3) Bill, 1999, sponsored by the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, was passed by the Oireachtas last night. Priority was given to the enactment of this legislation to provide the option for incorporating a stabilisation mechanism in the Telecom Éireann IPO, should the Government so desire at the appropriate time.

I now turn to the wider context in which the IPO is being undertaken and in which the Telecom Éireann ESOP was concluded. In recent years the focus of Government policy has centred on the need to introduce strong and effective competition as this is the best way to ensure consumers, business and residential, enjoy the benefits of the full range of high quality services at competitive prices. To this end the market has been fully opened. As I indicated in recent debates, we focused on liberalising the market and stimulating competition because it is important for this country to have a modern, high-quality telecommunications sector. Within this new liberalised environment we need a strong and competitive Telecom Éireann if our plans for Ireland are to be realised.

The ESOP is of major importance to Telecom Éireann, its employees and customers. There is still, however, an element of begrudgery. On the sum of £190 million, it is as if 14.9 per cent of the shares have been handed over to Con Scanlon in the CWU free of charge. That is a lie and anyone who writes this is peddling incorrect information. Some 9.9 per cent of the shares have been paid for. The remaining 5 per cent are linked to the transformation process. The ESOP brings important responsibilities as well as benefits. If one has a stake in a company, one will want it to work in order to secure dividends. The employees of the company are rising to the challenge.

The IPO is a logical follow-on from the strategic alliance with KPN-Telia and the ESOP which have changed the ownership structure of the company. There is a broad level of consensus for the flotation. This is testament to our evolving strategy towards the company and the sector in general in recent years. Approximately 980,000 have registered and are seeking more information on the flotation. I will listen with interest to what my colleagues have to say. I commend the motion to the House.

Mr. Yates

We are dealing with two issues, the ESOT and the IPO. The Minister accepted an amendment tabled by Deputy O'Shea that following the passage of the telecommunications legislation providing for the IPO a motion should be tabled in response to queries raised about a number of issues. It was my expectation that the Government would determine the number of shares to be made available, be it 20 per cent or 50 per cent, to retail and institutional investors. We are being asked, however, to approve the motion without knowing what the Government's proposals are.

Mrs. O'Rourke

Not until the end of June.

Mr. Yates

This motion should be part of a sequence of events. We should see the Government's hand. The issue of price will be dealt with later. My party's approach – the Minister's rhetoric strongly points in the same direction – is that Telecom Éireann is a public asset owned by its 1.1 million subscribers. When driving home the other day, a listener rang Eamon Dunphy's radio programme or "The Last Word" to ask why do we have to buy something that we already own? This is not akin to selling shares in Sherry Fitzgerald or the EBS or oil company stock. It is the first time we have gone down this route. Depending on demand, if necessary, almost all the shares should be sold retail.

I have proposed that everyone who registers should be able to buy up to £3,000 worth of shares. The Minister implied on "Morning Ireland" that under my proposal anyone who applies for less than £3,000 worth of shares would suffer.

Mrs. O'Rourke

When I landed in Luxembourg all I had was a copy of the Deputy's statement.

Mr. Yates

Under my proposal Kate and Mary would be able to buy £100 or £200 worth of shares but no one would be able to buy £50,000 worth. It is clear from the Minister's speech and her high-powered £40 million advisers, Merrill Lynch and AIB Capital Markets, that the argument is that the price will not be achieved unless institutional shareholders bid. It is my advice that the share issue will be well oversubscribed.

Cablelink was valued initially at £150 million to £180 million. This increased to £240 million to £260 million and subsequently to £350 million. It was sold for £535 million.

Mrs. O'Rourke

A great price.

Mr. Yates

It was, but Telecom Éireann is valued at £5.5 billion. On the day the ESOT was launched it was valued at £2 billion. It could make £8 billion or £9 billion. The one certainty is that the share issue will be well oversubscribed. The Minister should make a political decision that the lion's share will be allocated to retail investors to whom a minimum of 35 per cent – the Minister can sell 50.1 per cent – should be made available. Judging from what happened in the case of British Telecom and in other European states, this is the best opportunity to sell shares to the public. I understand that once bidding starts there will be a windfall profit. There will be a minimum 17 per cent mark-up. It could be as high as 100 per cent.

The argument may be made to the Minister that it would be easier to raise money from institutional investors who own blocks of shares of, say, 4.7 per cent or 5 per cent to meet future capi tal needs of Telecom Éireann. I totally disagree with that argument because there are so many structures for rights issues and bonds and so many new financial devices in place for Telecom Éireann in its future plc life and when it is quoted on the Nasdaq and these exchanges. There will be so many bankers and equity institutions throwing money at Telecom Éireann, that will not be an issue.

One of the things about ESOT is that they cannot sell the 5 per cent within five years and the 9.9 per cent within ten years. The firmer the long-term loyalty of the shareholding base, the better. Mrs. Murphy is far less likely to go for a return whereas if a stockbroker in Manhattan, New York, buys shares, he will look to buy other shares the following week and will sell. Stockbrokers will simply look at Telecom Éireann for a killing – a quick buck and a speculative gain. We are treading historic territory in terms of democratic ownership. The rhetoric is going in one direction but the Minister's advisers are going in a different one – they are buck building. Some 35 per cent should go to the public. That may be somewhat short of the £3,000 but even if it was £2,500 or £2,000, it would really boost registration and give effect to what the Minister wants.

