Dáil Éireann debate -
Wednesday, 5 Apr 2006

Vol. 617 No. 5

Leaders’ Questions (Resumed).

Mr. Rabbitte

The Labour Party joins in deploring the grisly murder yesterday and offers the Taoiseach support in his efforts tomorrow to get the Northern Ireland institutions back up and running.

I want to raise with the Taoiseach the decision his Cabinet made yesterday to sell off a strategic State asset, the most important decision since the Eircom sale. Is the Taoiseach resolved on this course irrespective? I know there is one view abroad, as there currently is on many issues. There was one view abroad on the sale of Eircom, and the sale turned out an unmitigated national disaster, a decision which set back the telecommunications infrastructure in this country by at least a decade. There was also one view taken in most sections of the media and by most of the commentators, not to mention the advisers and consultants who got €70 million for advising on the sale.

The Taoiseach proceeded with the Aer Lingus decision yesterday and has proceeded to build up anticipation and to sell the company on the basis of two deceptions. The first is that the Minister for Transport and the Taoiseach's spokespersons have put abroad the word that because of EU rules, the State was prevented from investing in Aer Lingus. That is not so, which fact has been established by the commission set up by the European Court of Justice, so it is perfectly permissible for a State company to invest for normal commercial reasons in a company, just as a private investor can.

It is interesting to look at the Goldman Sachs report of November 2004 in which that company made it quite clear that it was asked to advise on Aer Lingus, subject to the over-riding stipulation as follows:

The current policy of the State is to provide no further equity funding to the company. The State will not provide further capital to the company either to fund expansion or in the event of a financial crisis.

Goldman Sachs made it plain this restriction was a matter of Government policy, not an EU restriction.

The second deception relates to the pretence that the Minister for Transport is retaining a golden share. The Minister and the Taoiseach know the European Court of Justice rejected as illegal the ownership of a minority golden share which would protect strategic interests. In the case of the UK Government's golden share in the airport operator, BAA, it was ruled illegal under EU law in May 2003. The golden share had special voting rights attached to it and sought to give Ministers the final say in major decisions such as selling the airport. The European Court of Justice ruled on this matter that it is illegal to use the golden share for protection of strategic interests. The Taoiseach is so confident about the decision made, but it is a surprise to most people that the Progressive Democrats has pushed Fianna Fáil so far to the right — it would be unthinkable even a decade ago that Fianna Fáil would have sold off the national airline in a country that has the strategic requirements of an island nation. The Taoiseach nonetheless proceeded. If he is as confident as that of his decision——

An Ceann Comhairle

The Deputy's time has concluded.

Mr. Rabbitte

——why could it not be done on the basis of honestly setting out the case rather than asserting two major falsehoods, that he cannot invest as the shareholder and that the golden share will protect us?

The Taoiseach

I do not think either of those are the basis of the debate. Whatever about earlier arguments, I have been engaged and involved with Aer Lingus for a long time. I was the last Minister for Finance to invest substantial resources in Aer Lingus to keep it flying at the time and to allow it to buy the Airbuses which was a big modernisation issue. As Taoiseach I was involved in the effort following 11 September, which was no fault of the company, when the aviation business worldwide slumped to the bottom and where strong airline companies were going to the wall, to try to work with the staff interests to protect it and keep Aer Lingus flying. I have long been a supporter to try to strategically help Aer Lingus. We spent the period from 2003, after that last plan, up to 2005 deciding how best to allow the development of Aer Lingus into the future. I accept the sale or part sale of a State company is a big decision. The Government decided to allow the sale of a majority shareholding in Aer Lingus a year ago to facilitate an equity injection into the company while retaining a significant stake in the company to protect the State's key strategic interest. That was part of the decision yesterday.

Following consideration of the report received from the advisers who worked on this during the past year, following the two years' work put in by the Government, and following agreement with the Minister for Finance on the matter, the Minister for Transport presented the case to Government yesterday on the implementation of the investment transaction. In line with the Government decision of last year a majority of the Government's shareholding in Aer Lingus will be sold. This will be done through an initial public offering of the company's shares on the Stock Exchange. The State will retain at least 25.1% of the company to protect the State's strategic interest. It is important that is done.

