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Dáil Éireann debate -
Friday, 24 Jun 2005

Vol. 605 No. 2

Air Navigation and Transport (Indemnities) Bill 2005 [Seanad]: Second Stage.

I move: "That the Bill be now read a Second Time."

I thank the House for agreeing to deal with this important emergency legislation at such short notice. The Seanad was similarly supportive. Following the appalling terrorist attacks in the United States on 11 September 2001, insurers withdrew cover for third party war and terrorism risks at short notice and it was necessary for Governments to provide cover so that civil aviation could continue to operate. In Ireland we enacted the Air Navigation and Transport (Indemnities) Act at short notice in December 2001. That Act was designed to expire after 12 months unless motions were passed by both Houses of the Oireachtas keeping it in place. This was due to the significant liability undertaken by the Exchequer under that Act, and because of the perceived temporary nature of the insurance problem at that time.

Thankfully, commercial insurance became available by the second half of 2002 and it was possible to allow the Act to lapse in December 2002, one year after its enactment. Unfortunately, however, the problem has not gone away. During 2004 it became clear that insurers were worried about potentially ruinous claims in the event of a terrorist attack involving the detonation of what is referred to as a dirty bomb, or an electromagnetic pulse. A dirty bomb is one that has been deliberately contaminated with chemical, biological or radioactive material to cause widespread damage to people and property. An electromagnetic pulse is a device that sends out a broadband, high-intensity, short-duration burst of electromagnetic energy — essentially a high-powered pulse of radio waves. Such a bomb could disable or permanently destroy all the electronics and computers in an airport, including those of all the aircraft at that airport, and interfere with radio links for air traffic control. The problem for insurers is that an event involving one aircraft or airport would almost certainly give rise to claims under several, and perhaps dozens, of insurance policies. Cover for "dirty bomb" risks is not normally provided in other areas of insurance, such as marine and property insurance. The international insurance industry believes that such a risk cannot be covered by insurance and must be dealt with at a Government level, in the same way as natural catastrophes.

The matter was discussed on several occasions at meetings of the European Commission's ad hoc group on aviation insurance. As might be expected, neither the Commission nor member states were anxious to give any premature signal to the insurers that they would be prepared to take over any part of the insurance risk, and consequently no overt action was taken while it was not clear that insurance cover would actually be withdrawn. A key part of the strategy in 2001 had been to encourage the commercial insurers to go back to providing the cover that had been withdrawn.

At the most recent meeting of the ad hoc group, on 2 June 2005, member states were informed that insurers have now begun to withdraw cover for “dirty bomb” and electromagnetic pulse risks for aircraft hull insurance as renewals fall due. This has already affected Spain’s Iberia Airlines, and my Department has been advised that it will also apply to an Irish cargo airline when its policy is renewed on 1 July. That airline has been in regular contact with the Department of Transport since it was alerted to this issue, and the Department is exploring with it what kind of assistance it may need in light of the change to its insurance cover.

As a result of that information from the European Commission, my Department immediately set about drafting new legislation to enable the Government to provide indemnities. The Bill that I now present is very closely based on the 2001 Act. However, some changes have been necessary to reflect our experience with that Act and to take account of developments in the intervening period. The most significant change arises because this is expected to be a permanent change in insurance conditions. Insurers do not intend to go back to covering "dirty bomb" and electromagnetic pulse risks in future. Therefore, it is not appropriate for the new Act to have a provision for it to lapse automatically.

Since that insurance withdrawal will be permanent, the new Bill will allow Government orders and ministerial indemnities to be issued for 12 months at a time. That should significantly reduce the administrative burden on aviation companies as well as on my Department. The fact that the Bill cannot lapse automatically is balanced by the 12-month time span for indemnities, which means that indemnities cannot be put in place and then simply left there indefinitely. The Bill also provides that indemnities can be terminated at any time, should that become appropriate. It is possible that the aviation industry in Europe will establish a mutual insurance fund that will eventually eliminate the need for Government support, and I understand that European legislation will be initiated by the European Commission soon to deal with the issue.

However, that will take several years and may need further legislation when the exact form of the scheme becomes clear. The other important change is that, in 2004, a new European regulation was adopted requiring all but the very smallest aircraft to have insurance, including insurance for war and terrorism risks. That regulation came into effect on 30 April 2005. In 2001, only licensed airlines were required to have insurance and the 2001 Act did not allow the issue of indemnities to private or corporate aircraft operators.

