I thank all the Senators who contributed to this debate and I join with them in congratulating the chairman, the board of directors, the management, and the staff of Irish Shipping on their continued successful record in operating a semi-State company. It is a shining example of what can be achieved in the semi-State sector. Irish Shipping have had 13 consecutive years of profit and success. I think it was Senator FitzGerald who referred to the foresight of the late Seán Lemass who set up this company in 1941. The proud record of this company over the years is indeed a tribute to the foresight and vision of that man in getting this enterprise off the ground.
Many of the contributions made by Senators raised points which can be answered. In the approach of the Government, myself and the Department to this, there was no question of the big stick being wielded over Irish Shipping. There was no question whatsoever of any directive being issued to them saying, "This must be done and that must be done." It was a question of consultation. I had many discussions with the chairman and the chief executive of Irish Shipping on the problem that existed at Verolme Cork Dockyard, on what their plans were for the future, on what they were likely to be ordering in the future.
For some time they had been considering the acquisition of a Panamax carrier. This would enable them when the opportunity arose to tender not only for the carrying of coal—for which there will be an urgent need in the future—to the new Moneypoint power station. This carrier, which will be approximately 72,000 tons dead weight, will be a welcome addition to the fleet of Irish Shipping. In years to come if we had foreign ships bringing in our coal to Moneypoint there would be many cries not alone in this House but from the public inquiring why Irish Shipping had not got this business and why we were not in the position to carry our coal. This is good forward planning. The interim period between the planning of this ship and the time at which the board of Irish Shipping would like to have ordered it, because of a very good cash flow position and, indeed, their whole financial position, was not very long. We did not have to lean on their shoulders to make them bring this plan forward once they were satisfied that the end result was that they would get this ship at the prevailing world market price.
I followed these negotiations. They were carried out between myself and the management of Irish Shipping. Other Government Departments were involved, including the Department of Industry, Commerce and Tourism and the Department of Energy. Indeed, the proposal got very careful consideration right along the line. I ensured at all stages that the commercial interests of Irish Shipping were fully preserved, that no damage would be done to them by this operation. That is the way the final package is emerging. The final price is at present under negotiation, because there are some extras being sought for inclusion on the carrier.
In relation to the carrier itself, Verolme Cork Dockyard had the experience some years back of building a carrier of this tonnage and size. There are some minor adjustments and some improvements that can be made in today's planning and sketching of that type of ship and it is in that particular area that negotiations are going on, but there will be no damage whatsoever done to the commercial integrity of Irish Shipping. They will get the benefit of the prevailing world market price and equity from the Exchequer. The vessel will be financed 50/50 equity and commercial borrowing. The equity will get drawn down first and then they will draw from the borrowings. For example, if the final figure is £13 million, it will be £6½ million equity first and then the £6½ million borrowings. There is no question whatever, and I want to assure everybody here, including Senator Cooney and others who have raised it, of Irish Shipping being asked to resort in toto to commercial borrowing. The situation and the implications of it were considered fully by the Government and as soon as this Bill passes through the House and becomes law, arrangements will be made very early in January for the placing of this order and the draw down to which I referred will be carried out in the order which I outlined.
Senator FitzGerald and Senator Whitaker raised the question of what is the national interest, what is the social interest and how one qualifies in financial terms these indeterminate factors. Let me say straight away that both Senator Whitaker and Senator FitzGerald accept that it is very difficult to quantify in strictly economic terms where the balance of public interest lies. We should evaluate and look at the situation that faces the Government and the situation in which we live today. Senator Mulcahy raised the point quite rightly that ship building across the world today is subsidised either visibly or invisibly and it is very difficult for any Minister or any Government to know precisely what is the total subsidy involved, be it visible or invisible. It is very difficult because each country has its own policy in relation to its own shipbuilding industry on how to protect it either by subsidy or by cheap loan finance or whatever measure. There are many ways and means, as we all know, of doing this. That is the position that we must look at today.