The Minister will mandate our advisers to commence work on the implementation of the IPO. The Minister has also advised us of the outcome of the consultations with the trade unions on investment transactions. Understandably there are a number of issues of concern they wish to see addressed, following long discussions with the Minister for Transport. Job security and pensions are the two major issues. The Ministers for Transport and Finance have mandated the management of Aer Lingus to engage with the trade unions with a view to resolving the issues identified by them. Hopefully, through this process, we can find a way forward to allow the staff's interests to be addressed to the maximum extent possible. That is the background. It is not a question of what the Government can or cannot do. It is a question of allowing Aer Lingus with the State still being involved, to develop into being a stronger airline than it has been in the past. Twice in the past decade Aer Lingus almost went down. This, based on all the best advice, is the way to allow it get available funding in the financial markets, to have additional aircraft, to help the financial strength of the company, to grow into the future and to implement its own business plan. To do otherwise, would be to reject the best advice available to us. Deputy Rabbitte will appreciate that the Government could do that. I could do that and say we do not accept the advice of the management, and for that matter, the last management, the board, the advisers or our Government people and go a separate road on which nobody has advised.

A Deputy

These were the same advisers in the case of Eircom.

The Taoiseach

If I was to do that I would be open to far more questions.

Ms Burton

What will happen to the golden share?

An Ceann Comhairle

Deputy Rabbitte without interruption please.

Mr. Rabbitte

The Taoiseach answered fewer of my questions than usual. For example, there is no clarity in the statement issued yesterday. Can the Taoiseach say when the IPO will take place? Precisely how much of the company will be disposed of? What proportion of the pension deficit will be cleared? If his argument is that he envisages a further demand for finance, in those circumstances will not his share and the share of the ESOT be reduced? Are his arguments not the exact arguments we heard at the time of the Eircom takeover? Surely, colleagues in the House can recall it so short a time ago. The then Minister, Senator O'Rourke, was just short of doing a Molly Malone on it in O'Connell Street, going up and down with her wheelbarrow, inviting anyone to come along and buy the shares, and we see what happened. We see what has happened to our telecommunications infrastructure and to the roll-out of broadband where Ireland has slipped from second place in the league table to the bottom.

An Ceann Comhairle

The Deputy's time is up.

Mr. Rabbitte

Will the Minister for Transport, Deputy Cullen, do a Molly Malone this time? Can one imagine such an accident prone Minister being in charge of handling an IPO in these circumstances? Would the Taoiseach buy a secondhand voting system from this Minister?

Mr. Cullen

I would not buy one from the Deputy either.

Mr. Rabbitte

This is the situation we are in. Can the Taoiseach say when the IPO will take place? Exactly what size of share is being retained. What does he propose to do when that share is diluted? Does he accept the European Court of Justice ruling in the matter of a golden share? Why is he putting it abroad that this is going to protect a strategic interest in the future when he knows it will not? Did it protect us in the case of Irish Sugar? Was not the House told at the time by the former Minister, Michael O'Kennedy, that he would retain a golden share, which I think was 35%? Did that protect Irish Sugar? We are doing all this for how much? Is it €400 million? Some €400 million is a peddling amount of money in these circumstances.

An Ceann Comhairle

The Deputy's time is exhausted.

Mr. Rabbitte

Given that, obviously, much of the homework is done behind the scenes will the Taoiseach give us some idea of how much it will cost us in advisers and consultants to sell a strategic national asset?

The Taoiseach

The next steps are that the Ministers for Finance and Transport will mandate the company to negotiate with the trade unions on the package of measures to address the concerns that have been identified. I have already said they are job security, pensions and possible dilution of ESOT shareholdings, following the issue of additional shares in the company. These and others are the issues the company will engage in with the unions. In parallel with this process the advisers appointed by the Ministers last year will be mandated to commence preparations for an IPO of shares in Aer Lingus as early as possible, taking account of the need to comply with Stock Exchange rules and to launch the stock in the most positive market conditions. A period will have to elapse while that is being done. The final terms of the investment will be agreed between the Ministers for Transport and Finance and the general principles of the disposal of the majority of the State's shareholding will be laid before the Dáil for approval. Together, the State's share and the trade unions' share will amount to 40% of the company.

Ms Burton

For how long?

The Taoiseach

The issue is to try to allow Aer Lingus to grow, expand and prosper. The best way of ensuring the company does not go the road of other airlines, including very strong companies such as Swissair and some of the biggest government-owned airlines in the world, is to try to allow it to grow and prosper.

Ms Burton

New Zealand was forced to renationalise its former State airline.

The Taoiseach

Thankfully, the number of people using our aviation industry, the strength of our tourism base and investment in the economy mean it is sensible to do this. With continued State involvement in Aer Lingus, this option will be good for the airline, staff and customers. The transaction will give the company access to the broadest range of funding available on the financial markets, enhance its financial strength and give it commercial flexibility to compete and win in one of the world's most dynamic industries.

Mr. Stagg

There is nothing preventing it from doing that at present.

The Taoiseach

If one wants Aer Lingus to survive, it must be allowed to trade and deal on the same terms as others.

Ms Lynch

Why not invest in it?

