Dáil Éireann debate -
Wednesday, 18 Feb 2004

Vol. 580 No. 2

Aer Lingus Bill 2003: Report Stage (Resumed) and Final Stage.

Debate resumed on amendment No. 3:

In page 4, lines 20 and 21, to delete "for so long as he or she thinks fit".

—(Deputy Crowe).

Mr. S. Ryan

Now that I have had time to reflect on my contribution, I would like to clarify some matters and bring my contribution to a conclusion. A pertinent point was raised about the report the Minister said he received from the chief executive officer and the chairman of the board of Aer Lingus. I asked the Minister what was the nature of the report. I formed the impression, when I referred to a written report, that he nodded his head. Will the Minister confirm whether the report was a written one?

The kernel of this is to try to ensure the best future for Aer Lingus. Despite what the Minister has said, I do not believe it is necessary to privatise the company. The difficulty for me, the people working in the company and the public is that the Minister, as he said this afternoon, has not yet made up his mind. On the one hand, he is considering the matter and can be convinced one way or the other but, on the other hand, his stated objective is to propose the privatisation of Aer Lingus. According to media reports, the Minister believes this is the direction the company should go. He now says, however, he is pulling back from that position and is having the issue reviewed.

The Minister referred to a Mr. Hooper whom he has asked to provide a consultant's report on the various options that might be available to him. What riding instructions, to use racing parlance, did the Minister give to Mr. Hooper when he asked him to carry out this investigation? The Minister does not have a great record for implementing consultants' reports, particularly when they do not tally with what he wants. Two or three reports on Aer Rianta have been produced by eminent people who have recommended against the establishment of three separate companies or the privatisation of the company. The Minister disregarded the reports and sought other reports. This issue will come again before the Dáil for its consideration. What terms of reference did the Minister give Mr. Hooper? Is the Minister confirming that he has an open mind on Aer Lingus?

I support amendments Nos. 3, 4 and 6. It has not been proved that it is necessary to privatise Aer Lingus. The organisation has pulled itself up by its bootstraps to become an efficient organisation with a super management team. That team has done excellent work in pulling together the elements required to make the company a viable organisation that will go from strength to strength. It is already making significant profits and, hopefully, will make more in future. I hope everybody involved in this, including the board, will move to the next stage with an open mind and not be directed by the ideological attitude of the Minister and some of his colleagues in the Government.

Mr. Sargent

Like my colleague, Deputy Eamon Ryan, and my constituency colleague, Deputy Seán Ryan, I support amendments Nos. 3, 4 and 6. Unfortunately, the Government seems to be guilty of short-term thinking about the future of Aer Lingus. Whereas a considerable amount of pain has been endured by staff over the years to ensure the ability of the company to compete with any competition the market can throw at it, the Government seems to have a blind spot about the long-term need to have a State airline. Aer Lingus has fulfilled that role for many years.

One of the long-term considerations that is too often overlooked, probably because it is too difficult to contemplate, is that the supply of fossil fuels in general will be more difficult to guarantee in the future. Over Christmas I did a considerable amount of reading on this subject. The year 2010 is envisaged internationally as the peak production year for fossil fuels worldwide. This follows similar analysis which was carried out on US oil production, which peaked in 1970 and probably explains some of the more aggressive foreign policy adventures of the American Administration to guarantee supplies for the American economy. In the UK, gas production peaked in 2000. This is not to say there will not be supplies of fossil fuels for a number of decades in the future but that the supplies are more difficult to guarantee.

A State airline is vital infrastructure for national security. It is flawed and irresponsible thinking on the part of the Government to believe it is possible to privatise Aer Lingus and still ensure this island economy will be able to continue to operate in the way we take for granted. It is a real possibility that if Aer Lingus were privatised and not accountable to the Government or the people, we could end up with services from this country that would, effectively, be hopping to Britain or Europe for hub services. There would be nothing like the service we currently take for granted or the type of service that is essential for our economy, which is already completely open and vulnerable to global trends and, to add to that vulnerability, poorly off in terms of fuel security.

I appeal to the Government to take the broader view for the sake of the national interest and, indeed, in the interests of Aer Lingus. It should not be drawn into thinking that because Aer Lingus is able to compete, it will manage better in the private sector. The company is well able to compete with any private sector company and, for that reason, the Minister should give an assurance to Aer Lingus that he does not have a policy up his sleeve whereby, when he gets the chance, he will sell the shares to a larger consortium or company. That is the suspicion many people have and it has not been allayed by the Minister, given his previous history and utterances. If the Minister is thinking of the national interest, he will accept amendments Nos. 3, 4 and 6 and not proceed on a slippery slope to privatisation. He should think of the greater national interest, which requires that we have a national airline that will be able to cope on the rocky road ahead and provide the type of transport service to which we have become accustomed.