I have read reports about a row pertaining to a matter to which the Minister did not refer in her speech. She said nice things about Deputy Spring and so on. I understand Mr. Cassells and ICTU have been in and out of Government Buildings saying they want to retain one worker-director in the new company. I thought the Minister might mention that in her speech because when debating Committee and Report Stages—

Mrs. O'Rourke

I will answer a question on that.

Mr. Yates

—she said she was about to have meetings. The Minister was very open and supportive of that point of view. I read in a report in the Irish Independent that Department officials said this could not be done. I will get the Minister the report on the toing and froing on this issue if she wants it. I would like clarification on whether a single worker-director will be retained on the board after the IPO is complete? If this cannot be done, what is the impediment?

The report states that senior officials at the Department of the Taoiseach and the Department of Public Enterprise are to meet Telecom Éireann trade union leaders to try to defuse a dispute over worker-directors and that the unions have threatened to take industrial action. It goes on to state that it appears the Department of Public Enterprise has serious difficulties now with the idea of worker-directors. The Minister told us in good faith she would deal with this issue so what is happening?

Mrs. O'Rourke

I will tell the Deputy exactly what is happening when I answer questions.

Mr. Yates

I also strongly advocate in regard to the IPO that there should be a loyalty bonus for those who retain the shares and stay with the company for a five year period. The Minister did not mention that in her speech. Since we are accepting the bona fides of this by not opposing the motion, the Minister should include such a loyalty bonus. That is even more important for the company than the discount issue. What period does the Minister have in mind? What are the terms of any loyalty bonus?

I do not need to rehash the difficulties with the former and new chairmen and vice chairmen – difficulties which were self-inflicted. Mr. Thompson did not last very long despite what we were told in the beginning. I know the Minister is greatly discomfited by any reminder of this saga, and I hope she will be more sure-footed in future.

My key point on that aspect of the IPO is that a minimum of 35 per cent of the stakeholding be sold. That means we will have to increase the total amount sold to the public, that the balance only should go to the retail sector, that retail institutional space is based on that political decision, that an amount up to £3,000 based on the final registration amount will be a prerogative in that and that there is a loyalty bonus for those who stay after a certain number of years.

The Minister was a little touchy or defensive in her speech about any criticism of the way the ESOT has transpired. She even went as far as to say she was the only one to defend it. I am not in the business of defending the Minister's decision; that is not my job. My job is to probe the Minister's decisions. I actively support employee shareholding in the public and private sectors. It is a very good way of giving a stake to people in their own productivity in what are very competitive enterprises. In many businesses, the people are the company.

Does the Minister accept her negotiation of ESOP or ESOT provides a precedent or yardstick by which future ESOPs will be considered? In other words, is the Minister setting out as her stall the 5 per cent and the 9.9 per cent? We have the One World Alliance and the potential IPO the Minister has advocated for Aer Lingus, subsequent to the One World Alliance. The position as regards Aer Rianta is up in the air as is that pertaining to the Great Southern Hotel Group, which has more than 800 employees. Electricity is also moving into a bold new world. Is the Minister, as a representative of Government, saying this is the way we intend to proceed? I do not mean something warm, rhetorical and dripping with sincerity but something concrete like the 9.9 per cent.

Mrs. O'Rourke

This is not the Cabinet.

Mr. Yates

Other employees would like to know where they stand? Has a precedent been set? The Communications Workers' Union has more than 8,000 members from An Post, for example. Where do they stand? Is it one rule for one and a different one for others? The Minister said they paid for the shares. Of the £190 million, Telecom paid £100 million.

Mrs. O'Rourke

There was a pension cost.

Mr. Yates

There were no salary deductions for the ESOT.

Mrs. O'Rourke

There was a pension cost.

Mr. Yates

I am saying that in the interests of total clarity. Let us say this goes for a larger figure than £5.5 billion, the right wing correspondents will become a little more uptight.

Mrs. O'Rourke

What will they say about KPN-Telia?

Mr. Yates

I am coming to that. The difference between the deal the Minister did and KPN-Telia is the 60 per cent clawback. I agree with ESOT, the price at which it was struck and the terms on which it was done. Why did the Minister not include a clawback? At the time the shares were valued at £2 billion, and we know the current estimate is £5.5 billion and rising. We are going to put a value on the shareholding which could be astronomically higher than was envisaged the day the Minister signed the deal. The Department officials the same people now advising the Minister, were crafty enough with KPN-Telia to include a clawback provision.

Mrs. O'Rourke

On some of it.

Mr. Yates

I will not personalise the issue. Was the Minister not determined to see ESOT through and to safeguard the rights of workers but that if market forces show it is worth much more than we could have speculated, we should do what we did with KPN-Telia and include 50 per cent clawblack? I think a clawback might have been a prudent measure and would have allowed the Minister defend herself against the criticisms now being made.

Mrs. O'Rourke

The Deputy does not really like what the workers got.

Mr. Yates

No, the Minister should not misrepresent the point I am making. I like the deal, but the Minister is now a sitting target for putting a value on the shares which is grossly inaccurate and understated.

Mrs. O'Rourke

The Deputy will have to bring back Deputy Michael Lowry.