An Ceann Comhairle

Allow the Taoiseach to continue without interruption please.

The Taoiseach

The only way the airline will thrive is to allow it to implement its own business plan, which will result in the long-haul fleet doubling in the short term and growing by more than 55% over the next five years, with the positive implications this will have for employment. This is the right way to proceed.

Ms Shortall

The Taoiseach failed to answer any of the questions.

Mr. J. Higgins

I notice the millionaire-owned press this morning warmly embraces the Government decision to privatise the national airline. Why would it not do so given that some of its key players made a fortune in asset-stripping the previous major taxpayer-owned company the Government privatised, namely, Telecom Éireann? No doubt the directors of Greencore warmly applaud the decision to privatise Aer Lingus. After all, they made a fortune from another Fianna Fáil privatisation, never mind that they destroyed the beet and sugar industries and the jobs of hundreds of workers in the process. The millionaires who owned Irish Ferries will also warmly support the Government's privatisation plans and might even buy shares. They might also be in a position to advise the new owners on how one takes a trade union workforce with reasonable pay, jobs and conditions and turns it into a yellow pack operation of exploited migrant workers. The bankers, to whom the Taoiseach wants us to be nice, will also applaud the decision as they will get enormous consultancy fees. In other words, in the privatisation of Aer Lingus the Taoiseach is in the company of sharks and not the majority of the Irish people. The decision to privatise the company, if implemented, will be one of the most outstanding acts of economic treachery committed by any Government in the history of the State.

In previous times, attacks on Aer Lingus or its workers would draw loud protests from Fianna Fáil backbench Deputies from north Dublin, Clare, Limerick or Cork but now that the greatest act of betrayal is imminent we hear not a whimper of opposition. A collapsed rugby scrum would emit more intelligible grunts than we have heard from Fianna Fáil Deputies in protest at the privatisation of Aer Lingus. If the airline's workers from north Dublin had sent in cabbage heads from the local vegetable farms to decorate the benches behind the Taoiseach, they would get more decent representation in opposition to the privatisation plans than from those who represent them at present.

Mr. O’Donoghue

The Deputy should stop insulting the greens.

Mr. J. Higgins

Why does the Taoiseach persist with the fraudulent assertion that privatisation is necessary for funding when he is well aware that, if necessary, public funding to the tune of billions of euro can be wisely invested in this national asset? Shamefully, under his mandate our nationally-owned pension funds are invested in the murderous armaments trade and killer tobacco industries but are not allowed to be invested in a publicly-owned company.

The Government does not have a mandate from the people for this privatisation. Prior to the previous general election the Fianna Fáil Party did not go before the people with a commitment to privatise Aer Lingus. The workers in the company would be entirely justified in paralysing these privatisation plans with industrial action and would be acting far more democratically than the Government. I challenge the Taoiseach and his party to withdraw the privatisation plans and make them a key issue in the forthcoming general election. Let us debate the matter and allow the workers and people to have their view on it. I have no doubt what that will be.

The Taoiseach

One of the great features of parliamentary democracy is that people are entitled to hold opinions. The Deputy is entitled to his opinion but I disagree with practically everything he says and does on every issue and this one is no exception. His theory would have resulted in Aer Lingus's closure. The company still employs 3,600 people. It employed 3,000 more when it was in State ownership and hamstrung by the constraints imposed by the State which prevented it from developing. These are the great things the Deputy would have.

Mr. J. Higgins

That is untrue. The Government refused to invest in Aer Lingus.

The Taoiseach

The Deputy's small band of merry men and women in the company would always argue that Aer Lingus should be restricted, kept in State hands and not allowed to develop. They take pride in the fact that Aer Lingus, as our national airline——

Mr. J. Higgins

The Taoiseach should address the issues.

The Taoiseach

I listened to the Deputy. Democracy works both ways and, like him, I am entitled to speak.

An Ceann Comhairle

Allow the Taoiseach to continue without interruption. Deputy Joe Higgins will have an opportunity to speak.

The Taoiseach

The Deputy would prefer Aer Lingus, when the European open skies policy comes into force, to continue to be able to fly into just five airports in the United States and have no opportunity to develop and grow and no chance of enhancing its status. Rather than unions and workers owning some of the shares, he would prefer them to be the slaves of what he sees as the capitalist class. He opposes workers owning shares and being able to have pride in their company. His ideology is gone, even in the most eastern parts of the communist world. His day and his old arguments are finished and he should realise it.

Mr. D. Ahern

Even Deputy Rabbitte no longer believes them.

Mr. J. Higgins

The Taoiseach should return to his history books and learn the real history——

(Interruptions).

An Ceann Comhairle

Allow Deputy Joe Higgins to continue please.