Minister for Transport (Mr. Brennan)

This is Report Stage of the Bill. I do not want to go into a rehearsal of all the issues dealt with on Second or Committee Stage and will just make one or two points in regard to the report. In light of the continuing turn around in the company's finances, last July I asked the chairman of Aer Lingus to examine and report back to me on future options for the company. He furnished that report to me on 16 September 2003. That report put forward the view that a private sector investment process should be initiated and that was the judgment of the chairman and the chief executive. I have not actually queried the process undertaken in the company which resulted in that report. That is a matter for the chairman and his organisation. I consider the report as an important input into the Government's deliberations on the future options of the airline.

On a number of occasions I stressed that it would be remiss of me not to look at all of the options for the future of the airline, given that — as many Deputies said — this is a volatile and cyclical business. It would also be remiss of me not to take account of the fact that the airline has come close to collapse twice in ten years. On both occasions this House and the taxpayer were not found wanting. A number of issues concern the EU in the future in the event of any fresh demand for capital in what is a cyclical business. Those arguments will be contained in the paper which I will produce.

Ms Shortall

How would selling it provide capital?

Mr. Brennan

To make it absolutely clear, no decision has been taken by Government to dispose of any shares in Aer Lingus.

Ms Shortall

Why then is this Bill before us?

Mr. Brennan

I also wish to make it clear that we will — because of the amendment in subsection (5) — revert to the House in the event of any proposed sale. The approval of Dáil Éireann will be required for the disposal of any shares. If that day arrives, we can discuss these issues in greater detail.

Some allegations were made about the motives of senior executives. In fairness, I must defend them. I found them nothing but professional and honourable in all their dealings and in any advice they gave the chairman, the board or myself through the chairman. I have no doubt but that their motives are entirely honourable.

Deputy Sargent mentioned the issue of the payments to staff. On many occasions I have paid tribute to the staff in Aer Lingus who worked hard at putting through the survival plan. This morning I said that over 1,000 people had left the airline in the past 12 months. At the same time we also speak for the taxpayer, thanks to whom and to the company's resources we are today formally signing off on 14.9% of the shares. To facilitate this, interest free staff loans were arranged and, as I appreciate, pay was forgone for a period. The profit sharing scheme is approximately 10% of company profits for the staff. I do not know how good the Deputy is at arithmetic. The value of Aer Lingus is somewhere between €400 million and €1 billion. At a figure of €500 million, which is not a valuation but a figure picked for ease of calculation, 15% is €75 million. I have paid tribute to the workers in Aer Lingus and I continue to do so. They have done a fine job. However, it is not as if the other side of the equation has been found wanting. The company and the taxpayer have today provided €75 million worth of shares to Aer Lingus workers, for which they have not had to pay as we would.

Ms Shortall

They paid in kind through the survival package.

Mr. Brennan

They got interest free loans, 10% of the profits and shares which this House is awarding today, worth approximately €75 million or perhaps more. The value could be twice or three times that or half of that. It is substantial and this House is agreeing to it. We must watch the two sides to this.

Some 40 times perhaps, I have spoken on the matter of ideology and principle to Deputy Shortall but we will never agree on it. Any time a Government is accused of moving from the public sector to the private sector, it is called ideology. It is called principle when that is not the case. When one is standing up for the State company it is called a principle. Why is it not an ideology to be for State enterprise? This is an interesting question because every time the Deputy gets on her feet she accuses me of being ideological.

Ms Shortall

If it is not broken, why fix it?

Mr. Brennan

I could equally say——

An Ceann Comhairle

This is the Minister's second contribution on which there is a limit of two minutes.

Mr. Brennan

A very good one. I cannot accept these amendments for the reasons I have given.

Question, "That the words proposed to be deleted stand", put and declared carried.

Amendment declared lost.

Mr. Crowe

I move amendment No. 4:

In page 4, to delete lines 23 to 27.

Question put: "That the words proposed to be deleted stand."

The Dáil divided: Tá, 65; Níl, 50.

