State Guarantees (Transport) (Amendment) Bill, 1965 (Certified Money Bill) —Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Transport and Power (Mr. Childers)

The State Guarantees (Transport) Act, 1962, provides that the Minister for Finance may guarantee the due payment by Córas Iompair Éireann of any moneys payable by the Board under contracts for the provision of goods and services or both goods and services entered into by the Board with my approval, given with the consent of the Minister for Finance.

I have been advised that the State Guarantees (Transport) Act, 1962, does not provide explicity for guarantees of payments due under contracts entered into by the Board to be expressed in any currency other than Irish currency; and the purpose of the present Bill is to remedy that defect. The only guarantee given under the 1962 Act was in respect of a contract entered into by the Board in 1962 in US dollars for the purchase, by extended payments, of diesel locomotives from General Motors Corporation, USA.

Amending legislation of a somewhat similar nature was necessary in the case of Aer Lingus and other companies covered by the State Guarantees Act, 1954 and, more recently, in the case of the Electricity Supply Board; and the necessary provision was made in the State Guarantees (Amendment) Act, 1964 and the Electricity (Supply) (Amendment) Act, 1965. In the present case, however, the guarantees which the Minister for Finance may give extend only to payments in respect of contracts for the provision of goods and services and do not extend to borrowings.

Section 2 of the Bill extends the powers of the Minister for Finance in the State Guarantees (Transport) Act, 1962 to enable him to guarantee payments by the Board in foreign currencies and establishes the method of calculating the equivalent in Irish currency of moneys due by the Board in foreign currency. Rules for conversion follow those in the State Guarantees (Amendment) Act, 1964. Such conversion is necessary to determine the value in Irish currency of the guarantees given by the Minister for Finance for the purpose of subsection (2) of section 2 of the State Guarantees (Transport) Act, 1962, which prescribes the maximum amount of principal in Irish currency which may be guaranteed at any one time.

I recommend the Bill to the House.

Mr. Garret FitzGerald

As the Minister has said, this is one of a series of Bills to cover a defect in the original Act, which is a rather surprising one. The Minister has not indicated how this came to be discovered or, indeed, how the original defect occurred. However, now that it has been discovered, it is right that we should remedy it.

I note that, in these instances, the guarantees which the Minister may give extend only to payments in respect of contracts for the provision of goods and services and do not extend to borrowings. I think this is appropriate. One of the things I was interested in in relation to this Bill was whether or not this was the case because, unlike Aer Lingus, which earns a very high proportion of its revenue from abroad and is, therefore, in a position to remunerate capital borrowed abroad, CIE's capital earnings are very small, excluding hotels, and would amount to no more than 3 per cent. It would be inappropriate, in these circumstances, economically to finance the expansion or continuation of CIE by foreign borrowings and it is a good thing that this power has not been included here. As it has not been included, I do not think this is an appropriate time to say more about the capitalisation of CIE or the appropriateness of investing further large sums for revenue equipment, as distinct from maintaining the existing investment and carrying on the railways for as long as they can carry on in their present condition, which could be for 20 to 25 years. That is something we can, no doubt, clarify on another occasion. Bearing in mind the limited purpose of the Bill and its limited value, I do not think we can have any difficulty about supporting it.

Mr. O'Quigley

Could the Minister indicate for what purpose, at the present time, it is necessary to get this amending legislation and to what will it be applied?

Mr. Childers

It is for dieselisation.

Mr. Garret FitzGerald

Is there no other purpose in contemplation to which this would be applied?

Mr. Childers

There is a programme of diesel engine purchases which includes new diesel engines of a more modern type and replacement of existing diesel engines. The utility of some engines is being gradually reduced by age. It does not imply any extension of the rail system of CIE.

Mr. Garret FitzGerald

Having brought out that point, which was not clear to me, it would be appropriate to comment that the Government's decision in relation to CIE and the provision of continuing capital for the railway system of CIE is open to question. It would certainly seem that there is a very strong case from a practical and a social point of view, which one would not contest, for maintaining the railways in their present form and running them down gradually over a prolonged period. Because they were run from 1921 to 1949 without any injection of capital we know that a railway system can be run for a very long time without further investment of capital. If this guarantee is to extend the continuing purchase of diesel engines it appears that the Government's intention is to continue to invest in railway equipment. One may question the desirability of this.

Mr. Childers

I have not come prepared for a discussion on the policy of CIE because this Bill merely enables CIE to be sure they can make purchases for dollars for purposes which relate to the operation of CIE which have already been discussed in relation to the Transport Act, 1964 and the annual Estimate in the Dáil. I did not conceive that the discussion could be extended to this point.