Mr. Yates

I think the bird has flown and that the Minister has been left holding the baby as she now sees that a clawback might have been prudent. However, no such provision was made.

Mrs. O'Rourke

Consult with Deputy Michael Lowry.

Mr. Yates

In her speech the Minister said that "A further amount, representing 60 per cent of the rise in value of KPN-Telia's shareholding above a certain threshold is also payable to the State". Why did the Minister, on whatever threshold was deemed appropriate, not put that in place? I look forward to the Minister's answer and her perspicuous wisdom on it.

Mrs. O'Rourke

When it is all over will the Deputy come over and look at the details?

Mr. Yates

It would have safeguarded the interests of the public and of taxpayers. From the ESOP point of view, of course people could get a loan, as they do when buying a house. If the value of the house shoots up, a person can get an additional loan. The Minister could have got an additional £40 million or £50 million for taxpayers which would have done much for many people.

Mrs. O'Rourke

We could have got a lot in 1996 as well.

Mr. Yates

For much of this the Minister is, fortuitously, in the right place at the right time, despite the difficulties with the directors, and I wish her luck.

What is important in terms of the role of a Minister is not the things civil servants allow one do in his or her name, but the points of difference the Minister makes because they go in a certain direction. This is the key point in how Ministers make a difference and make their mark. There are many photo opportunities and things to be done and signed, but basically if the current Minister was not in office somebody else would do that work.

Mrs. O'Rourke

Not in quite the same way.

Mr. Yates

The Minister can make her mark and be absolutely decisive by ensuring the windfall forms an historic contribution towards an investment in public transport. The Minister knows she is running into the sand in terms of money for CIE which needs borrowings for rail safety and for Luas, the development of which necessitates investment by the private sector.

Mrs. O'Rourke

Why not?

Mr. Yates

The Minister should make her mark and secure the money for transport.

Mrs. O'Rourke

Does the Deputy not like the private sector?

Mr. Yates

I like the private sector, but public expenditure must be invested in public transport. The private sector will only invest at a price and for a profit. If the Minister wishes to make her mark she should put down a clear marker by say ing she will earmark at least £1 billion of the proceeds for the purpose of public transport. That would be a political decision which could not be taken by the people in the Department of Public Enterprise and which would require the Minister to deliver at the Cabinet table.

Mrs. O'Rourke

Did the Deputy ever hear of the Minister for Finance?

Mr. Yates

We will support the IPO and ESOT. We are disappointed that we do not have the Government's memorandum of decisions in relation to all the points I have raised.

Mrs. O'Rourke

The Deputy is disappointed he is not in Government.

Mr. Yates

The proceeds should be used, not to add them to the amorphous body of Exchequer revenue, but to address our greatest public need, namely, our infrastructural deficit, traffic gridlock and the need for a proper public transport service.

Mrs. O'Rourke

The Deputy must never have met a Minister for Finance.

Mr. O'Shea

Tá áthas orm seans a fháil labhairt sa díospóireacht tábhachtach seo. Tá an díospóireacht ar bun mar ghlac an tAire le leasú uaim nuair a bhí an Bille os comhair na Dála. Molaim an tAire as ucht sin.

This debate is taking place because the Minister accepted an amendment of mine when the amending legislation was before the House. I praise her for that as it strengthened accountability to the House, something which is important as in some ways the role of the House can be weakened through some of the legislation passed by it.

An issue of very great importance is worker participation. Leaving the ESOT and ESOP to one side, I am referring to worker representation on the board of Telecom Érieann which will be a private company given that the majority of shares will have moved from the State by the end of the transaction. There is a wider question in relation to this matter and I hope that what the Minister has agreed to in this context will become Government policy in the event of further privatisations of public enterprises and that a debate such as this will take place when a motion has to be passed by the Dáil approving further proposals. At what stage are discussions between Congress and the Department of the Taoiseach in relation to worker participation on the boards of public enterprises which become privatised? I think the Minister agrees that a comprehensive approach in this regard is necessary. Legislation is required to ensure that in all future sales provision is made for a worker representative on boards. Here we are dealing with a specific situation which must be rectified in the context of the smooth running of this exercise.

Obviously, I share other Members' admiration of Deputy Spring regarding representation in the context of ESOT. However, another issue is the principle of worker participation. I would extend the concept beyond public companies which are privatised to all boards, although this is a wider question which does not relate to the responsibilities of the Department of Public Enterprise. It is extremely important that there is worker participation on the board of this changed company and that we set a precedent for future developments.

The Labour Party will not vote against the motion, but another issue which perplexes me is why it was so important that this company should be the subject of these transactions at this time. Telecom Éireann is performing well and making a profit, but a great deal of taxpayers' money has been invested in it. What is the reason for doing this now?

The asset belonged solely to the people until the strategic alliance partner was sold a 20 per cent share. I understand Deputy Yates's question about why, if we own it, we need to buy it again, but that is a different question. It has always struck me during my political life that there has been a shortage of equity capital in Ireland. I welcome the Minister's widespread approach to citizens and I am pleased that 2.8 million people have invited to buy shares in the company. The Minister must be the judge of whether the number of shares available to each person is sensitive commercial information. However, some indication of what will be available would be useful. It is encouraging that 980,000 people—

Mrs. O'Rourke

It is nearing one million as we speak.

