An amendment in the name of Senator West has been circulated but the amendment is out of order on the ground that it could have the effect of imposing or increasing a charge upon the Revenue.
Irish Steel Holdings Limited (Amendment) Bill, 1982: Committee and Final Stages.
Sections 1 to 4, inclusive, agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
I oppose this section for reasons that I outlined in my Second Stage speech but I should like to point out to the Minister that I was pleased with what he said. However, as we know only too well — I know very well from my experience in this House—it is one thing for him to say something; it is quite another for us to pass legislation and the legislation, once we pass it, is there and we must obey it or pay the penalty. While I certainly welcome his sentiments and welcome the fact that as far as I can gather, he indicated that he was not entirely happy with the operation of this philosophy, if I may use the term, because it comes into every semi-State Bill and I protest on every occasion, I must oppose the section, as it stands.
I would like to refer the House to the section that is being amended, and that is section 6 of the 1979 Steel Holdings (Amendment) Act. That section provides that there shall be paid by the company to its chief officer, whether that officer is so described or otherwise, such remuneration and allowances as the company, with the approval of the Minister, given with the consent of the Minister for the Public Service, shall determine. When one looks at the section which is proposed to be substituted for section 6 in the 1979 Act it must be clear to everyone that it is much less restrictive. Even then I think it is too restrictive, and what I intend to do is to quote what were the opinions of the board of Irish Steel Holdings. This comes from A History of Irish Steel by Sarsfield Hogan. I would add that from my experience this has been the attitude of the board in the other commercial semi-State companies to whom this is applying. I quote from page 189:
In July 1972, a second report was published, that of the Review Body on Higher Remuneration in the Public Sector. That body was guided by the same chairman as the earlier Review of Organisation, so that the two reports were referred to as Devlin 1 and Devlin 2. The second report recommended the adoption of pay levels for the higher posts in the public sector as a whole, including local authorities, ministerial and parliamentary offices and the judiciary. In the case of state-sponsored commercial companies, specific limits of pay were proposed for the chief executive of each company according to the report's evaluation of the comparable importance of the various bodies. These limits were to be mandatory on the appointing boards and were to include not only actual pay but also the value of any benefits, such as a company car, which might be received by the chief executive. The proposals therefore meant that the board could select its chief executive but not decide how much he was worth to the company in terms of salary. The most suitable person (possibly the only one suitable) could not be appointed if he were unwilling to accept the limit of pay prescribed by Devlin 2.
These recommendations in the Devlin reports caused concern to the Board of ISH. The executive director, in sending comments to the departments, strongly urged the view that inclusion of a commercial company such as Irish Steel among `the public services' and thus within the domain of the executive functions of government would be a mistake. He stressed the deterrent effect of the Devlin recommendations on the promotion in state enterprises of the spirit of initiative and risk-taking which were essential to commercial success. The disadvantage which such an arrangement would impose on these enterprises in the comparision (which the Devlin report suggested should be the test of their success) of their performance with that of similar enterprises in the private sector was obvious. So also was the danger that the restraints on remuneration of chief executives in state companies would be a disincentive in the recruitment of staff generally and condemn these companies to an artificial system of salaries out of line with the market forces which determined how talent and experience should be rewarded. Among the functions of company directors were those of hiring, firing, and remunerating their staff including above all the chief executive on whom they placed the primary responsibility for the success of the undertaking. That function was now to be curtailed without, it was claimed, any compelling reasons.
The Government, however, accepted without qualification the recommendations in both Devlin reports regarding commercial bodies and took steps to implement them as a measure of reform in the organisation and objectives of the public services taken as a whole. Time will tell whether such arrangements will be applied with the degree of flexibility required by the commercial companies.
During 1973 and 1974, following government adoption of the Devlin prescriptions, the ISH board fruitlessly sought approval, firstly from George Colley and later from Justin Keating, for somewhat better remuneration for their chief executive than the arbitrary limits allowed. In the case of ISH the chief executive for this purpose was the general manager and not the executive director who, by terms of appointment and contract, was not a wholetime officer of the company. At the end of the period covered by this chapter, the directors were still seeking to find some way out of the strait-jacket imposed by the Devlin formula.