Tá

• Ahern, Michael.
• Ahern, Noel.
• Andrews, Barry.
• Aylward, Liam.
• Blaney, Niall.
• Brady, Johnny.
• Brady, Martin.
• Brennan, Seamus.
• Browne, John.
• Callanan, Joe.
• Callely, Ivor.
• Carey, Pat.
• Carty, John.
• Collins, Michael.
• Cregan, John.
• Curran, John.
• de Valera, Síle.
• Dempsey, Noel.
• Dempsey, Tony.
• Dennehy, John.
• Ellis, John.
• Fahey, Frank.
• Fleming, Seán.
• Fox, Mildred.
• Gallagher, Pat The Cope.
• Glennon, Jim.
• Grealish, Noel.
• Hanafin, Mary.
• Haughey, Seán.
• Healy-Rae, Jackie.
• Jacob, Joe.
• Keaveney, Cecilia.
• Kelleher, Billy.
• Kelly, Peter.
• Killeen, Tony.
• Kirk, Seamus.
• Lenihan, Brian.
• Lenihan, Conor.
• McCreevy, Charlie.
• McDaid, James.
• McGuinness, John.
• Moloney, John.
• Moynihan, Donal.
• Moynihan, Michael.
• Mulcahy, Michael.
• Nolan, M. J.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• O'Connor, Charlie.
• O'Donnell, Liz.
• O'Donovan, Denis.
• O'Flynn, Noel.
• O'Malley, Fiona.
• O'Malley, Tim.
• Parlon, Tom.
• Power, Seán.
• Roche, Dick.
• Ryan, Eoin.
• Smith, Brendan.
• Smith, Michael.
• Wallace, Mary.
• Walsh, Joe.
• Wilkinson, Ollie.
• Woods, Michael.
• Wright, G. V.

Níl

• Allen, Bernard.
• Boyle, Dan.
• Breen, James.
• Breen, Pat.
• Broughan, Thomas P.
• Bruton, Richard.
• Burton, Joan.
• Connaughton, Paul.
• Crowe, Seán.
• Cuffe, Ciarán.
• Deasy, John.
• Deenihan, Jimmy.
• Durkan, Bernard J.
• English, Damien.
• Enright, Olwyn.
• Gilmore, Eamon.
• Gogarty, Paul.
• Gormley, John.
• Gregory, Tony.
• Harkin, Marian.
• Hayes, Tom.
• Healy, Seamus.
• Higgins, Joe.
• Higgins, Michael D.
• Hogan, Phil.
• Kehoe, Paul.
• Kenny, Enda.
• Lynch, Kathleen.
• McCormack, Padraic.
• McGinley, Dinny.
• McManus, Liz.
• Morgan, Arthur.
• Moynihan-Cronin, Breeda.
• Neville, Dan.
• Noonan, Michael.
• Ó Caoláin, Caoimhghín.
• O'Sullivan, Jan.
• Pattison, Seamus.
• Rabbitte, Pat.
• Ring, Michael.
• Ryan, Eamon.
• Ryan, Seán.
• Sargent, Trevor.
• Sherlock, Joe.
• Shortall, Róisín.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Upton, Mary.
• Wall, Jack.

Tellers: Tá, Deputies Hanafin and Kelleher; Níl, Deputies Crowe and Durkan.

Question declared carried.

Amendment declared lost.

Mr. Brennan

I move amendment No. 5:

In page 4, line 26, to delete "referred to in subsection (1)”.

Amendment agreed to.

Mr. Crowe

I move amendment No. 6:

In page 4, lines 35 and 36, to delete "without the general principles of the disposal being laid before and approved by Dáil Éireann".

Question, "That the words proposed to be deleted stand", put and declared carried.

Amendment declared lost.

Mr. P. Breen

I move amendment No. 7:

In page 4, to delete lines 39 to 45.

As the Minister is aware, companies already have the power to issue shares and divide them into classes. We feel the wording of this section is duplicated. I assume the Minister will say that he wants to be certain it is covered. Perhaps he will pass on the same message to the Minister for the Environment, Heritage and Local Government regarding electronic voting.

Mr. Brennan

The Deputy has anticipated my reply. Deputy Naughten believed the wording of the section was duplication. To ensure there is no confusion or doubt about the ability of the company to issue new shares or divide them and to ensure the legislation serves the purpose intended, the advice of the parliamentary counsel is that the existing text should be retained.

Mr. P. Breen

We felt there was no need for this section.

Amendment, by leave, withdrawn.

An Ceann Comhairle

Amendment No. 8 is out of order as it involves a potential charge on Revenue.