Under the new Bill, it will be possible to issue indemnities for private and corporate aircraft registered in Ireland, as well as for the airlines, airports, ground-handling and maintenance companies that received indemnities under the 2001 Act. If we did not extend the legislation in that way, it would be tantamount to a legislative decision to ban all private and corporate aviation. As a further consequence of that change, the Bill extends the scope of airports to include all licensed for public use by the Irish Aviation Authority. The 2001 Act included only airports with commercial scheduled services. The extension of the definition will include the aerodromes at Connemara, Inisheer, Inishmaan, Inishmore and Weston. It should be emphasised that the State would not simply be automatically subsidising the operation of corporate or executive jets. Indemnities will be granted only if essential to the continued operation of civil aviation, and anyone granted an indemnity will be required to pay a commercial rate.

The new Bill also deals with a problem that emerged under the 2001 Act. Under that legislation indemnities could be issued only to businesses that had commercial insurance policies before the cover was withdrawn. In other words, no provision was made for new airlines or other indemnified businesses that might commence operation after the withdrawal of insurance. As a result, it was not possible for the Minister to provide an indemnity for a new airline, Skynet. As it happened, Skynet was able to obtain sufficient insurance to allow it to commence operations. However, as a precaution, and in light of the fact that the withdrawal of cover for "dirty bomb" risks is expected to be permanent, the new Bill will allow indemnities to be given to new businesses that otherwise meet the criteria for qualifying for indemnities.

On the other side, to increase protection for the State, the new Bill contains examples of reasons the Minister may refuse to grant an indemnity or may issue a restricted one. In the 2001 Act, while the Minister was under no obligation to issue indemnities, it was not clear why he might refuse an application. The reasons for refusal now include situations where an applicant has not or will not comply with conditions, whether an applicant has paid amounts due to the Minister under the Act, whether the applicant has all the necessary operating licences, whether the risk is excessive, and whether it would not be in the public interest to provide indemnities for a particular class of activity, aircraft or applicant.

To avoid any future problems about collecting money, it is intended to require payment in advance for the indemnities to be issued under the new Bill. It is not clear at this stage how much revenue will be collected for indemnities under the Bill. Under the 2001 Act, about €5.4 million was collected and a further amount of about €2.6 million is the subject of a High Court claim between my Department and Ryanair.

I will now say a few words on each section of the Bill. Section 1 deals with interpretation. Three categories of aviation undertakings that will be able to obtain indemnities are identified: airlines and operators of private and corporate aircraft; airports and aerodromes licensed as public service aerodromes by the Irish Aviation Authority; and other companies that provide essential aviation services. Those include baggage handling, maintenance, refuelling and security.

Section 2 deals with making a state of difficulty order. That and section 3 are the fundamental sections of the Bill. Section 2 gives the Government power to make an order to declare that a state of difficulty affecting the supply of insurance relating to air navigation services exists. The requirement for the Government order reflects the enormous levels of indemnity required to provide enough cover to enable Irish aviation to continue in operation. The maximum period for such an order is 12 months. Further orders can be made.

It is anticipated that this change in insurance cover worldwide is permanent and that will mean that orders must be made for the foreseeable future. Section 3 empowers the Minister to give or renew indemnities during the course of an order under section 2. Section 4 provides that an indemnity may be issued only in a case where the undertaking requesting the indemnity had insurance immediately prior to the state of difficulty that gave rise to the order under section 2. However, where a new aviation undertaking starts business after the commencement of the state of difficulty order and if it would normally have required such cover, an indemnity can be issued for it too.

Section 5 makes it clear that the Minister is not obliged to give an indemnity and provides that no liability will attach to the Minister if an indemnity is not given, is delayed, or is in error. This section appeared as section 12 in the 2001 Act but has been moved in this Bill to make its order more logical. While the 2001 Act did not give any examples of reasons the Minister might wish to refuse to issue or to renew an indemnity, this Bill cites some issues that the Minister may take into account, including failure to pay for previous indemnities issued under this Bill; whether the conditions of previous indemnities have been complied with; whether the Minister is satisfied that conditions in an indemnity to be issued will be complied with; whether the undertaking holds all the necessary licences to operate; and if it would not be in the public interest to issue an indemnity having regard to the overall liability under the Bill.