An Cathaoirleach

The scope of the Bill is very limited.

Mr. Garret FitzGerald

I shall not push the point. It was not clear to me that there were continuing purchases involved at the moment. When this point was brought out by Senator O'Quigley I thought I should bring the matter up but in deference to your ruling, Sir, I shall not press the matter further.

Mr. Childers

Perhaps, I have not made myself fully clear. The 1964 Act provided for total capital to be made available to CIE of £6 million from 1964 for five years—in other words, to the end of 1969. That was agreed to by the Dáil and also by the Seanad. The purchase of the diesels comes within the capital requirements of CIE agreed to by both Houses of the Oireachtas so this is absolutely within the limits of what has been agreed to.

Mr. Garret FitzGerald

I appreciate that. Although we were told that the capital investment involves dollar expenditure we are now told something of the character of the investment.

Mr. McQuillan

In his statement the Minister says that the only guarantee given under the 1962 Act was in respect of a contract entered into by the Board in 1962 in US dollars for the purchase, by extended payments, of diesel locomotives. Do we take it that the mention of extended payments covers the day-to-day position at the moment in regard to payments due or being made?

Mr. Childers

Payments continue to be made on the basis of the contract entered into by CIE which I am glad to say was of a satisfactory character particularly in relation to current interest rates. It is for the completion of these payments and also for carrying out the full diesel engine programme envisaged under the 1964 Bill that this is required.

Mr. McQuillan

This relates to the 1962 Act and to the amendment to that Act in that regard. Could the Minister indicate to us, with reference to the 1962 Act, what was the full commitment with regard to the extended purchase of diesel locomotives? Was there a limit in regard to the figure and the date by which the extended purchase would finish?

Mr. Childers

The total cost was £2,200,000 over a period of years.

Mr. McQuillan

What period?

Mr. Childers

Five years.

Mr. McQuillan

I should like to seek clarification at this stage. I gather that certain payments have been made to date. Why is it that the position has altered? Why has it become necessary at this particular stage to discover that amending legislation is necessary to deal with something that up to the present appears to be satisfactorily dealt with under existing legislation? It is a matter of extended payments and these payments were evidently made to the satisfaction of General Motors and all concerned. Why has it become necessary, at this stage, to alter this?

Mr. Childers

It is simply because we were advised by the Attorney General that the phrasing of the previous legislation was inadequate. We have also been so advised in connection with Aer Lingus and the Electricity Supply Board. It is just a defect in writing the legislation which we are now overcoming. There was an absence of precision with regard to all three cases, in the previous legislation. There is no other hidden reason and there is nothing complicated about this at all.

Mr. Garret FitzGerald

Is it the case that the 1962 Act relates to a specific contract of £2,200,000 and, if so, how can the Minister speak of this applying to future purchases of diesel engines if the contract is now completed? I may have misunderstood the Minister on this.

Mr. Childers

It applies to present and future contracts. It removes doubt in regard to present contracts and it removes doubts that could be felt in regard to future contracts.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee.

Section 1 agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Garret FitzGerald

I understood that the Minister said on advice that the 1962 Act relates to the guarantee contract for £2,200,000. If this Act amends the 1962 Act how does it apply to the whole capital programme?

Mr. Childers

I did not make it clear to the Senator. The first contract is £2 million odd, and guarantees under the 1962 Act may be given up to a total of £5 million.

Mr. Garret FitzGerald

I see.

Mr. O'Quigley

I think the Minister is to be commended for introducing this Bill and this section, because I believe that where legislation is found to be defective those who find it in that condition should not hesitate to confess their previous failure, whether culpable or otherwise, and in a Bill of this kind to regularise the position. I observe that subsection (1) of section 2 deems previous moneys to have been included, and moneys in currencies other than the currency of the State. The Minister is to be commended for regularising that position.

On Second Stage the Minister told us that these moneys were being guaranteed for the purpose of the CIE dieselisation programme and that more of these diesel engines will be purchased abroad. I gather that £2.2 million of the £5 million has been allocated for that purpose already. I understand that the Minister would have no experience of what I am about to say now, and it is very relevant to the question of the application of these moneys.

Section 3 agreed to.

Title agreed to.

Bill reported without recommendation, received for final consideration, and passed.

Seanad Éireann debate - Wednesday, 1 Dec 1965

State Guarantees (Transport) (Amendment) Bill, 1965 (Certified Money Bill) —Second and Subsequent Stages.

Seanad Éireann debate -
Wednesday, 1 Dec 1965