I move: "That the Bill be now read a Second Time."
On behalf of the Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe, I am pleased to introduce to the House the Harbours Bill 2015. The Bill results from the review of ports policy which began in 2010 and culminated in the publication of a new national ports policy in 2013. The primary purpose of the Bill is to provide the necessary legal basis to allow for the later transfer by ministerial order of the five designated ports of regional significance to local authority-led governance structures. Every Deputy is aware of just how important our ports are to our island nation. The Competition Authority estimates that ports handle around 84% of all our merchandise trade in volume and about 62% in terms of value. The ports are, simply, critical to our ability to trade with the rest of the world.
Our ports face challenges to ensure they are capable of meeting the modern needs of the economy and the nation. These challenges are nothing new as throughout history the fortunes of individual ports have ebbed and flowed in response to changes within ports and the shipping industry. Currently, there are nine State commercial port companies operating under the Harbours Act 1996. Their status is that of a State-owned private company the shareholders of which are the Minister for Transport, Tourism and Sport and the Minister for Public Expenditure and Reform. The companies are guided by a board of directors appointed by the ministerial shareholders and managed by a chief executive officer answerable to the board of the company. Additionally, we also have Rosslare Europort which differs from the other ports as it does not operate under the Harbours Acts but is instead a business unit of larnród Éireann. Within the nine State port companies there is enormous variety. As an example, in 2014, Dublin Port handled 21 million tonnes and 7,000 vessels, while at the other end of the scale Wicklow Port handled 94,000 tonnes and 56 vessels. It is clear that different ports perform different functions and service different markets. National ports policy recognised these differences through providing a clear outline of the Government's strategic vision for the sector by categorising it in three tiers.
The tier 1 ports of national significance are Dublin, Cork and Shannon Foynes. Collectively, these three ports handle over 80% of all tonnage handled in Irish ports in any given year. All three have ambitious development master plans and earlier this year the Minister, Deputy Paschal Donohoe, launched the first phase of the Shannon Foynes development, its east jetty project, while both Cork and Dublin ports have just recently received planning permission from An Bord Pleanála for their projects in Ringaskiddy and the Alexandra Basin. The expected total outlay on all these projects is over €350 million and all will be delivered without any Exchequer contribution. The Minister was delighted to learn recently that all of the projects had qualified for EU funding through the trans-European transport network, TEN-T, programme and its related Connecting Europe Facility, CEF, funding stream.
The tier 2 ports of national significance are Rosslare Europort and Waterford Port. These ports together handle approximately 7% of total tonnage. Importantly, both offer competition to the bigger ports in the economically significant unitised LoLo and RoRo trades. Both are well positioned in terms of their ability to service direct routes to the Continent and are well connected to the national rail and road networks.
The ports of regional significance are the remaining five State port companies. They are Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow ports and any other port which handles commercial freight. These are the ports which are central to the Bill. Collectively, they handle approximately 4.5% of total tonnage, which represents a decrease of over 30% in their collective market share when compared to 2000. Within them there are individual, very different stories, with some quite dramatic decreases in commercial tonnage in Dún Laoghaire, New Ross and Wicklow, with much more modest decreases or even steady State developments in Galway and Drogheda. The Government recognises that there are those with particular interests who may question the need to make any change to the status quo. However, at a national strategic level, we need to be clear on which ports are fundamentally important for national competitiveness and regionally significant.
The approach adopted by the Government is broadly accepted by all as common sense. The Oireachtas Joint Committee on Transport, in its review of the Bill, stated its overall purpose was broadly supported by the committee. In respect of the ports of regional significance, national ports policy recognises that the five ports continue to play an important role for their regional hinterland. However, this role is not one that requires central government oversight.