Section 6 allows the Minister to impose conditions when issuing an indemnity. The Minister may declare an indemnity void if the conditions are not complied with. It is expected that the conditions will include a requirement to comply with whatever conditions were in the original insurance policy and to notify the Minister if an event arises that might give rise to a claim. This section has one additional feature over the 2001 Act. It specifically states in subsection (2) that the Minister may impose conditions for the purpose of reducing the risk of claims arising in connection to the indemnity.

Section 7 limits the State's liability to whatever limit previously existed under the original insurance cover which was in force before the state of difficulty order came into operation. Furthermore, when all indemnities are taken together, the State's liability will be limited to €9 billion, the same as in the 2001 Act. The Bill proposes that if the total claims from indemnified undertakings were to exceed €9 billion, the payments from the Exchequer would be a proportion of the claims made. In addition to the provisions of the 2001 Act, this section also provides for valuation of the indemnities for undertakings which were not in business before the state of difficulty order came into force but which would have normally required this insurance cover were it available in the market.

Section 8 limits the period of any one indemnity to 12 months, although it may be shorter than that if considered appropriate. Under the 2001 Act, the period of validity was limited to 31 days because the indemnities were seen as a temporary measure. However, as this withdrawal of insurance cover is likely to be permanent, issuing indemnities every 12 months will lessen the administrative burden on both the aviation sector and my Department.

Provision is also made to cover the retrospective period back to 16 June 2005, the likely date of publication of this Bill, in the event that charges need to be applied to cover the period of validity of any letters of comfort that might be issued by the Minister for the period prior to the enactment of the Bill.

Section 9 allows the Minister to impose charges, analogous to insurance premiums, for indemnities. The charge to be applied for indemnities under this Bill has not been set. Guidelines were put in place by the European Council regarding charges for indemnities following 2001 and it is likely that the European Commission will review those guidelines in light of the current situation. Commission officials have indicated that the issuing of indemnities by Governments will not be deemed to contravene the restrictions on State aids, and legislation to that effect is expected to be initiated by the Commission, possibly before the end of July.

Section 10 provides that the Minister may only issue indemnities to Irish licensed airlines, private and corporate aircraft and to airports and service providers whose services are essential to support civil air services. The provision in this section which enables indemnities to be issued to private and corporate aircraft is new. This cover is required because recent European legislation requires these types of operations to have war and terrorism risk cover. Previously, this was not statutorily required but many had such cover in any case.

Section 11 gives the Minister all of the defences against claims that would have been available to the insurance company if the insurance cover had continued in place. Subsection (2) ensures the issue of an indemnity by the Minister does not give any additional rights to a person compared to those they would have had if the insurance had continued in force.

An additional feature over the 2001 Act is to provide for cases where indemnities are issued for undertakings which were not in business before the state of difficulty order came into force but which would have normally required this insurance cover were it available in the market. Those undertakings would not have had previous insurance on which to base the Minister's defences. In those cases, the Minister's defences are based on those that would be held normally by that type of undertaking in its policy.

Section 12 requires applications for indemnities to be in the form required by the Minister and to provide relevant information to the Minister. Section 13 provides that the Insurance Acts do not apply, so that the Minister does not have actually to become an insurance company under the Insurance Acts in order to issue indemnities. Application of the Insurance Acts would have meant that various statutory requirements could arise which would not be relevant or appropriate for the circumstances with which this Bill is concerned.

Section 14 allows the Minister to terminate or suspend indemnities at any time. However, an indemnity in respect of an aircraft in flight will not terminate until it lands. If indemnities are terminated, airlines must get their aircraft to land at the nearest airport as soon as possible unless they get specific permission from the Minister to fly to another airport. This is another key element in limiting the Exchequer's exposure.

Section 15 allows the Minister to re-insure all or part of the liabilities associated with the indemnities, if such re-insurance cover were to become available. Section 16 provides the power for the Minister to make payments in respect of claims under the indemnities. Some minor textual changes have been made to the 2001 Act to clarify how claims are to be presented to the Minister.

Section 17 provides for the Minister's expenses for the administration of this legislation to be met from the Exchequer. Section 18 provides for the payment to the Exchequer of moneys received under the Bill. Finally, section 19 provides for the Short Title of the Act. I commend the Bill to the House.

I recognise the urgency of this legislation and appreciate the Minister and those who support the Bill, which received unanimous support in the Seanad, do so with the best motivation and in the belief it is essential the State should take action in the manner proposed. I also appreciate the briefing I received from the Minister's Department. I have examined the record of the debate on the Bill in the other House and acknowledge the arguments that trade, tourism and aviation in general depend on the State providing the indemnity for aircraft hulls from 1 January and later for airports and so on, when and if they are damaged by a dirty bomb.