Mr. O'Shea

It is increasing all the time. That is welcome because it means the people will own a portion of the asset in a personal as opposed to the collective capacity in which they owned it up to now.

I share Deputy Yates's view that the percentage of shares made available to citizens should be as large as possible and the Minister should make every effort to meet demand. Obviously, the growing number of respondents will not reflect the number of people who will own shares. That said, it is imperative people who indicate a wish to buy shares and who undergo all stages of the process should have their applications granted. The loyalty bonus is a good idea. People will have the option of disposing of their shares if they wish. For those who hold their shares for a specified period, a graduated loyalty bonus is another option the Minister should examine.

This is a major transaction in the history of the State and a number of things are being done for the first time. If a high proportion of people seek to buy shares, their demands should be met. Perhaps the Minister would indicate the level of shares which might be on offer to people. It would be self-defeating exercise, if there were many applicants and the number of shares offers was small. If many people apply, it should be possible for them to avail of a substantial number of shares if that is their desire. If it is capped at a certain level, there could be a problem.

How will the effective privatisation of Telecom Éireann benefit the consumer? The Minister had good news for us when she announced that there is to be a reduction in the cost of telephone calls to the US and the UK. However, on a related issue, there have been stories told about the recent Cablelink sale concerning the initial valuation of the company. What valuation did Rothschilds put on Cablelink when the matter was first raised at Cabinet? It has been alleged that the sale of the company was made at a level well above the market value. If so, the consumer will pay because it will result in higher prices. There is also the question of necessary investment, and we do not want to see dominant positions developing. This is something which should be addressed.

What is important is how the initiative will benefit the consumer. We tend to talk too much about people and citizens and what they consume and not enough about their rights and responsibilities. I am concerned that we talk a great deal about certain exercises benefiting the consumer when there is a wider agenda for those people as citizens. That is fundamental to the issue we are debating. Will the citizen benefit from this initiative?

I welcome the ESOT exercise as a trade unionist and bearing in mind that the Communications Workers' Union negotiated and agreed the package. On the other hand, I do not see it being a precedent for future privatisations. Telecom Éireann is an extraordinarily valuable asset which is part of the technology driving our economy, and there is huge potential in terms of its development and the range of services it can supply to consumers. From the sounds coming from both parties in Government, it seems there will be other privatisations. The Labour Party will take each as it arises and deal with it from there. However, I do not believe we will see too many packages like this one. Are there any plans for the Electricity Supply Board? Some of its employees are concerned about how the future is shaping up and what may develop.

We will not vote against the motion. We welcome the precedent of bringing the principles of the sale before the House. I hope the Minister will endeavour to convince her colleagues in Government that the Oireachtas should follow this course in future. There is the shareholding aspect and there is the other aspect of the ESOT and worker participation. The Minister has made no provision here for worker participation. The Government should address this and take action on it across the private and public sectors. Worker participation should become a feature of all companies in the economy.

The present situation calls for a resolution and the Minister should bring it to an early conclusion. Provision was not made for it recently when the Bill was passed so I am not certain how the Minister intends to deal with this issue when a resolution is reached with congress. In other words, how does the Minister set out the legal imperative when her legislation has already been passed? My point, with which the Minister would probably agree, is that the way to go forward is to make it a general provision this year when a publicly owned company is privatised. That legislation would obviously apply to Telecom Éireann without having to amend the Minister's legislation.

We should reflect on the fact that we have reached a stage with the IPO and the ESOP that effective ownership of Telecom Éireann has moved out of the public sector. The State is no longer the majority shareholder. I ask the Minister to state the position as regards the shares which will remain after this share offer. Obviously the value of these shares will escalate rapidly and there would then be an opportunity to return to the market and obtain a great deal more for them. Would the Minister be aiming those shares at the institutional sector or the retail sector? There will be a surprisingly high level of take-up from ordinary citizen investors here. If the Minister returns to sell the remaining shares she should devise a means to sell them not to institutional investors but to those who do not avail of the offer on this occasion but who may wish to do so having seen the success of the flotation. She should encourage the development of a culture where the man in the street becomes involved in the purchase of equity capital. Over time that has been a restricting factor in the development of the economy. It has been extraordinarily difficult to generate this kind of capital. Various devices and agencies have been put in place from time to time with varying degrees of success but with no substantial or resounding success. When something like the present offer comes centre stage and it is clear to all that those who avail of the offer will do well out of it, it may have a profound effect on the attitude of people generally towards equity capital.

Institutions, large corporations, etc., have a certain anti-democratic ambience. When the employees' group of shareholders are in place, is there a proposal to encourage them to unite as a body so that the power of their shareholding can be focused more firmly and reflected in company policy in the future?

Mr. McGuinness

I support the motion. I welcome the development at Telecom Éireann because it offers a great opportunity to the public and the company. The fact that the employees are being given shares and the public is being allowed to buy shares provides them with an opportunity to buy into the future development of telecommunications, e-commerce and information technology. If the flotation is successful – no doubt it will be – it will provide a wonderful opportunity to develop information technology structures. It will also allow the public to have a say in the future of a company, the development of which we have all stood by and been proud of over the years and it will provide an opportunity to participate in the development of the company and in the job creation possibilities which this share option offers.