Ms Shortall

On a point of order, I have been in correspondence with you on your ruling in this regard and the ruling of the Bills Office. There is a long established precedent that amendments requesting a Minister to report to the House are accepted. The Chair knows perfectly well how restricted members of the Opposition are in terms of amendments and that we are not allowed to table amendments that result in a charge on the Exchequer. Our only other option to raise an issue is to ask the Minister to report on it, and such reporting to the House on the implications of the pensions scheme does not result in a charge on the Exchequer.

The precedent is long established in respect of Social Welfare Bills. Every year, several amendments requesting reports are deemed to be in order and are accepted. I can quote other precedents, such as the Containment of Nuclear Weapons Bill, the Freedom of Information Bill——

An Ceann Comhairle

It is not necessary to quote this. I had substantial correspondence from your party's Whip and I have allowed you to make your point of order.

Ms Shortall

——the Residential Institutions Redress Bill——

An Ceann Comhairle

I will respond to the Deputy's point of order. We will not debate this on the floor of the House.

Ms Shortall

A clear precedent exists and I cannot understand the basis of the Chair's ruling that this amendment, requesting——

An Ceann Comhairle

The Deputy has made her point and I ask her to resume her seat.

Ms Shortall

On that basis, I have no other option but to request that this section be recommitted to Committee Stage.

An Ceann Comhairle

Which section does the Deputy wish to recommit?

Ms Shortall

Section 8.

An Ceann Comhairle

Before we come to deal with the proposal to recommit a section of the Bill, I wish to outline the position to the Deputy. I carefully studied the correspondence from your party's Whip. I have also studied the precedents in this House and have ruled in accordance with all my predecessors. The only instance in which such an amendment was allowed is in Social Welfare Bills. I understand this was agreed by a sub-committee on Dáil reform. The view was that it would not be possible to have amendments to Social Welfare Bills unless special exemption was made for them. I have studied the rulings carefully and in all other instances, such amendments were not permitted. That is the ruling on this issue.

We will not have a debate on this here. If the Deputy wants to come to the Office of the Ceann Comhairle, we will be glad to discuss it in detail and show her the rulings.

Ms Shortall

Before you interrupted me I was in the process——

An Ceann Comhairle

The Chair did not interrupt anybody. The Chair never interrupts, it intervenes.

Ms Shortall

——of quoting five examples of Bills, other than Social Welfare Bills, enacted since 2000 on which reporting type amendments were allowed.

An Ceann Comhairle

While the Deputy wishes to recommit section 8, it does not relate to the amendment. However, there is nothing to stop her seeking to recommit the section.

Ms Shortall

The amendment refers to page six, between lines 42 and 43.

An Ceann Comhairle

The amendment does not arise. We are talking about section 8. Does the Deputy wish to have section 8 recommitted?

Ms Shortall

Yes, I have just said that.

An Ceann Comhairle

I am just pointing out to you that it has nothing to do with your amendment.

Question put: "That the Bill be recommitted in respect of section 8."

The Dáil divided: Tá, 46; Níl, 62.

Tá

• Allen, Bernard.
• Boyle, Dan.
• Breen, James.
• Breen, Pat.
• Broughan, Thomas P.
• Bruton, Richard.
• Burton, Joan.
• Crowe, Seán.
• Cuffe, Ciarán.
• Deasy, John.
• Deenihan, Jimmy.
• Durkan, Bernard J.
• English, Damien.
• Gilmore, Eamon.
• Gormley, John.
• Gregory, Tony.
• Harkin, Marian.
• Hayes, Tom.
• Healy, Seamus.
• Higgins, Joe.
• Higgins, Michael D.
• Hogan, Phil.
• Kenny, Enda.
• McCormack, Padraic.
• McGinley, Dinny.
• McManus, Liz.
• Moynihan-Cronin, Breeda.
• Neville, Dan.
• Noonan, Michael.
• Ó Caoláin, Caoimhghín.
• O'Dowd, Fergus.
• O'Sullivan, Jan.
• Pattison, Seamus.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Ring, Michael.
• Ryan, Eamon.
• Ryan, Seán.
• Sargent, Trevor.
• Sherlock, Joe.
• Shortall, Róisín.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Upton, Mary.
• Wall, Jack.