Those arguments are persuasive and may be correct. However, we cannot know that for certain because all we have at this stage is unsubstantiated opinion. The Bill is being rushed through in the last days of the session with only an hour and a half set aside for a debate. I am loath to support legislation with such important ramifications on the basis of opinion.

On 1 July, a private Irish carrier's hull insurance for dirty bomb damage will be withdrawn. This seems to be the nub of the matter. I have spoken to a number of people involved in aviation and it seems quite common to have exclusion clauses in insurance contracts. For example, radioactivity damage as a result of a nuclear explosion or similar is already excluded. This exclusion has not prevented aircraft from flying and the consequent benefits for thriving business and tourism interests.

The Minister states that insurance for dirty bomb damage is an EU requirement. This seems extraordinary because the insurance industry has decided it is an uninsurable risk, in other words, there is no premium that could persuade it to provide insurance against this type of risk. However, the Government, with no proper debate or scrutiny in the House and without an opportunity for real research, has decided the taxpayer must provide for the €9 billion indemnity risk which the insurance companies are not willing to carry.

Most taxpayers have no idea what is going on here this morning but if they did, they would like to believe it would give us some pause for thought. I appreciate the efforts of the Minister and his officials who have tried, in the restricted timeframe, to brief Members on the import of this legislation. However, questions remain unanswered. Given the magnitude of the exposure for the taxpayer, no questions must be left unanswered and there can be no ambiguity.

Council Regulations Nos. 2407/1992 and 785/2004 require carriers to have insurance. However, Article 55 of Regulation No. 785 states that "in exceptional cases of insurance market failure", which is the case in the current situation, "the Commission may determine, in accordance with procedure of Article 9, the appropriate measures of obligation of an air carrier to provide an insurance certificate". I do not accept the EU can require that an uninsurable risk be insured. If it can do so, the onus in on the Commission to determine the appropriate measures. It has clearly not done so in this case.

Why must we rush in such unseemly haste to provide indemnity? The case in question relates to a private carrier's hull insurance. Why is it essential that the State must provide this type of insurance to a private carrier? It is not the case that lives are at risk. Are other EU member states rushing forward with similar gratuitous indemnity provisions? In the limited time available, I have looked at the websites of other states' transport departments. There is no sign, for example, of Britain providing indemnity insurance. The Minister mentioned Spain's Iberia Airlines has already been affected by this and perhaps such protection was afforded in that case. There is little point in providing dirty bomb cover for an Irish aeroplane over Frankfurt if we do not receive reciprocal cover for a German aeroplane over Mullingar or Tallaght. In short, we are rushing to provide something which is not necessary. At least, I cannot be certain it is necessary or required by the EU. Even if it is necessary, is it affordable or reasonable to require the taxpayer to do it?

As may be read in the small print when one or one's luggage takes a flight, airlines are capable of altering their contracts to exclude cover for certain risks. They already exclude radioactive damage. Of course, should a calamitous event occur, the State would step in. If an aircraft was damaged by a bomb and people were injured or property or the airport damaged, the State would give every possible relief to those affected. That is a different matter to providing an insurance guarantee which is compensatory rather than consisting of the relief which would be given by any human being or the State to its citizens.

The cover is limited to €9 billion for any claim which, in itself, represents an enormous sum. We may pay €9 billion but, seven or eight months later, might be exposed to a further €9 billion when another dirty bomb causes damage. It is conceivable, though I hope it will never happen, that the taxpayer would have to stump up €9 billion repeatedly. I have to ask whether it is wise that we are exposed to these sums of money. Is compensation and airline protection the best way to use taxpayers' money in what would be catastrophic circumstances in terms of insurance and security? It would make sense in one event but would not if such events recurred. Is it the kind of action which is reasonable for the State to take? I am unsure whether it is and I am not even sure the possibility of recurrence has been considered.

My final objection arises from the absence of a fund. The Bill envisages that premia similar to those of commercial insurance companies would be charged by the Government. That is perfectly reasonable, even if some companies do not think them worth paying. If the scheme was to be established, it makes sense that they should pay for it. I realise it would be years before the fund would collect a sum approximating to €9 billion. Bizarrely, however, no provision is made in the Bill for any fund. Charges are simply to be swallowed by the Exchequer. My reading of it is that the money is to be used as the Minister for Finance sees fit. That is a flaw in the Bill. The Minister may not foresee the legislation remaining on the Statute Book forever but that Europe will take over the liability, as it should. That may be why a fund will not be established. I do not know that. It could be a result of the fact that, on the basis of a perceived rather than a real deadline, it is being rushed through without giving sufficient thought to the matter.