We have a very highly skilled work force here who have been trained in their particular skills over the years. The position I and the Government have faced in relation to this work force is: do we scatter them to the four winds and destroy their skills? In a very difficult time for employment, do we do that, or as Senator Hillery pointed out, do we use the public sector's resources to assist the private sector in such a situation? The Government considered this at length and came down fully in support of it as it is in accordance with their strategy for tackling the problems of the recession. It is well known to everybody that we did not choose to create unemployment to solve other economic ills at this particular time, as some others far more developed than us, have decided to do. Rather did we choose to put whatever Government resources were available towards the protection of employment. We are a developing economy, an economy whose young well-educated work force is one of our great strengths. It is the duty and responsibility of the Government to ensure in these particularly tough times that employment is protected as far as the Government can possibly protect it. If somebody wants to find fault with that course, so be it, but that is the Government's strategy, and when we look at the results and the human problems and the devastation that is happening to other economies because of the deep international recession, I believe we are on the right track. The Government believe we are on the right track and the time will come when it will be put to the test for the people of Ireland to decide whether we are on the right track or not. It is difficult to come down and compute accurately in every single aspect because we must take into consideration changing economic circumstances.
In relation to cost factors involved in placing the order for the Department of Defence and the Department of Fisheries and Forestry, I am not familiar with details and I am not in a position to give out information in relation to those two orders. What I can say is that I was personally involved in every step and stage of negotiations in relation to Irish Shipping's order. It was and is being done on a purely commercial basis. Irish Shipping are getting this ship at the world price. The Government are stepping in with a subvention to make up the difference. There were questions raised inquiring if this was feather-bedding and if it was correct to subsidise bad workmanship or low productivity in the Cork Verolme Dockyard. I am not in a position to pass judgement on that, nor do I believe is anybody here, but I took the opportunity in recent months of saying to the management and the workers of Cork Verolme Dockyard that the demand for shipbuilding in the world is stagnant. We have an over-capacity in shipping in the world today and they need not be expecting orders to turn up in the future which will take up their full capacity. I used the occasion to point out to them that when we look around at developments in offshore oil drilling in Ireland today, there must be opportunities there for a diversification of some of the technical skills in the Cork Dockyard. I urge them to take every opportunity they get to try to diversify. In relation to the Government decision of last July to place those orders with the yard, I fully believe that they took the right decision in the circumstances. There is now two years' guaranteed work at Cork and they can use the opportunity in the meantime to see what diversification can be done. I read with interest the comments of the managing director of that dockyard when he called for greater productivity in the years ahead. We all know that the word "productivity" has been bandied around but it is only when one is familiar with an industry that one can make a rational judgment as to what productivity improvements can be made.
I have covered a number of the points made in general terms in my reply so far. Let me tell this House that Irish Shipping are quite confident that they can charter this vessel successfully on the world market and that they do not see it as anything like a millstone around their necks in the short period in which they will have the vessel prior to its envisaged use for Moneypoint. Irish Shipping's experts are quite confident that they can usefully charter this vessel and have it earning more foreign exchange currency, as Senator Hillery remarked in the debate.
I have dealt with the envisaged payment schedule for the vessel. I assure everybody that there will be no damage whatsoever done to the commercial accounts of Irish Shipping. They have fully calculated the full effects of this and at the end of the day they are quite happy with the arrangements that have been made.
Senator Conroy called for more development of maritime activities. Some years ago there was a scheme to try to entice more of the private sector into shipping activities. But, as we all know, there is now an over-capacity in this area. It is not an area that is attractive to private investment at this time. But I would refer him to the great harbour development programme being undertaken by the Government in Drogheda, Cork, Foynes and Rosslare. We are making great progress in the area of harbour development.
Senator Whitaker questioned if we had approached this decision in a rational way. As far as I am concerned, I classify myself as a rational individual, and I have approached it in a rational manner. I would take the point that there is always scope for applying cost/benefit analysis to every transaction. Taking all the social aspects into consideration, taking the national interest into consideration, I am absolutely satisfied that the outcome of the cost/benefit analysis to the Irish economy is positive. We are always conscious in Government that social considerations can involve cost to the taxpayer. But it is a very fine balance which must be struck. The balance in this situation came down on the right side. We should be seen to provide an opportunity to keep the work force together to get this ship for Irish Shipping so that we can carry our own coal in the future so that it is available when we need it while at the same time providing for the diversification of a very skilled work force. When one has seen the human deprivation that unemployment causes, for instance, family breakdowns creating social frustrations, the cost to society cannot be measured in economic terms. It is right that the Government should have a social conscience. The Government have a social conscience and they made the right decision in this case.