Níl

• Ahern, Michael.
• Ahern, Noel.
• Andrews, Barry.
• Aylward, Liam.
• Blaney, Niall.
• Brady, Johnny.
• Brady, Martin.
• Brennan, Seamus.
• Browne, John.
• Callanan, Joe.
• Carey, Pat.
• Carty, John.
• Collins, Michael.
• Cregan, John.
• Curran, John.
• de Valera, Síle.
• Dempsey, Tony.
• Dennehy, John.
• Ellis, John.
• Fahey, Frank.
• Fitzpatrick, Dermot.
• Fleming, Seán.
• Fox, Mildred.
• Gallagher, Pat The Cope.
• Glennon, Jim.
• Grealish, Noel.
• Hanafin, Mary.
• Healy-Rae, Jackie.
• Jacob, Joe.
• Keaveney, Cecilia.
• Kelleher, Billy.
• Kelly, Peter.
• Killeen, Tony.
• Kirk, Seamus.
• Lenihan, Brian.
• Lenihan, Conor.
• McCreevy, Charlie.
• McDaid, James.
• McGuinness, John.
• Moloney, John.
• Moynihan, Donal.
• Moynihan, Michael.
• Mulcahy, Michael.
• Nolan, M. J.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• O'Connor, Charlie.
• O'Donovan, Denis.
• O'Flynn, Noel.
• O'Malley, Fiona.
• O'Malley, Tim.
• Parlon, Tom.
• Power, Seán.
• Roche, Dick.
• Ryan, Eoin.
• Smith, Brendan.
• Smith, Michael.
• Wallace, Mary.
• Walsh, Joe.
• Wilkinson, Ollie.
• Woods, Michael.
• Wright, G. V.

Tellers: Tá, Deputies Stagg and Durkan, Níl, Deputies Hanafin and Kelleher.

Question declared lost.

Amendment No. 8 not moved.

An Ceann Comhairle

Amendment No. 9 arises out of committee proceedings. Amendment No. 10 is related and the amendments may be taken together by agreement.

Mr. P. Breen

I move amendment No. 9:

In page 6, line 45, to delete "or former employees".

The amendments concern the Aer Lingus pension fund, which the Minister described as adequate. While I am aware that the fund is linked to national wage agreements, it must be linked to the consumer price index. We are concerned at the failure to change the pension arrangements for employees of Aer Lingus, and possibly Aer Rianta, who have been employed with the company since 1970. In other words, under the Bill, the contributory old age pension will be deducted from any pension received by this group of employees. The amendments propose to change that position.

On Committee Stage, the Minister stated that the Retired Aviation Staff Association would meet the chief executive of Aer Lingus, Mr. Willy Walsh. Did that meeting take place and, if so, what was its outcome?

Mr. S. Ryan

I support the amendment. While I was not involved in the Committee Stage debate, I recall that I referred in my contribution on Second Stage to the need to provide for an appropriate pension scheme. For years, the retired staff of Aer Lingus and Aer Rianta have made the case that their pension schemes have fallen behind those of other public servants. The purpose of the Bill is to facilitate the part privatisation of Aer Lingus in the future. In that context, it would be appropriate to take cognisance of the needs and plight of the people who worked to build up the company over the years and made sacrifices during difficult times to make it attractive.

The Aer Lingus pension scheme is inadequate and is not linked to national wage agreements or index linked in any shape or form. The Bill must provide that any new pension scheme be at least as good as those enjoyed by comparable employees in the public and private sectors. On that basis, I hope the Minister looks favourably on the amendment and addresses the issue in the interests of those who have given time and effort to build up the company.

Ms Shortall

I support the amendment and the comments of the previous speakers. Members of the Retired Aviation Staff Association are concerned about their future position in the event that Aer Lingus is sold and transferred to private ownership. They are also concerned about the current arrangements for the company pension scheme and the adequacy of its funding. A dispute about whether the company's contribution to the scheme is inadequate has been ongoing for some time.

The Minister and Opposition spokespersons have received many representations on this issue, but it was not until a song and dance was made and parliamentary questions were tabled that the RASA managed to secure a meeting with the chief executive of Aer Lingus, which is not an acceptable way for the chief executive of a major company to behave in respect of retired staff. When we discussed this issue at length on Committee Stage, the Minister stated that arrangements had already been made for such a meeting, which was to take place a couple of weeks later.

Retired staff are looking to the Minister to provide some guarantee on the standing of the pension scheme in the future. They have many concerns, principally about the funding of the scheme and the issue of index linking their pensions. Notwithstanding how difficult it was to do business with the company and the Government under the current arrangements, staff are concerned that unless some guarantees as to the security of their pensions are written into the legislation, they will be left at the mercy of the future owners if Aer Lingus is sold. This is an unacceptable way to treat people who have given long service to an excellent semi-State company.