I do not want to be difficult on this issue because I am aware much effort has gone into it and a perceived need exists. The public does not have the slightest idea of what we are doing this morning and, I am sure, will not thank me for my comments on the matter, which may interfere with the legislative programme and cause inconvenience. However, the longer I considered this, the less choice I felt I had. I have to oppose it, at least to create time for its consideration. It represents, by any standard, a significant exposure to the State and deserves longer than an hour and a half of ill-informed scrutiny by this House. It is possible that I am being extremely cautious but we have a history of these matters. My memory is of rushed and largely misunderstand export credit insurance legislation. When that was rushed through, everybody considered it a great and essential idea. It came back to haunt us. That affair looms large and gives me pause for thought. For that reason, I want it noted that we made some attempt to give it the scrutiny required of the Opposition and by the House in general.

I do not intend to delay the House regarding this Bill. I will not use my allotted time on Second Stage. I accept the necessity of the Bill. The Labour Party supported the original Bill in 2001 and sees the current legislation as an extension of that. However, I am concerned we were not given adequate notice of this Bill. The Minister and his officials would have known for some time of the need for this legislation and I wonder why it was sprung on us at the last moment.

We received word from Brussels on 5 June. That is when the matter became clear. I referred to that in my speech so as to provide a timeline.

That may have been when the decision was made in Brussels but it was known in advance for some time that new legislation would be required for this area, given that the earlier legislation had lapsed. I do not know why this rush exists at the European and domestic levels.

I would like information on the operation of the previous provisions in terms of whether airlines have complied with their requirements and premia are paid up to date. The Minister, when he sums up, might provide the House with this information. What proceeds have resulted from these premia? Have all airlines paid up to date and if not, what penalties are incurred? I am not satisfied that adequate safeguards are provided in this Bill to ensure airlines which do not pay their premia are sufficiently sanctioned. I would appreciate if the Minister provided information on that.

I am also concerned that the small number of amendments I tabled have been ruled out of order on the grounds they would give rise to a potential charge on the Exchequer. I appeal to the Ceann Comhairle not to be so strict. The Opposition must have some role in this House. Amendments we propose to legislation can be said to result in a charge, even if only an administrative one. It is unduly strict to rule out of order on that ground the amendments I have proposed to this Bill. It is unreasonable and I ask that the decision be reconsidered. No charge of substance is involved in any of these. The intention of the amendments was to improve the Bill. They are minor technical amendments. I hope to have an opportunity to speak to them.

I would like the Minister to indicate that this arrangement will be revisited in the future. This should have formed part of the Bill. Some may argue for a sunset clause, as was included in the previous one. Other than providing an opportunity to examine this and learn the operation of the scheme, there is undoubtedly a lack of choice in this matter. It has to be provided. While theoretical in many ways, potential exposure exists. There should be an opportunity to revisit the matter in, possibly, five years so as to see the scheme's operation. I would like to see that in the Bill.

I do not intend to delay the House further and will support the Bill.

Most people considering this Bill will think of major airlines and airports such as Dublin, Cork or Shannon. Those airports must be up-to-date in the type of security provided there to minimise risk. I know advances have been made in the type of machinery used and monitoring, and that will be important. I note the Bill extends to facilities that do not have the capacity to do that, such as smaller aerodromes. Three or four of those listed are in remote locations but one is not. Weston Aerodrome is situated between Lucan and Leixlip and has a sizeable number of movements, up to the levels of Dublin Airport, so it is not an inconsiderable aerodrome.

I have serious concerns about the way Weston Aerodrome operates, the profile of the owner and its non-compliance with just about every rule and regulation in the book. It is located in an area where 80,000 people live. Major international companies sought — it was granted — to divert the way planes flew after the attack on 11 September 2001, and I understand why. Weston Aerodrome is beside the State laboratories where certain materials are kept — I will say no more.