The area of deregulation and the new moves being made by Telecom Éireann with regard to the sale of shares not only give the employees and the public an opportunity to have a say in the future of the company but also pose a number of challenges for Telecom Éireann because the telecommunications infrastructure is quite dated whichever way we look at it. Huge sums of money have been invested in the infrastructure but a sizeable sum is needed if the company is to move from its present position to being a world player in terms of the development of information technology and e-commerce. This will be a challenge if the company is to ensure that the whole country participates in the new developments of e-commerce and information technology. This particular technology ensures, if it is available countrywide, that there is no poverty trap. In other words, every community throughout the country has the opportunity to participate in world markets by way of Internet advances and e-commerce transactions. A considerable amount of legislation on security in this regard is needed, but first we must address the area of infrastructure. That is one of the challenges which will face Telecom Éireann in the future. We need to ensure that the telecommunications infrastructure is up to date, that the type of technology required by commercial and residential interests throughout the country is made available to the general public and that the issue of connectivity is dealt with as far as Ireland is concerned.

With regard to Telecom Éireann's involvement in this huge opportunity, I commend the company on its information age project, which includes pilot projects at Castlebar, Ennis, Kilkenny and Killarney. We must analyse the success of the Telecom projects and compile a checklist on the manner in which communities in project towns have succeeded in interacting with the information technology infrastructure available to them. We must ensure that available technology takes the needs of young people and their parents into account and we must ensure that educational structures in regard to young people's introduction to information technology are up to speed. All the opportunities for future job creation in this country rely on information technology. Telecom must be in a position in the future to play its role in providing the necessary infrastructure for that.

There is a very small window of opportunity here in regard to e-commerce. I want to highlight the successful participation of some small companies in e-commerce. In my own constituency, the Malone pottery company is successfully transacting business on the Internet. Recently, the Minister visited Kilkenny and acknowledged the company's success in accessing the Internet and in providing a partnership with NatWest on the security issues. This type of enterprise is an indication of the manner in which small Irish companies can access proper infrastructure and worldwide markets if given the necessary opportunities.

Much more can be done in this area. E-commerce is not just the preserve of bigger companies which are well prepared to enter the information age. E-commerce is an opportunity of which all citizens can avail. Private and public investment is required if this area is to expand and be capitalised upon. Telecom must take the lead role in this as it has done in regard to information age towns. If it provides the proper investment and initiatives, other private companies will come on board. It will then be necessary for the Government to invest heavily in internal connectivity to ensure all communities are in a position to come on board.

The opportunities provided for the share option issue will create further prosperity and opportunities for those who purchase shares. As e-commerce develops and the information age is rolled out to each community in Ireland, the allocation of additional shares must be considered. Further opportunities should be provided in the future to those who do not buy shares at their first offering. I welcome the motions before the House and urge the Minister to encourage Telecom to open up the infrastructure market and to encourage small companies' participation in e-commerce activities.

Mr. Higgins

(Dublin West): Let us put aside the gloss and the hard sell for a moment. This is a project aimed at the privatisation of Telecom Éireann, an immensely valuable State asset which has been built up over generations by taxpayers on the one hand and the commitment of its workers on the other. The Minister is today presenting the first phase of a plan for the total privatisation of Telecom Éireann. That does not mean that ordinary Irish people will democratically own this valuable national asset. Telecom will end up in the hands of the major grabbers from the international stock exchanges, banks, financial institutions and other players in the world capitalist market.

The Government is already privatising and planning to privatise State assets with complete abandon. It is amazing to hear the Tánaiste and Minister for Enterprise, Trade and Employment, with hardly a reference to the Government, promising the private sector that it will soon be in a position to take over bridges, water reservoirs and so on. Without as much as a nod in the direction of the Minister for Public Enterprise, the Tánaiste also informed us that Aer Lingus, another valuable State asset, will be privatised and given into the hands of major investors. This has all happened with scarcely a murmur of opposition from Fine Gael, whose only probable criticism is that the privatisation programme is not being pursued with sufficient vigour, or the Labour Party. That is quite shameful.

In her speech the Minister concentrated on what she doubtless views as the selling points of the Telecom Éireann privatisation and religiously ignored some of the shameful aspects of the process. The Minister failed to mention in any detailed way how the second 5 per cent which will go to the employee shared ownership trust ties into efficiencies and cost cutting. She stated that the additional 5 per cent will be transferred to the employees in stages, on the basis of progress in achieving efficiencies in work practices and cost savings under the Telecom partnership agreed in 1999 between management and unions in the company. What does that mean in practice? The answer is quite bluntly laid out in the booklet given to employees entitled "Employee Share Ownership Plan – Your Questions Answered". One of the questions reads: "Does the 5 per cent depend on all aspects of the transformation document, including 2,500 job losses over five years?". The answer is yes. However, it goes on to state that all staff reductions will be effected on a voluntary basis. That in no way compensates for a catastrophic loss in the employment potential of the State sector.

The fact that people may voluntarily agree to take redundancies on certain terms will cover over the fact that 2,500 vacancies will not be available in the future for young people coming into the jobs market. That may not be very noticeable at the moment when the economy is growing rapidly but when the capitalist cycle turns, as it inevitably will, we will be faced once again with the catastrophe of growing unemployment. Those 2,500 jobs will be dearly missed but there is not a murmur of opposition. Competition is the god. The full complement of employees could be kept by diversifying and extending the remit of this valuable State company in an imaginative way. That is not the agenda, however,the agenda is to sell off this asset.