As the Minister will be aware, many of the people concerned opted for early retirement as part of two survival packages for Aer Lingus, introduced in the past decade or thereabouts. These people are fearful for the future and the least the chief executive should have done was meet them on request. It is unfortunate that we have reached the stage that the Minister had to request the chief executive to talk to the RASA. I ask the Minister to report to the House on the outcome of the meeting and the guarantees or undertakings that can be given to retired Aer Lingus staff to allay their fears.

In my earlier amendment, I endeavoured to receive a report from the Minister on what he would do to safeguard the security of the pension scheme in the future and I regret the Chair's ruling on the matter, which I will pursue.

Mr. Brennan

It is necessary for me to reject these amendments. I can confirm that a meeting took place between Mr. Willie Walsh, chief executive of Aer Lingus, and representatives of RASA on 23 January 2004, at which the representatives of RASA outlined their position in full. In response, Mr. Walsh provided a statement which set out Aer Lingus's position regarding the pension scheme. The statement advised, inter alia, that Aer Lingus had not changed the rules of the scheme nor does it have any proposals to do so. In addition, the company has no proposals to establish a new scheme.

As an employer, Aer Lingus has an obligation to make contributions at the rates set out in the rules of the scheme and has complied with this obligation in full in respect of all current and former employees. I understand it was agreed at the meeting that both parties would reflect on the matters raised with a view to arranging a further meeting if either side felt that was necessary.

It is important to note that pension entitlements for employees of commercial State companies, including Aer Lingus, are matters primarily for the trustees, the members of the relevant scheme and the company or companies involved. The State has no direct involvement in the funding of these schemes.

I wish to read the contents of a letter which I have received from the Department of Finance, dated 28 January 2004, which states:

... it is a long standing policy and principle that pensions in the commercial semi-state sector are a matter for the trustees of the funds, the members of the schemes, and the companies themselves. It is inappropriate that ... the Department should become involved in this matter. Any issues raised on this front should be referred to the Company.

This has been a long-standing policy.

In regard to the Irish airlines' general employees' superannuation scheme which covers general employees in Aer Lingus, it is important to explain that this is a multi-employer scheme which includes two semi-State companies. A key issue of the scheme is that it cannot be amended without the consent of all participating employers and a majority of members so that no employer is in a position to negotiate exclusively with its employees as to their pension entitlements.

Deputies Naughten and Shortall raised the issue of funding. Pension entitlements for employees of commercial State bodies, including Aer Lingus, are a matter for the trustees. I understand that employers have met all their liabilities towards the pension fund in accordance with the rules of the scheme.

It was said on Committee Stage that there may not be enough money in the existing pension funds to meet the rules of the scheme; that is not the case. I am advised that the last actuarial valuation was carried out on 31 March 2003 and the scheme satisfied the minimum funding standard included in the Pensions Act 1990.The rules do not provide for annual pension increases on the basis of the current valuation or for future pension increases. I understand that the scheme is more than adequately funded to meet current pension entitlements.

For a variety of reasons it would not be an option for Aer Lingus to establish pension schemes specifically for former employees which would have benefits paid out in line with national wage agreements. Aer Lingus has advised that, in any new scheme, the lines proposed would be immediately in breach of the minimum funding standard under the Pensions Act as the assets which would be transferred from the existing scheme to the new scheme would be insufficient to provide for an increase in benefits in line with national wage agreements. The additional funding would have to be made available to the fund and the question arises as to who should provide that funding. We have already ruled out State funding in this area.

Ms Shortall

On the last point made by the Minister, I note that he said he has already ruled out State funding. There is nothing preventing the company from providing additional funding to the scheme. I note the message from the Minister for Finance that this is a matter for the company and he refers the matter to Aer Lingus. That is a little rich. The Minister for Finance is the sole shareholder in Aer Lingus. If the company were to remain in public ownership, I would agree that it should be resolved between the company and the retired staff. The difficulty is that they have not managed to secure a meeting with the chief executive until recently on the intervention of the Minister, and therefore it is difficult enough for them to do business. In the event of the ownership of the company changing in the future, there is certainly a moral responsibility on the Minister for Transport to ensure that the concerns of the retired staff are addressed. I appreciate the Minister's action in ensuring that the meeting with Mr. Walsh took place in January but there are outstanding issues as the Minister has stated and the meeting did not result in any agreement being reached.