This aerodrome is part of a marketing exercise by a large number of people for the Ryder Cup, which is a major event, so it is not an inconsiderable location. It is licensed for a runway of less than 800 metres on code one. I supplied video evidence to the Irish Aviation Authority showing that it uses an area beyond that designed as a stopway-clearway. It has laid tarmacadam on a total of 14,000 metres and uses or has used areas for which it does not have a licence. It does not have planning permission for buildings on the site. The proprietor has built a hotel and conference centre and ripped up archaeological sites to put in a golf course. He has absolutely no regard for the planning laws. It is advertised as Dublin's second airport with 24-hour cargo accommodation even though only daylight flying is allowed. I am drawing a picture of who we might indemnify. Over the years I have been in and out of, and on the phone to, the Irish Aviation Authority offices. The planning process is completely subverted in Kildare and south Dublin. Warning notices have been issued to the aerodrome with regard to the height of planes.

Three Government Departments, Transport, the Environment, Heritage and Local Government and Defence, have a regulatory role in this. The Department of Defence has a problem with what Weston Aerodrome does, and is on record as such. It would be unconscionable for this type of facility to be indemnified when it is clearly non-compliant. I hope the provision in section 5 is used to crack down on this as I have no confidence in the Irish Aviation Authority to do so. If the practice at Weston Aerodrome is replicated in any other airport or aerodrome I would have serious concerns about the level of control we can have potentially on this type of facility. Either a blind eye is being turned or there is no intention to make it comply with the licence it has been given. I cannot see the point of having a licence if months go by before the authorities get back to someone who makes a serious complaint that includes giving video evidence to the Irish Aviation Authority, which was gathered by members of the public who sat in a ditch in the freezing weather. It is the role of the Irish Aviation Authority to gather such evidence.

I understand why we need to indemnify. I hope that in a year's time we can charge for that indemnity, as the Bill proposes, but the Minister must take serious note of the rules of compliance and ensure they are fully met. If the laws are broken, the taxpayer should not be asked to indemnify that type of behaviour in a further example of the State not intervening. The State must intervene and use every power available to stop this type of behaviour. It would be one thing if this aerodrome was used for the purpose for which it is licensed, but it is used for much more than is covered by the licence.

The House was supportive of the original Air Navigation and Transport (Indemnities) Act and how it applied to civil aircraft, but the issues involved here are less to do with people and more to do with commerce. While we obviously have an interest in protecting commerce and protecting exports and imports, more information is required on who benefits from such legislation and how. In his speech, the Minister discussed a company whose insurance cover will not be in place from 1 July. The Bill is being treated in an urgent fashion to counteract that threat. As a Member of this House, I do not know the name of that company, the business in which it is involved, nor the extent to which it is involved in exporting materials.

It is the largest Irish cargo exporting company. I will put the name on the record.

That in itself is useful as we must be aware of the extent of the economic threat of a lack of indemnity in terms of failing to put legislation such as this in place. In general we must be ultra-cautious about the use of indemnities. We need look no further than the difficulties with the export credit scheme for beef to Iran as an example in our recent politics. An individual and a company tended to benefit most from that particular indemnity.

I also have concerns that outside of protecting the commercial interests of the Irish economy, the indemnity is extended, as Deputy Murphy stated, to aerodromes operating not for the transport of goods or only partially for the transport of goods, but more as locations for private and corporate aircraft. It is proposed that the indemnity be extended to such aircraft. In a sense it almost represents a subsidy to a privileged use of transport in this country. I do not see the same principle applied to cases where insurance does not apply to private car transport or the granting of such indemnity or cover to people who use public transport. The Minister must be clear as to why this cover exists in this circumstance when it would not be offered to other transport users.

To be helpful, it is not our decision. We do not have a choice. It was decided within the European Commission as a European regulation so we must do it.

Given that we still do not have a situation whereby Council meetings are fully open to the public in terms of the nature of the conversation that takes place, what arguments were made and who made them, I will take the Minister at his word on that. It is still a strange and bad principle because the effect of this indemnity is almost a further subsidy for a privileged type of transport. We should not encourage that principle.

The only major point of contention touched on by previous speakers in the debate is to what extent this Bill should mirror the previous Bill in terms of having a sunset clause and passing out over a given time period. In his speech the Minister made the argument that it is not necessary because the Bill allows for ministerial orders that would have a timeframe. I put it to the Minister that that might need to be reviewed. Our experience of ministerial orders is that they are placed in the Library of the Dáil and unless the Opposition chooses to use its Private Members' time to challenge whether a ministerial order should be continued we rarely have an opportunity of approving or disapproving that ministerial order.