In line with the Government's reforms in the area of local government generally, responsibility for the oversight of these regionally significant ports should be devolved to the most appropriate level of government, that is, the local authorities. This devolution of responsibility will allow the ports to continue to develop as required by their regional economy and in tandem with their regional community. The change in perspective will enrich and enhance their future development. It better aligns the needs of the local authority, the regional economy and the port. For some of the ports, the requirement that a separate statutory company should oversee and manage the port may no longer be appropriate. The Department of Transport, Tourism and Sport has funding available for local authorities for a due diligence exercise in respect of all five companies. The results of these exercises will inform the eventual model of transfer chosen for each port. The Bill is flexible enough to allow for either the continuation of the existing company and a transfer of the ministerial shareholding to the local authority or for dissolution of the existing company and a physical transfer of all assets, liabilities and employees to the local authority.
The main provisions are found in Parts 2, 3 and 5 of the Bill. Part 2 deals with the first of the two possible transfer methods, that is, a transfer of shareholding in the existing company. Section 8 provides the actual power to transfer the shareholding to a port company. Any order under the section will be made by the Minister for Transport, Tourism and Sport with the consent of the Minister for Public Expenditure and Reform, as the other current shareholder, and the Minister for the Environment, Community and Local Government.
Section 9 provides a potentially interesting new dynamic for the commercial ports sector. It allows for the local authority chief executive, subject to the consent of the elected members of the council and the Minister for Transport, Tourism and Sport, to consider a divestment of shares in a transferred port company to the private sector. However, it ensures continued public ownership of the port through limiting any such disposal to 49% only of the shares in the company. This represents a new potential method of sourcing funds for future development for the transferred port companies. It is not currently a feature of the sector.
Section 10 provides for a general ministerial power of direction to the transferred port companies in respect of the national ports policy. The section requires the Minister for Transport, Tourism and Sport to consult the Minister for the Environment, Community and Local Government and the chief executive of the local authority concerned prior to issuing any such direction. The requirement for consultation addresses a concern identified by the Oireachtas joint committee with regard to its potential unilateral use and possible interference in a particular company's operations. The section restricts the use of the direction to general policy issues only; it cannot be used to direct a company to act in a particular manner in a particular instance.
Sections 11 to 27, inclusive, lay out the administration of the transferred companies under the new local authority shareholding arrangements. The Harbours Act will continue to apply to any company that transfers under the transfer of shareholding model. However, as the Acts contain several explicit provisions relating to the ministerial shareholding, the sections require amendment to reflect the fact that the shareholding has transferred. The exercise of these shareholder functions will primarily be a matter for the local authority chief executive, but the Bill also provides for a number of important oversight functions for the elected members.
Section 11 lists 17 sections of the Harbours Acts that will no longer apply to a transferred company. These sections are those requiring an active role for the shareholders in consenting to something. Obviously, since the shareholding has changed, these sections can no longer apply and amended versions are instead included within sections 13 to 27, inclusive. Many of these sections are routine in nature such as section 14 which requires any change to a transferred company's memorandum and articles of association be approved by the relevant local authority chief executive. Therefore, I will focus my remarks instead on a number of the more substantive sections, as well as on the role of elected members generally in the oversight of the transferred companies.
In instances where the transfer of shareholding model is chosen as the transfer method, the company structure remains in place as it applies today. One important consideration in the model is to ensure the appropriate balance between the commercial freedom of the company and democratic oversight. The Bill achieves this balance through providing for a number of specific oversight functions for elected members of the council. First, section 23 requires the chairperson and the chief executive of a transferred company to appear before the elected council, if invited, to account for the administration of that company. Second, there is a provision within section 22 for any proposed chairperson of a transferred company to appear before the elected members prior to formal appointment. This mirrors the current practice of prospective chairpersons appearing before the Oireachtas joint committee, a practice which the Government introduced and which has proved its worth in allowing elected representatives to quiz prospective chairpersons on their vision and ambition for the company in question.