Will the Minister give a commitment to resolve this issue prior to any change taking place in the future ownership of the company? In providing that commitment, will he report back to the House on the outcome of the next meeting with the chief executive and the action the Minister is prepared to take to resolve the matter prior to the Government divesting itself of any part of the company? Will he report to the House at the same time as he is reporting on the proposals for the future ownership of the company?

Mr. P. Breen

I am disappointed that the Minister has not accepted these amendments. I believe the Minister for Finance would be delighted if part of Aer Lingus was put up for sale in the morning because all the funds would go into the State coffers and provide him with significant funds for future budgets. The Minister is wrong when he says no funding is available. He would be quick to take the funding if there were a sale of Aer Lingus in the morning.

Obviously little transpired at the meeting with the retired aviation staff association and the chief executive of Aer Lingus, Mr. Walsh. It is disappointing because many of these people gave long service and a life commitment to the company and the company has grown substantially over the years. It had its bad times but has been successful in recent times with profits of up to €70 million and €80 million in 2002 and 2003, respectively.

I will press this amendment. I am sorry the Minister has not accepted the amendments. As Deputy Shortall said, I hope that future meetings will take place between RASA and the chief executive and that there will be a favourable outcome to this matter.

Mr. Crowe

It was interesting to hear the Minister speak about the Minister for Finance. Primary teachers would not be too pleased with the unilateral changes the Minister introduced to their pension scheme. Those hoping for some assurances from the Minister will note that he has not been able to give them. The concern of many former workers in Aer Lingus is that they regard this legislation as changing Aer Lingus. They are naturally concerned that their pensions will not meet the standard they hoped for when they retired. Nothing the Minister said will reassure these people, rather concerns will be heightened with the passage of the Bill.

Mr. S. Ryan

It is disappointing to listen to the Minister when he gives the impression neither he nor the Minister for Finance has a role in a decision to alter or change the structure of the existing pension scheme for Aer Lingus and Aer Rianta. Any proposal to change this scheme would require the approval of the Government. It is in that sense that the retired Aer Lingus and Aer Rianta staff are angry and appalled by the treatment they have received over the years. Having acknowledged the problem, the Minister was not prepared to deal with it in a substantial way.

When one reads and examines the Bill and its objectives, one encounters a fact of life — the existing staff have a poor pension which does not keep pace with inflation. The longer they live, the worse it will get for those who have made great efforts. Certain people wish to move in for the kill and to acquire Aer Lingus by buying shares in it. The Government has shown in this Bill that it is prepared to facilitate such people. Deputy Shortall argued that the Government will facilitate a change of ownership in Aer Lingus if it has its way. There is not the slightest possibility that the existing inadequate status of the pension scheme will be improved for current and future pensioners. It is totally unacceptable that it cannot be rectified in the context of this Bill, which will change the status of Aer Lingus at some future stage if the present Government continues in power. If that is the case, nothing can be done about it. It is imperative that the objective of providing for a fair and agreed pension scheme should be incorporated in this Bill. I cannot see why the Minister cannot incorporate such a scheme in some way.

Ms Shortall

Will the Minister make such a commitment?

Mr. S. Ryan

In the interests of the principle of justice and fairness for all, surely the Minister should think of some mechanism to deal with these anomalies.

Mr. Brennan

I am not aware of any precedent, in the public or private sectors, for establishing a new scheme for pensioners along the lines of that suggested by Deputy Ryan. The scheme he suggests would result in the payment of benefits which would exceed those which have been paid for by means of contributions. It is not possible to deal with the pensioners in isolation from the existing employees, as that is a separate issue.

Mr. S. Ryan

We are not asking the Minister to do that.

Mr. Brennan

This issue has implications beyond those which apply to Aer Lingus and the case under consideration. Apart from the funding and the legal reasons, I do not think it is feasible to devise a scheme for former employees.

Mr. S. Ryan

This is not for former employees, it is for all staff.

Mr. Brennan

As I pointed out earlier, it has to be a matter for the trustees and the company. I do not think it is appropriate for a Minister to get involved in detailed negotiations about the level of pensions in commercial semi-State companies. The Deputy is correct when he says that the Department of Finance ultimately signs off on these agreements, but it does so on the basis of prudence and governance rather than on the basis of specific negotiation of the details.

Ms Shortall

The Minister is going to walk away from his obligations.

Mr. Brennan

I take the point made by Deputy Seán Ryan about existing employees. I have dealt with it from the point of view of the company's responsibility. There is no precedent in the public or private sectors for establishing schemes for former employees. The fact that such a precedent does not exist has enormous implications in the entire commercial semi-State sector area. I do not think that I can do it for that reason.