It is possible, perhaps by way of a Committee Stage amendment, to oblige the Minister for Transport of the day to put the ministerial order before the House for ratification. It is important that where a threat to the State exists in terms of a possible large payout that we do not have to go through the usual machinations of finding out if a ministerial order exists, whether it deserves to be challenged and if it can be challenged. The whole House should be involved. For that reason, more thought needs to be given to that aspect of the Bill.

The general principle of the Bill is acceptable and it will not be opposed by my party but we should be wary of getting into a situation where airline use in all circumstances must be protected as if it were some type of Holy Grail. In the same way that private cars might be used in an over-extended way and people should be encouraged to use public transport or walk, the use of private and corporate aircraft is regarded at times as a status symbol that has very little to do with getting from A to B on time. If problems arise because of the rising price of oil and insurance difficulties for the people who use aircraft as a personal private plaything, I would not be upset about that. The Bill is about more important aspects, however, including the commercial threat to the Irish economy, and as the Minister said it is correct that it must meet the deadline imposed on the individual company. On those grounds, the Green Party will not oppose this legislation.

On first reading there appears to be nothing wrong with this Bill. In fact, the Minister's officials are to be commended. They identified a problem, acted on it by formulating a strategy and legislation was prepared. The Government took up the baton and the Bill before us is the result. If other aspects of air transport were executed as efficiently we would have a second terminal at Dublin Airport, with the building of a third having commenced. We would have a long-term strategy, perhaps even an all-Ireland one, for the development of other airports and the long-term future of Aer Lingus would be secure. We can but dream that this is a new beginning for Government.

On reading the Bill a second time a number of crucial questions arise. There is an important principle in the Bill, namely, that when the chips are down and the private sector is running for the hills, the Government comes to the rescue. It is interesting that the Government's "sell it quickly to anyone" privatisation agenda is missing from this Bill. In bringing forward this Bill it is conceding an important point, that is, that the Government has a role to play in the economy and that it is the backstop when the private sector bolts.

This Bill should dictate terms to the insurance business and companies which receive the indemnities. For example, the Bill allows for charges to be levied for the proposed indemnities. That is essential. If Ryanair can charge the weakest in society for a wheelchair, we can charge it and other airlines for insurance cover.

Section 5 outlines the reasons for not issuing an indemnity. Why not add a clause allowing the Minister to refuse an indemnity to carriers and other companies which are either in dispute with their workers or refuse to recognise their unions or participate fully in the State's industrial relations machinery? I ask the Minister to examine that possibility.

In terms of setting down markers, why is the insurance industry being allowed to walk away from this risk? Is this the beginning of cherry-picking in that they decide the risks they will cover, knowing that somebody else will pick up the slack and leaving the vast profits those companies make untouched?

On the question of the source of the risks, I note from the Bill that the cover is extended to all carriers, suppliers and airports in the Twenty-six Counties. Has consideration been given to the increased exposure of Shannon Airport in terms of the type of war and terrorism cover envisaged in this Bill? That is a facility with daily flights of US military personnel and detainees and it appears to be the most exposed in terms of potential risk.

What contribution of the indemnity charges will be levied on Shannon Airport because of those flights? What insurance cover is the US Government providing for the flights in and out of Shannon in terms of the potential risk to the local population and the airport staff from what the Bill describes as dirty bombs or is that paid for by the Irish Aviation Authority? Is it another case of the Irish Government paying someone else's Bills?

I thank all the Deputies for their contributions on Second Stage. Despite the fairly short notice of the Bill, it is clear Members took time to study its impact and raised various points in that regard.

Deputy Olivia Mitchell is correct. I do not disagree with her, and other Deputies made the same point. I would rather not be here — I am sure everyone here is of the same view — dealing with this Bill but the problem arose in June out of the ad hoc group in Brussels and we were informed immediately. My officials briefed me on it immediately and we decided, as did other Governments in the same position, that we had to deal with it to protect Irish aviation, our airports and the other ancillary companies — baggage handling etc. — in airports.

To reply to Deputy Mitchell's point, the fact is that insurance will not be available. We are aware that Iberian Airlines has experienced serious difficulties in trying to get cover as a result of this decision and the Government had to step in. The company that a number of Deputies referred to — I have no difficulty putting it on the record — is Air Contractors. It is the largest Irish cargo airline with 200 employees and it will be affected from 1 July. That is partly the reason for this legislation.