The Minister stated how pleased she was that Deputy Spring has been appointed to the board of the company, that he is a competent and professional person who will be seen as such by the investment community. I have no doubt he will be seen as such as well. It is entirely appropriate for the person who booted the ideas of James Connolly, democratic socialism and State ownership as a principle out of the constitution of the Labour Party. No doubt the capitalists who want to get their hands on Telecom Éireann can be fully confident. It is a despicable reflection on the Labour Party and how far it has gone in its betrayal of the concept of public ownership, democratic accountability and democratic ownership of vital State assets, a fundamental of the ideas of democratic socialism espoused by James Connolly, the founder of the Labour Party. Now the party does not raise a murmur in Opposition to this or any other privatisation which might be proposed. I am proud that workers are beginning to fight. I commend the workers from the Great Southern Hotel chain who came to the Dáil last night to protest against the privatisation of a flourishing State asset. I level the same criticism at the leadership of the Irish Congress of Trade Unions.

I was amused to hear the Minister say that one of the objectives of the share offer generally, and a personal objective of hers, is to promote wider share ownership. That is almost exactly what Mrs. Thatcher said when she came to power in Britain. Today, following the confidence trick on ordinary working people in Britain, fewer shares are now in the hands of working class people and more are in the hands of the investors, bankers and major institutions.

That will happen here. The Minister will trick the ordinary people with the soft sell and the mail shots which tell people that if they put a few hundred pounds in, it will be a wise investment. For most of those people an exigency will arise. A family crisis or some such thing will result in them having to sell the shares off. Who will be there to purchase them? Once ordinary people have spent their money buying the shares, they will be snapped up by the investors and bankers.

Mrs. O'Rourke

What the Deputy is saying is anti-democratic.

Mr. Higgins

(Dublin West): It is not anti-democratic. This is a confidence trick on ordinary people. The Minister is privatising a valuable State asset and pretending that it is going into the hands of the ordinary people. That is just a circuitous route to ensure it will be in the hands of the investors from multinational and major national capitalist interests. That was the experience with water privatisation in Britain. It was a catastrophe for ordinary people.

Mrs. O'Rourke

I am not talking about the privatisation of water.

Mr. Higgins

(Dublin West): The Minister is talking about an equally valuable State asset.

It is a sad reflection that I am the only Deputy who stands in this Dáil in opposition to what will turn out to be a robbery of a vital State asset. The Minister and the Government are masterminding this robbery.

Mrs. O'Rourke

That is very anti-democratic.

Mr. Yates

They used to say the earth was flat as well.

Mr. E. Ryan

As is required under the legislation on ethics in Government, I declare my interest – I am an adviser to two telecommunications companies, Esat Digiphone, the mobile phone company, and Torc Telecom, which is involved in the card phone market. Clearly those are different interests to those of Deputy Higgins.

Mr. Higgins

(Dublin West): The Deputy can be sure of that.

Mr. E. Ryan

Deputy Higgins poses as the champion of the downtrodden working class man. Nothing could be further from the truth. His suggestion that the transfer of a significant stake in Telecom Éireann to the workforce of that company is a travesty strikes me as odd in the extreme, even when one considers that the trend on the left in Europe, Britain and here is towards the idea of greater participation by the workforce in the operations of the companies for which they work. We are entering an era of more responsible capitalism which is more responsive to its own workforce.

Mr. Higgins

(Dublin West): Is that why house prices are going through the roof?

Mr. E. Ryan

This is an enlightened era for capitalism where—

Mr. Higgins

(Dublin West): Where people cannot afford to buy houses.

Mr. E. Ryan

—capitalists are learning that the shift to the knowledge based industries means that employers, often depicted by Deputy Higgins as greedy and ruthless individuals, are realising that they must invest in people. That is an international trend and I am glad it has been reflected in the shifting position of the Labour Party.

The idea that the State must be involved ipso facto in the ownership of industry is outdated. It was a good idea when it was initiated. It could be suggested that 60 years ago the private sector in this State was not strong enough and the international private sector was not responsible enough to reflect to the social dimensions of the economy. Now, however, there is an increasing realisation that the private sector is prepared to invest its money in the people and the companies.

In such an era, State ownership is irrelevant. The whole issue was placed in a new and dramatic light when the late John Smith, then leader of the British Labour Party, suggested the idea of the state playing an enabling role for its citizens. That view is shared on the Labour Party benches. The State does not exist to own vast tracts of the economy, be they airlines, telecommunications companies or electricity production companies. The State has evolved and we have moved on.

We now have a State which seeks to regulate in the same manner in which a referee regulates a football game. It blows the whistle when the capitalists so often decried by Deputy Higgins get out of control. That is the role of the State – to reign in private enterprise when it shows its greed in an unwholesome manner. That has been its role since Mr. Haughey brought Fianna Fáil into Government in 1987. That was when the trend for privatisation started. The trend is on track and will pay dividends. We owe much of our economic success to these privatisations. They freed up large companies which were, unfortunately, placed in the invidious position of the State not having the wherewithal to reinvest in them to meet the competitive challenges of a more globalised market, yet they had to achieve certain efficiencies in terms of how they operated.