Section 19 requires the annual audited accounts of the transferred company, accompanied by a report on the year generally, to be laid before the elected members. While it is a matter for the relevant local authority, there are obvious potential links between the submission of the accounts and the power of elected members to require a chairperson and the chief executive to appear before the council under section 23. I have already stated the consent of the elected council will also be required where any disposal of shares in the transferred company to the private sector is envisaged.
In the case of board appointments to the transferred companies, the Minister for Transport, Tourism and Sport is clear in his view that the improvements to the board appointments process generally must apply to any transferred company also. Therefore, section 22 mirrors the improvements introduced in section 39 for those companies remaining under ministerial shareholding. Directors will be selected through the State board appointments process which the Minister for Public Expenditure and Reform launched in February. The Bill requires that certain skill sets be present on the board, including maritime transport, financial, legal and commercial skills. It also indicates a further set of skill sets that might be considered for board level representation such as infrastructure planning or environmental management.
The local authority chief executive will formally appoint the persons recommended by the Public Appointments Service. The maximum length of total service of any director will be limited to ten years. This will allow for the development of board level experience, as well as provide the required fresh thinking, which is a necessary feature of any board. The central oversight of the Department of Public Expenditure and Reform of board fees will be maintained. As is the case today, the chief executive of a transferred company will be appointed by the board of the particular company after consultation with the local authority chief executive. The central oversight of the Department of Public Expenditure and Reform of terms and conditions of chief executives will be maintained.
These are the key issues addressed in Part 2, but the Bill also provides for a second transfer method within Part 3. This model is called "transfer and dissolution of companies" and outlined in sections 28 to 33, inclusive. Essentially, the sections are based on existing precedents generally and provide for the break-up of the company as a corporate body and its complete integration within normal local authority structures. The port would be administered as any other functional area of a local authority. All employees would transfer to the service of the local authority, as would all property, assets and liabilities of the company. The Bill provides for the continuation of harbour and pilotage limits.
Part 5 runs from section 37 to section 49 and generally comprises technical amendments to the existing Harbours Acts that are being made on foot of submissions made during consultation or experience gained in the years since the last amendments were made. There are, however, three important elements of this Part of the Bill that further improve the overall corporate governance culture within the ports sector. Section 39 amends the board appointments process through, for example, introducing mandatory skill sets and introducing an overall term limit of ten years.
Section 40 introduces a new statutory provision regarding the accountability of a chairperson and the CEO of a port company to elected representatives. The section requires the chairperson and the CEO to appear before the Oireachtas joint committee if invited to do so and account for the administration of the port company.
Section 42 extends the current prohibition on Members of the Oireachtas and MEPs serving on the boards of port companies to include councillors. This will apply equally to those companies the shareholding of which remains with the Minister and the shareholding of which transfers to a local authority shareholding model. National ports policy is clear that the boards of port companies must comprise individuals with the necessary skills required in any commercial company. The Bill is legislating for that very fact in sections 22 and 39. There have been instances where councillors serving on port company boards have had to absent themselves from discussions at board meetings and also from council discussions on topics owing to potential conflicts of interest. When people elect their local representative, they obviously do not want to see his or her contribution to local democracy restricted in such a manner.
As Deputies can see, the Bill is an important step in the development of the commercial ports sector and an important contribution to the further devolution of responsibility from central to local government. The changes it introduces will enhance the ports' role as centres of their regional economies, deepen the economic development role envisaged for local authorities and improve the corporate governance and democratic accountability of the sector overall. The ports sector is an unsung hero of the economy. Without it, we simply could not trade with the world and many of the everyday items we take for granted would not be available. The amendments the Bill proposes on board structures will enhance the corporate performance of ports and ensure they will continue to fulfil their vital role as facilitators of the economy.
The Minister, Deputy Paschal Donohoe, and I look forward to hearing the views of Deputies on this important Bill and sector. We hope the objectives of the Bill will enjoy the support of the House, just as the Bill enjoyed the broad support of the Oireachtas Joint Committee on Transport and Communications during its scrutiny. I commend the Bill to the House.