From recollection, our main airlines — Aer Lingus, Ryanair etc. — renew later in the year, from about September or October, and the Dáil may not be in session to deal with some of them. Our main carriers would have been in difficulty also in that timeframe and it was decided to move quickly on the issue.

There are no subsidies involved. As I said earlier, we will charge the full commercial rate for the insurance, which is only right. On this occasion we will want payment before the cover will issue. I understand that was not the case under the previous Bill but on this occasion we will ensure we get full payment up-front for the cover.

In reply to Deputy Shortall, I gave the figures to the House earlier. She may have been attending another meeting at the time. On the last occasion the premiums amounted to €5.4 million. There is a further €2.6 million owed by Ryanair, which it disputes, and I understand that case is before the High Court. Deputy Mitchell smiled when I said I made the changes to ensure we do not end up in that situation.

In terms of the beneficiaries, they will be largely our own people who will be affected if a catastrophe occurs. We are doing this for families etc., mainly Irish families if it involved our own airlines.

I accept this is not a satisfactory situation. All governments would probably take that view. We will seek to ensure that a mutual scheme is set up, that will take governments out of the picture at a European level, to cover all European airlines. That is being examined by the European Commission and the sooner we can move to that position, the better from everybody's perspective.

In reply to Deputy Mitchell's question about a possible claim for €9 billion, if such a claim was made the Government would have to decide at that point what should be done. The Bill does not provide for such a possibility and it would have to be considered if such a catastrophe occurred. It would be a matter for all Governments as to how we would do that. If we are to protect Irish aviation from a commercial point of view, our passengers and our tourism industry, we must put this measure in place. Deputy Shortall made the point that the possibility of such a catastrophe was theoretical but the European Commission has decided we must provide these covers and extend them to other airports licensed by the Irish Aviation Authority. It is not just about the large airports but all airports and all airlines. The Commission also decided corporate and private aeroplanes must have this cover irrespective of the Government stepping in. Such cover was not mandatory previously, although a number of corporate and private airlines took it out. If we were not to do this, we would effectively ground all private and corporate airlines doing business in this country, which would create an untenable situation from an Irish perspective.

In that case, they might stay and pay their taxes.

Deputy Boyle might accept that much corporate activity is extremely legitimate in terms of foreign direct investment into this country. We rightly must take account of the situation.

Nuclear, marine and property insurance matters are excluded. However, war on terrorism cover has been provided for aviation activities and is a requirement of the new EU regulation, Regulation 785/2004. The Commission has not yet considered whether a change to the regulation is appropriate and we await its deliberations. The Bill is an enabling provision to allow the provision of cover. As an example, the United Kingdom has had legislation in this area for many years. I have given the name of the cargo airline company referred to by Deputies. Orders must be laid before the Oireachtas and either House may vote to annul them within 21 days, which is a normal arrangement.

On the points made with regard to Weston Aerodrome, the Bill does not deal with such matters. The Deputy raised serious matters with regard to airport security, which I am sure will be picked up during the debate. All appropriate laws which are already in place are being acted upon at whatever airport where this is necessary. We obviously want to ensure appropriate security arrangements are in place at every airport. As the Deputy rightly stated, the regulation and safety of flying at Weston aerodrome is a matter for the Irish Aviation Authority. I would be somewhat taken aback if the accusations made by the Deputy during the debate stood up. I hope they do not and would want to hear from the IAA that this is not the case. Section 5 allows the Minister to refuse an indemnity where licences are not in place as required.

In reply to Deputy Shortall, the airlines complied with the requirements and all payments have been made, except in the case of Ryanair, which is the subject of a court case.

That is the overall position. We must move quickly in this regard. However, each case will be considered very carefully. Companies will not come in and get cover without the fine detail being examined. The State will not necessarily take the entire insurance package. Cover will be specific and we will ensure that the State's exposure is minimal so as not to take cover from the commercial sector. The commercial sector will continue to cover a broad range of issues. We will be very precise on interpretations. We learned from the previous Bill in drawing up this Bill, with the result that some areas have been tightened up.

I accept we all have concerns about the need to enact the Bill in such a short timeframe. I appreciate the Dáil and Seanad's facilitation of the Bill because there is no choice if we are to keep Irish aviation flying. The Bill extends further than the previous Bill into areas concerning airports, baggage handling and other areas which would not have cover if the Bill were not passed. A great deal is at stake but, please God, we will not have to face the day where such a catastrophe would be visited upon our people in our aviation facilities or on our airlines.

Question put and agreed to.
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