I do not recollect having heard the name of the publication from which Senator West quoted.
It is A History of Irish Steel published by Gill and Macmillan and written by G.P.S. Hogan who was, for a time, executive director of Irish Steel Holdings.
That is a very frank statement of the feelings of the board of Irish Steel Holdings, so I am not a voice crying in the wilderness. I know that every other commercial semi-State company are worried about the increasing levelling out which provisions such as that in section 5 of this Bill are affecting. I would reiterate the point that I made to the Minister, that is, that it is not sufficient to pay executives in commercial companies administrative rates. In case my remarks are misinterpreted, I have no axe to grind with the civil service. We have a first-class civil service. I do not want any of my remarks to be interpreted as being in any way disparaging towards them. All I would say about the civil service, and it is a problem which other areas of life seem to suffer from, is that it is slightly over-manned. However, we are very lucky to have such a good body of men, but that is not the point. The point is that an executive director in a high-technology industry cannot be regimentally fixed at a level described by the service, and I am encouraged to hear the Minister say he will look at this over a wide range. I would be very happy to see something being done quickly before it really produces the consequences about which I am very worried.
One cannot but sympathise with the case which has been made by Senator West. It is a point that has come up in the Seanad many a time. I agree with Senator West that it is welcome that the Minister says that the matter will be looked at in the round. This is the way to tackle it. There is no sense in rejecting a section of this Bill because of a problem that pervades the whole of the semi-State sector. If the Minister would add that it will be looked at on a wide bases urgently, I certainly would be satisfied.
I would like to add my voice to what has been said. Reluctantly I have to disagree with Senator West. He said that it was a frank statement by Sarsfield Hogan. Of course it was a frank statement, but inaccurate because on the one hand we have a semi-State body attempting to compare themselves to an ordinary commercial concern and complaining about the restrictions being imposed on them in relation to or in comparison with commercial concerns, yet the very subject that we are discussing is the vast amount of money we are going to pour into Irish Steel. I would like to know where the comparison starts and ends. If I am in business, I cannot come looking to the Government for an injections of £30 million, £40 million or £50 million. I have to abide by the economic and, indeed, the efficiency factors that govern my operation. It is my opinion also that our employees in semi-State bodies are very well paid. I would say that there are very few people in private industry earning as much as are the executives in our semi-State bodies. I would say also that very few of the executives in private enterprise enjoy the same privileges, rights and protection as those involved in semi-State bodies. Therefore, I cannot for one moment concede that Senator West's proposal would do anything whatsoever to improve the calibre of the management of the semi-State bodies. I know that any time there is a vacancy for high or low management in the semi-State bodies they have the best in the country applying because the applicants recognise that this is where the real financial cream is to be found.
Senator Crowley has a point, but again it is only part of the truth, it is not the whole truth. I am not talking about employees in semi-State bodies in a general sense. I want to make that absolutely clear because I would agree that, in general terms — terms of salary and security on a general level — the employees in semi-State bodies are adequately remunerated. The point I wish to make concerns perhaps one or two men at the very top. Senator Crowley must be only too well aware of the number of private industries turning this point on its head, who pride themselves on being private industries and who come running to the Government seeking loans. They are not semi-State bodies; they get Government help in terms of IDA grants, Fóir Teoranta grants and so on. We have a structure ten miles wide of support for private industry. So remember that the private industries benefit from support in direct ways and in indirect ways. Therefore, it has become increasingly hard to make a distinction.
What private industry has got £50 million? CIE have got £90 million.
But one has to compare the size, the number of employees. CIE and the Post Office are the biggest employers in the country.
Senator West to continue, please.
I think my point is absolutely valid. I am just talking about the one or two people. Probably in the case of this industry the one person is in the chief executive position of managing director. I think that everything I said is valid. I think the quotation concerned is valid. I am glad to hear that the Minister has an open mind on it and will be reviewing the situation. I was encouraged by that.
Question put and agreed to.
Section 6 agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.