Mr. J. Higgins

I see one of the Cork Deputies has got his voice back. Perhaps he will raise it in support of Aer Lingus workers. The Taoiseach should go back to his history books and read the real history of socialism.

Mr. D. Ahern

The crowd who used to print money.

Mr. J. Higgins

He would learn that the monstrous dictatorships in eastern Europe, with which Fianna Fáil Party Governments had diplomatic relations and its Ministers regularly visited, would be anathema to that for which the Socialist Party has always stood.

The Taoiseach has evaded the issues. Why are right-wing economists — not socialists — calling for the renationalisation of Eircom following the disastrous outcome of that privatisation? The Independent Deputies, not all of whom are socialists, support maintaining Aer Lingus in public ownership, as do the company's workforce and the people. It is the right-wing ideologues of Fianna Fáil and the Progressive Democrats who are pushing the privatisation agenda and forcing our national airline into the hands of sharks.

The Taoiseach should wake up. All over Latin America, for example, people are up in arms in opposition to the privatisation of crucial services such as water. The clock is turning against the neo-liberal agenda and towards the idea of investing in public companies. The way forward for Aer Lingus is to bring workers to the heart of the company and develop it democratically with a full input, not to take the Government's route of handing it over to sharks and, inevitably, losing control of it. If in ten years the national airline has been asset-stripped by corporate vultures, with jobs, wages and working conditions ravaged, the Taoiseach may well be riding into the sunset, but it will remain as a monument of shame to the neo-liberal agenda he and his Government has pushed for the past nine years.

Mr. Cullen

The Deputy would see it closed with his philosophy. That is the rubbish we heard in the 1960s.

Mr. J. Higgins

If I were the Minister, I would hide in the benches over there.

Mr. Cullen

I will not hide. The Deputy will never find me hiding. I stand my ground.

Mr. J. Higgins

Remember the clapped out voting machines when you talk about old ideology.

Mr. Cullen

That's an old song. You should get something a bit more original.

The Taoiseach

Obviously the Deputy and I disagree on this and we will continue to disagree. I remind the Deputy that, before it was liberalised, the old Department of Posts and Telegraphs was in place when I was first elected to the House. One of the biggest issues for constituents was having to wait four or five years to get a telephone. There were no telephones.

Mr. Stagg

They are waiting again now.

The Taoiseach

People could not make telephone calls. Now one can walk into any office or premises and get a telephone on the same day.

Mr. Stagg

They cannot.

(Interruptions).

The Taoiseach

There is huge competition now.

(Interruptions).

An Ceann Comhairle

Members of the Labour Party are not members of Deputy Joe Higgins's party. He asked a question and he is entitled to hear the reply without interruption.

Mr. D. Ahern

They would sell their souls to anybody.

The Taoiseach

They would make an excellent Government by renationalising the telephone system to bring us back to the dark past. I suppose they would ban mobile telephones as well.

(Interruptions).

An Ceann Comhairle

Allow the Taoiseach to continue. Deputy Joe Higgins had his opportunity to speak.

The Taoiseach

I will say two things because obviously I will not be allowed to speak. Deputy Joe Higgins argued for years — I admire him for this — about how great the countries of eastern Europe were and how we should be the same.

Mr. J. Higgins

This is incredible.

The Taoiseach

The Deputy argued for that.

An Ceann Comhairle

Deputy Joe Higgins must resume his seat. He had an opportunity to speak.

Mr. J. Higgins

This is slanderous.

The Taoiseach

The truth is always slanderous.

Mr. J. Higgins

The Taoiseach cannot explain——

An Ceann Comhairle

Deputy Joe Higgins had his opportunity to speak.

Mr. J. Higgins

——the difference between Stalinism and democratic socialism.

The Taoiseach

Deputy Higgins would tell all the countries that joined the European Union that they were wrong and that they should re-nationalise all the companies they have sold. He believes that but I think it is rubbish and, thankfully, the people in those countries think it is rubbish as well. I reject the Deputy following that course here.

Aer Lingus in its current situation can hardly manage to deal with the five airports it flies to in the United States. However, there are 22 locations in the United States that want to do business with this country.

Mr. Stagg

The Government will not invest in the company.

The Taoiseach

Please listen. It is not possible to fly people from these locations if one does not have the aircraft. I am sure the Deputy understands that.

Mr. M. Higgins

What about a flying voting machine?

The Taoiseach

Therefore, we need investment to bring people here. If we can bring these people to different regions of the country, it will develop tourism, which will create jobs and allow us to become a modern country.

Mr. Stagg

One does not have to sell Aer Lingus to do that.

The Taoiseach

I know Deputy Higgins does not particularly like that but that is what I want to do for the future. I believe this policy is the right one.