There is nothing wrong with the Minister's proposal. It shows the caring side of the Government's method of action. A 14 per cent equity for the workforce in a company is an enormous contribution.

Mrs. O'Rourke

They will pay for it.

Mr. C. Lenihan

They will pay for it, but they will benefit from this process. The Government should examine the wider issue of equity participation by the workforce generally in industry, which is clearly a problem throughout the European economy. I hope this decision by the Government sets a trend for the private sector at large, whereby workers are given a proper dividend from the profits of successful companies and, if the companies are not doing well, take the cuts that go with that.

Mr. Higgins

(Dublin West): They will have nothing left after they pay their mortgages.

An Leas-Cheann Comhairle

The Deputy, without interruption.

Mrs. O'Rourke

Deputy Higgins should keep to telephones.

Mr. C. Lenihan

I hope this initiative becomes a benchmark and that workforces will benefit from the profits of their companies.

Deputy Higgins is adopting a strange position. I suppose he is a lone voice in this regard.

Mr. Higgins

(Dublin West): For the moment.

Mr. C. Lenihan

He is the lone voice of old-fashioned socialism. I do not know if he is an adherent of the stagist theory but if he is, I hope he does not die a disappointed man because the signs are that up to the year 2026 this economy will continue its canter and develop into a gallop.

Mr. Higgins

(Dublin West): Up to when?

Mrs. O'Rourke

The year 2026.

Mr. C. Lenihan

If the Government's record to date is anything to go by, the signs are that it will continue to redistribute the fruits of that growth to the people who believe they have been left behind.

Mr. Yates

It might not last until the year end, unless the Progressive Democrats are clamped by the Government.

An Leas-Cheann Comhairle

Please allow Deputy Lenihan to continue. The time is limited.

Mr. C. Lenihan

The Government will last its full term. I appeal to the Tánaiste and the Taoiseach to give a clear commitment that they will continue in Government for the full five year term.

Mr. Yates

The Deputy's relationship with the Tánaiste is well known.

Mr. C. Lenihan

There has been a disappointing trend in recent years, across all political parties, of not having the nerve to go the full five years. This four year electoral cycle is also damaging from an economic viewpoint. It would be more beneficial if Governments were prepared to set a trend and remain in power for the full five years. Six year terms might introduce a degree of stability. Deputy Higgins might even welcome a six year term, during which he could outline his stagist theory which would bring about the revolution.

The Minister has set a headline on the issue of equity participation in respect of companies moving from the public to the private sector. This will lead to greater demands when we come to the electricity issue and other companies. The Government should emphasise its determination to continue this initiative which guarantees the workforce and the trade unions – the people who have contributed to the success of these companies over the years – a payback from the privatisation of their companies. It is the ideal way to balance the obvious disadvantages they suffer in terms of security. There is no point pretending conditions of employment are as secure in the private sector as they are in the public sector, and workers who move to the private sector are being given adequate compensation and participation. I hope the Government continues this trend right across industry.

There is a problem of wage inflation in the marketplace. In the long-term we have to view this economy in terms of non-pay rewards for a workforce that wishes to develop its relationship with a company. An ideal way to do this would be to allow equity participation by ordinary members of staff. That would also dampen down inflationary wage demands—

Mr. Higgins

(Dublin West): Is the Deputy in favour of a wage freeze?

Mr. C. Lenihan

I do not favour a wage freeze, but there should be a rebalancing of the way we award incremental pay increases under the national pay deal and a higher component of equity participation and dividend reward for ordinary members of the workforce so they can benefit from a company's success. If that happened, particularly in terms of high technology companies which can quickly increase in value when they are floated, ordinary workers could make much more money than under incremental national pay deals. If we are really interested in defending and vindicating the rights or ordinary workers, this is something Deputy Higgins and our colleagues on the Labour benches might consider.

Mr. Higgins

(Dublin West): What will happen in the slump?

Mr. Yates

Before the Minister replies, may I ask her two brief questions? On two occasions I asked her if the workers who did not vote for the ESOP would be denied the Partnership 2000 concessions. Will she answer that question? Some 37 Cablelink workers, who maintain they are on secondment from RTE, have not yet given their agreement to the sale. What is the position in that regard? This could affect the sale of Cablelink and the IPO? What is the Minister's understanding of the legal position on that?

Mrs. O'Rourke

I will answer those two questions before I give a general reply. The Deputy must not have received my letter of 11 May.

Mr. Yates

I have not received it yet.

Mrs. O'Rourke

He will probably get it today. Six people declined to participate in the ESOP. I checked the Official Report because the Deputy said I was uncertain. I was a little uncertain, but I did say that, under trade union rules, collective bargaining would be the norm in a matter such as that. The details of the proposal were outlined to staff at trade union meetings throughout the company and were accepted in ballots by an overall majority of members in all the trades unions. The staff of the company were given formal individual invitations to participate in accordance with the joint conciliation council collective agreement. The first two pay increases due under Partnership 2000 were implemented. The company informed me that more than 99.9 per cent of the staff have opted to participate and, as of today, only six individuals out of a total of 12,000 have declined, and the door remains open to them

Mr. Yates

Will they get the pay increases?