Mr. S. Ryan

In most other public service companies, such as CIE, improvements for existing staff are carried through pro rata to former staff.

Mr. Brennan

It depends on the deed of trust.

Ms Shortall

The Minister has control over that now. The pensioners are looking to him to resolve the issue.

Question, "That the words proposed to be deleted stand", put and declared carried.

Amendment declared lost.

Mr. P. Breen

I move amendment No. 10:

In page 6, between lines 47 and 48, to insert the following:

"(2) Aer Lingus shall establish a scheme for the granting of superannuation benefits to former employees of Aer Lingus and this scheme shall be carried out by Aer Lingus in accordance with its terms.

(3) The New Scheme under subsection (2) shall fix the superannuation benefits payable under such scheme in line with national wage agreements.”.

Amendment put and declared lost.

Mr. Brennan

I move amendment No. 11:

In page 9, to delete lines 39 to 41.

Amendment agreed to.

Mr. Brennan

I move amendment No. 12:

In page 9, line 46, after "provisions" to insert the following:

"and in particular as respects the repeals effected by section 2, different days may be appointed as respects——

(a) different enactments specified in the Schedule,

(b) different provisions of those enactments, or

(c) different purposes”.

Amendment agreed to.

Bill reported with amendments and received for final consideration.

Question put: "That the Bill do now pass."

The Dáil divided: Tá, 61; Níl, 50.

Tá

• Ahern, Michael.
• Ahern, Noel.
• Andrews, Barry.
• Blaney, Niall.
• Brady, Johnny.
• Brady, Martin.
• Brennan, Seamus.
• Browne, John.
• Callanan, Joe.
• Carey, Pat.
• Carty, John.
• Collins, Michael.
• Coughlan, Mary.
• Cregan, John.
• Curran, John.
• de Valera, Síle.
• Dempsey, Tony.
• Dennehy, John.
• Ellis, John.
• Fahey, Frank.
• Fitzpatrick, Dermot.
• Fleming, Seán.
• Fox, Mildred.
• Grealish, Noel.
• Hanafin, Mary.
• Harney, Mary.
• Healy-Rae, Jackie.
• Jacob, Joe.
• Kelleher, Billy.
• Kelly, Peter.
• Killeen, Tony.
• Kirk, Seamus.
• Lenihan, Brian.
• Lenihan, Conor.
• McCreevy, Charlie.
• McDaid, James.
• McGuinness, John.
• Moloney, John.
• Moynihan, Donal.
• Moynihan, Michael.
• Mulcahy, Michael.
• Nolan, M. J.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• O'Connor, Charlie.
• O'Dea, Willie.
• O'Donnell, Liz.
• O'Flynn, Noel.
• O'Malley, Fiona.
• O'Malley, Tim.
• Parlon, Tom.
• Power, Peter.
• Power, Seán.
• Roche, Dick.
• Smith, Brendan.
• Smith, Michael.
• Wallace, Mary.
• Walsh, Joe.
• Wilkinson, Ollie.
• Woods, Michael.
• Wright, G. V.

Níl

• Allen, Bernard.
• Boyle, Dan.
• Breen, James.
• Breen, Pat.
• Broughan, Thomas P.
• Bruton, Richard.
• Burton, Joan.
• Connaughton, Paul.
• Cowley, Jerry.
• Crowe, Seán.
• Cuffe, Ciarán.
• Deasy, John.
• Durkan, Bernard J.
• Enright, Olwyn.
• Gilmore, Eamon.
• Gormley, John.
• Gregory, Tony.
• Harkin, Marian.
• Healy, Seamus.
• Higgins, Joe.
• Higgins, Michael D.
• Howlin, Brendan.
• Lynch, Kathleen.
• McCormack, Padraic.
• McGinley, Dinny.
• McGrath, Finian.
• McGrath, Paul.
• McManus, Liz.
• Morgan, Arthur.
• Moynihan-Cronin, Breeda.
• Neville, Dan.
• Noonan, Michael.
• Ó Caoláin, Caoimhghín.
• O'Dowd, Fergus.
• O'Sullivan, Jan.
• Pattison, Seamus.
• Penrose, Willie.
• Perry, John.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Ring, Michael.
• Ryan, Seán.
• Sargent, Trevor.
• Sherlock, Joe.
• Shortall, Róisín.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Upton, Mary.
• Wall, Jack.

Tellers: Tá, Deputies Hanafin and Kelleher; Níl, Deputies Durkan and Stagg.

Question declared carried.