The enactment of the present Bill is necessitated by the need to make provision for the capital and borrowing requirements of the B & I Company in respect of a further passenger car ferry. As announced by the Taoiseach on 18 May 1979 the Government have decided to authorise the B & I Company to acquire a fifth passenger-car ferry from Verolme Cork Dockyard to be followed in due course by an order from Irish Shipping Ltd.
Construction of the new ferry for the B & I will begin without delay and the new vessel is expected to be available around mid-1981. It is expected to cost around £21 million on current indications. This represents a very sizeable investment, reflecting the dramatic worldwide escalation in the cost of new ships in recent years. The cost of acquiring new ships is a major problem nowadays for shipping companies. Over the past ten years, the cost of new tonnage has quadrupled. This places an insuperable difficulty in the way of financing new tonnage out of earnings. I am satisfied that the B & I Company could not finance this new vessel wholly by loan capital and that an Exchequer contribution in the form of additional equity is essential. It is proposed, therefore, to allocate part of the additional Exchequer equity provided for in the Bill towards the cost of the new ferry. The balance would be financed out of borrowings by the B & I Company and in that connection the proposed increase in the State guarantee limit will provide for any guarantee which may be required.
The B & I were acquired by the State in 1965 mainly to secure a greater measure of Irish participation in cross-channel services in the interest of trade and tourism generally. I believe that the company have gone a long way towards fulfilling this objective, despite the extremely competitive conditions prevailing on the Irish Sea. The company now carry a significant proportion of all passengers, cars and freight moving on cross-channel sea services and are thus in a strong position to influence the competitiveness and the quality of service to Irish tourism and to Irish exporters and importers. The company's well-established freight services to Europe have also assumed a greater significance with our membership of the European Community. If the company are to be enabled to continue fulfilling this obligation, they must continue to offer and maintain the best standards of service for passengers and freight. Modern, fast and efficient vessels are a fundamental requirement for this purpose. The company's existing ferries, apart from the new Connacht, were acquired as part of the extensive modernisation undertaken by the company in the late sixties. These existing ferries will, of course, see the company into the eighties but forward planning is essential at this stage, taking account of the need to renew the company's fleet during the eighties. Replacement of the company's earlier ferries could take several years to complete. It is necessary in these circumstances to initiate the process of fleet renewal now and the provisions of the present Bill will enable the first concrete step to be taken in that direction.
The fleet renewal programme forms an important element of the company's future development plans. The implementation of these plans will gear the company to exploit the market opportunities of the eighties and provide for the expected growth in traffic.
Features of the company's plans, apart from fleet renewal, include the introduction of a Jetfoil Service between Dublin and Liverpool early in 1980 and a new car ferry service on the Southern Corridor between Rosslare and Pembroke. The company are also planning additional roll-on/roll-off freight capacity on the Irish Sea, which the company pioneered in the sixties, and which is now a significant growth area.
The company will also be providing additional capacity on their continental services, a market which is also showing considerable growth potential following Ireland's entry into the EEC.
The implementation of these plans will enable the company to create an additional 400 jobs within the organisation with a considerable number of further job opportunities also arising in other areas associated with the company's developments.
The report on the B & I by the Joint Oireachtas Committee on State-sponsored bodies is a timely document. The Committee made a number of very interesting suggestions on a number of points and I have arranged for my Department to examine these critically in consultation with the B & I. The usefulness of the Committee's report to my Department and the B & I Company is enhanced by the fact that the Committee's deliberations represent an independent look at the operations of the B & I. Many of the points made by the Joint Committee in relation to such matters as the future rate of return on the company's investments and the funding of their future development plans are constructive and of direct relevance to the company's future development plans. There is no doubt that the company's future development proposals, including fleet renewal, will call for significant capital. The extent to which the B & I Company themselves will be able to fund part of their future capital requirements from their own resources will depend on the company's profit-making over the next few years. My objective is that the company — through a combination of loan finance and accumulated profits — should aim at the highest possible level of self-financing.
There has been a dramatic expansion in the activities of the B & I Company since their passage into State ownership in 1965. 1978 was the company's most successful year to date. Passenger, freight and car carryings rose to record levels. A record net profit of £1.35 million was achieved, although the company consider that this could have been over £2 million but for net losses of nearly £900,000 caused by labour disputes outside the company's control at various ports to which the company operate services. The continued development of the company and the provision of new vessels and ancillary equipment to that end is important in the furtherance of national development. Apart from the essential services which they operate in the interest of trade and tourism, the company activities are of very considerable direct benefit to the economy. For example, 65 per cent of their turnover is earned in the form of valuable foreign exchange while 71 per cent of their expenditure is made in Ireland thus maximising the benefits to the economy. They provide employment for nearly 2,000 people and their total annual payroll is over £10 million. Between 1968 and 1978 they paid £31 million to Verolme Cork Dockyard for the construction of five new vessels and the conversion and overhaul of others. The present car ferry order will provide full employment at Verolme Cork Dockyard for the next two years.
The provision of the Bill will provide a basis for the continued development of the B & I Company. I accordingly recommend the Bill to the House.