Mrs. O'Rourke

Apparently they will not get the third one, which was abrogated. I knew I had written a letter to the Deputy. Under the terms of the collective agreement, the six individuals will not receive the Partnership 2000 increases but neither will they have pension contributions deducted from their salaries. It cuts both ways. They will not pay the 5.6 per cent, or whatever it is.

With regard to the Cablelink matter, on which I believe the Deputy put down a question—

Mr. Yates

It was disallowed by the Ceann Comhairle's good office.

An Leas-Cheann Comhairle

Please allow the Minister to reply. The time is limited.

Mrs. O'Rourke

That relates to RTE, and the Minister for Arts, Heritage, Gaeltacht and the Islands, Deputy de Valera, will have to examine it.

Mr. Yates

She disallowed it also.

Mrs. O'Rourke

Did she?

Mr. Yates

Yes.

Mrs. O'Rourke

A total of 37 people were seconded. Cablelink discussions are taking place with RTE, SIPTU and the employees. The Telecom Éireann unions seem to have reached some kind of agreement, but I hope Cablelink will reach agreement also.

To return to the general points, I welcome the consensus and I also welcome Deputy Higgins's view. He was elected and, therefore, he is entitled to give his point of view in this House. That is what democracy is all about. A sufficient number of people thought he was their man and they voted for him in the election. There is no merit in him saying he is the only one. The Deputy is not entitled to distort what I said. If 99.9 per cent of the workforce wants to participate, it is anti-democratic to deny them that right.

Mr. Higgins

(Dublin West): I was talking about—

An Leas-Cheann Comhairle

The Deputy should allow the Minister conclude. If the Minister addressed her remarks to the Chair she might not invite interruptions.

Mrs. O'Rourke

If 99.9 per cent of a workforce decide they want to buy shares I cannot understand how Deputy Higgins can claim to represent them when only six people out of 12,000 are left.

Mr. Higgins

(Dublin West): On a point of order, I wish to correct the Minister.

An Leas-Cheann Comhairle

That is not a point of order. I want to hear the Minister. She has only ten minutes.

Mr. Higgins

(Dublin West): The Minister has had an opportunity to speak. I was referring to the sale—

An Leas-Cheann Comhairle

That is not a point of order. The Minister is entitled to reply to the debate.

Mrs. O'Rourke

If one million people have decided they want to know more about the flotation, it is anti-democratic to deny them the chance to purchase shares. Those are the facts.

Mr. Higgins

(Dublin West): I referred to what happened under Margaret Thatcher – very few shares remain in the hands of workers.

An Leas-Cheann Comhairle

The Deputy should allow the Minister to speak. She has three minutes remaining.

Mrs. O'Rourke

The Deputy cannot deny people their rights. People have a right to purchase shares if they so wish. It is heavy-handed "stateism" to stop them partaking in the share ownership of their company. The Deputy now wants to prevent people from learning more about a State asset. That is the daftest proposal I ever heard.

Mr. Higgins

(Dublin West): I want to keep the company fully in the hands of the people.

Mrs. O'Rourke

They will get no return on it.

Mr. Higgins

(Dublin West): They are getting a return.

Mrs. O'Rourke

The Deputy should not be daft.

An Leas-Cheann Comhairle

We cannot have this sort of question and answer exchange.

Mrs. O'Rourke

It is daft when a democratically elected representative wants to deny people their rights. I cannot understand that approach.

Mr. Higgins

(Dublin West): I am not denying people their rights, I am denying the rights of grabbers to take over the company.

Mrs. O'Rourke

Is the Deputy describing citizens as grabbers? I note the points made about loyalty bonuses. We are working on an incentive scheme but we have not concluded the details. I hope we are being inventive on this issue. A loyalty bonus is one option which will be considered by the Government.

I was asked whether the employees of every semi-State company will receive 14.9 per cent of the shares. That will not be the case as I am approaching this on a case by case basis. One cannot compare An Post with Telecom Éireann. Telecom Éireann was not cash rich but it was in a fast-developing area of business. An Post made extremely modest profits. It has good workers but we will look at that company in a different way.

There will be different solutions for different companies. I will not adopt Deputy Higgins's approach which puts all semi-State companies in the same bracket and prescribes a route for issuing shares to every worker when the company is offered for sale to the public. I am not zealously running around to every semi-State company saying "you're next".

Two issues will be decided closer to the closing date. The registration period will take until around the end of May. The next stages will start to unfold after that. Decisions regarding the division of the shares between retail and institutional investors will also be made.

I did not put a value on Cablelink when I brought the memorandum to Cabinet. It was part of a plan to liberalise the market. Deputy O'Shea asked if consumers will pay for this development. Etain Doyle has more power than I have and will control prices for basic television services. Cablelink's prices will have to be competitive if it wants to compete with digital, terrestrial, satellite and other new forms of broadcasting systems. It will not survive otherwise and they paid enough for it.

I thank Deputy McGuinness who is chairman of the information committee in Kilkenny which is doing very well. I also thank Deputy Conor Lenihan for his comments. I welcome the consensus on this matter in the House and I welcome Deputy Higgins's comments.

Question put and agreed to.

Sitting suspended at 2.15 p.m. and resumed at 2.30 p.m.